Logistics for Competitive Advantage - Essay Example

Logistics for Competitive Advantage Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Name Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Course Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Lecture Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 1st August 2012 Introduction The challenge facing business in the modern business environment means businesses have to be constantly on their toes to gain a competitive edge in the market. It is especially difficult for new entrant to establish a foothold in a market with well established competitors. After conducting market research the consortium in the case study has chosen to use a low price strategy to market their online product offerings. Logistical activities play an important role in the determination of the final price of the product offered to the consumer. The significance of this price determining role of logistics is greater when products have to be transported over larger distances over sea. For any logistical activity to contribute to competitive advantage of the online store it must provide the store with place and time utility and facilitate lower cost of products. This papers show how the logistical activities discussed contribute to the realization of the lower prices, Time and place utility for the online consortium. These logistic activities are: a) Singaporean sourcing operations, supplier selection, evaluation and procurement, b) International transportation from Singapore to Australia, c) Australian Quarantine and Inspection clearance. Singaporean sourcing operations, supplier selection, evaluation and procurement Low cost of products Singaporean sourcing operations, supplier selection, evaluation and procurement can be used as a means to lower the cost of products in Australia. The above three logistics activities can be handled in the online retail store discussed in the case study to offer a competitive advantage mainly in terms of the pricing of the products. The above three logistic activities will eventually result in low product prices in Australia due to the fact that the country has the ability to manufacture the goods to be sold at a very low cost. The online store can source its product directly from Singapore, this can be achieved by forming collaborations with the existing suppliers so as get the goods. This will enable the online store to get the goods from Singapore at very low prices hence there will be a substantial decrease in prices of the goods (John & Langley 2002, pp. 59). The cost of goods will also be low since the manufacturing cost in Singapore is low. The low cost of products in Singapore also enable contribute to the low costs of products in the newly established online retail store in Australia. Place utility Singaporean sourcing operations can also be used in enhancing the place utility of the online retail store been established in Australia. Place utility is termed as the process of escalating the attractiveness of one’s product by a change in physical location. The Singaporean sourcing operations, procurement evaluation and supplier selection cam play a major role in achieving the placed utility of the online store by this the goods will be made available to the individuals who want to use/ consume them (Murphy & Wood 2011, pp. 60). Additionally, the Singaporean sourcing will ensure that the Australian online store can acquire the goods with ease form the Singaporean distributors so as to offer them to the consumers in the market. The Singaporean sourcing operations, evaluation, procurement and supplier selection will be coupled together with the online retail tore been established in Australia to ensure that the new online retail store achieves a place utility for the good that it is providing to the market. Time utility Time utility is that is used to make certain that the goods and products are made available to the consumers within the required time. The Singaporean sourcing operation can also be used in enhancing the time utility of the products been sold by the online retail store been established in Australia (James & Lambert 2008, pp. 78). The sourcing operation of Singapore is a crucial value adding activity that tends to add some value to the products; this can be done by delivering them to the consumers at the right time. The sourcing in Singapore is vital since it will assist the online store based in Australia to get the goods and deliver the goods within the required time limit. The logistics management activities will help in adding value to the goods been sold in the new retail store since it provides time utility for the products been sold. The evaluation and procurement process in Singapore is also used in adding value to the goods; this can be achieved by making certain that the products been sold in the online retail store are distributed to the targeted consumers within the required time limit (James & Lambert, 2008, pp 79). Time utility can also be achieved through the evaluation and transporting goods to the right places in the right time. Contribution of Transportation to Lower prices, Time and Place utility Price Transport is considered the single-most expensive logistic activity and it follows then this logistical activity must be carefully planned for and executed. Transportation activities can assist the consortium realize its strategy of offering low cost products or drive them out of business if they fail to handle them properly (Ho 1997, p. 78). If for example a wrongly handled shipment fails to reach Sidney for several days while customers order for the catalogue item contained in the shipment have a high backlog consequently leading to delays in customer orders. In this example failure of the shipment to pass the test of time and place utility leads to failure to meet customer expectations. A manager in charge of shipping the online store’s good s from Singapore can manage the process to the give the store a price advantage over rival business by taking a number of steps. First, he can lower the rate of shipping the cargo to Sydney by consolidating all the products into one shipment. In so doing he will be able to take advantage of economies of scale that comes with transportation of larger volumes of commodities. Second, prior to selecting a carrier the manager should carry out marketing research to know the trade-offs he would make between the service offered by a carrier and the cost of transportation. It is important while to make the appropriate trade-off so as not to accept a lower service level that may reduce the value of the goods being transported (Paché 2007, p.315). Due to increased liberalization in international trade leading to increased number of sea carriers a transport manager is spoilt for choice while selecting a transporter who can assist the online store offer their products at lower prices. Third, a transport manager must make arrangements for the payment of all relevant transportation charges and make sure all the arrangement for the shipment of the cargo are completed in advance. Failure to plan effectively for the movement of the shipment may lead to penalties being imposed by the carrier if