Enhancing performance through logistical capabilities in Mexican maquiladora firms

Theodore P Stank

Increased competition in domestic U.S. markets brought on by maturing industries and pressure from global competitors has resulted in dramatic change in the strategies pursued by manufacturing firms. One change resulted in the growth of production outsourcing to nations with an abundance of low-cost labor. Another change has resulted in the increased importance of logistics and supply chain management-managing goods and information flows from raw materials to the sale of finished goods.1

Many predominant firms from the United States, Europe, and Asia operate production sharing facilities along the U.S.-Mexico border. These facilities, called maquiladoras, temporarily import parts and components for assembly and then ship the finished goods out of the country.2 Mexico's maquiladora industry has enjoyed steady growth in key categories including total number of plants, employees, unit volume, sales, and dollar valueadded. Fueled by the trade increases expected under the North American Free Trade Agreement, as well as favorable labor rates created by the recent peso devaluation peso, annual growth is expected to continue at 10 to 15 percent through the end of the decade.3

Interestingly, firms with maquiladora operations have not emphasized logistics as a critical component of their Mexican operations.4 Faced with nearly 2000 mile long supply lines between themselves and many of their vendors and customers, maquiladoras must improve the way they handle the cross-border movement of inbound subcomponents and raw materials and outbound finished goods or risk losing their competitive edge against domestic U.S. production facilities, as well as lucrative new overseas locations.5 Distribution obstacles, in addition to indirect labor costs, have been cited as the foremost challenges of operating in Mexico and are considered the primary reasons for closing Mexican operations. High logistics costs and unsatisfactory customer service levels resulting from strategic decisions that fail to incorporate logistics input into the design of supply chains to and from Mexican facilities represent a threat to future success.6

The objective of this research is to investigate the performance of Mexican maquiladora firms on key logistics capabilities. The results of the research will foster a greater understanding of the logistics capabilities of Mexican maquiladoras as well as help logistics academicians and practitioners identify the capabilities that are associated with enhanced logistical performance in an international setting.

In the following sections, key issues in maquiladora operations and logistics are explained and findings in previous research are reviewed. Research hypotheses are introduced and details are provided regarding the sample, measures, and methodology used. Results are then presented, followed by a discussion of the conclusions and implications which may be drawn from the research findings.

BACKGROUND AND RESEARCH HYPOTHESES

The following narrative reviews prior research covering the history and operations of the Mexican maquiladora industry. Additionally, research identifying capabilities critical to competing through logistics will be highlighted. Conclusions are drawn and presented as the basis of research questions investigated in the study.

Maquiladora Operations

Production-sharing operations can be found in locations around the globe that offer attractive combinations of low cost labor, cheap land, favorable taxes and tariffs, and access to raw materials and foreign markets.' In Mexico, implementation of the National Border Program in 1961 fostered the establishment of manufacturing operations along the northern border of Mexico to stimulate economic growth, infrastructure, and tourism in the area.8 U.S. companies competing with European and Japanese manufacturing growth fueled by low labor costs moved the low value-added, labor intensive steps of their production processes to Mexican border cities. Today, over 2000 facilities operate along the Mexico-U.S. border, employing nearly 550,000 workers. In 1992, the industry added nearly $5 billion in value to product exported to U.S. markets.9

Early maquiladora facilities were primarily involved in assembling imported parts into finished goods or more complex subcomponents for export to the U.S. Increasingly, activities that required greater skills and more complex technology have been moved to the Mexican border. Research conducted by Fawcett and Smith" showed that over 50 percent of maquiladora firms practice integrated manufacturing operations that combine not only subassembly and final assembly but also design and fabrication within a single facility. Further, 65 percent of all maquiladora firms participating in the research utilized medium-technology operations, while 14 percent represented high-tech processes. Only 22 percent of the respondents were classified as low-technology, labor-intensive.

Since its inception, the maquiladora industry has been steadily evolving toward cutting edge operations.' Today, Mexican maquiladora facilities are given high ratings not only for cost efficiency but also for quality, productivity, and reliability.'3 Much support exists to substantiate this performance. Ford's Mercury Tracer plant in Hermosillo, for example, was rated the highest quality assembly plant in the world in a study conducted by MIT in 1990.14Ninety percent of the managers surveyed in a recent study of 128 production-sharing operations reported that their Mexican facilities had met or exceeded performance expectations.5

One shortcoming of maquiladora operations, however, is lack of emphasis on the design and development of logistics capabilities to support production and distribution requirements. Logistics managers typically are not involved in key strategic decisions that directly impact logistics, yet must find ways to support complex operations after location, production, and other decisions have been made. As a result of this reactive approach, the logistics costs of supporting operations often greatly exceeds expectations while service reliability is problematic.16

Fawcett and Smith17 determined that logistics is receiving increased attention from maquiladora management and is emerging from its role as a support function for purchasing and production. As integrated North American-wide operations become more commonplace in the future, more attention must be paid to developing improved logistics capabilities to establish strategic differentiation by enhancing service levels and cost structures or risk losing competitive advantage.18 Understanding the logistics capabilities necessary to efficiently and effectively move subcomponents and raw materials into Mexico and finished goods out to North American customers can provide maquiladora firms with an important tool with which to establish an edge on competitors.19

