Quality management in logistics:
an examination of industry practices
Shams-ur Rahman
The University of Wollongong, Wollongong, Australia
Abstract
Purpose– The objective of the study is to examine the extent to which quality management practices, tools and methods are employed and adopted in Australian companies.
Design/methodology/approach– To address the aim of the study, a survey instrument was developed and data were collected from a field research on a sample of manufacturing, retail, and logistics companies.
Findings– The results of this study indicate that the primary obstacles for not implementing quality programs are “establishing employee ownership of the quality process”, “changing the corporate culture”, and “training and education of employees”. The results also show that the most important component that identifies quality in logistics is “on-time delivery”.
Originality/value– This study demonstrates that integration of quality programs with corporate strategy, development of closer links with suppliers, and consistency in order cycle are critical initiatives required for improvement.
KeywordsAustralia, Distribution management, Quality, Surveys Paper typeResearch paper
Introduction
Today’s global business environment is characterized by expanding foreign markets, comprehensive information networks, improved transport and distribution systems, increased competition and customer expectations, combined with and greater levels of uncertainty. In such an environment, it is widely acknowledged that effective and efficient management of logistics and supply chain activities can provide a means of gaining competitive advantage. In recent years, logistics and supply chain management has received increasing attention, from both academics and managers alike (Holmes, 1995; Crosset al., 1997; Magretta, 1998; Shinet al., 2000; Poweret al., 2001; Rahman, 2002).
In spite of evidence from around the world suggesting that effective quality management practices can lead to improved organizational performance (Stundza, 1990; AQF, 1991;
Main, 1992; Kumar and Gupta, 1993; Sohal, 1995), the importance of quality management to logistics systems has not been fully realised. Quality is acknowledged as being critical to the value-adding process of product creation and delivery; orders requiring rework have been estimated to cost in excess of eight times the cost of properly produced and delivered customer requirement (Bowersox et al., 1985).
Quality management involves being proactive in performing
the right activity the right way the first time, and continuing to perform tasks to the required level. In logistics, that could translate into strategies aiming to make order cycle times shorter and more predictable, as well as maintaining certain levels of in-stock availability and certain fill rates on customer orders.
It has only recently been recognized that an essential ingredient of successful supply chain management is high quality logistics throughout supply networks (Coyle et al., 1996; Choi and Rungtusanatham, 1999). Despite this, most recent studies on quality and logistics have focused on a single company or on its immediate suppliers and customers (Ebrahimpour and Johnson, 1992; Tan et al., 1998). It is important to note that the quality level delivered to a final customer is the result of the quality management practices of each partner of supply chains, and hence each partner plays an important role in the production and distribution process.
There is evidence to suggest that improving the quality of all logistics operations and supply chain stages results in reduced costs, improved resource utilization, and improved system efficiency (Beamon and Ware, 1998). Beamon and Ware (1998) developed a conceptual model for the assessment, improvement, and control of overall quality of supply chain systems. There are only few empirical studies which have investigated the effect of quality practices on logistics performance, from a supply chain management perspective.
Through an investigation of the supply chains of the US electronics components industry, Forker et al. (1997) demonstrated that quality management practices are related to organizational performance and suggested that companies should continue promoting quality management practices throughout their supply chains. Anderson and Jerman (1998) developed a causal model based on the criteria of Malcolm The current issue and full text archive of this journal is available at
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Supply Chain Management: An International Journal 11/3 (2006) 233 – 240
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Baldrige Award to investigate the influence of quality practices on logistics performance. Their results showed that a significant relationship exists between level of quality practices and logistics outcomes, especially in the context of logistics operational performance and customer service. Choi and Rungtusanatham (1999) reached a similar conclusion when they compared quality management practices across various supply chains and industries. In a recent study of the textile apparel industry, Romano and Vinelli (2001) found that quality management practices and continuous monitoring of quality parameters in logistics activities can improve a company’s ability to meet its customers’
expectations.
