Effects of Globalization on Loogistics - Essay Example

effects of globalisation on logistics al Affiliation) Introduction For many years, researchers and analysts have invested massively in investigations revolving around the growing business globalization trends and international logistics forecasting (Schoenherr, 2009). Nonetheless, a few discussions explain the interrelationship between the globalised business nature and its impact on the logistical and supply chain practices adopted by organizations. Moreover, logistics has rapidly undergone transformation, with the onset of globalization presenting a number of developments such as technological innovations and environmental conservation in the process of adopting suitable supply chains. According to Cowen (2014), the alterations experienced along the geographical settings subject organizations to a myriad of customer expectations, varied consumer tastes and preferences. Moreover, the advancements in technology play a pivotal role in adjusting the flow of factors of production, hence increasing the levels of competition within each market and industry. Consequently, the main setting of this paper is to highlight the impact of globalization on the current economic environment, with specific focus on the logistics and transport sectors. Nonetheless, the paper bases its argument on the fact that the process of globalization is undoubtedly transforming the logistical strategies employed by service and products providers (Kovács, 2015). Globalization, furthermore, combines various actions and trends, which makes the impact of this process not only complex but also revolutionary. Therefore, the paper will analyze the various logistical strategies that surround the process of globalization, and outline the arguments that support the main theme of the paper. Part 1: Customer demands Nolan (2012) argues that the subsequent shift to the global business is driven by the desire to access lower labour costs, despite the exposures such as regulatory shifts and high transportation costs subjected to the organizations. With the onset of global business, revolution, many organizations sell to more consumers in wider geographic locations, hence raising the complexity of the processes required to satisfy each market segment. Furthermore, the wider global customer base presents a myriad of challenges for companies that are accustomed to the provision of standard logistic solutions to a smaller regional-based market. In the global field, nonetheless, customers demand not only for the high and perfect reliability of the delivery but also the customization and subsequent solutions to their problems. The above demands explain the complexities that obligate the organizations to adopt diverse and modern logistical solutions that would enable them to retain the customer base. Companies that operate in the industrial and retail channels all encounter diverse logistic requirements that reflect the nature of the specific industries for the products (Jacoby, 2012). Such requirements obligate the formulation and implementation of strategies that much the competition within the market. For instance, tracking and tracing of products in transit is a strategy employed due to the security concerns attached to the safety of consumer products. Furthermore, customers require specific logistical delivery requirements characterized by tight delivery windows, and in geographical locations that may be difficult to access (Nolan, Zhang and Liu, 2007). Therefore, the organizations must invest in logistic services that penetrate such geographical locations and adhere to the tight delivery windows that are set by customers. Therefore, the businesses depend largely on the strategies on logistics to fulfil the diverse customer demands that arise due to global business revolution. In summary, the customer demands have obligated the multinational companies to adopt varied logistical options. Due to the varied customer tastes and preferences, most corporations tailor their operations to meet the demands of the varied market requirements. For example, most of the customers who require their deliveries made in a rapid and efficient way will have to pay more to acquire the efficient logistical mechanisms. On the other hand, consumers who buy bulky commodities have to acquire the services of cheaper logistical companies. Therefore, the customer demands are central in determining the supply chain practices adopted by companies within a specific global market. Part 2: Networked economies The second vital facet of global business is the requirement that organizations construct network capabilities that enable them to survive in the competitive global markets. Under this requirement, most organizations have developed strategies that link customers to products through interconnection with other logistics channels (Bhaumik, 2015). For example, in the traditional regional markets, retailers adopted an old formula for presenting their products to the customers. In this system, they presented customers with quality garments in attractive settings with assistance of well-trained public relations sales associates. Under this system, furthermore, the supply chain had the sole responsibility of delivering goods to the retail store. On the contrary, globalization has minimized the number of physical stores and replaced them with multiple substitution channels such as e-commerce, mobile and social sites, outlet locations and catalogues. Therefore, the networked economies require the strategic planning of organizations to adopt logistic solutions that exhibit and facilitate high levels if flexibility, as Nolan (2012) explains. The manufactures, for that reason, are under obligation to adapt to the new product requirements and the suppliers within the supply chain. On the other hand, the logistic service providers should give flexible services that