LOGISTICS

Introduction

Many businesses are faced with tremendous pressure as globalization of market intensifies competition.  In other words, global markets spells intense competition and that logistics is the key aspect of keeping pace with the fast changing world of the global economy.  Nowadays, logistics has emerged as a pivotal element in the business world as it can trimmed down the percentage of company’s total cost significantly, wherein, the logistics cost tends to decrease when customer satisfaction and retention is already evident.  Interestingly, according to (1994) logistics costs currently comprise between 10 and 25 percent of the total cost of an international sale alone, and these costs are rising due to the fact that being able to accrue customer retention, it means profitability in a sense and moreover, the increase of logistic cost is in pursuance for more global market opportunities.

            In general, logistics encompasses the processes involved from raw materials to end customer delivery, including purchasing, inventory management, warehousing, shipping and even customer returns. Further, logistics refers to the process of planning, implementing, and controlling the efficient, effective flow and storage of raw materials, in-process inventory, finished goods, services, and related information from the point of origin to the point of consumption (including inbound, outbound and external movements) for the purpose of confirming to customer requirements (1998) .  Logistics contribution to a company, especially companies operating in a global scale, aids the company be able to sustain competitive advantage through the combined benefits of improved customer service and lower costs (1993).  In this paper, we would tackle ten identified disparate areas and issues of global logistics and be able to describe and expound on five of the ten areas or issues for the purpose of extending our knowledge about the essence of the said issue or area.

 

Main Part

 

When we speak of the word “global”, it denotes a broad spectrum.  It talks about the imports from Asia to the U.S., the exports heading to Europe, the movements occurring within regions and products or the finished goods moving from a manufacturing plant in the Philippines going to Germany.  Global logistics is dynamic in its nature, particularly the way it is done. Advancement in global logistics is thereby, making the world small as it continues to conquer the boundaries.  However, as global logistics being more driven to defy globalization arise the accompaniment of global logistics issues and expansion of its area.  To name several global logistics issues, this paper will mention 10 different issues in relation to global logistics, the first five issues or area will be discussed.

First, is the global logistics area of reverse logistics, sometimes being regarded as a recycling process, is a special form of inbound logistics that embodies an objective to maximize economic value given the resulting product.  Reverse logistics is one of the elements of the increasing diverseness of logistics systems that is concerned with secondary flow of goods referring to the products in which the original use of the products has been completed.  Recently, reverse logistics had an economic impact on industry significantly as reflected, either a detrimental to a company or as a competitive advantage for capturing market share’s potentials.

Second, since the process of global distribution, it entails that the logistics function will be susceptible to intricate as well.  To countermeasure the complexities of global logistic functions, many firms have turned to third party or contract logistics (1995). The major manufacturers are looking forward to their transport operators to take over some of the functions previously done in-house.  Additionally, to be able to be successful, companies are inclined to foster a strong partnership with the third party providers, such that companies can maximize their potentials in delivering globally, through offering exclusive long-term contracts, thus, allowing companies to focus on their core businesses functions.

            Third is the movement of product.  With global logistics, it is able to drive the delivery cycle via the power of the contract combined with the customer that establishes expectation and satisfaction of a successful solution way before the actual shipment happens.  Movement of products is critical in the global logistics process since it evaluates and assesses the capabilities of a certain company as to how they are capable of doing business in an efficient way.  In Walmart, for example, the movement of products in their supply chain is very well-organized, dependable and up to date.

Fourth is the movement of invaluable information that is a key aspect of the success of global logistics. The nature of doing global business necessitates the relegation of the accurate messages that can make or break a certain business transaction.  That is why, global logistics seeks the aid of technological advancements to be able to provide a communication line and to break the barriers in the operation of global logistics, such as culture.  Language, for instance, may hamper the dealings of global logistics, but with the help of email, one is able to rely on it and interpret of what is it that needs to be interpreted.

The nature of time zones greatly varies from country to country.  Not only the global logistics requires doing boundless business, it should also come to terms of dealing with time zone barrier, which brings us to our fifth issue.  Therefore, the time zone of Europe must also come to terms with that of an Asian country.  More or less the issue of time zone makes business do over time so that it can make both ends meet and drawing out a win-win solution that would likely result to collaborative efforts.

Sixth is the delivering of superb service, in spite of the hindrances, means fully grasping the customer expectations, like the dimensions of assurance, responsiveness and empathy, in trying to meet the said expectations or even exceed on it. Customers compare their perceptions with their expectations when evaluating a firm’s service. Consequently, research from  (1991) revealed that reliability of service, which entails performing the promised service dependably and accurately, is the most important dimension in meeting customer expectations.  Seventh is the integration within the company between the company and the customers and between company and the vendors. In logistics, where there is limited customer contact and rare face-to-face interactions, along with the issue of time zone, culture and language, companies should work on the integration aspect to foster smooth flow of business processes in the long-run, eliminating the risk of conflict or misunderstandings.   Eight, since of the non-traditional approach to global logistics, presumably there is difficulty in implementing reverse logistics strategies especially in the world economy that operates 24 hours a day, 7 days a week in 365 days.  The combination of both inbound and outbound transportation to and from the company will be able to take advantage of the worldwide economies of scale.   Ninth, are the lack of standardized bill of lading & other uniform documents of the fact that global logistics also varies.  The bill of lading from Japan mayhap different from that of Switzerland or even in some countries it introduces paperless transactions. Tenth is the capacitance issue that is plaguing the United States & other industrialized nations, for the fact that, as the dimension of global logistics widens the need to increase the capabilities of the global logistics.

 

Conclusion

 

It is important for companies to closely look into the global logistics issue and areas because it would be vital and an important key aspect in the business process. Unable to do so, in the long run, the company would experience the adverse impact of logistics, like resulting to higher costs, non-competitiveness that leads might lead to market share loss, low profits, inhibit the potential for profitable global market opportunities, if companies in this regard neglects the logistic issues that may surmount.  Nevertheless, companies should brace the likely future trends of global logistics as it is seen to continue to expand.

 

 

 

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