The Importance of Transportation in Logistics between a Successful and Unsuccessful Company - Term Paper Example

? THE IMPORTANCE OF TRANSPORTATION IN LOGISTIC BETWEEN A SUCCESSFUL AND UNSUCCESSFUL COMPANY The Story of an Unsuccessful Logistics Firm – Nike In February 2001, Nike launched a complex new supply chain planning system that showed innumerable issues related to complicated integration problems, software bugs, faulty planning and implementation, lack of employee training, and so on. As a result of unsuccessful strategic implementation of supply chain planning system, the company in turn faced major challenges in deployment of inventory and forecasting demand. In financial terms, it was publicly announced by the company that the failure to implement effective and efficient strategic supply chain planning system software has caused the company to fall short of $100 million. According to the excerpts of the company’s CEO, Phil Knight, the implication of the event created considerable supply issues related to unplanned or uncertain inventory shortages or excess supply. When the company’s inventory did not match with the market demand, it had to offer huge discounts and slash prices of products to clear the additional stock piles. The strategy may not be considered as favorable business decision since getting rid of excess inventory in form of allowing huge discounts to customer puts pressure on company’s profitability and gross margins. On further analysis it was found that the company’s failure to implement successful supply chain planning system can be blamed to “big bang” or at-one-go deployment approach where the company chose to integrate the supply chain management system with their business strategy in a single phase instead of disciplined step-by-step implementation approach (Stanford University, 2000). The Story of a Successful Logistics Firm – DHL DHL is a German Logistics company that provides international services in express mail. The success is revealed from the fact that the market leader in air and sea mail supply chain and logistics (DHL Express, 2013). Despite of facing numerous challenges every day in carrying out daily operations such as traffics and systematic uncertainties (such as natural calamity, political strikes, etc.), the company is able to optimizing its transport and logistics in metropolitan cities. The company has been able to deliver their un-interrupted services to customers since 1969 which is worth appreciating when one considers traffic congestions, energy consumption, and traffic environment in the economy (Times of Malta, 2011). As the cities around the world starts to modernize from semi-urbanized to urban societies, the challenges of tracking, maintaining and controlling city logistics are becoming more challenging for the company. The company has traditionally relied on strong distribution network and swift customer service to offer prompt and efficient delivery. With the passage of time the company had to depend on modern software and technologies to handle throughput. As business strategy, the company focuses on latest technology to support supply chain and logistics functions. Over time, the company’s network grew larger and customer base increased significantly in every corner of world. The company’s total network links over 220 territories and counties (DHL, 2013). Comparison between the Successful and Unsuccessful Logistics Firms Difference in Strategic Implementation DHL’s strategic implementation of supply chain management and logistics is completely centered on their customers. The company extensively researches and analyzes issues related to economy, logistics, technology, society and environment. It then assess their impact on their business operations with the objective to determine the best possible combination of technology and networks that has the potential to reduce delivery time of providing services to customers and also reduce company’s cost of operations. The company follows a systematic analytical approach in implementation of their business strategy. The company follows a systematic approach by studying the impact of macro-variables on business first. The company also considers real time effect on business by including scenario analysis in their macro-environment study. The objective of such analysis is to be well prepared for any uncertainty that might appear during their daily operations (DHL, 2012). This is more realistic approach considering the fact that the market movements are uncertain but if probable scenarios are mapped appropriately, there are chances that the company will be able to re-channel using alternative distribution route or minimize the impact. Further, the company also analyzes customer requirements, buying behavior, and expectations. In the strategic implementation of supply chain, the company maintains individuality, transparency, updated technology, speed, and availability (Altman and Pankaj, 2012). In addition, the company’s role of logistics follows a very dynamic model that is adaptable to change with the shifts in industry trends. The company also respects the environment in which it works which is revealed by its initiative to adapt “green” business that focuses on implementing eco-friendly technologies and operations. In contract, the failure of Nike may be attributed to a number of facts including production of unpopular shoes that are not in demand, under production of some specific design products which are actually in demand in the market. This shows that the company has failed to conduct an effective demand analysis before launching their products in the market that led to the failure of successful implementation of supply chain management planning software as a whole (Locke and et.al, 2007). However, from the official statements of the company it is apparent that the company blamed the consequences of failure of their supply chain management and logistics on its new installed software i2 technologies. But on deeper analysis it was revealed that the main reason behind the unsuccessful integration of supply chain and logistics with business strategy was improper planning, failure to assess customer requirements effectively, and implementation of complex supply chain management system at a single point of time instead of following a step-by-step disciplined approach. Implication of Results The story of a successful and unsuccessful logistics firm reveals that the company’s success depends on how they manage their long-term with customers and distributors. Sometimes the management also plays a key role as evident from the case of Nike where the management of the company failed to understand market requirements and consequently their strategic implementation failed. In today’s competitive world, expertise in handling customers and networks using software services is must since the volume of data is enormous. It was found that DHL is committed to their customers and thus the company very carefully analyses every minute aspects related to their core business which if ignored might lead to failure of business. In short it may be said that while DHL was able to successfully implement their business strategy in managing their logistics, Nike failed to do the same mostly because of lack of proper planning and unclear vision. Works Cited The Times of Malta. DHL: A Leader in Global Logistics. 2011. Web. October 22, 2013. < http://www.timesofmalta.com/articles/view/20111017/business-news/DHL-A-leader-in-global-logistics.389470#.UmYm8HBTldM>. Altman, S. and Pankaj, G. DHL Global Connectedness Index 2012. 2012. Web. October 22, 2013. < http://www.dhl.com/content/dam/flash/g0/gci_2012/download/dhl_gci_2012_complete_study.pdf>. Toll Group. Toll and Nike – A Supply Chain Partnership. 2013. Web. October 22, 2013. < http://www.tollgroup.com/case-study/toll-and-nike-a-supply-chain-partnership>. Stanford University. Nike – Channel Conflict. 2000. Web. October 22, 2013. < https://gsbapps.stanford.edu/cases/documents/ec9b.pdf>. Locke, R. et.al. DOES MONITORING IMPROVE LABOR STANDARDS? LESSONS FROM NIKE. 2007. Web. October 22, 2013. < http://www.people.fas.harvard.edu/~hiscox/LockeQinBrause.pdf>. Derrig, A., Stocker, J., and Warren, L. Sustainability Assessment of Nike Shoes. 2010. Web. October 22, 2013. < http://www.uvm.edu/~shali/pdf.pdf>. Jeffs, C. Strategic Management. UK: SAGE, 2008. Print. DHL. Delivering Tomorrow. 2012. Web. October 22, 2013. < http://www.dhl.com/content/dam/Local_Images/g0/aboutus/SpecialInterest/Logistics2050/szenario_study_logistics_2050.pdf>. DHL Express. Service Guide 2013. 2013. Web. October 22, 2013. < http://www.dhl.co.uk/content/dam/downloads/gb/express/brochures/dhl_service_guide_2013.pdf>. DHL. Rate and Service Guide 2013. 2013. Web. October 22, 2013. < http://www.dhl.com.vc/content/dam/downloads/vc/express/shipping/dhl_express_vc_en_rate_guide_2013.pdf>. Read More