Previous surveys
The study by Read and Miller (1991) investigated the application of quality practices in the logistics activities of North American and European companies, with the aim of gaining insight into the extent to which quality initiatives were practiced, how such programs were structured, and their main results. The study found that lack of pressure to initiate and lack of managerial support were the major obstacles to implement a logistics quality program. One of their critical findings was that logistics quality programs are not driven by overall business success factors, as was previously believed.
Using a similar survey instrument, Millen and Maggard (1997) conducted a follow-up study to the Read and Miller (1991) study and provided a comparison of quality management practices between the two samples. The results showed much dissimilarity between the two studies. For example, the major obstacles for the implementation of quality programs found by Millen and Maggard (1997) was a lack of human and financial resources, as opposed to lack of pressure to initiate and managerial support, as found by Read and Miller (1991). Also, the Millen and Maggard (1997) study found a greater degree of quality practices implementation and quality tools usage across different areas of logistics operations compared with the Read and Miller (1991) study. A number of similarities between the two studies were evident, however. Managers in both studies agreed that quality will not return to a traditional role and these quality programs will be supported by management in the future. More recently, Sohalet al.(1999) investigated the adoption of quality practices in the logistics activities of Australian firms. There are many similarities between the main findings of the Sohal et al. (1999) and Millen and Maggard (1997) studies. This may be due to the fact that these two studies were conducted within a short period of each other. This research examines the status of quality management practices in logistics in Australian companies. It also provides a comparison of quality practices between manufacturing and retail companies, and logistics firms.
Research methodology
In February 2002, the Institute of Transport Studies (ITS), The University of Sydney, initiated a study to investigate world class logistics (WCL) practices in Australia. The research is part of the wider WCL study investigating the state of quality practices in logistics in Australian companies. The other objectives of the WCL study include examination of relationships between world class logistics practices and
environmentally responsible logistics, and assessment of the logistics outsourcing market, the results of which are under preparation. In this study, the survey instrument developed by Millen and Maggard (1997) was used with only minor modifications. The sample was drawn from companies listed in two published databases: Australia’s Top 500 companies (Hardwick, 2001) and firms enlisted as members of Logistics Association Australia (LAA). Banks and other financial firms, insurance companies, and real estate companies were excluded from the list of Australia’s Top 500 companies.
A total of 350 firms were selected for the study, consisting of 120 logistics, 103 manufacturing, and 127 retail/service companies. Logistics/operations managers were identified and sent copies of survey questionnaires, together with a cover letter and a pre-paid reply envelope. In order to maximize the response rate and to avoid non-response bias affecting the transferability of the findings, the following procedure was used: first, companies listed in the database of participants were contacted by phone. The names of the relevant managers and their current contact details were obtained.
Where possible, an attempt was made to speak to the relevant manager about the aim and the content of the survey. Then a reminder call was made to the relevant managers approximately two to three weeks after the mail out. Those who had not responded were encouraged to do so, and those who had not received the package were sent a second copy.
The survey resulted in 59 responses, a response rate of 17 per cent. This response rate was expected in view of the length and complexity of the survey and was considered acceptable.
Profile of the respondent
The respondents were asked in which market niche their companies operated. The responses are summarized in Table I. About 35 per cent of the companies indicated that transport/freight management is their niche market followed by retail/wholesale (17.3 per cent) and manufacturing (13.5 per cent). However, a vast majority of logistics firms selected
Table I Market niche in which the company operates
Market niche Per cent
Transport/freight management 34.6
Retail/wholesale 17.3
Manufacturing 13.5
Food/beverage 13.5
Distribution 11.5
Pharmaceuticals 11.5
Chemicals 9.6
Automotive 9.6
Medical equipment 7.7
Consumer products 5.8
High technology 5.8
Health care products 5.8
Telecommunications 3.8
Publishing and printing 3.8
Minerals and resources 3.8
Computers 1.9
Electronics 1.9
Copiers 1.9
Industrial machinery 1.9
Other 7.7
transport/ freight management (75 per cent) as their market niche, followed by distribution (37.5 per cent).
