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Procedia - Social and Behavioral Sciences 224 (2016) 571 – 578

6th International Research Symposium in Service Management, IRSSM-6 2015, 11-15 August
2015, UiTM Sarawak, Kuching, Malaysia

Malaysian Logistics Performance: A Manufacturer’s Perspective

Mohd Azlan Abu Bakara,*, Harlina Suzana Jaafar b
a, b
Malaysia Institute of Transport (MITRANS), Universiti Teknologi MARA (UiTM), Shah Alam 40450, Malaysia
b
Faculty of Business and Management, Puncak Alam Campus,Universiti Teknologi Mara (UiTM), Bandar Puncak Alam 42300, Malaysia

Abstract

In the highly competitive economy, logistics performance measurement is a primary concern among practitioners and academia.
The World Bank Logistics Performance Index (LPI) has produced the benchmark for more than 100 countries covering six main
components that are related to the trade facilitation in the context of the logistics supply chain. However, the output of the index
is based on logistics service providers, thus measuring the performance from the perspective of users , which does not only serve
as a comparison study, but also remains as the ultimate study to prove the friendliness of logistics and trade facilitation involved
in import and export processes. In the present work, six (6) components were used to assess logistics performance including
environmental friendly. Results revealed that trade friendliness by the logistics services is improved and requires further analysis,
according to the central hub of each sector in M alaysia. It attracts future development for the manufacturing industry by hav ing
excellent logistics services facilities.
© 2016 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license
© 2016 The Authors. Published by Elsevier Ltd.
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-reviewunder
Peer-review underresponsibility
responsibility of Universiti
of the TeknologiMARA
Universiti Teknologi M ARA Sarawak.
Sarawak

Keywords: logistics performance, Malaysia, manufacturing, trade facilitation

1. Introducti on

The service sector in Malaysia acquired tremendous achievements in the past decades. It is projected as the
largest contributor to growth in 2015 (Bank Negara Malaysia, 2015). According to the Annual Report 2014 by Bank
Negara Malaysia (BNM), the service sector contributed 55.3% of the total Gross Domestic Product (GDP). Service

* Corresponding author. Tel.: +6-035-544-2638; fax: +6-035-544 -2344.

E-mail address: [email protected]

1877-0428 © 2016 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of the Universiti Teknologi MARA Sarawak
doi:10.1016/j.sbspro.2016.05.442
572 Mohd Azlan Abu Bakar and Harlina Suzana Jaafar / Procedia - Social and Behavioral Sciences 224 (2016) 571 – 578

sub-sectors include intermediate service and final service. Specifically, transportation and storage are among the
intermediate services that contribute the most due to trade-related activities. In 2013, transportation and storage
contributed 3.6% to Malaysia’s GDP.
On the other hand, logistics and trade facilitation are most commonly d iscussed among practitioners and
academia. Logistics management involves some parts of supply chain management that plans, imp lements, and
controls the efficient, effective forward and reverses flow and storage of goods, services and related information
fro m the point of origin and the point o f consumption in order to meet customer’s requirements (CSCMP, 2014).
Meanwhile, trade facilitation is defined as the simplification and harmonization of trade that include s activit ies
involving collecting, presenting, commun icating and processing of the data required for the movement of goods
internationally (Eu ropean Commission, 2014). Moreover, it also includes reformation and modernizat ion of ports
and customs (Otsuki, Honda, & Wilson, 2013).
The Malaysian logistics industry has been recognized globally. In fact, the g lobal Logistics Performance Index
(LPI) in 2014 by the World Bank has ranked Malaysia at the 25th place out of 166 countries (Arvis et al., 2014).
Nevertheless, in-depth research in the area of logistics is still lacking. Despite recent studies in the Malaysian context
such as logistics service quality (Rah mat & Faisol, 2014), logistics development (Zuraimi, Mohd Rafi, & Dahlan,
2013), and logistics issues and challenges (Ali, Jaafar, & Mohamad, 2008), this current study empirically examines
the logistics performance fro m the context of users. As indicated by Estampe, Lamouri, Paris, and Brahim-Djelloul
(2013), customers remain the ultimate judges of how much the value is being created at logistics level.

