Maritime Logistics of Business Organizations - Term Paper Example

Running head: MARITIME LOGISTICS Maritime Logistics Introduction Business organizations deal in products and services that meet the needs of the clients. Thus, there is an obvious movement of the products and services from the producers to the consumers. The concept of supply chain include all the individuals or companies involved in the movement of products, finances, and services as well as the related information from the producers to the consumers (Mentzer, 2001, p.2). The chain can be a simple one with three parties involved from the producers to the consumers. On the other hand, the chain can be very complex with various subsidiaries between the first supplier and the final consumers of the products and services. It is desirable that the consumers get the right products, in the required amount, at the right place and in good time. If any of these goals are not achieved, then the supplier can suffer undue losses. These include rising cost of maintaining the inventory, increased cost of shipping or losing unsatisfied customers to the competing companies. Supply chain management refers to the proper coordination of the companies involved in the supply chain to ensue that the above objectives are met (Mentzer, 2001, p.2). It is aimed at ensuring that the business organizations have a long-term relationship with their clients. Logistics is an important channel in supply chain management being applicable in the procurement, production of products and services or in the distribution of finished products to the warehouses and the retail stores (Wassenhove, 2006, p.477). Maritime logistics involves the planning, implementation and control of the flow and storage of goods and services and the related information from the producers to the consumers such that the customers needs are met fully (Maritime Logistics, 2011, p.3). In this case, logistics ensures that products are available at the right place and at the correct time as required by the consumers at relatively low costs (Ailawadi & Singh, 2005, p.18). Sea transport has been in use for several centuries and continues to be the major means of transport to aid international trade. This is due to the capacity that the sea vessels can transport as compared to air transport. Proper scheduling for the shipment of products, maintaining the inventory, proper passage of information, and proper storage of the products are the key functions in logistics. Planning of these processes could be made more efficient by using modern technological applications. The model can be harnessed into a computer application that provides an optimal solution to the company objectives. However, this is challenged by the continued complexity observed in the distribution processes. One of the companies that have succeeded in the sector due to its response to the changing market is Maritime Logistics Group, Inc. The same approaches have been applied by Humboldt Maritime Logistics. Both the companies are U.S. based. Critical issues related to the Maritime Logistics challenge The continued expansion of international trade has had its impacts on the marine transport system with increased transshipment costs. There has also been an increase in the number of players in the marine transport system. Multinational enterprises often seek for better markets for their products across the boundaries and rely on the sea route as the major means of transport owing to the bulk of the products it can transport. Managing all these factors require development of an integrated system of activities (Magee, et al, 1985, p.3). A player in the system that is to retain more customers has to consider the key critical success factors essential in any business operations. One of the important factors that determine the success of maritime company is the customer satisfaction (Ailawadi & Singh, 2005. p.18: Schniederjans, 1998, p.8). Customers demand high quality products and services for the value of their money (Sople, n.d, p.1). The shipping companies should provide their clients with greater access to their markets for the finished goods. Providing greater access to the markets would even include an invention of a new routing system that connects to the potential market zones. The degree to which the customers are satisfied by the services offered by a given shipping company will determine the long-term operations of the company. The level of customer satisfaction will also reflect onto the size of the market share that the shipping company has in the transport market. The market share is thus, another determining factor for the success of the company. Another factor contributing to the success of an organization is employee satisfaction. There is need for high level of security for the cargo operators owing to interaction of different factors that threatens this security (Barnes & Oloruntoba, 2005, p.3). The security needs of the employees of a shipping company should be considered in the planning of the operations of the company. The ultimate cost of production is another determinant of the success of a company. Shipping companies often ensure that the operation costs are reduced as much as possible. The shipping companies must also adhere to the legal provisions by the government ministries concerned with the ports management. These ministries are concerned with regulatory functions of the ports (Chen, 2009, p.171). Maritime logistics and the supply chain management experience certain challenges that have seen the nature of shipping services change significantly in the recent past. One of the factors that pose challenges to the maritime logistics is technological advances that continue to be registered across the globe (maritimelogistics 2012, 2011). The technological changes have caused changes in the organizational structures and the kind of management in the organizations. The other factor that contributes significantly to the challenges faced in logistics