THE IMPACT OF LOGISTICS PERFORMANCE ON e COMMERCE

THE UNIVERSITY OF DANANG UNIVERSITY OF ECONOMICS FACULTY OF INTERNATIONAL BUSINESS RESEARCH PROPOSAL THE IMPACT OF LOGISTICS PERFORMANCE ON E-COMMERCE Course: Research Methodology (RMD3001_44K01.1_44K01.2) Lecturer: Bui Huynh Nguyen, Ph.D Group: MANGO (44K01.1) Student: Tran Thi Ngoc Lam Doan Bui Thao Ngan Huynh Thi Thuy Tien Nguyen Minh Thu Ngo Nguyen Thuy Trang Danang, June 19th, 2021 TIEU LUAN MOI download : skknchat@gmail.com Table of Contents RESEARCH RATIONALE 2 RESEARCH OBJECTIVES & RESEARCH QUESTIONS LITERATURE REVIEW: RESEARCH METHODS: INSTRUMENTS & PROCEDURES EXPECTED RESULTS RESEARCH CONTRIBUTIONS REFERENCES TIEU LUAN MOI download : skknchat@gmail.com RESEARCH RATIONALE Nowadays, the appearance of smartphones and modern devices in the 4.0 technology industry makes people’s lives and habits change gradually Moreover, thanks to the continuous development of the Internet, mobile devices, commerce are also moving in a new direction and applying scientific achievements of 4.0 technology Traditional commerce is gradually being replaced by e-commerce and this is a trend predicted to grow strongly in the future Unlike traditional commerce, where buyers and sellers will meet directly, in ecommerce, buyers and sellers will only transact through telecommunication devices connected to the Internet E-commerce becomes more convenient and increasingly popular with consumers, so the growth rate of e-commerce is growing rapidly In ecommerce, buyers and sellers not directly meet each other but transact online through the Internet, so another step has arisen, which is the stage of transporting goods from sellers to buyers That has created a close connection between the development of logistics activities to meet the development of e-commerce activities With the continuous development of e-commerce and the increasing demand of consumers, the development of logistics in Vietnam has not kept pace to meet that demand According to the Logistics Report 2018 of the Ministry of Industry and Trade of Vietnam, the growth rate of e-commerce is 24% while the growth rate of logistics is only 12% - 14%, much lower That said, urgent measures are needed to improve logistics performance to promote the development of e-commerce - an industry that is trending in the world Logistics service development is known as development in breadth or development in depth Development in breadth means increasing logistics size and sales Development in depth means increasing the operational performance of logistics In this study, our MANGO team will research the impact of the national logistics performance index on e-commerce RESEARCH OBJECTIVES & RESEARCH QUESTIONS: The aim of this research is to determine the influence of logistics performance on e-commerce, and simultaneously it also will show which logistics’ factors are most essential in the growth of e-commerce in the various regions by analyzing the data TIEU LUAN MOI download : skknchat@gmail.com collected As a result, some recommendations for developing business strategies are proposed too To attain this goal, the study has to answer these following research questions: (1) What impact does logistics performance have on e-commerce? (2) What are the most effective factors for promoting e-commerce? LITERATURE REVIEW: To evaluate the impact of logistics activities on e-commerce, the author relies on three research branches as follows: a The impact of logistics activities on commercial activities of enterprises and international trade activities between countries: From the perspective of commercial activities of enterprises, there is a study by the group of authors Schramm-Klein & Morschett (2006) In the research, the authors study the importance of logistics performance to the business performance of retail companies This research has shown that logistics performance will bring long-term benefits to marketing performance (customer satisfaction and loyalty) leading to the increased business performance of retail enterprises Moreover, improving logistics productivity can easily improve and achieve business performance in the short term, and in fact, it is one of the most important business strategies of retailers The study also shows that logistics coordination in the supply chain of enterprises (within the manufacturing company and between the manufacturing company and the distributor) plays a particularly important role in affecting the operational efficiency of retail companies From the perspective of international trade, there is a study by Hausman et al (2013) This paper investigates the impact of logistics performance on bilateral trade on a global scale The authors have made specific suggestions to improve logistics performance (time, cost, and reliability) in increasing bilateral trade b The factors which have impact on E-commerce: The research of Ho et al (2007) In the research, the authors have recommended methods which illustrate basic structures for raising E-commerce revenue on a national level: Endogenous Growth Theory, Exogenous Growth, Mixed TIEU LUAN MOI download : skknchat@gmail.com Growth Theory The study has shown that the above variables are important factors affecting the development of e-commerce in countries In addition, the exogenous theory (meaning the impact of external factors on a country) also significantly affects the development of e-commerce, or even more specifically, the development of ecommerce is influenced by the regional countries surrounding a country c Logistic Performance Index and Measuring Logistic Performance: Logistic Performance is a very difficult concept to define and can be seen as a sub-concept in a broader concept of enterprise performance What is the performance? Gleason and Barnum (1986) have pointed out the definition of performance based on effectiveness and efficiency More specifically, effectiveness is a goal