More than two-fifths of all firms (42 per cent) had between 45 and 500 full-time employees (Table II). The majority of the logistics firms (85.7 per cent) had between 45 and 100 full-time employees and a large proportion of manufacturing and retail companies (38.9 per cent) had between 101 and 500 employees. Over 7 per cent of the logistics firms had employees over 1,000 employees and about one-third (30.6 per cent) of the manufacturing and retail companies had employees over 1,000 employees. One-quarter of the manufacturing companies had between 501 and 1,000 full- time employees, whereas no logistics firms belonged to this employee segment. More than half of all firms (55.8 per cent) operated globally (Table III).
Quality practices in logistics
This section of the study examines the extent of quality management practices in logistics functions. Unlike previous studies (Read and Miller, 1991; Millen and Maggard, 1997;
Sohal et al., 1999), this study also compares the extent of these practices between manufacturing and retail organizations, and logistics firms. To ascertain any significant differences between the two categories of firms, a t-test was employed either at 0.05 or 0.01 level of significance.
Definition of logistics quality
Managers were asked how they define logistics quality by identifying its three most important components that describe quality in logistics, from a total of nine different components (Table IV). Respondents ranked “on-time delivery” (82.7 per cent), “total support of customer needs” (53.8 per cent), and
“consistency of order cycle” (40.4 per cent) as the most important. The top two components that identified quality for logistics firms were “on-time delivery” (87.5 per cent) and
“total support of customer needs” (68.8 per cent), whereas, the top two components for manufacturing and retail companies were “on-time delivery” (80.6 per cent) and
“consistency of order cycle” (50.0 per cent). This is consistent with the findings of other studies (Millen and Maggard, 1997;
McMullan, 1996). “On-time delivery”, and “order cycle” are frequently sited in literature as critical measures of logistics performance (Gunasekaran et al., 2001; Beamon, 1999).
These non-cost measures are used in practices along with cost measures within the scorecard and supply chain operations reference (SCOR) performance models. No manager of the logistics firms believed out-of-stocks to be an important component of logistics quality. Compared to the logistics firms, a high proportion of manufacturing and retail companies (30.6 per cent) viewed “accurate inventory information” as an important logistics quality indicator.
This finding suggests that accurate information on inventory is becoming increasingly important, probably because of the increased uptake of vendor-managed inventory (VMI) and efficient customer response (ECR) management practices.
Organisation and involvement
To understand the organizational aspects of quality programs, managers were asked to indicate the forms of organizational structure used and people involved in them. Table V shows forms of organizational structure used to manage the quality management and improvement processes, and the results they have on performance. Top-ranking was the use of a steering committee of senior management (26.1 per cent), closely followed by “quality circles” (25.1 per cent) and “quality department” (25.1 per cent). This suggests that companies Table II Number of full-time employee
Percentage of respondents
Manufacturers and retail companies Logistics firms All
45-100* 5.6 85.7 24.0
101-500 38.9 7.1 18.0
501-1,000* 25.0 0 32.0
1,0011 30.6 7.1 26.0
Note:*p,0:01
Table III Geographic coverage of companies
Geographic coverage Percentage of firms
Global 55.8
Australasia 25.0
National 13.5
State 3.8
Regional/intra-state 1.9
Table IV Definition of logistics quality
Percentage of respondents Manufacturers
and retail companies
Logistics firms All
On-time delivery 80.6 87.5 82.7
Total support of customer needs 47.2 68.8 53.8 Consistency of order cycle* 50.0 18.8 40.4
Error-free transactions 30.6 43.8 34.6
Accurate inventory information* 30.6 6.3 23.1 No goods damaged in handling or
delivery 19.4 31.3 23.1
Defined procedures and work
instructions 16.7 18.8 17.3
Reliable suppliers 5.6 12.5 7.7
Note:*p,0:05
Table V Forms of organizational structure used to support quality program
Percentage of respondents Manufacturers
and retail companies
Logistics firms All Steering committee of senior staff
management 19.4 43.8 26.1
Departmental functional quality
circles 30.6 13.3 25.5
Division/facility quality department 27.8 20.0 25.5 Cross-functional task force 19.4 26.7 21.6 Corporate quality department 22.2 6.7 17.6
use several forms of organizational structure to support quality program. When two categories of firms were compared, it was found that steering committees were used frequently (43.8 per cent) by logistics firms whereas, while quality circles were commonly used by manufacturing and retail companies (30.6 per cent).