Logistics Capabilities

Logistics has been positioned as one way for firms to differentiate their product or service offerings by enabling them to serve select customers better than competitors or at lower a price for the same service level. While the advantage of being the low cost provider is obvious, advantages accruing from enhanced logistics customer service have been difficult to quantify. The relationship between logistics and customer service has begun to receive more attention in recent years.20

The role logistics activities play in the "place" function of the 4 P's of marketing has been recognized as contributing to performance enhancements.21 Providing logistics value, i.e., maximizing service received at any given cost level, emerges as a critical element in strategy designed to impact purchase/repurchase intentions. The ability to retain current customers and to recruit new ones has been linked to a firm's market share, ROI, and profitability.22

Researchers at Michigan State University explored how firms used logistics to achieve competitive superiority by consistently meeting customer expectations better than competitors. Four critical areas of logistics competence were identified. The research concluded that world class performance in each of the four critical areas could translate into marketing and financial leadership, benefiting customers, investors, shareholders, and employees.23 The model is portrayed in Figure 1.

The logistical competencies that comprise world class logistics included positioning, the selection of strategic and structural approaches to guide logistical operations; integration, concerned with techniques used in achieving internal logistical operating excellence and development of external supply chain relationships; agility, a measure of a firm's ability to determine and quickly respond to changing requirements; and measurement, the degree to which a firm monitors internal and external operations. Each competency was conceptualized as being comprised of several functional capabilities which in combination create the competency.24

Research Hypotheses

Research has determined that improvements in the provision of logistics activities can result in enhanced performance.25 The aforementioned Michigan State research model detailed how firms used logistics to achieve competitive superiority by consistently meeting customer expectations better than competitors.26 The model empirically demonstrated a positive association between superior logistics capabilities and performance enhancements. These findings provided the framework for the current research relating improvements in logistics capabilities of Mexican maquiladora firms to enhanced logistics performance and form the basis for the relationships tested.

The current research utilized thirteen capabilities to describe the four logistics competencies. These capabilities were based upon preliminary findings of the Michigan State research as well as on previously published research covering leading edge or world class logistics and operations processes.27 The following hypotheses focus on performance implications of capabilities conforming to the four world class logistics competencies.

Logistical positioning capabilities have been linked to operational advantages. Strategies devoted to cost control have long been associated with logistics management. Yet overall sales and profits may be more greatly influenced by logistics customer service.28 Research has revealed that successful firms tend to be market or customer driven in the planning and execution of logistics functions.29

H1a: Mexican maquiladora firms that develop customer focus in logistics will exhibit enhanced performance.

Positioning a firm through its organizational structure has also been shown to have a positive association with firm performance.30 Specifically, firms with centralized logistics structures exhibited higher levels of functional integration and lower overall logistics costs.31 Centralized planning and coordination of operational processes enable an organization to minimize costs through economies of scope and scale.32 Yet front-line managers must be able to quickly define and apply decisions made at headquarters to better adapt to local operating conditions.33 With advanced information systems, firms can implement organizational strategies and decisions on the front-lines much more rapidly, capturing the best aspects of centralization and decentralization without completely committing to either.34 World-class firms should position themselves to centralize logistics decision-making and control while decentralizing implementation.

H1b: Mexican maquiladora firms that develop centralized logistics organizational control will exhibit enhanced performance.

H1c: Mexican maquiladora firms that decentralize the implementation of logistics organizational control will exhibit enhanced performance.

Closer coordination of activities both within and across the boundaries of firms throughout the supply chain is viewed as one important way to enhance performance. An integrated system of information exchange provides firms with the means to collect and disseminate competitive and market-related data in a timely fashion.35 Firms have come to realize that the more information they have about their supply chains, the better equipped they will be to meet the needs of customers.36 Failing to meet customer requests can be costly in financial terms as well as through diminished satisfaction.37 Thus, information and the utilization of information technologies can be viewed as weapons to gain competitive advantage.38

Communications among participating firms provides the glue that holds the supply chain together.39 Ongoing or continued sharing of meaningful and timely information among firms often creates trust between the supply chain members and leads to increased cooperation and more efficient and effective operations.40 Rather than hoarding proprietary information, firms must "be willing to share information concerning plans and best practices with their supply chain affiliates."41

H2a: Mexican maquiladora firms that are capable of timely, responsive data exchange with supply chain links will exhibit enhanced performance.

H2b: Mexican maquiladora firms that are willing to share key data with supply chain links will exhibit enhanced performance.

H2c: Mexican maquiladora firms that invest in networks to facilitate electronic data exchange with supply chain links will exhibit enhanced performance.

H2d: Mexican maquiladora firms that integrate internal logistics functional areas will exhibit enhanced performance.

H2e: Mexican maquiladora firms that develop improved relations with suppliers will exhibit enhanced performance.

