Management Essays – Global Logistics
Logistics is the overall management of the flux of commodities, selective information and other resources, including free energy and individuals, within the provenience and the place of economic consumption with the objective of meeting the demands of customers (especially, military organizations). Logistics postulate the consolidation of data, transportation system, armory, repositing, material-wielding, packaging and promotion. Logistics management is that component of the supply chain which projects, enforces and checks the effective, frontward and overturns flux and storehouse of commodities, services and interrelated data (Tompkins & Harmelink, 2008).
In the business sector, logistics might have either inner focus (inward supply), or outside focus (outward supply) tracking the flux and reposition of materials. The primary works of a qualified logician include stock management, purchasing, transport and shipping, repositing, consultation and the coordination and designing of these activities. Software system is used for logistics mechanization, which aids the supply chain industry in automatizing the workflow as well as management of the organization. Production logistics assures that each machine and workstation is being flowed with the right merchandise in the right measure and lineament at the right point (About FedEx, 2008).
The paper describes a global logistics organization. The organization that I have selected is FedEx Corporation (FDX), which is a popular logistics services company. It is established in the United States. Earlier, FedEx was known as Federal Express Corporation, Federal Express and FDX Corporation. FedEx is coordinated into different functioning units, each of which possesses its own variant of the word label, planned by Linden Leader of Lander Associates, in 1994. For each division, the Fed is in purple color and the Ex in a different color according to the divisions. The master “FedEx” logotype featured the Ex in orange; it is nowadays used as the FedEx Express word label. The FedEx word label is noteworthy for incorporating a concealed right-heading pointer in the negative blank space between the “E” and the “X” (About FedEx, 2008).
Factors that impact transportation needs
There are many factors, which affect the transportation requirements for global logistics. Some of them are explained below:-
Energy: It is a very significant factor that affects the transportation needs. If there is any increase in the cost of electricity, fuel, etc., it will create a great impact on the operating cost and thus will affect transportation. There are many transportation projects that are feasible, but fail due to the energy factor. For this, solutions to conserve energy should be developed while striving to achieve the goals. Some ways to conserve energy resources are:
Suspension programs: This implies minimal power usage during off- shifts and providing incentives to the users who cut back their usage during high load periods (Tompkins & Harmelink, 2008).
High-ratio units: This involves the installation of high efficiency gadgets, with no performance penalty. It requires investment, which reduces the payback and also the monthly bill.
The rising cost of fuel is a very sensitive issue whether it is concerned with third party transporters or private fleet. Some strategies to overcome this are:-
Mode assessment: According to the service requirements, the mode of assessment can be changed, which can result in reduced freight cost.
Transportation management systems (TMS): This system can provide proper planning and effective load tendering and result in substantial savings.
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Private fleet concerns: They can attain control over the fuel cost and its usage. The investment can be reduced by eliminating one or more fuel supply chain links.
Off-Highway Vehicles: In the United States, issues continue to be under scrutinies that are related to environment and air quality. If there are more stringent air regulations, it will affect warehousing. For this, electric vehicles can be used in place of non- electric vehicles. As a result, manufacturers of electric rolling stock will give great power and efficiency vehicles (Tompkins & Harmelink, 2008).
Price: Price is an important factor in determining the transportation partner for many companies. Past trends and records do not relate to the future performances. Presently, companies require efficient, effective and minimum transportation cost. Competition is growing at a fast pace in the logistics industry and the companies, which operate with core values at low price become successful in the market.
Global Marketplace: Global impact must always be viewed in the changing supply chain. Transportation and operation system should be designed in a way that products and packaging can be accomplished easily by the international customers. Exporting services include inbound and outbound freights to carry on international transactions. The company should provide 24 hour services for the customers (Tompkins & Harmelink, 2008).
Weather: It is also a significant factor that affects transportation system. If there are any weather uncertainties, it will negatively affect the transportation activities and can bring losses for the company. It can also affect the market functions and the exchange rates.
The logistics activities are carried out differently in different geographical area. If it is a local transaction, it can be carried out through roadways i.e. by vans, trucks, lorries and buses. If it is an out of state transaction, the transportation activities can be carried out through roadways as well as railways. If the transaction is coast to coast, it is carried out through ships. And the global transactions are carried through air as well as ships. The goods, information and resources are managed through effective distribution channels. There are separate logistics departments to handle these different types of transactions related to energy and people. There should be a proper balance between the inbound and outbound logistics for accomplishing effective transportation and operations in the market (Harps, 2008).
Strategic requirements of global logistics
Strategic planning has a great importance in global logistics and is very essential for the business to grow in the right direction. Strategic analysis can be used to forecast the demand and supply of the inventory, manpower, transportation and warehousing. Strategic network consists of the location, number and size of warehouses and dispersion centers and facilities. Strategic alliances or partnerships with the suppliers and distributors producing communication lines for decisive entropy and functional betterments, such as cross dockage, direct transportation and third-party logistics are also important for global logistics (Olavarrieta & Ellinger, 1997).
Strategic requirements also include product design co-ordination to integrate the new and existing products into the load management of the supply chain. Strategic analysis also supports the supply chain operations through information technology infrastructure. It helps in deciding, what to make and buy for the business. So, the overall organizational strategy is aligned with the supply strategy to support the global logistics operations.
- About FedEx. (2008). Retrieved August 22, 2008 from http://about.fedex.designcdt.com/
- Harps, L.S. (2008). Best Practices in Today’s Distribution Center. Retrieved August 22, 2008 from http://www.inboundlogistics.com/articles/features/0505_feature01.shtml
- Olavarrieta, S. & Ellinger, A.E. (1997). Resource-based theory and strategic logistics research. International Journal of Physical Distribution & Logistics Management 27(9/10), 559- 587.
- Tompkins, J.A. & Harmelink, D. (2008). 15 Key Factors That Impact Your Distribution Network Effectiveness. Retrieved August 22, 2008 from http://www.tompkinsinc.com/publications/competitive_edge/articles/07-04-Distribution_Networks.asp