ESTIMATION OF GLOBAL AND NATIONAL LOGISTICS EXPENDITURES: 2002 DATA UPDATE

Alexandre M. Rodrigues Assistant Professor Department of Marketing and Supply Chain Management Michigan State University

Donald J. Bowersox The John H. McConnell University Professor of Business Administration Department of Marketing and Supply Chain Management Michigan State University

and

Roger J. Calantone The Eli Broad University Professor of Business Department of Marketing and Supply Chain Management Michigan State University

Working Paper: Please do not reference without authors permission

Contact:

Dr. Alexandre M. Rodrigues Department of Marketing and Supply Chain Management Michigan State University N370 North Business Complex East Lansing, Michigan 48824-1122 Phone: 517-432-5535 x230, FAX: 517-432-1112 Email: rodrigues@bus.msu.edu

2005; A. Rodrigues, D. Bowersox, R. Calantone.

ESTIMATION OF GLOBAL AND NATIONAL LOGISTICS EXPENDITURES: 2002 DATA UPDATE

ABSTRACT Many firms have a significant and growing presence in markets outside their country of origin. Global operations have substantially increased transportation and inventory required to accomplish international commerce. Logistics is one of the largest costs involved in international trade. However, the sizing of global logistic expenditure is a difficult task. The objective of this research is to estimate logistic expenditure for the global economy. An Artificial Neural Network is used to generate national estimates. The estimation set constitutes 24 countries that represent approximately 75% of the global Gross Domestic Product. The model utilizes variables that capture economic activity, transportation activity, income level, country size, and geographic location. Cluster Analysis and ANOVA are used to validate the neural network estimates. There are two main contributions from this research. The first is an update of previous estimates. This study uses 2002 available data and as such represents the most current estimation of global logistic expenditure. The second is continuous improvement of the estimation method, including new input variables, better information quality, mathematical model refinement, and methods of model validation.

ESTIMATION OF GLOBAL AND NATIONAL LOGISTICS EXPENDITURES: 2002 DATA UPDATE INTRODUCTION Many firms have a significant and growing presence in markets outside their country of origin. In fact, global business transactions grew during the 1990s at a rate at least three times as great as typical domestic economies throughout the world (Bowersox and Calantone 1998). Global operations have substantially increased transportation and inventory required to accomplish international commerce. Global logistics management requires understanding of the relative transportation efficiencies in different countries. It requires that managers understand the transportation capabilities and characteristics of primary trading countries. Logistics is one of the largest costs involved in international trade. However, the measurement of national logistics expenditures is difficult. The objective of this research is to estimate logistics expenditures for the global economy. Information regarding logistics expenditures is relevant to both corporate managers and government administrators. Identification of transportation inefficiencies is essential to the development and promotion of infrastructure enhancements to improve logistics performance. This paper begins with the relevant literature review. Next, the methodology used for estimation and the related variables are described. The third section contains three parts: estimated national and global expenditures; model validation based on Cluster Analysis and ANOVA; and a comparison of trends across different groups and regions.

The final section concludes this article with the presentation of key findings, limitations, and potential paths for future research. LITERATURE REVIEW Heskett, Glaskowsky, and Ivie (1973) presented the first published research for logistical cost estimation. The authors developed a methodology for estimating total logistics cost and applied it to the United States. Their methodology considers total logistics cost as the sum of four types of commercial activities: Transportation, Inventory, Warehousing, and Order Processing. This basic methodology, with adjustments, has been used by Cass Information Systems and now the Council of Supply Chain Management Professionals (CSCMP) to estimate annual logistical expenditures in the United States (Wilson 2004). The study combines data related to three key components to estimate logistics expenditures: Inventory Carrying Cost, Transportation Cost, and Administrative Cost. The process includes Warehousing Cost as part of Inventory Carrying Cost. The challenge in estimating global logistic expenditure, as contrasted to the United States, is that the data to perform a direct measurement or roll-up summation methodology are not available. Although the data are available to varying degrees in most developed nations, they are not available in most other countries. Therefore, a countryby-country estimation requires the use of available primary and secondary data to project expenditures. The availability of such data varies extensively by country and regions. The first study to estimate global logistic expenditure was published by Bowersox (1992). The author presented an estimation of global logistics costs based on four