The ability to respond to change has been found to positively impact performance. Responsiveness means that a firm can immediately handle-or even anticipate-operational change and volatile customer demand.42 The need to respond quickly to requests from supply chain partners has caused many firms to re-think standard management practices.43 The ability to respond to emergent conditions may generate greater performance payoffs than static planning dependent upon long-range forecasting.44 As a result, initiatives developed to improve responsiveness such as just-in-time, quick response, and efficient consumer response have been found to increase customer loyalty and the prices customers are willing to pay.45

H3a: Mexican maquiladora firms that develop operational processes that are capable of rapidly responding to change will exhibit enhanced performance.

H3b: Mexican maquiladora firms that employ personnel that are capable of rapidly responding to change will exhibit enhanced performance.

Sophisticated measurement systems are required to meet the difficult demands placed on world-class logistics organizations.46 Performance measurement should monitor both the effectiveness and efficiency of the organization in accomplishing logistics goals.47 Good measurement systems also assist continuous process improvement by allowing managers to focus on eliminating the causes of process variations.48

A world-class logistics measurement system consists of both internal and external performance measures. Internal measures should monitor the costs and service levels of several different specific logistics functional areas, including warehousing, order processing, inbound and outbound transportation, and inventory. Internal accounting methods such as activity-based costing allow managers to understand the links between performance levels of specific activities and the demands they place on a firm's resources, identifying opportunities for taking costs out of the supply chain.49 Additionally, managers of world class logistics organizations compare internal processes to external standards benchmarked from leading target firms.50

H4a: Mexican maquiladora firms that adopt activity based costing to measure logistics costs will exhibit enhanced performance.

H4b: Mexican maquiladora firms that compare internal measures to external benchmarks will exhibit enhanced performance.

H4c: Mexican maquiladora firms that adopt functional logistics performance measures will exhibit enhanced performance.

METHODOLOGY

This section provides details regarding the choice of the sampling frame, survey design and administration, measure development and purification, and data analysis for hypothesis testing.

Sample Design

Interviews of managers from several functional departments of a large electronics firm located in Juarez, Mexico, were conducted to enable the researchers to develop a better understanding of maquiladora logistics issues. These interviews, combined with the researchers' expertise accumulated from close work with other maquiladora firms in several different industries and locations, provided the basis for a compilation of relevant measures of logistics capabilities and performance outcomes from prior research on world class logistics.51 A questionnaire covering managers' perceptions of their firm's level of expertise in various logistics capabilities as well as questions aimed at determining key demographic and performance information was developed based upon the interviews and previous literature.

Questionnaires were hand delivered to the entire population of 263 maquiladora facilities located in Juarez.52 The target executive of the survey was the materials manager for the facility. Past experience and the interviews suggested that this was the executive with the greatest knowledge of broad logistics issues ranging from procurement and delivery of subcomponents and raw materials to finished goods distribution. The delivery and subsequent collection of questionnaires was conducted by a Mexican citizen employed by the researchers. This method was chosen because knowledge of Spanish and the Mexican culture is considered necessary to gain access to the maquiladora facilities and executives. Delivery was not possible at 22 facilities. Fifty-one completed questionnaires were collected from the remaining 241 facilities, representing an overall response rate of 21 percent.

An examination of demographic variables revealed that a diverse range of companies completed the questionnaire. The size and industry distribution of the responding firms provide a close approximation of the population of maquiladoras operating in Juarez. Significant variance in response to demographic variables, as well as to variables comprising the measurement scales for the constructs of interest, was observed. A summary of respondent characteristics is presented in Table 1.

Nonresponse bias was estimated using procedures recommended by Armstrong and Overton53 as well as Lambert and Harrington.54 The last quartile of respondents were assumed to be most similar to nonrespondents since their replies took the longest time and most effort to obtain. The responses given by the last quartile were compared to those provided by the first three quartiles. The comparison of means of responses given by each group revealed only six significant differences (at p

Measure Purification

Items comprising the scales for logistics capabilities were submitted to purification procedures. Scales were purified by running factor analyses and dropping complex variables that loaded highly on two or more dimensions.55 Appendix A contains a listing of the logistics competencies and capabilities and the final items used to measure them, as well as the coefficient alphas for each capability scale.

The current research links high levels of logistical competence with performance benefits. Despite continued research on the performance implications of business processes, no consensus exists as to a universal performance definition. Similarly, no agreement regarding what factors constitute the best measure of performance has been reached.56 While performance has often been evaluated by analyzing financial information, when the object of analysis is the performance of a specific business function such as logistics, financial indicators may not be appropriate and/or relevant. Outcome-based measures often fail to account for behavior-based factors such as customer service or product sales support.57 Behavior-based measures can provide valuable supplemental information such as indicating the causes of poor performance highlighted by outcome-based measures.58