Respondents were provided with four approaches which could be used to administer a logistics quality program, and were asked to choose those alternatives that applied to their organisations. The results are shown in Table VI. The two most frequently used approaches were “specific employees dedicated to quality projects” (44.2 per cent) and “all employees having some quality project responsibilities” (41.9 per cent). Although the intensity of usage of different approaches in this study differs from the findings of Millen and Maggard (1997), the overall ranking of the approaches were the same. Compared to the logistics firms, managers of the manufacturing and retail companies used “specific employees dedicated to quality projects” and “all employees having some quality project responsibilities” approaches to support their quality program less frequently. Very few programs (11.6 per cent) were managed through an external department and no programs of logistics firms were managed through an external department.
Managers were asked the extent to which quality programs are, or would be, integrated into the company as a whole (Table VII). Managers of over two-fifths of all firms (41.2 per
cent) were confident that the quality programs would be fully integrated into the corporate strategy in the future. No respondent in either type of companies believed that their quality programs would not be supported by management in the future, however, the two groups disagreed as to how integrated the quality programs would be. The managers of manufacturing and retail companies were significantly more confident that the quality programs would be fully integrated into the corporate strategy (55.6 per cent) than the managers of the logistics firms (6.7 per cent) (p,0:01). One possible explanation for this is that many logistics firms may not yet see that pursuit of quality should be an integral part of the overall business process. Interestingly, 20 per cent of the logistics firms believed that quality would resume a traditional role in the future compared to only 2.8 per cent in the manufacturing and retail companies.
Seven different functions within logistics were listed in the questionnaire, and managers were asked to indicate the extent to which a logistics quality management program was implemented in these functional areas. The functional areas were ranked from most implemented to least implemented.
Table VIII presents these results. Overall, purchasing (82 per cent) and customer service (80.4 per cent) functions were identified as the areas in which a quality program had been implemented extensively. Production planning was found as the area in which quality programs were least implemented (70 per cent). These findings are similar to the findings of Sohal et al. (1999) and Millen and Maggard (1997). The managers of manufacturing and retail companies indicated a greater degree of implementation across all areas of logistics management compared to the managers of the logistics firms.
However, the difference is significant only in the areas of forecasting (p,0:05) and production planning (p,0:01).
This may be related to the fact that production activities such as components and final assembly, packaging are not frequently used third-party logistics services in Australia (Dapiranet al., 1996).
