Patrick’s Monday Vista #6- The World Bank’s Logistics Performance Index
The globalization of total production systems from extraction of raw materials though to the recycling of waste has been made possible in recent decades by innovations in three main areas – transportation technology, information and communications technology, and financial deregulation.It is now commonplace for international businesses to carry on R&D, manufacturing and distribution in many different geographical locations around the world depending on which locations are most advantageous from a competitive point of view.
This has introduced exponentially higher complexity and risk into the supply chains of these international businesses in comparison to what is encountered when operating solely within the borders of one single country.
In response to the challenge, Global Supply Chain Management theory and practice has been developed to enable businesses to cope with the added complexity and risk. Supply chain reliability it has been found is closely associated with the logistics performance of the countries in which operations are located and therefore logistics performance should be a key consideration in the location decisions of international businesses.
Since 2007, the World Bank has been producing the Logistics Performance Index which provides valuable insights into the logistics performance of countries around the world. The 2014 edition compares the logistics performance of 160 countries on the basis of infrastructure, services and border procedures. The full report can be downloaded free of charge on the World Bank website http://lpi.worldbank.org/
The Logistics Performance Index (LPI) measures the efficiency of trade supply chainsand highlights the strong correlation between logistics performance and a vibrant growing economy. Germany tops the 2014 classification with a score of 4.21 on a scale of 5 while Somalia is bottom with a score of 1.77.
Not surprisingly the top performers include many countries in western and central Europe, North America, Australasia and Japan. Additionally among the top performers with scores higher than 3.34 are countries such as Turkey, China, South Korea and South Africa. The worst performers with scores lower than 2.47 include large parts of sub-Saharan Africa and a number of Central Asian republics.
The top 10 countries and their 2014 LPI scores were as follows: Germany (4.12), Netherlands (4.05), Belgium (4.04), UK (4.01), Singapore (4.00), Sweden (3.96), Norway (3.96), Luxembourg (3.95), USA (3.92) and Japan (3.91).
Ireland came in 1th position with an LPI score of 3.87.