The complex nature of the subject warrants the use of multiple indicators of performance. Outcome-based logistics performance measures such as order fill rate or percent on-time deliveries capture certain performance dimensions, yet may be considered proprietary and, therefore, hard to collect. Behavior-based measures such as self-reports of order cycle time reductions or lead time variability are helpful in evaluating the quality of service rendered yet may be limited by self-report biases and comparability problems. A combination of outcome-based and behavior-based measures captures many performance dimensions and forms the basis for the selection of measures used in the current analysis.59

A set of measures was selected to achieve a multidimensional representation of logistical performance. The items chosen were considered important in achieving the objectives of world-class logistics and supply chain operations. They were based upon performance measures used in past research as well as on areas mentioned by managers in the pre-survey interviews.60

The primary rationale that dominated the selection of performance criteria was the ability to meet pertinent customer service demands while minimizing total cost. Several items did not receive sufficient response to be included in the analysis. The remaining questions reflect both cost considerations (lower transportation costs, decreases in expedited shipments, freight consolidation) and customer service elements (on-time delivery, lead-time compression, ability to handle delays), as well as international logistics concerns relevant to maquiladora operations (ability to handle border crossings of freight).

Analysis

Respondents were asked to indicate their agreement with statements concerning aspects of their companies' logistical capabilities and performance (based on 5-point scales where l=Strongly Agree and 5=Strongly Disagree). Overall scores for the 13 logistics capabilities were created by averaging the responses across the individual items comprising each capability scale. The overall capability scores were used to group data on logistics performance variables. Groupings were achieved by splitting out respondents with overall capability scores of 3 or less into one group (indicating high levels of capability) and respondents with overall capability scores of greater than 3 into a second group (indicating low levels of capability). T-tests of significant differences in means of performance variables between the two groups based upon levels of logistics capability were conducted to test each hypothesis.

RESULTS

Analysis provided strong support for three of the hypotheses, moderate support for seven, and weak support for one other. The hypothesized relationships between organizational control and implementation and logistical performance were not supported. The following narrative will review results of hypotheses for each logistical competency. A summary of the results is presented in Table 2. Positioning

The logistics capabilities related to competence in strategies and organizational approaches that guide operations had mixed performance implications. Table 3 presents the results of testing in this area.

The results provided moderate support for Hla, maquiladora firms that develop customer focused logistics will exhibit enhanced performance. Means between high and low groups for five of the eight performance variables were significantly different. Customer focus was significantly related to two important customer service performance indicators, percent on-time deliveries and order cycle time reduction. Customer focus also demonstrated a significant cost relationship. Routing and scheduling improvements to consolidate inbound and outbound freight shipments were accomplished at significantly greater levels by firms in the high customer focus group. No support was provided for Hlb and

H1c. Maquiladora firms that developed centralized logistics organizational control and decentralized implementation of organizational decisions exhibited no significant improvements in performance.

Integration

Integration capabilities were related to performance enhancements. Hypotheses involving the impact of information sharing and supplier relations on logistics performance were strongly supported. Firms with high levels of these capabilities demonstrated significantly better scores on seven of the eight performance variables than firms with lower capabilities. Neither capability was related to improvements in routing and scheduling to consolidate inbound freight shipments.

The hypothesized relationship between functional integration and logistics performance received moderate support, with significant differences found between high- and low-level firms on each variable with the exception of variables reflecting inbound transportation cost reductions. The relationship between connectivity and logistical performance was also moderately supported, with significant differences between high- and low-level firms found on scores for order cycle time reduction, routing and scheduling improvements for inbound and outbound freight, and effectively dealing with border crossing delays of freight. Information technology was only weakly related to logistical performance improvements, with significant differences noted in order cycle time reduction and routing and scheduling improvements. The results of testing of integration hypotheses are presented in Table 4.

Agility

Capabilities that contribute to firm agility were also related to logistics performance. Hypothesis H3a, involving the impact of operational flexibility on logistics performance, was moderately supported. Firms with high levels of operational flexibility demonstrated significantly better scores on four of the eight performance variables than firms with lower capabilities, including order cycle time reduction, increased on-time deliveries, expedited freight reductions, and routing and scheduling improvements. The hypothesized relationship between personnel flexibility and logistics performance was strongly supported, with significant differences found between high and low level firms on each customer service and cost performance variable except estimated percent of on-time deliveries. Managers perceived, however, that percentages of on-time shipment deliveries were increasing. Table 5 presents the results of testing for agility.

Measurement

The capabilities that form a competence in measurement were also found to be associated with logistical performance. Hypotheses H4a, H4b, and H4c, concerning the relationship between activity-based costing, benchmarking, and performance assessment, respectively, and logistics performance were moderately supported. High levels of activity-based costing were associated with significantly better scores on five of the eight performance variables, including reductions in order cycle time and expedited shipments of outbound freight, routing and scheduling improvements, and effective handling of border crossing delays of freight. Benchmarking was found to be moderately related to logistics performance, with significant differences between means of performance variables for high- and low-level firms in each area except estimated percent of on-time deliveries and reductions in expedited shipments of inbound freight.

