Analysis of relationship between operational performance and supply chain sustainability: A case of logistics service providers in Finland and Russia

The ever-increasing trend in globalization and customer orientation requires a logistics-sensitive organization. Integration of supply chain management with sustainable dimension is one of the key trends behind sustainable... [ view full abstract ]

The ever-increasing trend in globalization and customer orientation requires a logistics-sensitive organization. Integration of supply chain management with sustainable dimension is one of the key trends behind sustainable development of businesses. Previous research papers explore supply chains of apparel or manufacturing companies, but there are a few investigations of logistics companies though road freight transportation. Moreover, there is no research concentrated on cross-country analysis in this field. The main goal of this research paper is to explore the relationship between operational performance and supply chain sustainability metrics in case of Finnish and Russian road freight transportation companies. The research objectives of this paper is (1) to study the impact of operational performance measures on environmental company’s performance and vice versa; (2) to explore whether there is significant difference in operational and environmental performance between Finnish and Russian road freight transportation companies: (3) to develop a model that can be further used by management team for self-estimation on company’s performance in environmental and operational dimensions. 91 Finnish and Russian road freight transportation companies were taken as sample for investigation by multiple linear regression analysis and t-test for two independent samples analysis. The main result is the model that shows relationship between particular operational and environmental characteristics of the company’s performance. Conducted analysis showed that limiting transportation and other operations related waste and noise pollution can be achieved by improving “offering short delivery lead-time” operational performance characteristic; decreased consumption of hazardous/harmful/toxic materials lead both to providing higher customer satisfaction rating and lowering customer complaints (percentage of total sales). Customers value companies that get rid of hazardous materials in their operations and, furthermore, if a customer is not aware of the environmental practices of the company, he can switch to a competitor. Significant difference between environmental and operational measures in Finnish and Russian road freight transportation companies was determined. Finnish companies evaluate themselves higher on environmental characteristics whether Russian logistic service providers feel themselves confident in operational ones. This research paper contributes both to theoretical and practical literature on sustainability theme in service industry. From theoretical point of view this study broadens industries that were considered as earlier works concentrated mainly on manufacturing examples and not service providers. Managers of logistics companies may use results of the paper to get understanding what initiatives in operational performance should be invested in to get competitive advantage in environmental terms and vice versa.