Examining the role of logistics 4.0 enabled dynamic capabilities on firm performance

Published date24 July 2020
Pages607-628
Date24 July 2020
DOIhttps://doi.org/10.1108/IJLM-11-2019-0311
AuthorSurajit Bag,Shivam Gupta,Zongwei Luo
Subject MatterManagement science & operations,Logistics
Examining the role of logistics 4.0
enabled dynamic capabilities on
firm performance
Surajit Bag
Department of Transport and Supply Chain Management, School of Management,
College of Business and Economics, University of Johannesburg,
Johannesburg, South Africa
Shivam Gupta
Department of Information Systems, Supply Chain and Decision Making,
NEOMA Business School, Reims, France, and
Zongwei Luo
Beijing Normal University & Hong Kong Baptist University,
United International College, Tangjiawan Zhuhai, China
Abstract
Purpose The study investigates the effect of technological capabilities, organizational capabilities and
environmental capabilities on Logistics 4.0 capabilities and also examines the effect of Logistics 4.0 capabilities
on firm performance.
Design/methodology/approach The proposed theoretical framework is tested using WarpPLS 6.0
software. We selected samples from the Automotive Component and Allied Manufacturers in South Africa.
Initially, we sent the structured questionnaire online using Google forms to 800 potential respondents. After
doing follow ups, we received 230 completed survey responses. Further, data preparation is done using
established scientific approach and we checked suitability of its use in structural equation modelling. After
ensuring all necessary checks are completed, the results are found satisfactory to further proceed with testing
of research hypotheses.
Findings It is observed that technological capabilities, organizational capabilities and environmental
capabilities show significant effect on Logistics 4.0 capabilities. However, the outcome of technological
capabilities and environmental capabilities on Logistics 4.0 capabilities (
ß
50.27) is found stronger than
organizational capabilities. Logistics 4.0 capabilities shows significant effect on firm performance.
Practicalimplications It is important that the sustainability goals are aligned with Logistics 4.0 strategies.
Managers need to increase focus towards development of Logistics 4.0 dynamic capabilities that enhance
agility and responsiveness in the supply chain. Managers shouldcheck the financial performance and market
conditions continuously to further review logistics performance as this can influence the overall firm
performance.
Originality/value This study advances the literature on Logistics 4.0 applications in operations
managementby investigatingthe key linkssuch asLogistics 4.0 capability development and firm performance.
Keywords Logistics 4.0, Dynamic capability view, Reverse logistics, Firm performance
Paper type Research paper
1. Introduction
Mismatch in supply of manufactured goods and customer demands within supply chain are a
constant concern for manufacturers (Yin et al., 2018). Changes in customer demand are one of
the key drivers in the evolution of logistics systems (Yin et al., 2018). Prior to 1950slogistics
was a term popular in military that involved sourcing, vehicle maintenance and
transportation of supplies and military troops from one place to another. Logistics was not
considered broadly at that point of time. Physical distribution gradually appeared in late
1900sand the first course program on logistics started around 1960. However, in 1964 the
Logistics 4.0
enabled
dynamic
capabilities
607
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/0957-4093.htm
Received 7 November 2019
Revised 16 February 2020
30 June 2020
Accepted 2 July 2020
The International Journal of
Logistics Management
Vol. 31 No. 3, 2020
pp. 607-628
© Emerald Publishing Limited
0957-4093
DOI 10.1108/IJLM-11-2019-0311
span of distribution of products was extended to include physical supply and was termed as
business logistics (Ballou, 2007).
In this dynamic business world firms are facing various sustainability-related challenges
in global logistics operations and emerging digital technologies can provide solution to such
problems (Strandhagen, 2017a;Witkowski, 2017). Smart logistics or Logistics 4.0 has evolved
around 2011 with the aim of meeting the changing customer requirements and providing
sustainable logistics solutions (Winkelhaus and Grosse, 2020).
The three main features of Logistics 4.0 are vertical integration (integration of different IT
systems at various levels inside a plant); horizontal integration (inter-corporation
collaboration) and end-to-end engineering integr ation (cross linking of stakeholders,
products and machines) (Strandhagen et al., 2017b). Logistics 4.0 involves system-based
planning and control of the physical movement of goods and its associated information flow
from the source to the final destination. Logistics 4.0 use front end and base technologies
(Frank et al., 2019) and provides logistics solutions to customers by meeting their demands
without increase in costs. Logistics 4.0 mainly uses technologies like Internet of Things (IoT),
Cyber-Physical Systems (CPS), big data analytics and cloud computing (Winkelhaus and
Grosse, 2020). Based on these technologies various advanced systems are operated-such as
warehouse management systems, intelligent transportation systems, intelligent
transportation systems, information security and autonomous order processing via block
chain technology and smart contracts (Barreto et al., 2017;Hofmann and R
usch, 2017).
Logistics 4.0 aims to eliminate imprecision and further improve speed process based on
near- and real-time information. Human involvement is required to interact with machines
and control the processes (Barreto et al., 2017). The logistics benefits in an Industry Internet of
Things (IIoT) background include increased visibility and integrity control of the supply
chain. It also requires dynamic reconfigurabilityof supply networks popularity (Barreto
et al., 2017). Logistics 4.0 capability development requires development of dynamic
capabilities such as technological capabilities and environmental capabilities to enable digital
technologies and execute plans (Winkelhaus and Grosse, 2020;Gammelgaard, 2019).
Logistics 4.0 is a blend of technologies that help to automate the forward and reverse
logistics flow with availability of real-and near-time information (Winkelhaus and Grosse,
2020). Logistics 4.0 benefits include ensuring timely delivery and supply; ability to build firms
agility, flexibility and responsiveness in the supply chain and ability to apply predictive
analytics (Dubey et al., 2019;Russell and Swanson, 2019). These abilities can significantly
reduce the delivery lead times with customers (Winkelhaus and Grosse, 2020). Logistics 4.0
can improve quality parameters significantly and supports environmental sustainability and
social sustainability. Logistics 4.0 also cut costs significantly in the supply chain. Therefore,
Logistics 4.0 capabilities can impact the reverse decision making at strategic, operational and
tactical levels (Winkelhaus and Grosse, 2020).
Strategic decisions in logistics include capacity adjustment decisions, financial
investment decisions, customer service level improvement decisions, delivery performance
improvement decisions and lowering treatment cycle time of a return (Lambert et al., 2011).
Logistics 4.0 capabilities with the ability to apply supply chain analytics and predictive
analytics can be useful to make better logistics strategic decisions. Tactical decisions in
reverse logistics include decisions related to reduction of disposal costs and managing
warranty costs, efficacy of production scheduling, impr oving dispatch performance,
forecasting system accurateness, reducing cycle time of various processes and estimating
cost of returned goods (Lambert et al., 2011;Schoenherr and Speier-Pero, 2015).
Logistics 4.0 capabilities can help to gather information from various sources and further
such information can be used in making quality tactical decisions in reverse logistics.
Operational decisions in reverse logistics include inventory holding decisions, quality control
of returned products, reduce time frame for collection of returnable goods, time to assist a
IJLM
31,3
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