An Empirical Examination of Performance Measurement for Managing Continuous Innovation in Logistics

Performance measurement within organisations identifies areas of a business that need attention and improvement. The measurement and control of logistics performance requires the selection of critical performance measures and the development of information systems to gather required data, report on variance analysis and recommend corrective action. The logistics function is increasing in its strategic importance as more and more firms in developed economies such as Singapore and Australia are forced to compete globally to survive. Innovative firms measure outcomes of strategies and action plans to ensure that systems and processes allow for continuing improvement. The key objective of the research reported in this paper was to investigate the performance measures used in logistics firms and their significance in enabling improvements and continuous innovation in logistics operations. The study adapted and refined the CIMA model for Continuous Innovation and used it as the basis for in-depth case studies on 10 firms from Singapore and Australia. The findings show that logistics firms are placing an increasing importance on performance measurement, and using a broader spectrum of performance measures, due to the dynamic business environment. This study provides important lessons for managers in logistics organisations (and in organisations that include a logistics function) because the timely and effective measurement of outcomes is imperative for firms wishing to examine the effectiveness of their innovation processes and competitiveness in the marketplace. Copyright (C) 2006 John Wiley & Sons, Ltd.