Dimensions of Logistics Management - Essay Example

Logistics Table of Contents Introduction 3 Dimensions of Logistics Management 5 Importance of Logistics in Modern Organisations 7 Innovation in Logistics Management 10 Challenges and Barriers to Logistics in Modern Organisations 12 Conclusion 16 References 19 Appendices 22 Appendix 1: (Mind Map) 22 Appendix 2: (Research Log) 23 Introduction Logistics, in business context, generally refers to physical transfer of goods or services from the suppliers to the receivers. The rapid growth of international business process has eventually helped in expanding the dimensions of logistics business process by multiple folds. As a result, it becomes the prime responsibility of every entrepreneur or governmental business process to understand every aspect of logistics business process in a much effective manner (Aveta Limited, 2014). From a management perspective, one can refer logistics as a credential part of supply chain management. Moreover, from the functionality perspective, logistics in business background can be technically termed as the backbone of every possible type of small or large scale business processes. This business actively supports the globalisation of production / manufacturing business, where one nation acts as manufacturer, whereas the other nation, act as procurer. The major functional aspect of logistics lay in ensuring the fact that the ordered goods get delivered to the customers within the set time frame and at acceptable conditions (Aveta Limited, 2014). The systematic functionalities associated with logistics have been illustrated in the following: Analysis of the goods to verify whether those are in proper conditions or not Packing of the analysed goods Labelling of the goods according to their preferred destination points Insurance Transportation of the labelled goods Delivery to the set destinations within specific timeframe (PwC, 2014). Apart from the above discussed functionalities, the means of carrying out varied logical operations are also multiple. For instance, logistics operations can be carried out either in the domestic markets or at international levels. Large scale corporations utilise both types of logistics operations for commencing their functionalities. However, in a similar manner to that of the hospitality industry, the logistics industry also gets impacted by constantly changing economic scenario of the nations due to massive reliance on the utilisation of fuel. Thus slight change within the economic stability of a nation often results in bringing about huge distortions within the overall functionality of the corporations relating to logistics (PwC, 2014). Regardless of the above discussed facts, logistics industry can only perform well if the external surrounding environment projects favourably aid in attaining perceived objectives. Instances regarding multiple uncontrollable factors can be provided that subsequently hamper the effective functionality of logistics organisations. Once of such instances can be related to the inappropriateness of the transportation facilities within specific geographical areas. Situations related to inappropriate infrastructure development and increasing price of fuel often restricts the normal functionality pace of logistics sector. High restrictiveness within the governmental norms can also act as hampering facts against the appropriate functionality of this sector (Penton, 2014). Thus, by taking reference of all these aspects, this discussion will majorly focus towards evaluating the significance of logistic business process towards supporting and developing the other business processes. Moreover, the discussion will also focus towards evaluating the possible economic and marketing barriers that might hamper the overall functionality of logistics business by major extent. Considerable emphasis will also be provided towards the implementation of technology within the logistics operations and how it supports the varied functional dimensions of this business process (Penton, 2014). Dimensions of Logistics Management From the above discussion, a clear understanding can be attained regarding the vastness of logistics business process. However, management of such vast business process might turn out to be a cumbersome job. Consequently, the overall logistics businesses have been segregated into multiple dimensions depending on the type and necessity of functionality areas (Sweeney, 2013). In alignment with the recent findings, one can state that “the people dimension” holds a vital ground, ignorance to which might result in giving rise to multiple barriers within the logistics functionality approach. Justification to this context can be provided depending on the fact that logistics and supply chain business processes are intensively reliant on the fundamental skills of the people (Sweeney, 2013). For instance, both the suppliers and the receivers involved in logistics business often constitute those people who posses greater understanding or experience about the process. Moreover, it is the decisive capabilities of the human suppliers and receivers based on which every functionality within the logistics business process gets designed. The people dimension also encompasses the applicability of necessary technology and innovation implementation within the logistic business processes, as a result of which, it attains the capability of coping up with the increasing level of global competitiveness (Sweeney, 2013). The second most crucial dimension in alignment with the logistics business process is “the micro economic dimension”, which takes into concern the decision-making process of business organisations concerning appropriate allocation of resources. An instance in this context can be provided by taking consideration of the periodic changes in the transportation rates of the goods, as brought about by the management bodies of logistic organisations with the prime intention of safeguarding their profitability and interest rates under situations when the fuel prices are high. Apart from this, “the macroeconomic dimension” also