components: Total Gross Domestic Product (GDP), Government Sector Product, Industrial Sector Product, and Total Trade Ratio. In a later study, Bowersox and Calantone (1998) refined the estimation method by introducing an Artificial Neural Network (ANN) model. It expanded the scope of the previous approach by including infrastructure variables related to cost and information systems. The model was used to predict individual country logistics expenditures using 1996 data. The study was later updated using 1997 data (Bowersox, Closs, and Stank 1999). The most recent estimation of logistics expenditures was published by Bowersox, Calantone, and Rodrigues (2003). The study considered twenty-seven variables that captured information regarding geographic region, income level, country size, economy level, and transportation activity. The neural network model was used to estimate national logistics expenditures using 2000 data. This article presents an update of the process using 2002 data. In addition, this research represents continuous improvement in the estimation method, as well as the inclusion of new input variables, better information quality, mathematical model refinement, and model validation. The authors acknowledge the limitations of this research. However, the importance of sizing the global logistics market to the development of business strategy and national policy serve to justify a continuous effort to develop and refine the methodology. The fact that sufficient data do not exist to apply even the crude

methodology deployed to the critical Middle East and North Africa regions serves to illustrate the need for continued methodological development. METHODOLOGY Artificial Neural Networks Artificial neural networks are collections of mathematical models that emulate some of the observed properties of biological nervous systems and draw on the analogies of adaptive biological learning. An artificial neural network is composed of a large number of highly interconnected processing elements that are analogous to neurons and are tied together with weighted connections that are analogous to synapses (Haykin 1999). The starting point for most networks is a model neuron. This model neural consists of multiple inputs and a single output. Each input is modified by a weight, which multiplies with the input value. The neuron will combine these weighted inputs and, with reference to a threshold value and activation function, use these to estimate an output. One can use several model neurons and array them to form a layer. A layer either has all of its inputs connected to a preceding layer or to external inputs. In turn, all outputs are connected to either a succeeding layer or to external outputs. Next, layers can be structured one succeeding the other so that there is an input layer, multiple intermediate layers, and finally an output layer. Intermediate layers, those having no inputs or outputs to the external world, are called hidden layers.

Learning in a neural network is called training. The training is conducted by the utilization of a training set, a group of cases that contain both input variables and known output variables from the actual experiment under study. From the difference between the desired response (known outputs) and the actual response (neural network outputs), the error is determined and is propagated through the network. At each neuron in the network an error adjustment is made to the weights and threshold values. This is analogous to fitting parameters in a non-linear regression. This corrective procedure is called back propagation and it is applied continuously and repetitively as long as the individual or total errors in the responses exceed a specified level. At this point, the neural network has completed the training process and can be used to estimate based on new input data. This methodology has three major advantages. First, neural networks can build models when more conventional approaches fail. Because neural networks learn to recognize patterns in the dataset they can easily model data that are too complex for traditional approaches. Second, neural networks can generalize. In other words, they can respond appropriately to patterns that are only somewhat similar to patterns in the original training data. Finally, neural networks are flexible in changing environments. Although neural networks may take some time to learn a sudden change, they are excellent at adapting to dynamic information. Dataset Data availability and reliability is one of the challenges to developing country research. To minimize these problems, and to be able to make reliable comparisons

across countries, available economic and infrastructure information was used to capture the relationship between activities and characteristics that generate national logistics expenditures. The main source of data was the World Development Indicators database (The World Bank 2004). Other important sources of data were: United Nations Conference on Trade and Development (UNCTAD) (2004), Organization for Economic Co-operation and Development (OECD) (2004), EUROSTAT (2003), and USDOT (2003). These data sources contained information for the year 2002. The input variables were selected from previous studies (Bowersox and Calantone 1998; Bowersox, Calantone, and Rodrigues 2003). An attempt was made to control not only for country size, but also for geographic region and income level. Variables that capture economic activity and freight activity were also included. The output variable was the ratio between National Logistic Expenditure and Gross Domestic Product (GDP). Figure 1 summarizes the variables used in this current estimation.