2. Logistics performance

Logistics performance (LP) defin itions vary and according to the objectives of the study. According to Chow,
Heaver, and Henriksson (1993), researchers always have difficu lties to define LP due to the reason that firms
normally have mu ltiple and frequent conflict ing goals. The most frequent defin ition cited fro m Mentzer and Konrad
(1991) defines LP as effectiveness and efficiency in performing activ ities. Th is defin ition h as also been further
extended by Fugate, Mentzer, and Stank (2010) as multi-dimensional and is defined as the degree of efficiency,
effectiveness, and differentiation associated with the accomplishment of logistics activities.
In other words, LP does not only help firms but could also identify their performance as a benchmark study for
the industries or national level to remain co mpetitive in short and long -term periods. According to Mentzer and
Konrad (1991), efficiency in the context of performance measures how well the resources are utilized and the
effectiveness in terms of how goals are accomplished. Fro m the other dimension, Neely, Gregory, and Platts (2005)
view fro m the marketing perspective that the term effectiveness refers to the extent to which customer requirements
are met, whereas efficiency is how economically the firm resources are utilized when providing a given level of
customer satisfaction. Besides, differentiat ion is defined as the ability of logistics to create value for the customer
through the uniqueness and distinctiveness of logistics services (Langley & Holcomb, 1992).
In the Malaysian context, very few studies are focusing on LP. Further details on availab le online journals and
publications of LP studies (within 2011 to 2015) are summarized in Table 1. The studies may have involved the
perception of logistics performance fro m the view of users and logistics service providers (LSP) in the broad
logistics study perspective. With the exception of a few studies available, the current study emphasizes the
evaluation of the logistics performance in Malaysia in the context of trade and transport facilitation.
T able 1. Logistics performance studies in Malaysia’s context.

Authors T ypes Sampling/Industry Year Area

Abu Bakar et al. Conference Paper LSP and Manufacturer 2014 T rade Facilitation
Zakariah and Journal Manufacturing 2013 Logistics Cost
Pyeman
Zuraimi et al. Journal LSP and Users 2012 Logistics Development
Lu & Lin Journal Manufacturer 2012 T rade Facilitation
Gupta, Goh,
Journal LSP and T rade Association 2011 T rade Friendliness
Desouza, & Garg
 Mohd Azlan Abu Bakar and Harlina Suzana Jaafar / Procedia - Social and Behavioral Sciences 224 (2016) 571 – 578 573

3. Research methodolog y

A questionnaire was developed based on two studies by Arvis et al. (2014) and Solakiv i, Ojala, Harri, Laari, and
Toyli (2010). Further justification fo r this is that the World Ban k LPI is recognized g lobally. Therefore, it is referred
to for result co mparison. In addition, it is also based on extensive literature review fro m the logistics performance
measurement studies. In order to evaluate the feasibility and co mprehensive understanding of the questionnaire
structure and survey format, a preliminary study was conducted. It is important to get the views fro m the experts in
terms of coding and content validity (Rattray & Jones, 2007). The final mailing list came fro m the membership list
of the Federation of Malaysian Manufacturers (FMM). Th is final list is represented by various industries and sizes.
To increase the response rate, two waves of approach with follow-up calls were made to all non-responding in the
first wave. A total of 129 surveys (10.3%) fro m 1248 surveys were co llected, wh ich excludes nine undelivered mail
surveys and three incomplete surveys. Even though the response rate was low, there was no evidence of bias ness
noted. Furthermore, a response rate in the 10-20% range is normal in Malaysia’s context for the same data collecting
method (Ramayah, Lim, & Mohamed, 2005).
The questionnaire is divided into four main sections. Section one consists of the demographic background of the
respondents, whereas section two comprises three main questions in relation to logistics performance in general
context. Meanwhile, section three contains dependent variable questions that include questions regarding cus tom
process, logistics cost, logistics service competence and quality, in frastructure, the effect iveness of logistics services
and lastly environ mental friendly. These two sections (section two and section three) use the five-likert scale (1=
Strongly Disagree to 5= St rongly Agree). In the last section, the questions are related to the personal background.
The internal consistency of the items was also tested. In the current study, the Cronbach alpha coefficient was 0.81.
According to the rule of thumb, >.80 is considered as good and a reasonable goal (Gliem & Gliem, 2003)

4. Data analysis / findings

In order to present the research findings, the respondents’ profiles are presented in sub-section 4.1, while the
main findings (i.e. the analysis of logistics performance) are presented in sub-sections 4.2 and 4.3.

4.1. Respondents’ profiles

The sample of respondents presents a broad range of characteristics. The demographic analysis evaluates the
usefulness of research findings. It indicates the capability of the respondents of this study, which is crucial for
acquiring a comp rehensive view of the current state of logistics performance in Malaysia. Table 2 illustrates a total
of 129 respondents fro m the context of nationality of the co mpany and level o f responsibility. A mong the four main
levels in the firms, managers (54.26%) and supervisors (27%) were the most represented.
T able 2. Logistics performance studies in Malaysia’s context.