work to the convenience of the consumers. In line with networked economies, retailers have to apply strategies in defining a suitable mechanism for handling the inventory behind the purchases (Hamel, 1996). Primarily, the customers are offered an array of delivery mechanisms such as ship to home, pick up at store. As explained, therefore, organizations must use logistical strategies to balance between the cost-cutting approach and ensuring speedy, secure and reliable delivery of customer products. To summarise, the networked economies have contributed to the growth of various logistical methods from which customers can choose. In essence, globalisation has enabled the improvisation of the management of product deliveries in multiple markets. Furthermore, the networked economies are responsible for the flow of information on the current trends in offering logistical solutions (Cowen, 2014). For example, after globalisation, most UK consumers have enjoyed cheaper maritime shipping costs that accrue from the growth of networked economies. Part 3: Cost pressures The global business revolution presents stiff competition for both local and international companies. Therefore, the competitive nature of this market, coupled with the desire of many companies to capitalize on the opportunities presented by the markets presents a situation in which firms experience competitive cost pressures (Kovács, 2015). Therefore, these cost pressures, which arise from the global business revolution, obligate businesses to seek optimized logistics networks. In line with the requirements of the competitive market, the cost saving approach has driven many companies to apply sophisticated strategies that enhance customer satisfaction. Therefore, organizations are realizing that it is necessary to adopt analytical tools in designing the logistical networks that reflect the multiple cost drivers, including labour and technology (Halal, 2007). More companies in various industries concur with the fact that logistics costs have increased, amidst some quarters arguing that, these costs have remained constant. The growing logistical requirements, nonetheless, are pivotal in shaping the organizational strategies employed by these companies. The skilled labourers, supply chain planners, truck drivers, warehouse staff and entry-levels logistics managers are the main contributors to the traditional logistic environment. However, more talent is required in managing the e-commerce platforms on which the consumers access goods and services through the internet (Boone, Kurtz and Qualman, 2011). Effective management of human resource, therefore, is a contributor of the global business revolution experienced in the logistics strategies. In summary, several factors determine the logistical costs accrued by firms in the international markets. The standards defining the transportation models vary across geographical locations, just as is the case in both quality inspection and handling of materials. Evidently, the pressures to reduce costs and the working capital remain to be part of the global business revolution that characterizes the landscape of logistics (Levinson, 2012). The organizations, therefore, employ strategies in finding innovative solutions to the complex requirements of customers, without increasing the logistics costs. Conclusion The above discussion envisages the nature of the global business revolution through factoring in certain facets of globalization such as human resource management, cost cutting and diversity in the consumer tastes and preferences (Bonacich and Wilson, 2008). Organizations have several strategies that address the current logistical trends that accrue from the development of global business. To begin with, most organizations have improvised their life cycle analysis through technology and optimization of transport solutions. The cost pressures helps in driving more sustainable solutions and improves the organizational visibility into the human rights conditions and the labour requirements of the global labour market. The organizations experience the need to comply with global trade databases. Therefore, collaboration with logistical service providers and freight forwarders is a strategy that most businesses use to improve their responses to the ever-changing government regulations (Schoenherr, 2009). Most organizations also have global material and delivery strategies that allow them to exhibit quicker responses to the flexible consumer demands. More organizations are investing heavily in development of hardware solutions that facilitate the better collection of data and tracking of information. Efficiency within the businesses continues to be a priority for the logistics service providers. What’s more, many organizations conform to the argument that the decision to enter any foreign market depends largely on the infrastructural resources available within the market. As such, the entry model envisages the best strategy that captures the logistical developments. In conclusion, the arguments by (Cowen, 2014) illustrate a rapidly changing business environment that experiences frequent developments in line with the onset of globalization. Logistics service providers, therefore, are pivotal in highlighting the role of global business on the supply chain management strategies employed by businesses. Bibliography Bhaumik, P. (2015). Supply Chain Network Design Based on Integration of Forward and Reverse Logistics. Global Business Review, 16(4), pp.680-699. Bonacich, E. and Wilson, J. (2008). The Logistics Revolution in Getting the Goods. Ithaca and London: Cornell University Press. Boone, L., Kurtz, D. and Qualman, E. (2011). Contemporary business. 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LOGISTICS AND SUPPLY CHAIN MANAGEMENT APPLICATIONS WITHIN A GLOBAL CONTEXT: AN OVERVIEW. Journal of Business Logistics, 30(2), pp.1-25. Read More