***** Insert Figure 1 about here *****

Training Set and Estimation Set The utilization of artificial neural networks to estimate requires the definition of a training set, a group of cases that could be used to train and define a neural network structure. The information presented by the annual report developed by Wilson (2004) was used as part of training information (Training Set A). The report contains the projected

logistics cost for the United States from 1981 to 2003, measured as a percentage of Gross Domestic Product (GDP). Information from 1981 to 2001 was used for Training Set A. In addition to this information, the estimates provided by Bowersox and Calantone (1998) were used as part of the training set (Training Set B). The study reports National Logistics Expenditures estimates for 19 countries, using 1996 data. The estimates published by Bowersox, Closs, and Stank (1999) were also considered as part of the training set (Training Set C). The study presents estimates for 24 countries, using 1997 available data. Finally, Training Set D considers the estimation results published by Bowersox, Calantone, and Rodrigues (2003). The study provides estimates for 24 countries, using 2000 data. The study also presents detailed tables of Training Sets A, B, and C. Table 1 presents the 24 countries used as the estimation prediction set. This group of countries was chosen to allow direct comparisons with previous estimates. In addition, quality and availability of secondary data is higher for these countries. They constitute a representative subset of countries, accounting for approximately 75% of the global Gross Domestic Product in 2002. The notable absence is the Middle East and North Africa regions. As noted earlier, data related to the infrastructure and economic activity of this important area is not sufficient at this time to meet the minimum requirements of the estimation model.

***** Insert Table 1 about here *****

Parameters of the Artificial Neural Network The Artificial Neural Network utilized six layers: one input layer, four hidden layers, and one output layer. The number of neurons in each layer was set respectively as: 29, 25, 20, 15, 10, and 1. The training parameters were set as follows: Learning Rate 0.5, Momentum 0.6, Training Tolerance 0.05 and Testing Tolerance 0.1. Using the back propagation algorithm, the Artificial Neural Network presented a Mean Average Percentual Error (MAPE) difference between the target values and output values of 1.87%. This represents an improvement in accuracy from the 2.8% MAPE reported in the previous study (Bowersox, Calantone, and Rodrigues 2003). The fitted Artificial Neural Network was then used to obtain National Logistics Expenditures as a percentage of Gross Domestic Product. A summary of the parameters used to train the Artificial Neural Network is presented on Table 2.

***** Insert Table 2 about here *****

GLOBAL AND NATIONAL ESTIMATES Presentation of Results Results are presented using the 24 country structure of earlier estimates. Table 3 presents the 2002 estimated national logistics expenditures, as well as a comparative analysis with the previous 1997 and 2000 estimations. Table 4 includes a comparative analysis of the logistics expenditures aggregated by geographic region. Using World Bank definitions, Table 5 presents a comparative analysis of the estimated expenditures aggregated by income level.

***** Insert Table 3 about here ***** ***** Insert Table 4 about here ***** ***** Insert Table 5 about here *****

The conservative estimate of global requirement for logistics expenditures is estimated as US$ 5.1 trillion in 1997 and US$ 6.4 trillion in 2000. The 2002 estimate is US$ 6.7 trillion. This represents a 32% increase from 1997, and a 5% increase from 2000. The 2002 estimate represents 13.8% of the world Gross Domestic Product. Validation of Results The set of logistics expenditures presented in Table 3 are estimates based on past patterns of behavior. A logical objection to any estimate is the veracity of such macroestimates. To attempt to tie the logic of how a countrys particular and unique economic

