Analysis of the factors affecting logistics capability and strategy on firm performance for the garment industry in Bangladesh

Abstract

This paper is devoted to prioritize and evaluate the key logistics capabilities and strategies to achieve a competitive advantage for superior firm performance. The purpose of this study is to identify the most influential factors of logistics capability and strategy of the garment industry in Bangladesh. Five dimensions concerning logistics capability and strategy were selected based on factor analysis, including value added service capability, information technology capability, procurement capability, purchasing strategy and inventory management strategy. Methods: This paper utilizes quantitative method exploiting the structural equation model (SEM) based on AMOS, version 23 and SPSS, version 20 to analyze the data surveyed from 385 garment factories in Bangladesh. Results: The findings identified that logistics capabilities positively associate with firm performance and logistics strategies were not significantly associated with firm performance. Information technology capability was found to be the most influential factor in the garment industry followed by value-added service capability, procurement capability, purchasing strategy and inventory management strategy. Conclusions: Based on theoretical considerations and findings of the empirical study, it can be stated that the role of logistic capability is an indispensable to improve productivity that enable Bangladesh garment industry to hold position in the global market. There is a significant part of information technology to influence foreign investors and develop sufficient infrastructure for the flow of information. It’s necessary to use software application for the further development of production process.