Quality measurement and improvement
Three questions were asked to assess the effectiveness of quality programs, performance benchmarks, and tools used to measure improvement. Organisations use a variety of procedures to learn about the effectiveness of their quality efforts and to set targets (Table IX). The most frequently cited method by managers was “quality audit by internal resources” (70.6 per cent). This finding is consistent with the findings of the previous studies (Sohalet al., 1999; Millen and Table VI Approaches to administer logistics quality program
Percentage of Respondents Manufacturers and
retail companies
Logistics firms All Specific employees have been
dedicated to quality projects 33.3 58.3 44.2 All employees have some
quality project responsibilities 33.3 50.0 41.9 Each manager have his/her
own approach
organizationally 29.0 16.7 25.6
Quality is managed through an
external department 16.1 0.0 11.6
Table VII Integration of quality program in 2000s
Percentage of respondents Manufacturers and
retail companies
Logistics firms All Fully integrated into the
corporate strategy* 55.6 6.7 41.2
Integrated into only certain
business functions 33.3 46.7 37.3
Receiving some management attention with little
integration 8.3 26.7 13.7
Resuming a traditional role 2.8 20.0 7.8
No longer supported by
management 0.0 0.0 0.0
Note:*p,0:01
Table VIII Extent to which a quality program was implemented Percentage of respondents Manufacturers and
retail companies
Logistics firms All
Purchasing 88.9 64.3 82.0
Customer service 83.4 73.4 80.4
Transport 83.4 71.4 80.0
Warehousing 86.1 64.3 80.0
Inventory control 83.4 57.1 76.0
Forecasting* 76.7 50.0 75.0
Production planning** 83.4 35.7 70.0
Notes:*p,0:05,**p,0:01
Maggard, 1997; Read and Miller, 1991). Compared to logistics firms (46.7 per cent), a significantly high proportion of manufacturing and retail companies used “quality audits by internal resources” (80 per cent) (p,0:05). While the use of third-party audits (i.e. external quality audits) was common among the manufacturing and retail companies (47.2 per cent), none of the logistics firm used this procedure (p,0:01). The managers of manufacturing and retail companies indicated a greater usage of all procedures except
“competitive benchmarking”.
Table X shows the extent to which various methods are used by companies to benchmark performance against customer expectations. Three most frequently applied techniques were “line management visits to customer sites”
(60.8 per cent), “customer surveys” (47.1 per cent), and
“internal measurements of repeat business” (35.3 per cent).
These results suggest that the participating organizations are customer-focused and utilize a variety of methods to assess customer needs and expectations. Compared to the logistics firms, more manufacturing companies employ “customer survey” techniques to ascertain customers’ expectations. In general, logistics firms did not use “market research data” and
“published information in trade and business journals”, whereas a small number of manufacturing companies used such techniques (5.6 per cent).
Managers were asked to indicate the tools they used to identify and track improvements in processes (Table XI). The
most commonly used tools were “flow charts” (68.6 per cent),
“statistical process control” (58.8 per cent), “cheek sheets”
(37.3 per cent) and “histograms” (27.5 per cent). These results are similar to the findings of Millen and Maggard (1997). However, the managers of manufacturing and retail companies indicated a greater degree of application of these tools across all areas of logistics management compared to the managers of the logistics firms. The results also showed that the logistics firms do not use tools such as “cause-and-effect diagrams”, “Pareto charts”, and “scatter diagrams”.
Compared to logistics firms, significantly more manufacturing companies use statistical process control (69.4 per cent compared to 33.3 per cent) (p,0:05) and flowcharts (75 per cent compared to 53.3 per cent). Since traditionally control chart is used in the production area, this result does not come as a surprise.
Satisfaction with the existing quality program
The respondents were asked to show the extent of their satisfaction with each of the key quality processes using a scale of 1 (very dissatisfied) to 5 (very satisfied) (Table XII). The mean scores for each aspect were calculated, and these were used to rank order the various aspects of quality program.
The results show that the rank ordering of the various aspects of quality program are virtually same as the rank ordering found by Sohal et al. (1999). Obtaining “management commitment” and achieving the set “goals” were identified as the two aspects of logistics quality program that gave managers the most satisfaction. Obtaining “management commitment” and “management involvement” gave managers of logistics firms most satisfaction, while achieving
“goals” gave managers of manufacturing companies most satisfaction. However, it is important to recognize that the extent of satisfaction is relatively moderate, varying between 2.97 and 3.40 (Table XIII). Managers were least satisfied with the “education and training” aspect of quality program.