holds high creditability, if seen from the functional perspective of logistics industry. This is due to the fact that the functionality pace of logistics industry projects direct proportionality with the increase or decrease in the economic pace (Liu, 2009). Justification regarding this fact can be elaborated in a manner that during the period of economic recession, the production pace of large and medium scale industries slows down. However, certain small scale business processes might continue to function due to their lower consumption of resources. As a result of this slow down, the aggressiveness and the competitiveness within the global trade process also falls down in an eventual manner and thus minimises the need of global logistics operations. Taking reference of the above mentioned aspects, the prediction about the dependency of logistics business on multiple dimensions can be made. Within these dimensions, technology also holds a greater contribution, which supported in enhancing the fluidity associated with the functionalities of logistics industry (Liu, 2009). It will be vital to mention that the above discussed varied dimensions relating to logistics often support the business organisations of this modern day context to perform effective functions. In this regard, such functions can be elaborated as building better interrelation with the customers, creating the finished products in an effective manner and most vitally developing along with preserving superior competitive position among others (Liu, 2009). Importance of Logistics in Modern Organisations In this contemporary business world, it is important for any organisation to reap the benefits of advanced logistics in order to attain its predetermined goals. Thus, it can be asserted that the advantages of advanced logistics are important in several aspects of an organisation. These aspects have been elaborated in detail in the following: Decrease Costs Advanced logistics within an organisational process leads to reduction of costs associated with several aspects. One of such aspects is the reduction in inventory storage. It will be vital to mention that the saving through this aspect also creates the opportunity for the organisations in utilising the same in other aspects. Moreover, the reduction in the cost is also observed in freight through the application of advanced logistics process. The economy of freight is gained by the selection of appropriate mode of transport, which would reduce operational costs on behalf of the organisations. It also considers the selection of appropriate route for transportation process, which at certain times, prove to be s highly economical for the organisations. Thus, it can be apparently observed that all the aforesaid elements aid in lessening organisational costs, thereby increasing profit margin by a considerable extent. Specially mentioning, the increase in the profitability of an organisation is of significant importance for an organisation from financial perspective (Coyle &et. al., 2012). Increase Quality The use of advanced logistics is of significant importance to the modern day organisations from the perspective of increasing quality of the products and/or services. In this regard, development in the logistics process of an organisation often leads to greater development of products and/or services. This can be related with the notion of proper storage of products in the warehouse of an organisation. The proper storage in warehouse leads to lower possibility of damage of the products and/or services, resulting in improving the quality of the same at large. This often results into higher quality maintenance by the organisations. Moreover, development in the logistics process also leads towards superior development in the packaging of the products. This proper packaging of products leads towards higher maintenance of desired quality. This is more important for products that are vulnerable to environmental stresses. Thus, packaging done by the logistics department of an organisation is also important aspect to be taken into concern for maintaining the quality of products. Furthermore, the logistics department is responsible for making better reach of the necessary products and/or services to the ultimate customers. Thus, it can be inferred that logistics play a vital role in preserving the desired quality of products and hence, holds significant importance to the modern business organisations (Coyle &et. al., 2012). Increased Customer Service Logistics also hold the capability of raising customer service and hence, leads towards greater level of customer satisfaction. Thus, it is regarded as the imperative aspect of a business house for attracting the customers. Gaining and raising greater level of customer satisfaction is one of the prime objectives of each and every organisation, which supports them in attaining their respective targets. In this regard, customer satisfaction takes place by taking into concern varied elements of logistics. One of such logistics elements is the minimisation of order delivery cycle time. This is the total time taken in delivering a product after the order taken for the same. The reduction in the same increases customer satisfaction. Moreover, the other element is the reliability in the products ordered by the customers that are of desired quality. Furthermore, consistency in the frequency of the delivery of products in terms of quality and on time delivery is also important from the perspective of the customers. These all lead towards higher customer satisfaction, which is of prime importance from an organisation’s perspective (Sheffi, 2012). Organisational Control With the advancement in the logistics process, the organisations often become more efficient in making broader organisational control regarding different aspects. This is prominently with regards to the inward and outward supply of materials and information. Development in the logistics process also leads to better strategic decisions regarding the flow of products within and outside the organisations. This is mainly decided in accordance