Key Term and Why You Are Interested in It
The reason I chose this key term is that I want to research how logistics and transportation enhance global business industries. I have read before about the critical role of logistics and transportation. Nowadays, a company needs to have a department of logistics that deals with customers internationally. I would like to do a broad search in consideration that logistics involves many principles. Also, I am interested in the key term because I would like to further a professional career as a project manager in logistics and transportation. I want to research what are the implications of this career. How logisticians manage the supply chain management.
Explanation of the Key Term
Logistics and transportation involve a range of activities in industry. Logistics involves the whole process of creating and product until the delivery to the customer. The process starts with materials management when a company receives the raw material ready to go through multiple processes like manufacturing, packaging, assembly until the product is delivered to the final customer which is the physical distribution through transportation, warehousing, wholesale or retail. Physical distribution involves all the activities related to making parts and finished goods available for consumption, and it is distributed to channels from suppliers to consumers. The goal of logistics and transportation is to provide an excellent movement of merchandise from the company to the final destination. This implies precise planning between the departments in the company and communication with the customer.
Major Article Summary
The article I chose to discuss is A shift in fundamentals: the changing direction in logistics and transportation management. The article is an analysis of the challenges and changes that logistics and transportation have to face due to the great recession in the late 2000s. It gives an enhanced view of how things have to be different for companies to remain competitive.
Representing approximately 7 percent of sales and totaling more than $1.2 trillion annually in the United States, logistics expenditures represent a prime target for efficiency initiatives. Transportation costs account for a substantial portion of this amount at 63 percent of the total spend. However, it is more than just another cost for managers. Logistics and transportation decisions directly affect multiple areas of the firm’s success such as procurement, manufacturing, inventory, distribution and customer service. (Holcomb, Troth & Manroth, 2014). Traditional practices in the past are obsolete nowadays due to the expectancy of logistics and transportation. A company will have to adjust the time of shipping to the customers. Competency brings changes to the way logistics and transportation are performed. The challenges that are the face like hours of service, drivers’ shortage, organizational chaos, changes in management and expensive equipment. The previous practices are no longer valid after the recession and changing the way companies operate is a challenge as well.
As transportation costs are rising, so too are overall logistics costs. Inventory carrying costs have increased at a faster rate than transportation costs. This prompts the question as to how firms are making decisions that will impact both areas while keeping in mind the firm’s overall strategy and objectives. (Holcomb, Troth & Manroth, 2014). Managers also have to deal with challenges when transporting goods; they have to include the prices of the fuel, how to handle drivers’ shortages, issues with the transportation routes. Logistics and transportation involve much work, it is a planning and dedicating process that has to be studied meticulously. Especially for global managers, people who are pursuing a career in logistics must be aware of the challenges.
Discussion
- The previous article that I chose to summarize explains the whole concept of logistics and transportation. My research is focused on how logistics and transportation are fundamental for a company. In the article logistics and transportation plays a significant role in the economy. The author of the article explains how logistics and transportation have to be readjusted due to an economic crisis. The author describes that logistics and transportation have to find a new way or cut the cost of transporting goods. It also demonstrates that due to factors that a company cannot control logistics and transportation are in detriment, for example, the value of the fuel and the shortage of drivers. Logistics and transportation are always going to be present in the global business. Global logistics will still exist. Logistics managers need to be aware of the challenges because companies and customers rely on transportation practices to receive their goods. Logistics and transportation need to start at the strategic planning level and need to be communicated to the whole company. It needs to explain to the employees how their competency will affect the final logistics of the products.
- The articles that I chose for my research relate to each other because they base the analysis on logistics and transportation practices. The commentaries explain the fundamentals of logistics and transportation. Also, how can logistics and transportation have a final impact on customer satisfaction? It indicates how important it is to be vigilant without logistics practices. The efficiency at the end of the supply chain management will enhance the productivity of the company. It will bring more customers to do business with our company. The article Real options: applications to logistics and transportation explains many considerations when transporting the good to a customer. This paper presents a framework for using transportation options in a similar manner to stock or commodity options: a shipper would buy a transportation option from a carrier, or a carrier’s agent, which would give the shipper the right but not the obligation to send a shipment in a particular freight lane at a specified future time, for a defined future cost. Like a stock option, the shipper who purchased the choice would be free to use or not use the transportation option. Options offer many benefits to shippers and carriers looking for flexibility, and to carriers looking for enhanced revenues. The benefits due to both shippers and carriers should make transportation options attractive to both parties. (Rogers, 2006).
References
Holcomb, M. C., Liao-Troth, S., & Manrodt, K. B. (2014). A shift in fundamentals: the changing direction in logistics and transportation management. Transportation Journal, 53(4), 516.
Ronald S. Tibben‐Lembke, Dale S. Rogers, (2006) “Real options: applications to logistics and transportation”, International Journal of Physical Distribution & Logistics Management, Vol. 36 Issue: 4, pp.252-270,
HESSE, M., & RODRIGUE, J. (2006). Global production networks and the role of logistics and transportation. Growth and Change, 37(4), 499-509. doi:10.1111/j.1468-2257.2006.00337.x
Grazia Speranza, M. (2018). Trends in transportation and logistics. European Journal of Operational Research, 264(3), 830-836. doi:10.1016/j.ejor.2016.08.032
Critique
Considering logistics and transportation is a good idea to elaborate. It is an interesting topic to discuss and navigate several insights regarding the impact. However, selecting the topic must contain a broad purpose. For Instance, you must select this topic to derive the impact of modern logistics and transformation process on business performance. Instead of just focusing on these terms to elaborate, it is necessary to elaborate the broader view. The discussion is not specific. You came up with some fundamental changes in the logistics and transportation process in different industries (Ertem, İşbilir, & Arslan, 2017). However, the biggest weakness of this content is the lack of several initiatives that companies have taken to transform the whole process. Interestingly, you mentioned the shift in the sale process in different industries. It is imperative to elaborate what logistics factors have taken the process at the other level. For example, tracking of delivery and use of other technologies can be described in the content to make it moiré specific and purposeful. Price of fuel and driver shortage has been illustrated. These are two important factors in the logistics and transportation process (Gravier & Farris, 2008). Unfortunately, these are some traditional aspects in the global transportation industry. Technology has developed the whole process to reduce the impact of cost, fuel, and drivers. Even in the discussion, your purpose is to explain the importance of logistics and transportation for the company. Critically, I would like to suggest elaborating the difference between global and domestic logistics. Explaining both advantages and disadvantages can make the whole discussion meaningful. Some key benefits for shippers must be presented in the essay that can justify the importance of logistics and transportation for the company (Chieh-Yu, 2007). Thus, these are some weaknesses. To make the essay precise and meaningful, these suggestions must be considered.
References
Chieh-Yu, L. (2007). Factors affecting innovation in logistics technologies for logistics service providers in China. Journal of Technology Management in China, 2 (1), 22.
Ertem, M. A., İşbilir, M., & Arslan, A. Ş. (2017). Review of intermodal freight transportation in humanitarian logistics. European Transport Research Review, 9 (1), 1-11.
Gravier, M. J., & Farris, M. T. (2008). An analysis of logistics pedagogical literature: Past and future trends in curriculum, content, and pedagogy. International Journal of Logistics Management, 19 (2), 233-253.
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