Logistics and Globalization: Logistics Term Paper

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Logistics: Logistics and Globalization

Fierce competition has driven business entities to focus and invest in logistics networks, also referred to as supply chains. Advancement in transportation and telecommunication technologies has played a crucial role in propelling this growth right from the tactical, through to the operational level. A logistics network is made up of retail outlets, warehouses, suppliers, raw materials, work-in-progress stock, finished products, and distribution centers. To this end, logistics link producers and consumers, and integrate the different functional entities of an organization. Logistics management is about shaping a network so that it is able to indirectly meet the needs of the customer. It focuses on integrating the different elements of the network so that products are delivered to customers at the right time and place, in the right quantities, and at the right price. In a competitive marketplace, success depends on an enterprise's ability to identify and effectively capitalize on strategic opportunities presented by both internal and external factors. The concept of logistics comes in to help an enterprise leverage the advantages it has over competitors in the marketplace.

The Role of Logistics

Logistics serves to maintain the dynamic balance between the minute and the main elements of a product. In order to make full use of logistics, a firm has to develop a clear logistics strategy on the basis of its customers' requirements, as well as its own strategic direction (Bookbinder & Prentice, 2012). Logistics strategy development is a four-step procedure involving visioning, strategic analyses, planning, and change management (Bookbinder & Prentice, 2012).

Visioning: systematically developing organizational consensus in regard to key inputs, and identifying the relevant approaches and strategies (Bookbinder & Prentice, 2012).

Strategy Analyses: reviewing and selecting the most appropriate out of the strategies identified in the visioning process by assessing how they align with the intended goal, and the goals of the greater organization (Bookbinder & Prentice, 2012).

Planning: developing a plan outlining the logistic function's mission and goals, and the activities and programs needed for the achievement of these goals (Bookbinder & Prentice, 2012).

Change Management: implementing the adopted ways of conducting business, and assisting the organization to embrace the same (Bookbinder & Prentice, 2012).

Types of Logistics

There are four fundamental types of logistics; reverse logistics, military logistics, third party logistics, and fourth party logistics (Bookbinder & Prentice, 2012).

Reverse Logistics

This collectively covers the activities and processes surrounding the incorporation of recalled goods into the logistical systems network (Hawks, 2006). Consumer needs are constantly changing, and for this reason, companies are continually releasing new products, or venturing into new markets, some of which are totally different from the old ones. Consumer preferences vary, and it is therefore not uncommon for a product to fail to meet the needs of a particular market. Furthermore, companies may not be in a position to guarantee the satisfactory performance of a new product; they only advertise, expecting that the good will perform well over a certain period (Bookbinder, 2012).

If a product does not perform as expected, it is recalled. In a competitive marketplace, companies do not take their customers to chance, and they, hence, always strive to maintain their image, as well as market share (Hawks, 2006). The process of moving previously-released goods back to the company for either disposal, or redesigning with the aim of capturing value is referred to as reverse logistics (Hawks, 2006). However, reverse logistics does not only apply to recalled goods; it includes any activity that involves moving goods backwards (Hawks, 2006). These could include asset recovery programs, disposition of obsolete equipment, hazardous material programs, recycling programs, salvage and restock programs, to name but a few (Hawks, 2006).

Military Logistics

Military logistics collectively refers to the activities, processes, and resources "involved in generating, transporting, sustaining, and redeploying or reallocating materials" and military personnel (Smith, 2014). In its comprehensive sense, military logistics covers those military operations dealing with the disposition, evacuation, maintenance, distribution, storage, acquisition, development, and design of materials; the evacuation and hospitalization of personnel; and the acquisition, operation, and maintenance of facilities (Smith, 2014).

Third Party Logistics

This type describes companies that offer one, or multiple logistics-related services. Such services could include freight bill auditing, forecasting, in-depth reporting, freight rate negotiation, transportation management software, warehousing, to name but a few (Bookbinder & Prentice, 2012). A third party logistics provider either takes over the receiving, value added, storage and shipping responsibilities of a client, and carries them out at a 3PL warehouse; or manages one or more of the same at the client's premises (Bookbinder & Prentice, 2012).