is the change in trading patterns (maritimelogistics 2012, 2011). New trading patterns continue to emerge prompting the companies to embark on proper innovation and invention programs in order to match with the trends. The transformations observed have technical and financial challenges to the companies in the logistics. They also pose challenges to the logistics operations. Maritime logistics theories Logistics has several dimensions that have been sidelined for a long period leading to weaknesses observed. Researchers have recently observed that logistics strategies mainly focus on the satisfaction of the customers needs (Lu, 2000, p.80). A successful maritime logistics management should thus focus on the customer satisfaction by developing this dimension. Maritime logistics and supply chain management consist in developing a business practice approach aimed at meeting the demands of the customers. It involves attempts to reduce shipment costs while improving on the customer satisfaction through improved efficiency of the operations (Stopford, 2009, p.355). Maritime logistics will involve a consideration of certain aspects that are crucial to both the shipping firms and their clients. Firstly, the shipping firm has to assure its clients of the time-reliability of its services. Customer satisfaction will be enhanced if their products could be shipped to the destination on or before the due dates. A failure to achieve this will imply that the clients to the shipping firms will lose their customers due to unsatisfied demands. This eventually reflects on the sales of the services of the shipping firms. Trading companies will shift to other shipping firms that are more reliable. The security in the maritime transport system is another key factor. There is need to ensure security right from the source of a fleet cargo (Thai, 2009, p.148). Another influential factor is the cost of shipment. Shipping clients will be attracted to firms that offer the transportation services at relatively cheaper costs. Thus, in order to win more customers, shipping firms have to set relatively competitive prices for their services. The cost of maintaining an inventory is usually very high. It is a major concern in maritime logistics to ensure that the level of inventory in the warehouses is maintained at the minimum. The warehouses should not be overstocked and neither should there be a shortage of supply in relation to the demand. The kind of trade-off involved to manage the factors in such a situation defines the key function of a logistician (Stopford, 2009, p.355). Another key issue, especially in the maritime logistics, is the full utilization of the transport facility. It would be very uneconomical for the shipping firm to schedule some fleet when the transport vessels will not be used in full capacity. The other factor that provides a competitive advantage to a company in the maritime shipment is value added service to the shippers (Lu, 2000, p.80). Companies that would wish to gain competitive advantage over the others should include, in their services, value-added services to improve on the customer satisfaction (Lu, 2000, p.80). Applications of theory and knowledge to Maritime Logistics challenge As has been stated, several factors determine the choice of a shipping firm that a trading company will use for shipment of its products. These include ‘port itinerary, sailing date, arrival time, transit item, port proximity, regularity, reliability, and slot availability’ (Lu, 2000, p.81). All these factors affect the level of satisfaction that a client will derive from the services of the shipping firm. Port itinerary refers to the planning of the routing system for the fleets. It defines the pattern of the journey of a given transport vessel including the ports in which it will have stoppages. Traders destine their products to different places and the route taken by the transit vessels will determine which company to use. The schedule for the departure and expected arrival times of the fleet is another determining factor. There is need to have a flexible schedule for departure to accommodate the delay that could be experienced in the loading process. Besides, the traders will be satisfied if their shipped products reach the destination with the required time. A proper scheduling of the departure and expected arrival time will improve on the reliability of the services by the shipping firms. Port proximity refers to how the closeness of the sea port to the terminals served by other means of transport. It refers to the closeness between the port and warehouses or an airport that is part of the system. The accessibility of the port will attract more traders to use the shipping companies in the port. The kind of vessel used for the shipping services will also influence the customers’ attraction to a given shipping company. It should have been designed according to the standards provided by some regulatory organization like the International Association of Classification societies (Branch, 2007, p.133). The kind of transit item to be used will determine the other aspects like reliability and security of the goods on transit. There is also a need for a proper coordination of the departure and arrival of the shipping equipments. Certain arrangements have to be made to receive a marine vessel at a port. Further coordination is necessary in the entire shipping period between the ship operators and the fleet coordinators at the ports. Operations at Maritime Logistics Group, Inc Maritime logistics Group, Inc has considered a number of these factors in its operations. The company, with its headquarters in Miami, provides marine transport services, warehousing, and distribution services in the entire Latin America (Maritime Logistics Group, 2003). The company has headquarters situated close to both the sea and airport in Miami. This is a strategic location to ensure improve on reliability and easy access of its services by the clients. The company