Importance of Logistics Processes for Customer Service and Firm Performance: Evidence from Furniture Industry of Pakistan

Abstract

Research Question: This study examines the relationship between logistics processes, customer service and firm performance in the furniture industry of Pakistan. Motivation: Furniture industry in Pakistan comprises small and medium enterprises wherein production is mainly labor intensive. Therefore, the current study also investigates the mediating role of manufacturing flexibility for the relationship of logistics processes and customer service. The paper applies the logistics models developed by Bowesox (1974), Green et al.(2008), and Tracey (1998) to furniture industry. Idea: The core idea of the paper is to measure the effects of logistics process on customer service and the performance of furniture manufacturing firms. The study takes the logistics process as an independent variable, the customer service as the first dependent variable and manufacturing performance as a moderating variable. Data: Primary data on logistics, customer service, manufacturing flexibility and firm performance were conveniently collected through a questionnaire from owners/managers of 61 furniture manufacturing firms. Tool: Descriptive statistics, correlation and regression analyses were run to draw the results. Findings: Logistics processes positively affect customer service and firm performance. Customer service also exerts a positive effect on firm performance while the moderating role of manufacturing flexibility was not supported for the relationship of logistics processes and customer service. Contribution: Through efficiency in logistics processes, furniture manufacturing firms can serve customers in a superior way to ultimately achieve improved firm performance. The framework being restricted to efficiency of logistics processes only constitutes an important limitation of the study.