development and trade patterns devolve into particular levels of logistics expenditures, an analysis of relationships was performed between groupings of countries. These groupings are based on economic activity, trade volume patterns, and geographic location. These groupings were then tested to identify differences in logistics expenditures measured both in absolute dollars and in percentage of GDP. The first step to understand the relationships between input variables and the estimated expenditures is through a two-step cluster analysis. The two-step cluster analysis is an exploratory tool designed to reveal natural groupings (or clusters) within a data set that would otherwise not be apparent. This technique was used to provide a grouping based on economic activity, trade volume patterns, and geographic location as a basis for differential economic activity at a macro level. These variables represent a snapshot of trade activity both within and between all the countries. Since this approach groups countries on activities that create the need for logistics services, rather than on the logistics services themselves, an independent check of ranges of logistics costs can be validated. Using the cluster analysis classification, the logistics expenditures are exogenous to the grouping procedure. Therefore, the validation test is: Does the grouping of countries provided by the 2-step cluster analysis significantly differ from logistics expenditures estimates? All the training sets and the estimation set were used in this analysis, for a total of 108 cases. These cases represent the country set presented in Table 1 across different time periods.

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Three different clusters were obtained from this validation procedure (Table 6). Figure 2 and Figure 3 present the resulting clusters by geographic location and income level. The procedure allocated the United States as the sole country in the first cluster. The second cluster is composed by developed countries in the Pacific Rim, developing countries in South America, and Mexico. The last group is composed by European countries and Canada.

***** Insert Table 6 about here ***** ***** Insert Figure 2 about here ***** ***** Insert Figure 3 about here *****

These three groups were then used to determine if the logistics expenditure estimates were significantly different. A one-way ANOVA procedure was used. Results of the comparison tests between the groups are presented on Table 7. The three groups significantly differ at the p<0.05 level in their logistics expenditures, measured as both percentage of GDP and total US$. Therefore, the validation test is confirmed: the grouping of countries provided by the 2-step cluster analysis significantly differ on logistics expenditures.

***** Insert Table 7 about here *****

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Discussion of Results An interesting analysis is a comparison of trends across different geographic regions (Table 4) and income levels (Table 5). Whereas logistics efficiency has increased in developed nations, this is not true in the balance of the world. One possible explanation is that globalization has created greater operational pressures in developing markets. During the 90s, the developed countries experienced output growth of 2.4%, while developing nations recorded an average increase of 4.1% (United Nations Conference on Trade and Development (UNCTAD) 2004). Decreases in logistics efficiency in developing nations are potentially due to the fact that their current logistics infrastructure is not adequate to support this higher growth rate. Other possible explanation is the characteristics of products transported in each country. Transportation cost efficiencies are substantially affected by the value and density of products moved. Density is a combination of weight and volume. Typically, vehicles are constrained more by cubic capacity than by weight. While in developed nations the majority of freight activity is related to products with high value and low density, in developing nations the majority is related to products with low value and high density. CONCLUSION This paper reports the most recent effort to quantify the size of logistics expenditures in a global economy. Using secondary data and neural network methodology, selecting variables according to previous frameworks, the magnitude of

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global logistics cost and trends were estimated. Results estimate that global logistics expenditures represent 13.8% of the world Gross Domestic Product for the year of 2002. An interesting result is a comparison of trends across different groups and regions. Whereas logistics efficiency has increased in developed regions, this is not true in the balance of the world. These results highlight the necessity for logistics infrastructure investment and efficiency improvements throughout developing nations. Any macro estimation study such as this must come with some caveats. The input data accuracy is the best that can be achieved using available data from the World Bank, the United Nations, and similar organizations. Nevertheless, they are not perfect. The number of steps between the original collected data and these compendia vary widely and are subject to political intrigue in several areas. That means that absolute values for expenditures, provided in current US$, may be biased in unknown ways. Where appropriate, the relative measures (% GDP) are more reliable. There are three potential paths for future research. The first is to expand the estimation set by including additional countries, particularly in important regions such as North Africa and Middle East. This would enhance model generalizability and provide comparisons across additional geographic regions. The second is to improve model estimation by adding relevant variables. For example, investments in infrastructure areas such as telecommunications and transportation can be incorporated in the model. The third is to further understand the knowledge acquired by the neural network model. Auxiliary methodologies such as Decision Tree and Neural Networks Rule Extraction can be used to assist in the difficult interpretation of the fitted neural network. These