Descriptions Frequency Percentage

O rigin (Nationality) of Company
Local 81 62.8
International 48 37.2
Le ve l of Re sponsibility
Chief Executive/Owner 5 3.88
Director/Board Member 10 7.75
Manager 70 54.26
Supervisor 27 20.93
Other 16 12.40
Non-response 1 0.78
574 Mohd Azlan Abu Bakar and Harlina Suzana Jaafar / Procedia - Social and Behavioral Sciences 224 (2016) 571 – 578

As shown in Table 3, out of the 129 responses, 43.41% were responsible for logistics strategy and planning.
Furthermore, operation and warehousing received almost similar proportion at 20.16% and 18.6%, respectively. The
majority of the respondents had 2 to 5 years of working experience in logistics operation (36.43%), followed by 6 to
10 years and mo re working experience with 30.23%. Although the highest range was between 2 to 10 years, h igh
responses from the professionals who had more than 10 years of experience were also responded. This indicated
about 14.73% representing both 11 to 15 and 16 to 20 years of experience.

T able 3. Respondents’ area of responsibilit y and experience.

Descriptions Frequency Percentage
Are a of Responsibility
Operation 26 20.16
Purchasing/Procurement 22 17.05
Logistics Strategy/Planning 56 43.41
Warehousing 24 18.60
Other 1 0.78
Experience in logistics operation (Years)
2 to 5 47 36.43
6 to 10 39 30.23
11 to 15 19 14.73
16 to 20 19 14.73
21 to 25 4 3.10
26 to 30 1 0.78

As shown in Table 4, the firms represented by the respondents had a mix o f size and sales turnovers that
indicated 47.3% of the total respondents were fro m large companies. Meanwhile, the small and med iu m sized
companies presented 29.50% and almost 21%, respectively. On the contrary, almost 39% o f the respondents were
fro m the firms with more than RM 50-million sales turnovers, whereas 30.20% were between RM 300, 000 to RM15
million, and 3.9% were below RM300, 000. Thus, there was an excellent mix among the small and large firms.

T able 4. Size of company.

Descriptions Frequency Percentage
Size of Company
Micro 3 2.30
Small 38 29.50
Medium 27 20.90
Large 61 47.30
Sales Turnover (Annually)
Below RM300,000 5 3.90
Within RM300,000 to RM15 Million 39 30.20
Within RM15 Million to RM 50 Million 35 27.10
More than RM50 million 50 38.80
 Mohd Azlan Abu Bakar and Harlina Suzana Jaafar / Procedia - Social and Behavioral Sciences 224 (2016) 571 – 578 575

Finally, the questionnaire also includes the proportion of the percentage for logistics outsourcing. Logistics
outsourcing helps to reduce logistics cost among shippers, thus improving their core businesses (Qureshi, Ku mar, &
Ku mar, 2007). So me other points address that the outsourcing performance requires consistency for customer
satisfaction (Rahmat & Faisol, 2014). As presented in Figure 1, almost 50% of the international transportation and
forwarding activit ies were fully outsourced to LSP. This was followed by the do mestic transportation and reverse
logistics with 34.10% and 26.4%, respectively.

80.00
70.00 7.00
10.90
60.00 7.80 14.00
50.00 11.60
40.00 10.10 6.20
7.80 80%
30.00
49.60 48.10
20.00 8.50 10.10 10.10 5.40 4.70
34.10 10.10 90%
10.00 26.40 9.30 7.00 9.30 7.00 3.90 7.00
0.00 3.10 3.90 3.90 3.10 3.10 3.10
Fully

management
Processing
Forwardng

Invoicing

Warehousing
transportation

transportation

Value added

Logistics IT
management
Reverse
logistics
International

Inventory
Freight

Outsourced

services
Domestic

Order

System
and
(100%)

Fig. 1. Logistics operations that outsourced to the external LSP .

4.2. Analysis of the frequency of logistics performance components

The second section of the questionnaire addresses the overview of logistics performance measurement. Table 5
provides the information on the three measures as identified to measure the logistics performance. The table
describes the lowest rank of the logistics performance, i.e. ‘Malaysian business environment’, with the mean score at
3.30. E Several cases in the business environment were listed, includ ing general business perspective, location for
production, cost efficiency, transport infrastructure and locations of their competitors.
The overall logistics performance in the general context was ranked second, with 3.34 mean score. All main
factors indicating the performance were asked to the respondents that would at least enable our logistics industry to
be improved. This indicator includes the effectiveness of customs, quality of infrastructure, competitive price of
transport services, quality of logistics service, tracking delivery and foreign shipments arriving on time.
Meanwhile, most of the respondents agreed that their logistics capabilit ies and flexib ility were better as compared
to their competitors. Even though that was predictable, with the decision to outsource the logistics operation and
activities, they could perform very well. According to Fugate et al. (2010), co mparing logistics performance with
other competitors will create customer value and logistics differentiat ion, thus this can increase the quality in order
to compete in the competitive marketplace.

T able 5. Performance measures in general (based on mean).