with the demand in the market with regards to on time delivery of products. Simultaneously, it is also considered based on cost benefit analysis to the organisations. Thus, logistics plays an indispensable role in making wider organisational control, which is quite important from the perspective of organisational growth and advancement in future (Schulz, 2009). Competitive Advantage Advanced logistics is important from the perspective of an organisation with regards to the attainment of competitive advantage. This is prominently because of higher customer satisfaction, which takes place through better execution of advanced logistics process in an organisation. One of the prime reasons behind raising higher customer satisfaction is maintaining the quality of products and/or services that an organisation is being able to provide to the customers. Besides, another reason for augmenting higher customer satisfaction is the comparative lower price of the products. The organisations on account of the application of developed logistics process are being able to reduce the costs associated with their respective business process. This significantly backs the organisation to price the charge for the product in a comparatively lower margin as compared to the competitors. Thus, the above stated aspects lead to higher competitive advantage for an organisation. Moreover, it cannot be denied about the importance of gaining superior competitive position from the perspective of an organisation. Competitive advantage of an organisation is quite crucial in the modern era of business environment, as it lead towards greater attainment of predetermined goals and objectives of an organisation (Deepen, 2007). Better Customer Relations The significance of logistics specifically in modern organisations also lay in forming, developing and most vitally preserving the better relation with the customers by various ways. These ways comprise providing quality products and/or services to the potential customers and most vitally complying with their respective needs as well as preferences (Deepen, 2007). Innovation in Logistics Management It has been already stated above regarding the contribution of technological innovation in the development of logistics industry. This section will help in imparting a precise understanding about the significance of making innovation in the context of logistics management. One instance in this context can be provided by taking into concern the significance of present day communication techniques within the logistics related operations (Vorst & et. al., 2005). It is due to the innovation within the communication techniques that has subsequently helped in increasing both the pace as well as the efficiency within the logistics and supply chain operations on both domestic as well as global basis. The present day logistics organisations specifically rely on the use of technological equipments such as GPS navigation, RFID technology and high capability cargo transportation vehicles among others (Vorst & et. al., 2005). The installed GPS navigational tools within the logistics transportation vehicles precisely help in identifying the roadways that are subjected to less traffic flow and thus facilitates the delivery of ordered goods to the desired destinations within the set time frames. In a similar manner, the use of RFID technology provides the customers with the option of tracking down their requested goods during its shipment phase (Little, 2007). Through the use of necessary communication techniques, the customers are also provided with the option of contacting the support teams and clarifying about their respective queries. To a major extent, innovation implementation within the logistics operations has also helped in bringing down the overall costs of the process staring from packaging to delivery. Large scale logistics organisations often rely on the utilisation of sophisticated machineries that eventually bring down the extent of time consumed during the goods labelling and sorting operations (Little, 2007). Logistics functionalities have always been linked up with the concepts of value provision. As a matter of fact, it is a mandate for the logistics organisations to consider innovation within their process management. Justification regarding this mandate can be provided in a manner that without the implementation of innovation within the process management concepts, the logistics organisations will not be able to project high signs of dynamism that will be necessary for coping up with the competitive behaviour of the current global market. Rather than just remaining confined to the transportation of raw materials and finished goods within the suppliers and the receivers, logistics along with supply chain management also helps in managing the other crucial aspects of global and domestic business process (Lin, 2007). The reflection of the above mentioned instance can be attained from the supply of daily consumable goods from the manufactures to the buyers. Certain consumable products such as food grains and other perishable items also require the presence of appropriate containment or warehouse facilities without which, both the suppliers and the receivers might get subjected to specific amount of financial loss. Thus, logistics based organisations need to make necessary arrangements regarding such aspects for maintaining their survival in the present market scenario. Thus the necessity of technological implementation within the process design can also be found applicable under such necessities (Lin, 2007). Challenges and Barriers to Logistics in Modern Organisations With the rise of globalisation and liberation in this present day context, an extensive level of business market competition around the world can be witnessed. In this regard, there lays greater need of advancing logistics segment for the organisations to gain competitive advantage. However, there are certain challenges and barriers that the modern organisations face in this present day context with regards to the development in the logistics process. Hence, these challenges