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techniques can generate rules with approximately the same predictive power as the neural network itself and may provide improved interpretations of the relationship between input variables and estimated results. NOTES Bowersox, Donald J., "Framing Global Logistics Requirements," in Proceedings of the Council of Logistics Management. (Cincinnati, OH: Council of Logistics Management, 1992), pp. 267-277. Bowersox, Donald J. and Roger J. Calantone (1998), "Executive insights: Global logistics," Journal of International Marketing, Vol. 6, No. 4, pp. 83-93. Bowersox, Donald J., Roger J. Calantone, and Alexandre M. Rodrigues (2003), "Estimation of Global Logistics Expenditures Using Neural Networks," Journal of Business Logistics, Vol. 24, No. 2, pp. 21-36. Bowersox, Donald J., David J. Closs, and Theodore P. Stank, "Sizing Global Logistics Expenditures," in 21st century logistics: making supply chain integration a reality. (Oak Brook, IL: Council of Logistics Management, 1999), pp. 211-214. EUROSTAT, European Union Energy & Transport in Figures (Brussels, Belgium: Directorate-General for Energy and Transport, 2003). Haykin, Simon S., Neural Networks: A Comprehensive Foundation (Upper Saddle River, N.J.: Prentice Hall, 1999), pp. xxi, 842. Heskett, James L., Nicholas A. Glaskowsky, and Robert M. Ivie, Business Logistics Physical Distribution and Materials Management (New York: Ronald Press Co., 1973), pp. xii, 789. Organization for Economic Co-operation and Development (OECD), OECD in Figures (Paris: OECD Publications, 2004). The World Bank, World development indicators (Washington, D.C.: The World Bank, 2004), pp. v. United Nations Conference on Trade and Development (UNCTAD), Review of Maritime Transportation (New York, N.Y.: United Nations Publications, 2004). USDOT, U.S. Department of Transportation, Transportation Statistics Annual Report (Washington, DC: Bureau of Transportation Statistics, 2003). Wilson, Rosalyn, 15th Annual State of Logistics Report: Globalization (Washington, DC: Cass Information Systems, 2004).

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FIGURE 1 VARIABLES USED IN THE STUDY

INPUT VARIABLES
Geographic Region (8) - South America - Central America - North America - Asia - Europe and Central Asia - Middle East and North Africa - Sub-Saharan Africa - USA Flag Income Level (5) - Low Income - Middle-Income Lower - Middle-Income Upper - High-Income non-OECD - High-Income OECD Country Size (3) - Area (km2) - Urban population - Coastline (km) Economy (9) - GDP, PPP (current international $) - Inflation, consumer prices (annual %) - Unemployment, total (% of total labor force) - Imports ($) - Exports ($) - Trade Openness=(Imports+Exports)/GDP - Agriculture, value added (% of GDP) - Industry, value added (% of GDP) - Services, etc., value added (% of GDP) Transportation Activity (4) - Container port traffic (TEU) - RoadFreight (million ton-km) - RailFreight (million ton-km) - AirFreight (million ton-km)

OUTPUT VARIABLE Logistics Expenditures (% of GDP)

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FIGURE 2 TWO-STEP CLUSTER ANALYSIS: GEOGRAPHIC REGION

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FIGURE 3 TWO-STEP CLUSTER ANALYSIS: INCOME LEVEL

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TABLE 1 ESTIMATION SET

Country Argentina Belgium Brazil Canada China Denmark France Germany Greece Hong Kong, China India Ireland Italy Japan Korea, Rep. Mexico Netherlands Portugal Singapore Spain Taiwan, China United Kingdom United States Venezuela, RB Estimation Set World

GDP, PPP (current Billion international $) 412.7 284.9 1,355.0 924.7 5,860.9 166.3 1,601.4 2,235.8 199.0 182.6 2,799.6 142.5 1,524.7 3,425.0 807.3 904.6 469.9 186.1 100.1 878.0 406.0 1,549.1 10,308.0 135.1 36,859.1 48,770.9

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TABLE 2 PARAMETERS OF THE ARTIFICIAL NEURAL NETWORK

Number of Layers Neurons per Layer Network Parameters Learning Rate Momentum Input Noise Training Tolerance Testing Tolerance Epochs per Update Training Set MAPE

