Better Logistics Company - Essay Example

Company Background BETTER LOGISTICS CO., LTD. (BLC) was founded with the aim of becoming one of the leading and diversified logistics companies in China offering logistic service all over the world. It is a fast growing freight and Logistics Company based in SHAOXIG and has a wide network of overseas agents cooperating with it for many years. BLC delivers smart, fast and flexible solutions for the customer in the global business environment. BLC is known for its reputation in providing wide range of inbound/outbound operations, maintaining low air cargo fare rates and outstanding services, especially for the USA/Canada and Mid-South America. In addition to the basic forwarding operations, BLC is specialized in customs clearance, packing, warehousing, and transportation of all incoming and outgoing, air and sea shipments, as well as household goods and personal effects. The company’s objective has always been to satisfy the needs of all customers by offering a personalized transport service for any volume of goods and any destination. BLC has a Quality Policy as well a well publicized Mission Statement. For developing and delivering business excellence the company has obtained ISO 9001:2000 certifications in pursuance of providing "best-in-class" service via a quality management system. The company was awarded ISO 9001:2000 certification in 2004. Quality policy BLC aims at operational excellence with continuous improvement as key to growing our own business as well as our customers’ businesses. BLC believe the only way to maintain long-term relationships with clients is by running the highest quality operation, and by measuring performance to constantly improve it. As part of the Quality Policy, BLC regularly monitors customer satisfaction as one of the measurements of performance. It also monitors information relating to customer perception as to whether we met their expectations. This is an ongoing process, and helps to ensure that BLC is achieving its objectives and delivering on its promise for quality services, innovation and continual improvement. Mission Statement To provide fully integrated, cost effective logistics solutions which achieve our customer service expectations With commitment from professional people and use of advanced technology, achieve performance excellence through application of quality processes and collaboration with our business partners Offer value creation service to increase customer Competitive advantage Improve business process and information technology Synergize logistics network to maximize network utilization and service coverage Enhance logistics skill and learning culture Current Activities of company The current activities can be best summarized in the following chart: Ocean Freight Service Air Freight Service International Removal Trucking Logistics Service & Warehousing FCL & LCL cargo handling Consolidation Household goods packing and removals Conventional, special cargoes, part loads Combination of air, sea, rail and trucking services Transshipment handling Project cargo handling Office removals Fleet of heavy duty loading tucks for import and domestic needs Customs brokerage Storage, repacking Consolidation Special cargo handling Exhibit forwarding Radio tracking system Door-to-door delivery Frozen cargo, oversize cargo Chartering Warehousing Tracking system Project cargo handling Freight insurance services Inventory management Organization structure BLC has a well structured Management system to aid its day to day operations. The Internal organization daily management structure is represented below: Supply Chain BLC business has much to do with organizing and synergizing transportation and warehousing, so its supply chain structure is similar to its competitors with concentration on physical distribution. The red line represents material flow; the blue line represents information flow. Performance While apparently the business model of BCL is sound and it appears to be well managed, its performance lacks behind its competition and certainly does not achieve its goals for it was for which it was founded over a decade ago. It is just another mediocre company, despite its obtaining the ISO 9001:2000 certification. It has high aims but has fallen short in results. To date its annualized growth is just 10% while the industry average is about 13%. The best in class companies are however achieving an annualized growth rate of 25%. The problem areas of BLC can be enumerated as under. 1. BLC lacks in warehousing. Its current warehouses are small and not well organized. It moves the frozen cargo directly from trucks to containers at the shipping terminal as it does not own a warehouse with facility to hold such cargo. 2. The records are kept manually with help of spreadsheets taken out of computers. Information flow is slow as it is faxed from one point to the other and is not always up-to-date. 3. Its own fleet is efficient but small and it has to depend on several other owners who cannot guarantee availability in peak times. 4. It mainly deals with air-cargo and small pellets and has achieved a degree of excellence in this sector. However in sea-freights it depends entirely on its partners and agents overseas and has a communication linkage problem as there is no synchronized data base due to absence of enterprise software. 