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There has been a growing demand for 3PL activities; first, because companies are increasingly seeing it as an avenue to new business opportunities in the light of growing competition and deregulation; and secondly, because it enables businesses to cut down on costs by outsourcing their minor logistic activities and consequently focusing on management resources (Bookbinder & Prentice, 2012).

Fourth Party Logistics

Companies are facing increased levels of services, thanks to requisite integrating technology, virtual inventory management, complete supply visibility, and e-procurement (Bookbinder & Prentice, 2012). The traditional transportation solutions are becoming unable to meet the rising demand (Bookbinder & Prentice, 2012). As a result, companies are beginning to outsource their entire range of logistics-related activities from a single design, in an evolution referred to as fourth party logistics. A 4PL provider integrates the technology, capability, and resources that it has in place with those of another provider (complimentary) to advance a supply chain that is rather comprehensive (Bookbinder & Prentice, 2012).

The Scope of Logistics

Contrary to popular belief, the concept of logistics is not limited to manufacturing companies only; logistics is a critical element of every organization, be it in the private or the public sector (Bookbinder & Prentice, 2012). The scope of logistics is therefore very wide, ranging from the planning/assessment stage through to the reporting stage (Bookbinder, 2012). For purposes of simplicity and brevity, this text discusses the scope of logistics on the basis of inbound and outbound logistics.

Inbound Logistics

In a conversion process, creation of value is highly dependent upon the timely delivery of relevant inputs. Inbound logistics aims at making these inputs available at the right time, and at the lowest cost possible (Bookbinder & Prentice, 2012). To this end, all the activities and processes covered in the procurement performance cycle are within the scope of inbound logistics (Bookbinder & Prentice, 2012). That said, the scope of inbound logistics covers transportation, storage, and handling of stock of inputs during the procurement operation (Bookbinder & Prentice, 2012).

The movement of finished inventory, parts, or materials into the manufacturing complex is facilitated by a number of inbound logistics activities including sourcing, placement and expedition of orders, transportation, receipt, and storage (Bookbinder & Prentice, 2012). This implies that inbound logistics can provide efficient avenues for system cost reductions. For instance, the value of products, methods of transportation, size of shipment, and delivery time of inbound logistics differ from those of physical distribution cycles. In the former, shipment size is large, and the value of inventory and inventory transit costs significantly low.

Outbound Logistics

Companies bring their finished products to the market for the consumer to perceive value. These finished products are distributed through a network of supply lines and warehouses before finally reaching the end-consumer. The conversion process serves to add value to raw materials, giving rise to finished products that are of higher value than the original inputs. For this reason, the delivery time, transportation, and shipment size of finished products differ from those of inputs (Bookbinder & Prentice, 2012). The scope of outbound logistics covers all those activities and processes that take place after conversion is complete, precisely during the distribution performance cycle (Bookbinder & Prentice, 2012). It includes such activities as handling, packaging, warehousing, product transportation, and order management (Bookbinder & Prentice, 2012).

Challenges Facing Aviation Logisticians in the Global Environment

Aviation logisticians face multifaceted challenges; ranging from financial, to regulatory, political, economic, and environmental challenges. The ongoing debates on airport capacity in the west, and the recent instances of Avian Bird Flu and SARS are just but some of the factors that are likely to affect the industry significantly (Lawyer Monthly, 2013).

Regulatory Challenges: transportation and logistics laws impact on the operations of airline companies at both the national and international levels. In the spotlight at the moment is the "future direction of emissions trading" (Lawyer Monthly, 2013). Additionally, challenges relating to consumer and passenger rights are expected to get worse, especially because the regulation governing the same has made its way to the parliamentary process in the United Kingdom and several other European countries (Lawyer Monthly, 2013). Two major cost-related issues are expected to arise if these regulations are adopted; first, there is going to be greater emphasis on upfront clarity and transparency of cost to enable consumers make comparisons more effectively, which translates to higher website selling costs for airline companies; and secondly, the issue.....

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