6 29,25,20,15,10,1 0.50 0.60 0.00 0.05 0.10 1.00 1.87%

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TABLE 3 COMPARATIVE GDP AND LOGISTICS EXPENDITURES BY COUNTRY

1997 GDP (US$ Logistics (US$ Billion) Billion) 658 80 695 106 8,083 849 9,436 1,035 240 27 123 16 1,320 158 1,740 228 137 17 60 8 1,240 149 344 41 150 19 642 94 1,242 125 7,238 884 4,250 718 1,534 236 175 24 3,080 351 631 78 85 12 308 40 10,063 1,459 1,040 156 185 24 348 45 1,573 225 9,690 38,000 1,492 5,095 2000 Logistics GDP (US$ Logistics %GDP Billion) (US$ Billion) 12.1% 887 108 15.3% 892 131 10.5% 9,907 1,001 11.0% 11,686 1,240 11.4% 287 33 12.9% 152 20 12.0% 1,483 177 13.1% 2,114 323 12.6% 185 24 14.0% 123 19 12.0% 1,414 167 11.9% 421 50 12.9% 180 24 14.7% 805 107 10.1% 1,463 157 12.2% 8,626 1,100 16.9% 5,506 975 15.4% 2,546 433 13.7% 171 24 11.4% 3,445 382 12.3% 865 108 13.9% 94 13 13.1% 386 54 14.5% 13,012 1,989 15.0% 1,339 204 12.8% 147 19 13.0% 453 58 14.3% 1,939 280 15.4% 13.4% 11,357 46,620 1,778 6,387 2002 Logistics GDP (US$ Logistics %GDP Billion) (US$ Billion) 12.2% 925 110 14.7% 905 136 10.1% 10,308 957 10.6% 12,137 1,203 11.6% 285 35 13.0% 166 23 11.9% 1,601 186 15.3% 2,236 374 12.9% 199 26 15.3% 143 21 11.8% 1,525 186 11.8% 470 56 13.6% 186 25 13.3% 878 124 10.7% 1,549 174 12.8% 9,238 1,229 17.7% 5,861 1,052 17.0% 2,800 487 13.8% 183 24 11.1% 3,425 390 12.5% 807 102 14.1% 100 14 14.1% 406 57 15.3% 13,582 2,127 15.2% 1,355 204 12.7% 135 16 12.7% 413 52 14.4% 1,903 272 15.7% 13.7% 11,912 48,771 1,902 6,732 Logistics %GDP 11.9% 15.0% 9.3% 9.9% 12.1% 13.6% 11.6% 16.7% 13.0% 14.9% 12.2% 11.8% 13.4% 14.1% 11.3% 13.3% 17.9% 17.4% 13.2% 11.4% 12.7% 14.3% 14.1% 15.7% 15.0% 12.0% 12.6% 14.3% 16.0% 13.8%

Region North America

Country Canada Mexico United States Region Belgium Denmark France Germany Greece Ireland Italy Netherlands Portugal Spain United Kingdom Region China India Hong Kong, China Japan Korea, Rep. Singapore Taiwan, China Region Brazil Venezuela, RB Argentina Region

Europe

Pacific Rim

South America

Remaining Other Countries TOTAL

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TABLE 4 COMPARATIVE GDP AND LOGISTICS EXPENDITURES BY GEOGRAPHIC REGION

Region North America Europe Pacific Rim South America Other Total

1997 GDP (US$ Logistics (US$ Billion) Billion) 9,436 1,035 7,238 884 10,063 1,459 1,573 225 9,690 1,492 38,000 5,095

2000 Logistics GDP (US$ Logistics %GDP Billion) (US$ Billion) 11.0% 11,686 1,240 12.2% 8,626 1,100 14.5% 13,012 1,989 14.3% 1,939 280 15.4% 11,357 1,778 13.4% 46,620 6,387

2002 Logistics GDP (US$ Logistics %GDP Billion) (US$ Billion) 10.6% 12,137 1,203 12.8% 9,238 1,229 15.3% 13,582 2,127 14.4% 1,903 272 15.7% 11,912 1,902 13.7% 48,771 6,732