focuses on customer satisfaction. Having operated in the sector for decades, it has gained proper knowledge and expertise to meet these needs. It operates through numerous offices situated in other countries of the Latin America like Chile, Bolivia, Ecuador, among many others (Maritime Logistics Group, 2003). The company has proper coordination of the operations including the use of World Wide Web. Operations at Humboldt Maritime Logistics Humboldt Maritime Logistics is a company that provides shipping services and has been sensitive to the changing trends in the maritime transport system. The management of the organization has since developed initiatives aimed at ensuring high level of customer satisfaction. The company has come up with a system that will ensure a reduction in the cost of transportation for the local shippers and a better access to the markets in the West Coast of the United States. In fact, the company is considered ‘the first integrated marine highway freight program for the US West Coast (Humboldt Maritime Logistics, 2010). In order to have the initiative succeed, the company has entered into a partnership with another organization to come up with a more integrated project termed the Blue Coast Intermodal West Coats Hub-Feeder project (Humboldt Maritime Logistics, 2010). The initiative that has received funding from the US Department of transportation is aimed improving on the connection of the freight lanes so that the shippers can have better access to different markets. Conclusions and recommendations Therefore, it is evident that ensuring customer satisfaction is essential in the success in logistics operations. The shipping companies that have to attract more companies should focus on how best they can enable their clients to access potential markets. There is need to establish a reliable and flexible system of shipment to the clients at relatively cheaper costs. The organizations also need to come together to improve the marine transport system. The development of an effective initiative as was witnessed at Humboldt Maritime can attract the attention of donor agencies like governments that will then fund the projects to the benefit of the shipping companies. Appendix The Critical Success factors Customer satisfaction- customers demand more value for their money. The companies in the Maritime Logistics sector have to provide quality services at reduced costs in order to retain the customers. Improved security- this will also define the quality of services offered to the clients. The companies have to mitigate for the security risks and make appropriate security arrangements before departure of the fleet. It involves abiding by the fleet policies, continued security risk assessment, and developing mitigating plans to ensure security (Thai, 2009, p.152). Employee empowerment- another critical success factor in the maritime logistics is empowerment of employees and other key stakeholders. The employees need to be allowed to contribute to the policies of the company like those pertaining to the security. Another key factor that is often ignored is the kind of leadership and management of the organization. The management of the companies should be in forefront in the effort to achieve the company objectives. It should be ready to take risks and try new innovative ideas that can create better services, as was witnessed at Humboldt Maritime Logistics. Reference List Ailawadi, S. and Singh, R., 2005. Logistics Management. New Delhi: PHI Learning Pvt. Ltd Barnes, P and Oloruntoba, R., 2005. Assurance of Security in Maritime Supply Chains: Conceptual Issues of vulnerability and Crisis Management. Journal of International Management, 11(4). Branch, A., 2007. Elements of shipping. Eighth Ed. New York: Taylor & Francis. Chen, S., 2009. Port Administrative Structure Change Worldwide: Its Implication for Restructuring Port Authorities in Taiwan. Transport Reviews, Vol. 29, No. 2, 163–181. (Online). Available from: http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?vid=4&hid=13&sid=63dce9f3-19b6-447b-b705-893f76f9eff6%40sessionmgr14 [Accessed August 10, 2011] Humboldt Maritime Logistics. (2010). About us. (Online). Available from: http://humboldtlogistics.com/about/ [Accessed August 10, 2011] Magee, J. et al. 1985. Modern logistics management: integrating marketing, manufacturing, and physical distribution. New York: John Wiley and Sons maritimelogistics 2012. 2011. Welcome to Maritime Logistics 2012. (Online). Available from: http://www.maritimelogistics.org/ [Accessed August 10, 2011]. Mentzer, J., 2001. Supply Chain management. Second ed. NY: SAGE Maritime Logistics. 2011. Logistics management. Available at http://www.scribd.com/doc/27912060/Maritime-Logistics [Accessed August 10, 2011] Lu, C., 2000. Logistics services in Taiwanese maritime firms. Transportation Research, Part E 36; 79-96. (Online). Available from: http://directory.umm.ac.id/Data%20Elmu/jurnal/T/Transportation%20Research_Logistics%20%26%20Transportation%20Review/Vol36.Issue3.Sept2000/86.pdf [Accessed August 10, 2011] Schniederjans, M., 1998. Operations management in a global context. Westport: Greenwood Publishing Group Sople. N.d. Logistics Management. New Delhi: Pearson Education India Stopford, M., 2009. Maritime economics. Third Ed. New York: Taylor and Francis. Thai, V., 2009. Effective maritime security: conceptual model and empirical evidence. Maritime Policy & Management 36(2), 147–163. (Online). Available from: http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?vid=4&hid=13&sid=63dce9f3-19b6-447b-b705-893f76f9eff6%40sessionmgr14 [Accessed August 10, 2011] Wassenhove, L., 2006. Humanitarian aid logistics: supply chain management in high gear. Journal of the Operational Research Society, 57, 475–489. (Online). Available from: http://www.insead.edu/facultyresearch/centres/isic/Humanitarian/documents/JORS_Blackettmemoriallecture_Humanitarianaidlogistics-Supplychainmanagementinhighgear.pdf [Accessed August 10, 2011]. Read More