The relationship between performance assessment and logistical performance was moderately supported, with significant differences found between high- and low-level firms on four performance variables including order cycle time reduction, routing and scheduling improvements, and effective handling of border crossing delays of outbound freight. The results of testing for the measurement hypothesis are found in Table 6.

CONCLUSIONS AND IMPLICATIONS

The research provides an indication of the importance of competence in key logistics capabilities to the overall logistical performance of Mexican maquiladora firms. Further, the results provide insight as to how maquiladora firms should approach the development of logistical competencies to have the greatest impact on performance in their unique operating environment.

Capabilities related to competence in integration and agility were found to be of particular importance to logistical performance. The results reveal definite benefits associated with developing logistics processes that enhance supply chain integration-both internal and external to individual firms. Maquiladora firms that have achieved integration among functional areas such as purchasing, production, scheduling, distribution, and sales, and that have developed processes that enable them to readily share information with suppliers and customers demonstrated improved performance. Performance improvements were noticeable in customer service performance such as order cycle time reductions and increases in on-time delivery of shipments, as well as indicators of cost performance, i.e., decreased expedited shipments of freight and routing and scheduling improvements. Internal functional integration was also related to improved strategies in dealing with border crossing delays of freight shipments, a logistical performance area peculiar to maquiladora firms.

These performance areas accentuate the importance of coordination and information flow between internal functional areas as well as external service providers such as transportation carriers and draymen, international freight forwarders, and customshouse brokers. The increased complexity of maquiladora supply chains, characterized by domestic supply lines that stretch over two thousand miles and involve crossing an international border using a multitude of external players, mandates timely sharing of information and responsibility to ensure the seamless flow of product required to achieve superior logistical performance.

Increased agility enables maquiladora firms to determine and quickly respond to an extremely volatile operating environment. Maquiladoras that have adopted flexible processes in manufacturing, scheduling, and distribution, and manage personnel to achieve flexibility significantly outperformed other firms in both customer service and cost performance. Agility allows firms to rapidly respond to changes in supply and/or demand, changing production and distribution schedules easily to meet customer orders and overcome supply shortages or operational crises without excess expenditure of resources.

Successful implementation of innovative processes to increase integration and agility requires an effective performance measurement system to monitor key variables and ensure continuous improvement. Maquiladoras that have adopted tools such as activitybased costing, benchmarking, and performance assessments that reflect an agile operations emphasis (such as inventory turns and lot or batch size reduction) demonstrated enhanced logistical performance when compared with other firms. Again, improvements were noted in both logistics customer service and cost performance. Firms with a high degree of personnel flexibility also demonstrated a greater ability to handle logistics requirements unique to the transborder area.

Results regarding the importance of positioning capabilities, the strategic and structural approaches guiding logistical operations, were mixed. Not surprisingly, customer focus was found to significantly impact customer service related performance areas. A strategy that focuses on customer needs, however, also had a significant impact on such cost performance areas as routing and scheduling improvements to achieve consolidation in both inbound and outbound freight movements. This finding suggests that firms focusing on developing innovative processes to meet customer requests may also discover ways to cut costs, such as reducing expedited freight shipments. One Juarez maquiladora reduced expedited freight shipments from nearly $250,000 to less than $10,000 per month, while increasing on-time delivery rates by more closely managing both inbound and outbound product and information flows.

One particularly interesting finding was that maquiladora firms that centralized the control of logistics organizations and decentralized the implementation of organizational decisions did not exhibit enhanced performance compared to other firms. This result indicates that organizational structure is not significantly related to logistics customer service or cost performance benefits. Perhaps this finding supports the view of the future predicted by Bowersox et al.61 that suggests that the structure a firm chooses to organize its decision-making and control functions is becoming meaningless due to improved information availability and utilization. The current research findings indicate that management of logistics information flows, supply chain relationships, and internal employees and processes are more likely to be associated with enhanced performance. Perhaps field managers struggling with corporate or divisional headquarters for a greater measure of control in local logistics operations can utilize these results.

In summary, customer-focused Mexican maquiladoras demonstrated superior overall logistical performance when they developed capabilities and processes that (1) ensured a seamless flow of information among internal and external supply chain members; (2) developed local operations and personnel that could quickly respond to changes in supply and demand; and (3) were able to accurately measure their progress toward meeting operational standards. Additionally, the organization a maquiladora firms used to control and implement decisions were secondary to the managerial issues just listed.

The findings are useful for managers of maquiladora firms attempting to impact the bottom line by increasing sales through customer service enhancements and/or by cutting costs. While maquiladoras have placed a greater emphasis on improving production efficiency, logistics systems to support production and distribution requirements have often been neglected, resulting in higher overall costs than expected and service reliability problems. Research results indicate that maquiladora firms that focus on integrated and agile logistical functions will experience benefits in the form of improved logistics customer service performance and lower costs. It also supports local decision makers' attempts to achieve organizations that respond better to the local operational environment.