Logistics %GDP 9.9% 13.3% 15.7% 14.3% 16.0% 13.8%

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TABLE 5 COMPARATIVE GDP AND LOGISTICS EXPENDITURES BY INCOME LEVEL

1997 2000 2002 GDP (US$ Logistics (US$ Logistics GDP (US$ Logistics (US$ Logistics GDP (US$ Logistics (US$ Logistics WDI Income Group Billion) Billion) %GDP Billion) Billion) %GDP Billion) Billion) %GDP Low Income 4,131 609 14.7% 4,186 691 16.5% 5,360 933 17.4% Middle-Income Lower 8,027 1,295 16.1% 10,900 1,777 16.3% 12,950 2,324 17.9% Middle-Income Upper 4,782 645 13.5% 5,266 795 15.1% 3,241 471 14.5% High-Income non-OECD 923 123 13.3% 980 141 14.4% 1,076 146 13.6% High-Income OECD 20,136 2,423 12.0% 25,287 2,984 11.8% 26,368 2,970 11.3% Total 38,000 5,095 13.4% 46,620 6,387 13.7% 48,771 6,732 13.8%

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TABLE 6 TWO-STEP CLUSTER ANALYSIS: GROUPS Two-Step Cluster Number 1 2 3 0 3 0 0 0 4 0 3 0 0 0 4 0 4 0 0 0 4 0 0 4 0 0 4 0 0 4 0 0 4 0 0 4 0 4 0 0 4 0 0 0 4 0 0 4 0 4 0 0 4 0 0 4 0 0 0 4 0 0 4 0 4 0 23 0 0 0 3 0 23 37 48 Total 3 4 3 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 23 3 108

COUNTRY

Argentina Belgium Brazil Canada China Germany Denmark Spain France United Kingdom Greece Hong Kong, China India Ireland Italy Japan Korea, Rep. Mexico Netherlands Portugal Singapore United States Venezuela, RB

Total

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TABLE 7 ONE-WAY ANOVA: GROUP COMPARISON

Multiple Comparisons Dunnett t (2-sided) Mean (J) TwoStep Difference Cluster Number (I-J) Std. Error 3 -1.0076* .4249 3 1.3480* .3665 3 590.7233* 46.0305 3 121.7495* 39.7090
a

(I) TwoStep Dependent VariableCluster Number LOGCOST% 1 2 LOGCOST$ 1 2

Sig. .037 .001 .000 .005

95% Confidence Interval Lower Bound Upper Bound -1.965 -.050 .522 2.174 486.954 694.493 32.231 211.268

*. The mean difference is significant at the .05 level. a. Dunnett t-tests treat one group as a control, and compare all other groups against it.

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ABOUT THE AUTHORS

Dr. Alexandre M. Rodrigues (Ph.D. Michigan State University) is an Assistant Professor in the Department of Marketing and Supply Chain Management at Michigan State University. His primary areas of interest are: Global Logistics Strategy and Operations, Business Forecast Process and Management, Inventory Strategy and Deployment, Empirical and Theoretical Modeling of Supply Chains. Dr. Rodrigues has published in the Journal of Business Logistics, in addition to conference proceedings and practitioner publications.

Dr. Donald J. Bowersox (Ph.D. Michigan State University) is the John H. McConnell University Professor at The Eli Broad Graduate School of Management, Michigan State University. Dr. Bowersox has authored over 250 articles on marketing, transportation, and logistics and is author or co-author of fifteen books including the first logistics text published. His research focuses on logistics and supply chain management organization and strategy. He is founder, past president and recipient of the Distinguished Service Award of the Council of Logistics Management.

Dr. Roger J. Calantone (Ph.D. University of Massachusetts Amherst) is The Eli Broad University Professor of Business. In addition, he is director of Information Technology Management Program. Dr. Calantone has produced over 200 refereed academic publications and has co-authored 7 books in marketing, logistics and international business. His research interests are: product design and development processes, decision support and group decision support systems, technology market models and international development. Dr. Calantone has briefly taught at several other academic institutions.