Logistics Essay (Essay Sample)

Logistics
Name:
Institution:
Logistics
Logistics is increasingly becoming a major concern for any organization intending to broaden its scope. It is almost impossible to run the organization's operations effectively if there are no proper logistical mechanisms in place. Logistics is about timely delivery and smoothness inflow of goods from one point to the other to cut on operation cost. A consideration of recent developments in the field and their subsequent adoption is fundamental to ensure that a firm keeps up with the pace of competitors. The transformations brought by advancements in technology and the presence of third-party logisticians cannot be understated.
Third Party Logistics (3PL)
Providers of third-party logistics play a vital role in the supply chain management. According to CSCMP (Council of Supply Chain Management Professionals), third-party logisticians provide a range of logistical services for customer utilization. The services are bundled together or integrated by the provider and they include warehousing, transportation, and cross-docking. Others are freight forwarding, packaging and inventory management. These services are scalable and customizable as per customer needs or on the basis of market conditions, for instance, delivery service requirement and demand for their materials and products. Given the volatility of the current global economy, most firms are opting for third-party providers to reduce expenditures. Often, 3PLservices traverses logistics to include value-added services linkable to procurement or goods production process. It can entail services that integrate supply chain parts (Bolumole, 2001).
Benefits of Third Party Logistical Services to the Organization
Time and Cost Savings
Logistics is a core competency area for providers of third-party logistics. They possess a greater expertise and adequate knowledge that any selling or producing firm. It should be noted that most 3PLs are made up of specialists in operation for many years. The knowledge coupled with global networks of large size multinationals enables higher cost and time efficiency. 3PL provider's IT systems and equipment are constantly upgraded, updated, and adapted to the latest business needs and customer requirements. In a modern chaotic business environment, selling or producing firms lack adequate resources, expertise, or time to adapt to their systems and equipment as fast as 3PL.
Minimal Capital Commitment
Outsourcing all or most of operative functions to a third party logistics provider implies that the need for to a client to own his/her warehouse or transport facilities is eliminated. As such, the amount of capital needed for client business is lowered. It is even more beneficial if the corporation has soaring variations in the utilization of warehouse capacity. Normally, a flawed capacity utilization ration at an equal and constant expenditure for a warehouse minimizes the business overall revenue hence profitability.
Business Focus
Businesses engaged in international trade have core goals and objectives to be achieved periodically. The expansive nature of logistical operations for such firms prompts for outsourcing of a section of operation to lighten the managerial burden. An organization opting otherwise is at a risk of business collapse as core focus is blurred by minor logistical goals. Logistical operation drains out energy from the firm hence a need to hire specialists, especially if is not the core competency. Such a strategic move neutralizes the increasing business complexity for a growing corporation. Arguably, core competency adds value to the final product. Therefore, it is important to ensure that the organization is at the top of the pack is it is to survive the supercharged and highly competitive international business environment.
3PL Flexibility
Serious and dominant 3PL providers have branches globally. They have well-equipped facilities to coordinate import and export operation to ensure client satisfaction. It is critically important if the client’s business entails shipment of perishables like fruits and flowers from one continent to the other. Established third-party logistics provider ensures flexibility in geographical aspects by offering a wider variety of services unrivaled by clients should they provide for themselves (Anderson et al. 2011). Additionally, clients enjoy workforce size and resource flexibility because fixed logistical costs are transformed to variable costs.
Information Technology and Logistics
Information technology refers to processing business data using computers for efficiency and cost saving. It ranges from an application of electronics, telecommunication, and computing to distribute and process supply chain logistical information in a digital form. It is the design, management and utilization of computer-based IS (Information Systems) especially the hardware and software components of the computer system. An integration of logistics and supply chain operations using information technology not only improves efficiency but also reduces managerial costs. Eventually, the manufacturer’s competitive advantage is boosted.
IT contributes greatly to the restructuring of the entire set up of distribution to achieve better service levels and to lower supply chain and inventory costs. In the modern global economy, fundamental changes have occurred. Such transformations alter the relationship that business organizations have with suppliers, customers, colleagues and business partners. Specialized IT developments in logistics present multinational companies with unprecedented business opportunities to gain a competitive advantage over other firms. Therefore, firms intending to sustain their business logistical operation should invest in the latest information technology.
Integration of Supply chain and Information technology
Supply chain involves the flow of information and products from between organizations that form part of the supply network. Recent IT developments ensure an ease in availing information within the organization's premises and to the external environment. Such technologies coordinate activities to manage and oversee the supply chain. The information cost is dropping sharply as technology improves. Logistics and supply chain management is obliged to have a clear understanding of IT, especially if the supply chain is integrated with a bi-directional flow of information.
During the earliest stage of international logistics, the informational flow between the supply chain member corporations and the organizational functional areas were paper based. It slowed the entire process hence threatening a complete overhaul, strategic re-engineering, and process re-design. Pioneer logistics and supply chain managers often overlooked information as a critically competitive business resource because of a limited understanding of its value to the supply chain fraternity. Today, the capability of IT infrastructure offers a competitive positioning of corporate initiatives like the implementation of cross-functional redesigned processes and reduction of cycle time. The best performing global firms reap maximum gains because of integrating information technology in their logistical and supply chain operations.
There are three factors that affect the managerial view of information. Firstly, corporations are increasingly becoming obsessed with sourcing for ways to please customers. Thus, it is imperative to serve them in the best and most effective manner. Secondly, logistical information is an important factor in the managers’ ability to cut on inventory and human resource needs to a competitive and financially viable level. Lastly, strategic business planning is impossible unless there is a constant flow of information.
Supply Chain and Logistics Organizational Functions
Business enterprises that participate in logistical initiatives accept specified assigned roles. It is a common phenomenon for them to share a joint belief that the collaborative effort will ultimately yield fruitful results in terms of efficiency in exportation and importation of commodities. Over the last few decades, there has been a shift in power within the supply chain to retailers from manufacturers and business owners. Retailers are more prone to access of information, thus their rise to prominence positions is attributable to an embrace of technology.
If the information is shared as in the case of retail supermarkets, the parties involved can achieve mutual benefits. IT enables Point of Sale (POS) information in multiple retail outlets to be shared directly with major suppliers and manufacturers, irrespective of geographical location, to ease the logistical burden. Inter-organizational IS for logistics management has distinctive advantages like productivity improvement, cost reduction, and market or product strategy formulation (Quinn & Strategy, 2013).
There are five basic levels of collaboration among logistical organizations to uphold inter-organizational IS.
* Application Processing: Supply chain member conceives, develops and share a unitary application to other members it can be an order processing system or an inventory query.
* Multi-Participant exchange: a particular member of logistical community shares IT network interlinking it and lower level participants and to strengthen the business relationship.
* Remote Output/Input Mode: Members participate from a remote location if the logistics application system is supported by the IT system used by higher-level partners.
* Network Control: A network with multiple applications is developed and shared among the members for use mainly for low-level logistics.
* Integrative Network: a member becomes a data processing/communications utility integrating real-time applications and low-level participants.