The findings presented in this paper were limited to analyses of aggregated data from all respondents. Linking these results to the actions or financial performance of individual firms was beyond the scope of this study. Case studies of a representative sample of firms participating in the study would provide an interesting follow-up to this research. For example, an attempt could be made to determine whether managers' perceptions, as indicated in this paper, corresponded to actions in the workplace. Correlations between levels of logistics capabilities and financial performance might also be made. Further, future research should investigate the implications of the inconclusive findings regarding organizational structure and logistics performance.

NOTES

1Martin Christopher, Logistics and Supply Chain Management (Burr Ridge, Ill.: Irwin, 1994), and Stanley E. Fawcett, "Purchasing Characteristics and Supplier Performance in Maquiladora Operations," International Journal of Purchasing and Materials Management 29, no. 1 (1993): 27-34.

2Joshua A. Cohen, "The Rise of the Maquiladoras," Business Mexico 17, (special issue 1994): 54-58.

3Fawcett reference in Note 1; Stanley E. Fawcett and Sheldon R. Smith, "Logistics Measurement and Performance for United States-Mexican Operations Under NAFTA," Transportation Journal 34, no. 3 (Spring 1995): 25-34; and Stanley E. Fawcett, John C. Taylor, and Sheldon R. Smith, "The Realities of Operating in Mexico: An Exploration of Manufacturing and Logistics Issues," International Journal of Physical Distribution and Logistics Management 25, no. 3 ( 1995): 49-68; and Thomas M. Strah, "Clinton Postpones Border Opening," Transport Topics, no. 3173, 25 December 1995, pp. 3, 26.

4Fawcett and Smith reference in Note 3; and Arnold Maltz, Linda Riley, and Kevin Boberg, "Purchasing Logistics Services in a Transborder Situation: Logistics Outsourcing in US-Mexico Co-production," International Journal of Physical Distribution and Logistics Management 23, no. 8 (1993): 46-54.

5Kevin Boberg, Arnold Maltz, and William Smith, "The Importance of Warehousing in an Integrated Logistics System: An Empirical Study Along the U.S./Mexico Border," in Proceedings of the Intermodal Distibution Education Academy (Atlanta: Georgia Freight Bureau, Inc. in cooperation with Georgia Southern University), pp. 98-105; and Fawcett and Smith reference in Note 3.

6Same reference as Note 3.

7Edward W Davis, "Global Outsourcing: Have U.S. Managers Thrown Out the Baby with the Bath Water?" Business Horizons 35, no. 4 (July-August 1992): 58-65.

8Fawcett and Smith reference in Note 3; and S.M. Schwartz, "The Border Industrialization Program of Mexico," Southwest Journal of Business and Economics 8, no. 3 (Summer 1987):1-51.

9Same reference as Note 2.

10Fawcett and Smith reference in Note 3; and Schwartz reference in Note 8.

11Fawcett and Smith reference in Note 3.

12Fawcett, Taylor, and Smith reference in Note 3.

13Fawcett, Taylor, and Smith reference in Note 3; and David G. Waller and Loren E. Yeager, A North American Common Market (Cleveland: Cleveland Consulting

Associates, 1992).

14Waller and Yeager reference in Note 13.

15Fawcett, Taylor, and Smith reference in Note 3.

16Fawcett and Smith reference in Note 3; and Fawcett, Taylor, and Smith reference in Note 3.

17Fawcett and Smith reference in Note 3.

18Fawcett and Smith reference in Note 3; and Fawcett, Taylor, and Smith reference in Note 3.

19Fawcett and Smith reference in Note 3.

20See, for example, Bernard J. La Londe, Martha C. Cooper, and Thomas G. Noordewier, Customer Service: A Management Perspective (Oak Brook, Ill.: Council of Logistics Management, 1988); and Bernard J. La Londe and Martha C. Cooper, Partnerships in Providing Customer Service: A Third-Party Perspective (Oak Brook, Ill.: Council of Logistics Management, 1989).

21Daniel E. Innis and Bernard J. La Londe, "Customer Service: The Key to Customer Satisfaction, Customer Loyalty, and Market Share," Journal of Business Logistics 15, no. 1 (1994): 1-28; Peter Lynagh and Richard Poist, "Managing Physical Distribution/ Marketing Interface Activities: Cooperation or Conflict," Transportation Journal 23, no. 3 (Spring 1984): 36-44; Robert A. Novack, C. John Langley, Jr., and Lloyd M. Rinehart, Creating Logistics Value: Themes for the Future (Oak Brook, Ill.: Council of Logistics Management, 1995); and Jay Sterling and Douglas M. Lambert, "Establishing Customer Service Strategies Within the Marketing Mix," Journal of Business Logistics 8, no. 1 (1987): 1-30.

22 Innis and La Londe reference in Note 21; and Novack, Langley, and Rinehart reference in Note 21.

23The Global Logistics Research Team at Michigan State University, World Class Logistics: The Challenge of Managing Continuous Change (Oak Brook, Ill.: Council of Logistics Management, 1995).

24The Global Logistics Research Team at Michigan State University reference in Note 23.

25Same reference as Note 21.

26The Global Logistics Research Team at Michigan State University reference in Note 23.