Quality program implementation problem
The factors that impeded the implementation of the quality management program in logistics were also investigated, the results of which are shown in Table XIV. “Establishing employee ownership of the quality process” and “changing the corporate culture” were the two most significant impediments. Significantly greater number of manufacturing and retail companies rated this factor as being the impediment (66.7 per cent) than the logistics firms (26.7 per cent) (p,0:05). The managers of logistics firms saw “changing Table IX Process of measuring quality performance and setting targets
Percentage of respondents Manufacturers and
retail companies
Logistics firms All Quality audit by internal
resources* 80.0 46.7 70.6
Quality audit by external resources other than
customer** 47.2 0.0 33.3
Survey of customer
expectations 30.6 26.7 29.4
Process-specific measures 33.3 20.0 29.4
Competitive benchmarking* 16.7 46.7 25.5
Quality audit by customers 16.7 13.3 15.7
Notes:*p,0:05;**p,0:01
Table X Methods to measure performance against customer expectations
Percentage of respondents Manufacturers and
retail companies
Logistics firms All Line management visits to
customer sites 58.3 66.7 60.8
Customer surveys 52.8 33.3 47.1
Internal measurements of
repeat business 30.6 46.7 35.3
Market research data 5.6 0.0 3.9
Published information in trade
and business journals 5.6 0.0 3.9
Table XI Tools and techniques to measure improvement Percentage of respondents Manufacturers and
retail companies
Logistics firms All
Flowcharts 75.0 53.3 68.6
Statistical process control* 69.4 33.3 58.8
Check sheets 41.7 26.7 37.3
Histograms 27.8 26.7 27.5
Cause-and-effect diagrams* 25.0 0.0 17.6
Pareto charts* 22.2 0.0 15.7
Scatter diagrams 11.1 0.0 7.8
Note:*p,0:05
corporate culture” (40 per cent) and “training and education of employees” (40 per cent) as the two most significant factors obstructing the institution of quality improvement process in their organizations. In addition, the result showed that executive commitment was the least likely impediment to quality improvement process for both groups.
Table XV shows the reasons given by managers for not implementing a quality management program in logistics functions. “Lack of human resources” (61.5 per cent) and
“lack of financial resources” (38.5 per cent) were identified as the major reasons for not implementing a quality program.
Millen and Maggard (1997) came to similar conclusions in their research in the context of American companies. When
comparisons were made between manufacturing and logistics firms, the results indicated that the reasons such as “lack of human resources”, “lack of financial resources”, and “lack of training” were more severe in the case of logistics firms. “Lack of management support” is not considered by the managers of logistics firms as a reason for not implementing a quality program, whereas, 20 per cent of the manufacturing companies believed that it is a concern.
Summary
This research examined the status of quality management practices in logistics in Australian companies. Overall, the results indicated that many firms have successfully implemented quality programs in logistics functions. Over 50 per cent of the firms were satisfied with their current quality programs. The top two components that identified quality in logistics were “on-time delivery” and “total support of customer needs”. The participating companies used several forms of organizational structure to support quality program which include “steering committee of senior management”,
“quality circles”, and “quality department”. The primary obstacles for not implementing quality programs in logistics functions were “lack of human resources”, and “lack of financial resources”. Most commonly used tools to identify and track improvements in processes were “flowcharts”,
“statistical process control”, and “check sheets”. While the use of third-party audits was common among the manufacturing and retail companies, none of the logistics firm used this procedure. While obtaining “management commitment” and “management involvement” gave managers of logistics firms most satisfaction, achieving
“goals” gave managers of manufacturing companies most satisfaction.
