Logistics service performance contracts: design, contents and effects

Abstract

Purpose

The purpose of this paper is to explore how the performance management (PM) process may be affected by the design and contents of logistics service performance (LSP) contracts between customer and supplier.

Design/methodology/approach

A case study of four manufacturing companies' way of working with contracts towards their suppliers was conducted.

Findings

Different design and contents of contracts, containing some patterns related to industry, company size and degree of formalization, were found. The PM process with contracts was split up into one setup and one execution sub‐process. Once the setup was made, all resources were focused on measuring, analysing and improving LSP. The changed management of the PM process may be one factor explaining the improved LSP all studied customer companies perceived.

Research limitations/implications

An explorative approach with few cases limits the possibilities to generalize the results to analytical generalization.

Practical implications

This paper has illustrated how companies can apply LSP contracts.

Originality/value

Few empirical and especially case‐based studies of LSP contracts were found.

Citation

Forslund, H. (2009), "Logistics service performance contracts: design, contents and effects", International Journal of Physical Distribution & Logistics Management, Vol. 39 No. 2, pp. 131-144. https://doi.org/10.1108/09600030910942395