27Donald J. Bowersox, Patricia J Daugherty, Cornelia L. Droge, Dale S. Rogers, and Daniel L. Wardlow, Leading Edge Logistics: Competitive Positioning for the 1990's (Oak Brook, Ill.: Council of Logistics Management, 1989); Donald J Bowersox, David J. Closs,

M. Bixby Cooper, Stanley E. Fawcett, Edward A. Morash, Lloyd M. Rinehart, Steven R. Clinton, David J Frayer, Robert E. Bowles, Hans van der Hoop, and Heon Deok Yoon, "Global Logistics Best Practice: An Intermediate Research Perspective," in Annual Conference Proceedings (Oak Brook, Ill.: Council of Logistics Management, 1994), pp. 27-42; Douglas M. Lambert and James R. Stock, Strategic Logistics Management, 3rd ed., (Homewood, Ill.: Richard D. Irwin, Inc., 1993); Novack, Langley, and Rinehart reference in Note 21; James R. Stock and Douglas M. Lambert, "Becoming a `World Class' Company with Logistics Service Quality," International Journal of Logistics Management 3, no. 1 (1992): 73-81; and Oliver Wight, The Oliver Wight ABCD Checklist for Operational Excellence, 4th ed., (Essex Junction, Vt: Oliver Wight Publications, 1993).

28James Heskett, "Controlling Customer Logistics Service," International Journal of Physical Distribution and Logistics Management 24, no. 4 (1994): 4-10.

29Bowersox et al. 1989 reference in Note 27; Bernard J La Londe and Paul H. Zinszer, Customer Service: Meaning and Measurement (Oak Brook, Ill.: Council of Logistics Management, 1976); and La Londe, Cooper, and Noordewier reference in Note 20.

30Dan R. Dalton, William D. Todor, Michael J. Spendolini, Gordon J. Fielding, and Lyman W Porter, "Organizational Structure and Performance: A Critical Review," Academy of Management Review 5, no. 1 (January 1980): 49-64; John T Mentzer and Brenda Ponsford Konrad, "An Efficiency/Effectiveness Approach to Logistics Performance Analysis," Journal of Business Logistics 12, no. 1 (1991): 33-62; Danny Miller, "Strategy Making and Structure: Analysis and Implications for Performance," Academy of Management Journal 30, no. 1 (1987): 7-32; and Theodore P Stank, Patricia I Daugherty, and Craig M. Gustin "Organizational Structure: Influence on Logistics Integration, Costs, and Information System Performance," International Journal of Logistics Management 5, no. 2 (1994): 41-52.

31Stank, Daugherty, and Gustin reference in Note 30.

32Christopher reference in Note 1.

33Donald J. Bowersox, Patricia J. Daugherty, Cornelia L. Droge, Richard N. Germain, and Dale S. Rogers, Logistical Excellence: It's Not Business as Usual (Burlington, Ma: Digital Press, 1992).

34Richard N. Germain, Cornelia L. Droge, and Patricia J. Daugherty, "A Cost and Impact Typology of Logistics Technology and the Effect of Their Adoption on Organizational Practice," Journal of Business Logistics 15, no. 2 (1994): 227-248; Bowersox et al. 1992 reference in Note 33; Stank, Daugherty, and Gustin reference in Note 30.

35Christopher Gopal and Harold Cypress, Integrated Distribution ManagementCompeting on Customer Service, Time, and Cost (Burr Ridge, Ill.: Irwin Professional Publishing, 1993); and John T. Mentzer, "Managing Channel Relationships in the 21st

Century," Journal of Business Logistics 14, no. 1 (1993): 27-42.

36Paul Herbig, and Alan T Shao, "American Keiretsu: Fad or Future," Journal of Business-to-Business Marketing 1, no. 4 (1993): 3-30; and Dale S. Rogers, Patricia J. Daugherty, and Theodore P Stank, "Enhancing Service Responsiveness: The Strategic Potential of EDI," International Journal of Physical Distribution and Logistics Management 22, no. 8 (1992): IS-20.

37Adel I. El-Ansary, "Strategic Perspective of Communication and Information Systems in Marketing Channels," Journal of Marketing Channels 1, no. 4 (1992): 3-16.

38Michael E. Porter and Victor E. Millar, "How Information Gives You Competitive Advantage," Harvard Business Review 63, no. 4 (July-August 1985): 149-160; James R Stock, "Managing Computer, Communication and Information Technology Strategically: Opportunities and Challenges for Warehousing," The Logistics and Transportation Review 26, no. 2 (1990): 133-148.

39EI-Ansary reference in Note 37; Mentzer reference in Note 35; and Jakki Mohr and John R. Nevin, "Communication Strategies in Marketing Channels: A Theoretical Perspective," Journal of Marketing 54, no. 4 (October 1990): 36-51.