achievement, while efficiency is an economically optimal level of resource allocation According to another method, Sink et al (1984) have explained the performance concept including criteria: effectiveness, efficiency, quality, productivity, the quality of working life, innovation and profit Because there has not been a clear and widely acceptable concept of performance yet, not surprisingly, the meaning of Logistic performance is described in many different ways One of the outstanding examples is the definition shown by Rhea and Shrock (1987), following that, pragmatism in allocation is defined as the allocation aiming at satisfying customers However, they also said that it is important to include multi-target when explain “performance” Based on this viewpoint, Chow et al (1994) have defined the Logistic Performance, that is the level on which these goals can be reached: cost effectiveness, profit, social responsibility, on-time shipment, product availability, flexibility, low damage and loss, promise keeping, reasonable prices for materials, customer satisfaction, revenue growth and labor safety Following that, it seems to us that the Logistics performance concept is a multidimensional concept Therefore, there would not be a suitable measurement method Instead, the goal of authors and managers is figuring out a method for measurement which can reflect mostly the crucial sides of performance in both short and long term Caplice and Sheffi (1995) have shown that Logistics consists of a complex set of activities Therefore, in order to measure Logistics performance, it is necessary to TIEU LUAN MOI download : skknchat@gmail.com collect enough data in a systematic way to provide managers with the most general overview of the whole logistics system Nevertheless, in fact, the systems measuring Logistics Performance are not carried out regularly, the correlation between logistics indicators is not evaluated, duplication and omissions lead to the lack of a correct overview about logistics scenario in a company Authors have dealt with the above drawbacks by developing a set of evaluating criteria for the systems used for measuring Logistics Performance and apply them in the model of Goodyear Tire & Rubber Co., Inc and Digital Equipment Corporation Gunasekaran & Tirtiroglu (2001) presented a research synthesis methodology then came to the final conclusion The study analysed the proficiency of factors in a supply chain (SCM), focusing on methods of negotiating with suppliers, delivery performance, customer service, inventory and logistics costs In addition, the authors also pointed out the impact of those factors on customer satisfaction, which enabled businesses to not only improve the efficiency of their supply chains but also add more value to their products Chow et al (1994) applied the research method of data collection, synthesis and evaluation analysis This research worked with definitions and measurements of competences in logistics By reviewing and analysing previous research papers, they realised the difficulties in drawing conclusions about the relationship between a logistics strategy and logistics capabilities, therefore, proposed possible suggestions for improvements for future researches The World Bank (WB) published the LPI index for the first time in 2007 and updates are continuously made every two years for about 150 countries The index has played a statistically important role since it is established through a harmonized measurement for all countries by which they can determine the barriers encountered by bilateral trades and logistics requirements To be more specifically, WB incorporates key factors from international perspectives then calculates the LPI based on econometric techniques to maximize the significance level and confidence intervals As a result, The LPI is estimated by conducting a global survey of companies who operate freight forwarding and trade promotion businesses The scale to evaluate LPI ranges from 1=low to 5=high through criteria: Infrastructure: infrastructure related to trade and transport quality (ports, railways, roads, information technology) TIEU LUAN MOI download : skknchat@gmail.com International shipment: the ease to arrange for shipments with competitive prices Logistics quality and competence: Quality and competitiveness of logistics services (transport operators, customs brokers) Tracking & tracing: the ability to track and control shipments Timeliness: the punctuality of shipments in reaching the destination Customs: the efficiency of the customs clearance procedures such as the speed, simplicity, and predictability International studies have been carried out to indicate the relationship between LPI and international trade in which LPI is used to reflect trade facilitation For instance, Sourdin & Korinek (2011) demonstrated the positive impact of LPI on international trade generally and infrastructure particularly Marti et al (2014) came to the conclusion that LPI would strike a larger impact on commodities with more complexity In summary, previous studies have provided specific analysis and assessment for each of factors affecting e-commerce both nationally and internationally, as well as measured the effectiveness of those on logistics competences However, the relationship between e-commerce and LPI has not been taken into consideration, which becomes the reason for us to decide to examine the impact of LPI on e-commerce activities RESEARCH METHODS: INSTRUMENTS & PROCEDURES In this research, our group will answer research questions by approaching quantitative method and using existing (secondary) data We use 100 samples form a panel data of 25 countries for years: 2012, 2014, 2016, and 2018; namely Germany, the Netherlands, the United Kingdom, Sweden, Norway, France, Denmark, Spain, Italy, Finland, the United States, Canada, Japan, Australia, Korea, China, Vietnam, Indonesia, India, the