Factors That Have Led to An Increase in The Importance of Logistics as A Field of Study - Research Paper Example

Factors that have led to an increase in the importance of logistics as a field of study Abstract Various factors such as a globalized economy, technology, diversity and urgency of customer needs call for professionals in logistics to design, implement and operate flexible global networks that can respond to a myriad of critical concerns. Logistics operations need to be designed to optimize the use of resources without compromising profits and customer service and satisfaction. The field of logistics, therefore, becomes critical because of the way in which it links the manufacturing, distributing and transporting industries with a global market. In that sense, strong links to the market (the customer) is the basis of corporate power. Since customer service drives the supply chain, professionals in logistics are best placed to implement value chain integration that yields customer satisfaction. The industries create future advantages based on the integration of logistics and international supply chains. Key words: Global economy, customer satisfaction, value, supply chain, diversity, technology, professionals. Factors that have led to an increase in the importance of logistics as a field of study Logistics refers to the process of scheduling, applying and controlling the effective, efficient storage and flow of services, goods and relevant information from origin to consumption. The management of the logistics process aims at meeting the users’ requirements. In a business sense, logistics is a critical aspect because it must support procurement, warehousing, inventory, distribution, human resources, financial, customer support and distribution operations (Rodrigue, Comtois & Slack, 2006). Such operations are covered in the perspective of outbound, inbound, external and internal movements of materials and personnel. For materials, there is the additional aspect of return for environmental purposes. Apart from the physical items and personnel, logistics management also involves abstract items like information, time and energy, where the minimized use of capital is a universal concern (World Bank, 2010). This paper will discuss factors that have led to an increase in the importance of logistics as a field of study. The role played by logistics and supply chain management in a country’s economy makes the study of logistics critical towards increasing the country’s competitiveness in business. Because of the business objective of ensuring the correct items are available at the right time, place and quantity, logistics is inextricably linked to supply chains (Kahn & Kobayashi, 2007). It has become increasingly important to study logistics and supply chain management because of the direct link to an economy’s revenues and cost structure as well as the competitiveness of producers in terms of quality of products and delivery times. Further, logistics affect the producers’ responsiveness to the requirements of consumers, which makes it important to understand how the growth in freight flow affects the current changes in local, regional and global economic systems (Waters, 2003). An understanding of logistics enables supply chain logisticians to associate optimum logistics performance with export diversification, trade expansion, economic growth and the capacity to draw direct foreign investments. This is because the competitiveness of an economy depends on how the logistics and supply chain perform (Hossein, 2010). When these factors are balanced, the value added to an economy by logistics exceeds the total costs. The growing complexity of supplying materials to businesses as well as distributing products in a globalized supply chain also gives importance to the study of logistics (Christopher, 2010). The study produces professionals that are able to implement logistics models that ensure the following: efficient processes in customs clearance; arrangement of competitively priced consignments; efficient transport infrastructure; quality and competence of logistics services; and ability to trace or track shipments. It is important for the growing sophistication of consumers to be met by a resilient logistics system that enhances choice, innovation, convenience, design and quality. Hence, studying logistics will enable supply chain logisticians to transform a business’ or an economy’s supply chain into efficient processes that satisfy customers (Rodrigue, Comtois & Slack, 2006). Such professionals will be able to consolidate the effectiveness of individual departments into that of the entire supply chain. In foreign direct investment, logistics is a crucial factor. It has become a global concern that infrastructures of freight transportation into and out of ports in regions served by many countries are increasingly becoming incapable of managing current volumes of cargo adequately (World Bank, 2010). It raises even more concern when predictions indicate that the cargo volumes are expected to grow. Only a comprehensive knowledge of logistics systems will be able to eradicate the bottlenecks in infrastructure and guarantee an efficient movement of international cargo consignments. Working together, supply chain logisticians can plan necessary and relevant expansion and the efficient utilization of transport systems that support ports for the good of global trade (World Bank, 2010). Studying logistics management can provide solutions to the piling containers in fright terminals around the world. When fright stays at a terminal for long without clearance, it translates into costly delays, inconveniently readjusted schedules, penalties, increased fuel costs to compensate schedules and extra documentation (World Bank, 2010). A study by the World Bank showed that the inefficiencies of a single region will affect the efficiency of all waypoints and ports in the entire logistics system and supply chain, incurring additional and unnecessary costs. This is because world commerce and trade relies on sufficient services in freight transport. In the same way, the economic strength constituent trading countries, businesses, labor force, and citizens depends on how efficient the services in freight transport are (World Bank, 2010). These factors contribute to the significance of logistics as a field of study, where it must be understood that the situation of freight transport and port capacity directly affect foreign investment and world trade. Business and economy players are aware of the need to maintain or improve performance substantially and manage supply chains effectively. This need calls for more than solely depending on practical exposure (Kahn & Kobayashi, 2007). Studying logistics provides transferable knowledge and skills that promote efficiency and competitiveness in the industry, which spans beyond the traditional transportation perspective. Adequately skilled and knowledgeable persons in the field of logistics can identify and enhance the benefits of a supply chain to include lead times, costs and quality (World Bank, 2010). Such persons are capable of revolutionizing the value concept of supply chains and optimize cost reductions in the manner in which physical products and information move to the consumer from the producer and supplier. Technological advances have also added a new angle to the field of logistics (Christopher, 2010). Modern information and communication technology (ICT) has changed the economy and the fashion in which businesses are run in many aspects. Such advances have forced businesses and economies to adopt new ways of expanding their markets for competitive advantage and retain customers while attracting new ones. Modern businesses are marked with an increase in supply capacity, unique customer needs, market segments and global competition (World Bank, 2010). To remain relevant, they must align their logistics systems and supply chains with the contemporary environment. Supply chain logisticians must learn the new systems to be able to accommodate the ICT without harming their processes. The study of logistics must develop a structure that provides a holistic comprehension of the way ICT is diffused into the global business context. Therefore, the need to integrate business with changing technology is an important factor for the study of logistics (Christopher, 2010). References Christopher, M. (2010). Logistics & supply chain management: Creating value-adding networks, New Jersey: Prentice. Hossein, B. (2010). The handbook of technology management: Supply chain management, marketing and advertising, and global management. New Jersey: John Wiley. Kahn, S., & Kobayashi, S. (2007). Transport and its infrastructure. Geneva: Inter-governmental Panel on Climate Change. Rodrigue, J., Comtois, C., & Slack, B. (2006). The geography of transport systems. Routledge: London. Waters, D. (2003). Logistics: An introduction to supply chain management. London: Palgrave Macmillan. World Bank. (2010). Connecting to compete: Trade logistics in the global economy: The logistics performance index and its indicators. Washington: Author. Read More