40James C. Anderson and James A. Narus, "A Model of the Distributor's Perspective of Distributor-Manufacturer Working Relationships," Journal of Marketing 48, no. 4 (Fall 1984): 62-74; Lynn E. Metcalf and Carl R. Frear, "The Role of Perceived Product Importance in Organizational Buyer-Seller Relationships," Journal of Business-toBusiness Marketing 1, no. 3 (1993): 63-85; and L. Richeson, Charles W Lackey, Jr., and John Starner, "The Effect of Communication on the Partnering Link Between Manufacturers and Suppliers in a Just-in-Time Environment," International Journal of Purchasing and Materials Management, 31, no. 1 (Winter 1995): 20-28.

41Donald J. Bowersox, "Improving the Logistics Marketing/Sales Interface," in Annual Conference Proceedings (Oak Brook, Ill.: Council of Logistics Management, 1991), pp. 243-255.

42Bowersox et al. 1989 reference in Note 27; and Marshall L. Fisher, Janice H. Hammond, Walter R Obermeyer, and Ananth Raman, "Making Supply Meet Demand in an Uncertain World," Harvard Business Review 72, no. 3 (May-June 1994): 83-93.

43Larry J. Rosenberg and Charles D. Schewe, "Strategic Planning; Fulfilling the Promise," Business Horizons 21, no. 4 (July-August 1985): 54-62; and David Ulrich and Margarethe E Wiersma, "Gaining Strategic and Organizational Capability in a Turbulent Business Environment," Academy of Management Executive 3, no. 2 (1989): 115-122.

44Bernard J. La Londe and James M. Masters, "Emerging Logistics Strategies: Blueprints for the Next Century," International Journal of Physical Distribution and Logistics Management 24, no. 7 (1994): 35-48; and James H. Perry, "Emerging Economic

and Technological Futures: Implications for Design and Management of Logistics Systems in the 1990s," Journal of Business Logistics 12, no. 2 (1991): 1-16.

45Bowersox et al. 1989 reference in Note 27; and the Global Logistics Research Team at Michigan State University reference in Note 23.

46Bowersox et al. 1992 reference in Note 33.

47Mentzer and Konrad reference in Note 30.

48Bowersox et al. 1992 reference in Note 33.

49Bowersox et al. 1992 reference in Note 33; and Terrance L. Pohlen and Bernard J. La Londe, "Implementing Activity-Based Costing (ABC) in Logistics," Journal of Business Logistics 15, no. 2 (1994): 1-23.

50Bowersox et al. 1992 reference in Note 33; Dale S. Rogers, Patricia J. Daugherty, and Theodore P Stank, "Benchmarking Programs: Opportunities for Enhancing Performance:' Journal of Business Logistics 16, no. 2 (1995): 43-64; and Theodore P Stank, Patricia J Daugherty, and Dale S. Rogers, "Benchmarking: Applications by Third Party Warehousing Firms," The Logistics and Transportation Review 30, no. 1 (1994): 55-72.

51Bowersox et al. 1989 reference in Note 27; Bowersox et al. 1992 reference in Note 33; Germain, Droge, and Daugherty reference in Note 34; Lambert and Stock reference in Note 27; and Wight reference in Note 27.

52The Complete Twin Plant Guide, (El Paso: Solunet, Inc., 1995).

53J. Scott Armstrong and Terry S. Overton, "Estimating Nonresponse Bias in Mail Surveys," Journal of Marketing Research 14, no. 3 (August 1977): 396-402.

54Douglas M. Lambert and Thomas C. Harrington, "Measuring Nonresponse Bias in Customer Service Mail Surveys," Journal of Business Logistics 11, no. 2 (1990): 5-25.

55Michael A. McGinnis, "Shipper Attitutes Toward Freight Transportation Choice: A Factor Analytic Study," International Journal of Physical Distribution and Materials Management 10, no.1 (1979): 23-41; and J.C. Nunnally, Psychometric Theory (New York: McGraw-Hill, 1967).

56Garland Chow, Trevor D. Heavor, and Lennart E. Henriksson, "Logistics Performance: Definition and Measurement," International Journal of Physical Distribution and Logistics Management 24, no. 1 (1994): 17-28; and Diana L. Haytko, "The Performance Construct in Channels of Distribution: A Review and Synthesis," in Proceedings of the American Marketing Association (Chicago: American Marketing Association, Winter 1994), pp. 262-271.

57Haytko reference in Note 56; and Mentzer and Konrad reference in Note 30.

58Chow, Heavor, and Henriksson reference in Note 56.

59Chow, Heavor, and Henriksson reference in Note 56.

60Germain, Droge, and Daugherty reference in Note 34; Lambert and Stock reference in Note 27; the Global Logistics Research Team at Michigan State University reference in Note 23; and Wight reference in Note 27.

61Bowersox et al. 1992 reference in Note 33.

ABOUT THE AUTHORS

Theodore P Stank is assistant professor of transportation and logistics at Iowa State University. He earned his Ph.D. from the University of Georgia. He has published in a number of academic journals.

Charles W. Lackey, Jr. is associate professor of operations management and economics at the University of Texas at Brownsville. He received his Ph.D. in industrial organization economics from the University of South Carolina. His research interests include international operations strategy, supply chain management, buyer-seller partnering, and total quality management.

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