Russian Federation, the United States, Singapore, Brazil, Mexico, and Argentina These countries were selected by using purposive sampling technical and the criterion for selection is because of the availability of statistical data The dataset was checked for missing data and outliers TIEU LUAN MOI download : skknchat@gmail.com Collected data will be encoded and analyzed by using the software Stata version 14 The analysis uses statistical techniques to summarize the data and examine the relationships between variables in the study Firstly, descriptive statistical tools are used to describe the data Then, we consider the coefficient correlation between the model's variables These variables are next analyzed in the linear regression model (OLS method) to interpret analytical results Dependent variables: Sales of e-commerce of countries (excluding Vietnam) as recorded by e-market data and collated over the years This data of Vietnam is taken from the statistical data source of the White Paper on Vietnam Ecommerce Independent variables: (1) Data from the report of LPI (Logistics performance index) – the national logistics capacity index - Overall score - Infrastructure - International shipment - Logistics quality and competence - Tracking and tracing - Timeliness - Customs (2) Data about countries’ GDP (3) Statistical data about countries’ population All these above independent are taken from data source of World Bank EXPECTED RESULTS After referring to previous studies and based on the logistics knowledge learnt, the team made some predictions about the following results: (1) LPI has a positive effect on e-commerce in general, which means that when that variable rises, so does E-commerce growth As logistical capacity grows, the flow of goods and information will be facilitated, resulting in increased consumer satisfaction and, as a result, e-commerce growth TIEU LUAN MOI download : skknchat@gmail.com (2) The following variables (GDP and population) have a beneficial impact on e-commerce When those variables improve, e-commerce improves though too; because as the economy and population improve, the demand for online shopping improves as well, resulting in a force for E-commerce development (3) The variables having the biggest impacts on the development of e- commerce are transportation and infrastructure Characterized by the continuous movement of commodities in commerce in general and e-commerce in particular; factors such as storage, highways, and modes of transportation play a critical role because they have a direct impact on company strategies RESEARCH CONTRIBUTIONS: E-commerce sector is constantly rapidly growing and evolving all over the world and so is Vietnam The functions of not only logistics enterprises but also the policies set by management levels are critical in meeting development goals Understanding the role and impact of logistics on e-commerce will serve as a guide for developing ideas for the development of logistics to catch up with the ecommerce development trend as well as suggestions for management levels when issuing new policies -THE END - TIEU LUAN MOI download : skknchat@gmail.com REFERENCES: Caplice, C., & Sheffi, Y (1995) A review and evaluation of logistics performance measurement systems The International Journal of Logistics Management, 6(1), 6174 Chow, G., Heaver, T D., & Henriksson, L E (1994) Logistics performance: definition and measurement International journal of physical distribution & logistics management Gleason, J M., & Barnum, D T (1982) Toward valid measures of public sector productivity: performance measures in urban transit Management science, 28(4), 379386 Gunasekaran, A., Patel, C., & Tirtiroglu, E (2001) Performance measures and metrics in a supply chain environment International journal of operations & production Management Hausman, W H., Lee, H L., & Subramanian, U (2013) The impact of logistics performance on trade Production and Operations Management, 22(2), 236-252 Ho, S C., Kauffman, R J., & Liang, T P (2007) A growth theory perspective on B2C e-commerce growth in Europe: An exploratory study Electronic Commerce Research and Applications, 6(3), 237-259 Korinek, J., & Sourdin, P (2011) To what extent are high-quality logistics services trade facilitating? Marti, L., Puertas, R., & García, L (2014) Relevance of trade facilitation in emerging countries' exports The Journal of International Trade & Economic Development, 23(2), 202-222 Rhea, M J., & Shrock, D L (1987) Measuring the Effecitveness of Physical Distribution Custom Journal of Business Logistics, 8(1), 31 Schramm-Klein, H., & Morschett, D (2006) The relationship between marketing performance, logistics performance and company performance for retail companies International Review of Retail, Distribution and Consumer Research, 16(02), 277-296 TIEU LUAN MOI download : skknchat@gmail.com Sink, D S., Tuttle, T C., & DeVries, S J (1984) Productivity measurement and evaluation: What is available? National Productivity Review, 3(3), 265-287 Vietnam E-Commerce Association (2018), Vietnam E-Business Index Report 2018 Vietnam E-commerce and Digital Economy Agency (2018), White Paper on Vietnam E-commerce Vietnam Ministry of Industry and Trade (2018), Logistics Report 2018: Logistics and E-commerce TIEU LUAN MOI download : skknchat@gmail.com ... MANGO team will research the impact of the national logistics performance index on e- commerce RESEARCH OBJECTIVES & RESEARCH QUESTIONS: The aim of this research is to determine the influence of logistics. .. measured the effectiveness of those on logistics competences However, the relationship between e- commerce and LPI has not been taken into consideration, which becomes the reason for us to decide... does logistics performance have on e- commerce? (2) What are the most effective factors for promoting e- commerce? LITERATURE REVIEW: To evaluate the impact of logistics activities on e- commerce,