Based on the same concept of the LPI developed by the [82] The World Bank (2010), the GLPI proposed in this study is designed to facilitate cross-industry or cross-country assessment of GL performance and identification of gaps in GL practices. Similar to the LPI, the GLPI and its underlying indicator variables constitute a dataset to measure GL performance among industries or countries across several major categories of GL activities. The richer the dataset is in terms of categories of GL activities investigated and the number of industries or countries surveyed, the more robust the comparison and benchmarking will be. While the LPI considers various attributes affecting the logistics performance of a country such as infrastructure, information technology, service quality, government regulations and policies, etc. the GLPI looks at investment of resources, adoption of latest technology, and compliance with environmental regulations, etc. to determine the overall performance of the industry or nation in GL activities.
The approach adopted in developing the GLPI is also similar to that of the LPI. A five-point scale is used to gauge the performance of a surveyed firm in various GL activities. These numeric outcomes, from 1 (worst) to 5 (best), serve as indicators to indicate how bad or good a firm in the industry performs in the surveyed activities in comparison with others. The GLPI is then aggregated as a weighted average of the various performance scores using the principal component analysis (PCA) method to derive the weights for the indicator variables thereby improving the statistical confidence of the composite index.
Unlike the LPI which surveys the logistics companies and professionals trading with the countries under study on the various dimensions of logistics performance, the GLPI relies on the self-assessment of firms to report their performance in the surveyed GL activities. There are reasons for taking this approach. First, unlike logistics outsourcing, GL practices are still mainly in-sourced since the scale and the scope of activities on many occasions are still relatively small. Second, as a pilot study to collect data to prove the concept of the GLPI, limitation in resources has restricted the opportunity of hiring an expert panel to perform the evaluation