Table XII Rank order of key quality aspects with respect to level of satisfaction
Rank Manufacturers and retail companies Logistics firms All
1 Goals Management commitment
Management involvement
Management commitment
2 Management commitment Goals
3 Management involvement Goals Management involvement
4 Result to date Result to date
Education and training
Result to date
5 Education and training Education and training
Table XIII Mean scores of key aspects of the current quality programs Manufacturers and
retail companies
Logistics firms All
Management commitment 3.36 3.40 3.37
Goals 3.42 3.20 3.35
Management involvement 3.14 3.40 3.21
Result to date 3.06 3.13 3.07
Education 2.97 3.13 3.02
Table XIV Impediments to logistics quality program implementation Percentage of respondents Manufacturers and
retail companies
Logistics firms All Establishing employee
ownership of the quality
process* 66.7 26.7 54.9
Changing the corporate
culture 50.0 40.0 47.1
Establishing a common vision
through the organization 38.9 26.7 35.3
Training and educating
employees 33.3 40.0 35.3
Lack of data availability 22.2 20.0 21.6
Gaining senior executive (top-
down) commitment 16.7 20.0 17.6
Considering quality in long-
term planning 16.7 20.0 17.6
Note:*p,0:05
Table XV Reasons for not implementing a quality program in logistics Percentage of respondents Manufacturers and
retail companies
Logistics firms All
Lack of human resources 60.0 63.6 61.5
Lack of financial resources 33.3 45.5 38.5
No pressure to initiate 33.3 36.4 34.6
Lack of training 20.0 36.4 26.9
Lack of management support* 20.0 0.0 11.5
No need 6.7 18.2 11.5
Note:*p,0:05
Managerial implications
It is evident from this study that high quality logistics service is critical to customer service. This requires logistics managers identify necessary quality managements methods, tools and principles, and to apply them effectively in all areas of logistics functions. The results of this study indicate that participating companies assigned less importance to the “reliable suppliers”
(7.7 per cent). Supplying right product at right time in right quantity at right place is critical to running effective logistics systems (Lambertet al., 1998). There are evidences to suggest that closer links with suppliers ensure high quality services and improves return on investment for the partners in supply chains (Dyer, 1994, 1996). The results of this survey suggest that logistics managers of both manufacturing and logistics firms need to improve their perception on this aspect of logistics quality.
This study provided a comparison of quality practices between manufacturing and retail companies and logistics firms. Overall, manufacturing companies are ahead of logistics firms in the application of quality management practices in the logistics functions. No respondent in either type of companies believed that their quality programs would not be supported by management in the future, however, the two groups disagreed as to how integrated the quality programs would be. The managers of the manufacturing and retail companies were significantly more confident that the quality programs would be fully integrated into the corporate strategy (55.6 per cent) than the managers of the logistics firms (6.7 per cent). To achieve satisfactory results through quality practices, managers of logistics firms must understand that the quality programs must be integrated into the corporate strategy. This view has been frequently expressed in the quality management literature (Deming, 1986).
The results show that the managers of the logistics firms rate quality indicators such as “consistency of order cycle”
(18.8 per cent) and “accurate inventory information” (6.3 per cent) poorly. These two logistics service quality indicators are equally important and critical as measure such as the “on- time delivery”. Accurate inventory information is critical to avoid overstocking and understocking situations and to maintain a steady flow of products through supply chains (Lee and Billington, 1992). On the other hand, consistency of order cycle helps managers to minimize uncertainties related to order processing and order lead time (Lee et al., 1993).
Managers of the logistics firms should give appropriate attention to these quality indicators.
The managers of manufacturing and retail companies indicated a greater degree of implementation of quality programs across all areas of logistics management compared to the managers of logistics firms. Manufacturing and service firms are ahead even in areas which are traditionally considered to the core business areas of logistics firms such as transport, warehousing, inventory management. Managers of logistics firms must learn skills of quality management and effectively apply these skills in various areas of logistics management.
The results of this study show that both groups of firms have applied simple quality tools to monitor and measure improvements in various areas of logistics functions.
However, the managers of manufacturing and retail companies used these tools more frequently than the managers of the logistics companies. Tools such as
flowcharts, histogram, and Pareto chart are some of the simple but useful tools for logistics functions. The managers of the logistics firms must develop skills in these tools and apply them more frequently particularly in areas such as transport, warehousing and inventory control which are considered to be the core functions of logistics firms.
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Corresponding author
Shams-ur Rahman can be contacted at: [email protected]
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