and barriers restrict organisations to reach their desired objectives and goals. Therefore, it is essential for such organisations to overcome with certain challenges and barriers. These challenges or barriers have been elaborately discussed in the following discussion: Economy This particular aspect i.e. economy is quite important to consider for the modern business organisations, as it aids in determining the use of adequate technology and advancement in the field of logistics. It will be vital to mention in this similar concern that lack of finance acts as a crucial barrier in the adaptation of advanced technology in the field of logistics. In this regard, it can be apparently observed that most of the micro, small and medium enterprises lack in adapting adequate development in logistics. This is primarily because of having shortage in acquiring adequate finances. Moreover, it is also important to note that the crucial aspect of economic downfall also lead towards obstructing the logistics developmental procedure at large. It is also been noted that fall in economies due to global recession also restrict in making broader logistics development of several organisations. Besides, the development in the logistics process is often found to remain limited to the organisations of the developed countries. This is prominently because of the economic growth in the regions wherein such companies perform their respective operational functions. Thus, it can be claimed that inadequate economy and finance acts as crucial challenges as well as barriers in the development of logistics of an organisation (Hesselbach & Herrmann, 2011). Increasing Costs The rising inflation of the products and/or services creates a major challenge to the logistics department of modern organisations. This particular barrier leads to higher costs for organisations in the form of augmenting their respective operational expenses. The above discussed aspect can be elaborated by taking into the example of certain airline based organisations that hold immense importance in developing economies of nay nation. Justifiably, it can be affirmed in this context that the prime cause of the rise in operational costs is the increased level of price of crude oil in several countries of the world. This increase in the global crude oil price leads to significant barriers in the logistics department of several organisations by a considerable extent (Ailawadi & Singh, 2011). Infrastructure The necessary infrastructure of several nations can also be duly considered as a significant barrier to the logistics development of several organisations in this modern day context. The lack in the infrastructure development increases the costs of logistics department of several organisations. This can be justified with reference o the fact that the absence of adequate infrastructure often leads towards causing barriers and challenge for the organisations in delivering the products within time and proper reach to the customers. The organisations, as a result of such barrier, suffer significant loss without being able to deliver the products and/or services to the customers within a specific time frame. Thus, the notion concerning lack of infrastructure development in several regions is one of the major reasons for making the organisations to be incapable of delivering the products to the customers inefficiently (Ailawadi & Singh, 2011). Lack of Technology There exist several organisations in the world that do not possess adequate technology for developing their respective logistics department, which eventually creates a significant barrier to such organisations at large. The lack of technology or advancement mainly erupts due to having shortage in finance. It can be apparently observed that the organisations, which are more financially week, are incapable of adapting advanced technology. This shortage in technology often leads towards improper storage of products in warehouse, resulting in making the logistics department of the organisations to face several challenges. The same also leads towards damaging products in warehouse in a very short time span. Thus, lack of technology indicates the reduction of shelf life of products. This reduction in the shelf life of products creates a significant damage to the organisations. Further, it is also important to note that deficiency in utilising appropriate technologies will also lead towards improper packaging of products. This improper packaging of products generates more vulnerability of the same in the form of damaging. Besides, it can be ascertained that the above discussed challenge or barrier also affects the transportation process of the organisations by a considerable extent. The inadequate technology leads to causing barriers in proper transportation process of the products, which finds much difficulty in reaching the preferred products and/or services to the ultimate customers (Ailawadi & Singh, 2011). Political Issues The logistics department of several organisations in the world often face a major challenge relating to unsuccessful transportation of products due to the persistence of certain political issues. In several parts of the world, it can be found that there has been wider political instability and disturbances due to various reasons. These create a significant barrier in the logistics process of several organisations. This political instability and disturbances often create severe transportation barriers, resulting in affecting most of the logistics processes. Apart from this, political instability and disturbance also creates a significant barrier to the economic growth and the prosperity of a region and hence, can be related to as one of the logistics barriers. Moreover, political instability also results into technological underdevelopment of the business corporations of this modern day context. It can also be inferred that greater technological underdevelopment leads to a halt in logistics advancement by a greater level (Wang & Koh, 2010). Conclusion From the above analysis and discussion, it can be ascertained that logistics and supply