Standard
Variable Items Descriptions Mean Mode Rank
Deviation

LP1 Overall logistics performance 3.34 3.00 .5024 2

Logistics LP2 Malaysian business environment 3.30 3.00 .5713 3

Performance
Logistics performance of your firms
LP3 3.84 4.00 .6120 1
as compared to major competitors
576 Mohd Azlan Abu Bakar and Harlina Suzana Jaafar / Procedia - Social and Behavioral Sciences 224 (2016) 571 – 578

4.3. Analysis of the current state of logistics performance measurement

The third section addresses the overall logistics performance measurement. Table 6 provides the information on
the 20 measures as identified in the current state of logistics performance. As the table describes, respondents highly
acknowledge some measures in the logistics infrastructure. Up to 3.86 mean score, they agreed that logistics
facilit ies such as warehousing and telecommunicat ion infrastructure were well developed. Secondly, the analysis
also indicated that major infrastructures namely airport, seaport, road, and rail infrastructures were relatively in good
quality. The mean score for this measurement is 3.84.

T able 6. Current state of logistics performance measurement (based on mean).

Standard
Variable Items Description Mean Mode Rank
Deviation

COST 1 Increase in logistics cost components 2.22 2.00 .6060 20

Cost COST 2 Competitively price 3.57 3.00 .6945 14
COST 3 Charges and rates 2.92 3.00 .6800 18
CLR1 Clearance process 3.83 4.00 .7194 3
CLR2 T ransparency 3.64 4.00 .8700 10
Customs
CLR3 T imely information sharing 3.40 4.00 .9400 16
CLR4 Expedite clearance for high compliance 3.71 4.00 .8240 6
INF1 Major infrastructures 3.84 4.00 .7460 2
Infrastructure INF2 Logistics facilities 3.86 4.00 .7551 1
INF3 T rack and trace 3.64 4.00 .6953 11
EFF1 Consignment arrived on time 2.94 3.00 .9208 17
Effectiveness EFF2 Major delays for inspection 2.83 3.00 1.051 19
EFF3 Regulatory connection 3.47 4.00 1.132 15
COMP1 Competence operators 3.65 4.00 .5402 9
Competence COMP2 Provides quality services 3.58 3.00 .5641 13
COMP3 Logistics services have improved 3.58 4.00 .6603 12
ENV1 Set environment objectives 3.77 4.00 .9480 4

Environment ENV2 Clear division of responsibilities 3.76 4.00 .9745 5

Friendly ENV3 Effort to reduce effects 3.68 4.00 .8333 8
ENV4 T ake productive actions 3.71 4.00 .9290 7

5. Discussion

Based on Table 6, we could see the other logistics services score based on the respondents point of views. In a
view of the government context i.e. customs procedures, most of the users agreed that the process of clearance was
at most efficient. In fact, those who highly demonstrated the levels of compliance also received efficient clearance
process. However, the issues of transparency of clearance procedure from both customs agency and other border
agencies need to be highlighted. Similarly the issues of lack of regulatory forms to facilitate the industry by Ali et
al., (2008) require further clarificat ion. Th is is because this study also found that timely information with the
change of regulation (CLR3) is still in lower rating. In the trade facilitation, a unified and standard form of
regulatory is crucial as to facilitate the movement of goods inbound and outbound. Thus, it also reflects the trade
related activity in Malaysia.
 Mohd Azlan Abu Bakar and Harlina Suzana Jaafar / Procedia - Social and Behavioral Sciences 224 (2016) 571 – 578 577

It was evident fro m the analysis that the respondents stated that the logistics cost components would increase for
the upcoming years. In addition, the charges and rates fro m the domestic and international movements were
recorded as high rates. On the other hand, a new measure that is environ ment-friendly in the study reported positive
results. Most of the firms have set environmental objectives and effort to reduce the effect of the environ ment for
both in production and operation. This effort clearly needs a dedicated division of responsibilit ies and requires full
support from the high-level management and the green environmental policy by the government.
On the other hand, effectiveness related to delays for inspection and consignments not arriving on time g ive an
impact on customer satisfaction. Similarly, in the context of trade facilitation, regulatory connection (EFF3) i.e.
informal payments showed lower ranking and this activity should also be eliminated.

6. Conclusion

In conclusion, this study provides a unique contribution in that it has provided a benchmark for the logistics
industry in the perspective of users. Several conclusio ns can be made fro m the findings. Firstly, logistics
performance is important not only to firms but it is also needed to set the benchmark of industries and national level.
The benchmark must be set consistently and clearly needs to be used so that our performance can be improved.
This study only provides a general view o f the logistics industry and did not compare specifically according to
industrial areas. This is because of the limitation of the study. Future study needs to consider more participation
fro m various industries so that a comparison can be made against the performance according to each cluster of
industry.

Acknowledgement

The authors would like to thank the M inistry of Education Malaysia through the Malaysia Research Centre for
Logistics and Supply Chain (MaRCeLS) for the research grant and supports.

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