5. The managerial and supervisory staff is mainly from China and while the internal management is fairly good the staff is unable to respond accurately to overseas agents due to language and cultural barriers. SWOT Analysis of BLC A SWOT Analysis of the company will clarify the internal and external environments. Strengths 1. The company is already a decade old hence knows the basic needs of a Logistic Carrier 2. DLC is already proficient in air cargo and this will create confidence in its customers 3. It has a good network of agents that strengthens its delivery process 4. It has a good infrastructure and the necessary management team to support it Weaknesses 1. The company does not have sufficient Warehousing for large consignments 2. The company has no IT capability to trace and track its cargo efficiently 3. With delayed information it cannot satisfy customers 4. Without proper software dissemination of vital information is delayed 5. Manual work means delays and HR problems 6. As a private company it faces competition from Chinese Government owned companies (departments) who are nominated as Joint Venture partners Opportunities 1. The Chinese market is expanding rapidly offering opportunity for larger business volumes 2. FDI norms and terms are getting more liberal hence foreign companies are attracted by this opportunity 3. The world wide recession is a great opportunity as world wide it is perceived that the Chinese economy is better able to sustain, hence it is more attractive for foreign companies to operate from this region 4. It can use its Quanxi connections to get good Joint Venture partnership Threats 1. There will be great competition from other Chinese companies to lure foreign investors citing better staff equipped to overcome language and cultural barriers 2. Rivals will offer better networking (Quanxi) to attract foreign partners 3. It is short of capital and the foreign partner will look for financial strength of its local partner 4. Competitors are big as the regulatory barriers favor local Chinese Government departments to act as Joint Venture Partners who can also invest in capital Research Problems based on BLC status BLC is a typical example of a Chinese Logistic Company that has a mission but is unable to translate it into actual practice due to lack of vision. It is still thinking more like a Chinese company confined to local environment. It has to think in global perspective in order to become an efficient operator. China has opted to liberalize its economy for the purpose of getting a fair share of global trade and commerce. For this it has invited FDI in all sectors including Logistics. FDI plays an important role in making the Chinese Industrial might felt in the global markets. The problems faced by Logistics in China are the barriers that they face in obtaining FDI. These are basically three in nature; regulatory, language and culture and the mode of entry. A research needs to be carried out to seek solution of these barriers to enable BLC to avail of FDI through a suitable foreign partner to enable it to become a successful Logistic company. Analysis The success of a business depends upon one factor viz., closer buyer-supplier relationship through cooperation and collaboration. In this relationship the logistic company plays a vital role as it links the two collaborators and they both depend on it for maintaining timelines as well as interim arrangements like warehousing, processing documents and in certain cases, even taking care of packing of products. Both ends of the spectrum, the supplier and the buyer, are usually at some distance, and even in different countries. The Logistics Company therefore has to play a large role in linking them together and forging a viable supply chain that is both cost effective and dependable. The very reason for engaging a Logistics company is to hand over this function to a professional operator with core competencies to take over these responsibilities and to ensure that the supply from one to other is smooth both in terms of products as well as information. To mitigate intense competition in the market, logistics firms are required to provide comprehensive service offerings and broaden their geographic coverage. Usually their internal activities are hindered by limited capital capability. Thus, the establishment of strategic alliances and going for long-term strategic partnership become an appropriate choice BLC therefore needs to get into a partnership with a foreign Logistic Company with three motives in mind; to infuse much needed capital for upgrading its meager assets; to build modern warehousing for servicing its customers; to install suitable enterprise software linking itself with other partners in the chain for accurate and online information flow. On its part it needs to ensure that the language and cultural barriers are taken care of so that the foreign partner is not stressed by these factors. It must also take care of the Quanxi factor so that there are no unwanted stoppages and that all operations flow seamlessly t ensure a trouble free service for its customers. Training for the above and implementation of the process is equally important. Merely making suitable arrangements and installation of equipment and software will take BLC nowhere. It must see to it that a proper and regulated training schedule is observed and if the present managerial and supervisory staff is unresponsive then they need to be replaced with suitable candidates. Conclusions In the liberal times and in view of the foreign companies general quest to open shop in China, there is no dearth of FDI for the Logistics sector. However if BLC can overcome the barriers, it can get into a good Joint Venture with a credible foreign partner. For this it must first ensure that it can use its connections with the government circles to get a good foreign company allotted to it as a partner. Quanxi will matter heavily in this case. Secondly it must convince the partner that it will overcome the language and cultural barrier by providing a suitable and knowledgeable management and supervisory staff that either has the experience of working with a foreign company or is willing to be trained in their methods of management. Thirdly it must be willing and able to install suitable enterprise software that will synchronies the data with its partner and other collaborators. All this is quite possible and a survey of the company employees through research (questionnaire) also warrants that they are willing to do their best in order that their company moves to the next higher level of performance and success. Read More