chain management based organisations are playing an appreciable role towards supporting the developmental patterns of the present economies. Due to the persistence of varied immortal functionalities, the logistics organisations have subsequently earned the title of being the backbone of the present competitive global market. Throughout the analysis, varied functional dimensions of logistics approach have been considered for gaining an in-depth understanding about their impact on the overall performance of the modern business corporations. Specific preferences have been made on both macro and micro economic perspectives based on which the logistics based organisations specifically depend. The illustrations presented in the above discussion also elaborate distinct sorts of consequences that the logistics companies might get subjected to in case of economic instability and financial turmoil. Apart from the above discussed aspects, a detailed elaboration has also been made regarding the necessity of undertaking technological interventions and promoting innovation within the functionality and the process design of the modern business corporations. The contribution made by these aspects has also been illustrated within the dimensions of strategic implementation that are specifically meant to improvise the performance rate of logistics and supply chain management based organisations by multiple folds. Rather than being focused on the task factor, a majority of the logistics business processes in the present market scenario are projecting greater orientation towards the competition factor, which can be duly considered as quite vital by a certain extent. Such logistics based organisations are often found to be relying on extensive implementation of technology as a way of attracting clients. Justification regarding this perspective can be provided by taking into concern the fact that large scale client business organisations will gradually focus towards those logistics business processes that posses the capability of providing quality logistics services within preferred deadlines. All of these provisions might turn out to be completely inappropriate without the implementation of necessary technological innovations within the functionality and process designs of logistics business process. Throughout the discussions, multiple facts have also been projected regarding the importance of people dimension within the successful development of logistics management. Provided descriptions regarding such necessities also represent the manner in which the decisions made by the business owners does lay significant amount of impact on the overall functionality and sustainability of logistics and supply chain management based organisations. In addition, it can also be stated that logistics based organisations often get subjected to multiple other functionality barriers that eventually hamper their survival by a significant extent. Thus from an overall aspect, the logistics based organisations can be inferred as a backbone of the present day industrial scenario without which, the provision of accomplishing international trade practices might seem to be impossible. As a result, this can be duly considered as a mandate for business organisations to effectively analyse every single aspect associated with logistics business process, which will help them to perform their respective business processes effectively. References Ailawadi, S. C. & Singh, P. R., 2011. Logistics Management. PHI Learning Pvt. Ltd. Aveta Limited, 2014. The Importance of Business Logistics in Today’s Global Economy. Home. [Online] Available at: http://www.sixsigmaonline.org/six-sigma-training-certification-information/the-importance-of-business-logistics-in-today%E2%80%99s-global-economy.html [Accessed November 18, 2014]. Coyle, J. & et. al., 2012. Supply Chain Management: A Logistics Perspective. Cengage Learning. Deepen, J. M., 2007. Logistics Outsourcing Relationships: Measurement, Antecedents, and Effects of Logistics Outsourcing Performance. Springer Science & Business Media. Hesselbach, J. & Herrmann, C., 2011. Glocalized Solutions for Sustainability in Manufacturing: Proceedings of the 18th CIRP International Conference on Life Cycle Engineering, Technische Universität Braunschweig, Braunschweig, Germany, May 2nd - 4th, 2011. Springer Science & Business Media. Lin, C. Y., 2007. Technological Innovation for China’s Logistics Industry. Journal of Technology management & Innovation, Vol.2, Issue.4, pp. 1-19. Little, A. D., 2007. Innovation Excellence in Logistics. ELA European Logistics Association, pp. 3-36. Liu, S., 2009. A Research on the Relationship of Logistics Industry Development and Economic Growth of China. International Business Research, Vol. 2, No. 3, pp. 197-200. Penton, 2014. Ten Key Challenges for the Chinese Logistics Industry. Home. [Online] Available at: http://mhlnews.com/global-supply-chain/ten-key-challenges-chinese-logistics-industry [Accessed November 18, 2014]. PwC, 2014. Transportation & Logistics. Your Challenges. [Online] Available at: http://www.pwc.com/sg/en/industries/transportation-and-logistics.jhtml [Accessed November 18, 2014]. Schulz, S. F., 2009. Disaster Relief Logistics: Benefits of and Impediments to Cooperation Between Humanitarian Organizations. Haupt Verlag AG. Sheffi, Y., 2012. Logistics Clusters: Delivering Value and Driving Growth. MIT Press. Sweeney, E., 2013. The People Dimension in Logistics and Supply Chain Management – Its Role and Importance. National Institute for Transport and Logistics, pp. 1-325. Vorst, J. V. D. & et. al., 2005. Innovation in Logistics and ICT in Food Supply Management. Introduction, pp. 1-36. Wang, L. & Koh, S. C. L., 2010. Enterprise Networks and Logistics for Agile Manufacturing. Springer Science & Business Media. Appendices Appendix 1: (Mind Map) Appendix 2: (Research Log) Logistics and Supply Chain Management Research Log Researcher’s Name: - Authorise Name/ Signature:- Date:- Date:- Research Objective :- Date of Research Location Description of research Data Attainment sources Comments Documentation Number Read More