Integration of logistics function and business performance

Abstract

Purpose: The degree of integration amongst business functions in enterprises and through the supply chain can greatly affect performance. Integration, with a focus on logistic functions, is investigated to discover the internal and external integration connections at production enterprises so as to measure the association between the level of integration and performance. Design/Methodology/Approach: Internal factors of the analysis are logistics, procurement, sales, accounting and finance, and HR while external elements are suppliers and external customers. ROS, ROE and ROA were used as the indicators of performance. Based on questionnaire data, rank correlation analysis, factor analysis, regression analysis and structural equation modelling were applied. Findings: The research shows that the relationship between the level of integration and performance resulted in some cases in a significant correlation, although there were many instances where there was no positive association between integration and performance. The limitations of the research are the relatively small sample size and geographic scope. Practical Implications: Our research contributes to the scientific understanding of the integration of logistic functions, using four analytical methods. Research shows professionals how important the integration of logistic functions is, which works effectively to improve productivity. Originality/Value: The novelty of the research is to determine functions that can work efficiently with logistics to improve productivity. At the same time, the relatively small ratio of significantly correlated logistic integration factors with business performance signals to us that the integration-performance relationship makes it difficult to use the results in managerial practice.