the store is responsible for delays of the shipment. Place utility International transportation from Singapore to Australia creates time utility for the Online Store as it makes the product in the shipment available in Australia where they can be easily delivered to customers. Time utility To make sure the transportation from Singapore realizes time and place utility the online store should link its information system with that of the carrier through the Electronic data interchange or Value-added-Network (VAN) to effectively coordinate the shipment of the cargo (Paché 2007, p. 319) so it can reach its intended on time and avoid delaying customer orders. Australian Customs, Quarantine and Inspection clearance i. Low cost The application of Australian Customs, Quarantine as well as Inspection clearance can assist in lowering the cost of products being retailed in the consortium’s online store. This is mainly because Australia’s quarantine service is scientifically oriented and its main aim is to preserve Australia’s reputation of high quality products in the global market. According to (Logistics Magazine 2012), high quality products contribute greatly in reducing the price of commodities because the corporation in question will not engage in far reaching marketing. Moreover, Australia is privileged because it is free from many of the planet’s pests and diseases (Commonwealth 2011). This lowers the inspection expenditure of commodities sold in Australia and this ultimately leads to low commodity cost. Alternatively, Australian customs will assist in lowering the cost of commodities sold in the online retail store since import clearance is well regulated in Australia (Logistics Magazine 2012). Because of this, Australia ensures proper preparation and completion of import clearance transactions and this eventually leads to low product costs. In addition to this, Australian customs are electronically connected to other governmental agencies and departments. Information Communication Technology simplifies the clearance procedure, ultimately leading to low prices of products (Australian customs and Border Protection Service 2012). Because of the above mentioned reasons, the online retail store can make good use of Australian customs, quarantine and clearance inspection to ensure low cost of products. ii. Place utility Australian customs, quarantine and inspection clearance can help to add value to place utility for the prospective products offered for sale by the online retail store. This is mainly because the customs and quarantine procedures in Australia are well governed, and this helps to ensure that movement of commodities to the right places is attained. Moreover, Australia ensures that proper groundwork and completion procedure is followed during clearance as this goes a long way in guaranteeing that goods get to the intended place (Commonwealth 2011). Because of this, Australian customs, quarantine and inspection clearance are crucial logistics management activities that play a major role in ensuring that products get to the right place, where the intended customers can get access to them. Australian customs, quarantine and inspection clearance can facilitate value addition to place utility since they ensure that huge fines are paid for the commodities that do not follow the set procedures (Australian customs and Border Protection Service 2012). This can ultimately help the online retail store to attain place utility for the goods. Furthermore, Australian customs can facilitate proper documentation of commodities from Singapore and this can help in value addition to place utility for the products. Clearly, Australian customs, quarantine and inspection clearance can help the online retail store to achieve place utility. iii. Time utility Australian customs can enhance value addition to time utility since they assist in guaranteeing that commodities are delivered to customers in good time. Again, this is mainly due to the fact that clearance for commodity importation and exportation is well regulated and this facilitates products getting to the clients with minimal or no delay (Commonwealth 2011). Moreover, Australia ensures proper completion and preparation of clearance procedures and this goes a long way in ensuring that products attain time utility simply by being presented to the clients in good time. Because of these reasons, Australian customs and inspection clearance are crucial logistics management activities which enable the prospective products being retailed to attain time utility by being availed to the customers in real time (Logistics Magazine 2012). Conclusion All businesses that operate in a competitive business environment face the challenge of reducing the cost of their products and offer quality services to their customers. Nowadays, logistics is considered to be a function of marketing as it facilitates competitive advantage through service quality if items are delivered on time and to the right place and price advantage if all the logistic activities of the firm are handled properly. Singaporean sourcing operations, supplier selection, evaluation and procurement processes contribute greatly to a final lower price at the store as they enable a online store to obtain all it products in the same location saving them the logistical costs of sourcing products from a number of location. They also create place and time utility as they avail product in the right location (Singapore) and at the right time. Transport as the single most expensive logistic activity can be leveraged as discussed above to provide low price advantage for the Online Store. The efficiency of Australian Quarantine and inspection system ensures imported commodities move swiftly through the port of entry without delay making sure time and place utility is realized. This efficiency also ensures that delays that would otherwise lead to increased costs of the product are also avoided. Inspection also ensures quality of products and thus no need for expensive far reaching marketing which leads to price escalations. Thus, the firm can be able to offer consumers products at lower prices at a time and location that is convenient to them by choosing to source them from Singapore. References Australian Customs and Border Protection Service, Australian Government 2012, Customs Procedures for Importing and Exporting, viewed 1st August 2012, http://www.customs.gov.au/site/page4226.asp Commonwealth, Australian Government Productivity Commission 2011, Economic Structure and performance of the Australian Retail Industry July 2011, viewed 1st August 2012, http://www.pc.gov.au/__data/assets/pdf_file/0019/113761/retail-industry.pdf Commonwealth, House of Representatives Standing Committee on Economics Finance and Public Administration 2007, Australian Manufacturing: Today and Tomorrow, viewed 1st August 2012, http://www.aph.gov.au/Parliamentary_Business/Committees/House_of_Representatives_Committees?url=efpa/manufacturing/report.htm Ho, JK 1997, ‘What can contemporary systems thinking offer to logistics management as a James, S & Lambert D 2008, Strategic logistics management, McGraw Hill, New York. 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