Logistics Critique Essay
Case Study report of DHL Abstract The rapid development of global commerce has drove logistics to reduce products lifecycles, increase response and action efficiency and optimize investments of inventory for current businesses. Therefore, logistics plays a pivotal role in nowadays commerce. The objective of the report is to discuss and evaluate the existing logistics theories. Whereas, DHL will be selected as a case study so as to get a further understanding on logistics according to the analysis result. Introduction
As with the growing complexity of transporting goods and supplying materials for a business in world’s supply chain, expertise that developed to deal with this kind of problem is imperative so logistics. The concept of logistics is not specific, the world’s formal definition is ‘Logistics is the management science of supply chain and the art of controlling and managing any kinds of resources flow like products, information, petrol and even people between the origin point and the consumption terminal so as to satisfy clients’ demand’.
Logistics is in relation to the process of moving the right products and services at the right quality to the right place at the right time with right prices. It is said to be the essential part of any marketing or manufacturing activities. Logistics involves Literature Review Since the value of time becomes more and more important in today’s global commerce, transportation speed and delivery reliability are necessary for companies to compete emulously in business operations which drives logistics industry to improve service standard.
In 1996, Kostecki pointed that conscientious in accordance with service determine logistics companies’ emulously advantage and success. To that content, an important part to be integrated into time management for logistics industry is operating business with clients effectively and innovating more efficiency operation skills with clients. This is important because any inefficiencies and irregularities in operating with customers that happened in different regions can affect the commerce environment significantly for logistics companies argued by Ahanori and Nachum in the year 2000.
They said that the current development trend in logistics industry is just in time supply, e-commerce and growing globalization management. In 1998, Altabet predicted that logistics theory would be updated into supply chain management. The impact of effective forecast in the process of supply chain management on a company is significant. Kiely states that it will result in inventory investment reduction, customer satisfactory improvement and product distribution efficiency enhancement. Generally speaking, forecasting eliminates companies’ worry about excess inventory investment so as to increase the efficiency when operates with customers.
Another important managerial skill for commerce is the cost management theory. Degraeve and Roodhooft point that over half of entire costs is accounted from external goods and services parchment. In order to hold a competitive position in the logistics market, companies should develop a more dependable and lower cost supply chain while assure high service quality for customers. Some suggests that company can increase the cost management reliability via computer technology. With the increasing importance of globalization transaction, contracts act essential role in international trade.
On account of companies always being confronted with the situation of accomplishing orders with deadline and quotas, some suggest a management approach of Vendor management inventory to handle the problem (Waller, 1999). The management project help companies distribute the requirement materials more flexible and offer the possibility of cost reduction and efficiency improvement at the same time. Objectives With the purpose of understanding logistics theory in accordance with practical application and to see how enterprises apply logistics theory to enhance efficiency and reduce cost . tc. DHL, the global leading logistics player is selected for a case study about its logistics operations in this report. Logistics operation of DHL DHL is the leader of global express, international transportation and air freight. It is the world’s NO. 1 shipping contract logistics provider. DHL offers customers a full range of logistics solutions from documents to supply chain management. As the global biggest logistics expert, DHL is a strong logistics partner for its clients that can offer any kind of freight transportation via water, railway, road and air. It can supply either pecial or shared operations of warehousing and distribution to any kind of industry sectors. On account of DHL is entirely service oriented, it involves no material movement itself but that for clients both consigner and consignee and the intermediaries as well. It just includes physical distribution and procurement. While, procurement involves in packaging materials like paper, plastic and boxes etc. the process is as follows. The first step is to weight and check for condition of the products and materials that collected from the consigners and then pack them according to their various characteristics.
After that, products or services will be sent along to their destinations. DHL facilitate service performance via effective forecasting. It means the estimation of time required for both collecting wares from the consigner and that arriving to the final client. The crucial point of DHL’s entire business is timely delivery. The delivery documentation and process will be coordinated based on the approachability and distance to the final consignee. DHL can measure the time that it will cost for the goods to arrive to its end-point precisely.
DHL provides customers Web Shipping services that allocate a certain user name and password for each client which allows goods sender and receiver to track goods status via online information center. DHL has won the reputation for its continuous development on supply chain solutions innovation that improves control. It supplies for customers reverse logistics management solutions that enable client design, accomplish and conduct materials flow and regulate corresponding information, support of the supply chain to resize values and guarantee safe-handling of products.
It involves receiving, ordering, controlling and conducting returned goods. In addition, DHL offers service for manufactures of service and replacement. It enable customer receive and send manufactures’ replacement parts in terms of pre-designed service such as with a certain deadline. What’s more, DHL offers some services other than physical logistics services such as order management, global inventory management, freight solutions, and customs solutions. The following three figures show the flow process of DHL. Figure [ 1 ] Process Map of DHL Figure [ 2 ] internal process map of DHL Figure [ 3 ] external process map of DHL
Five objectives analysis of DHL’s operation Quality DHL has a process of performance measurement so as to supervise the daily working process and understand customers’ voice. The company applies DePict project management approach to track every project in order to ensure their service quality. Furthermore, most units in the management system of DHL are in accordance with the system ISO 9000 which is the global quality controlling standard. Hence, DHL always keeps a high level service quality. Speed DHL provides its client’s specialized solutions so as to ensure a faster response speed to the changing marketplace.
For its different kind of customers such as automotive, retail and fashion, DHL offers each of them unique logistics solutions so as to enable a lower response time to the market. Dependability DHL is a leading player in many fields of the logistics market; it operates business in about 220 countries and employs more than 31000 people. In addition, it has the world’s largest aircraft fleet and a huge number of ships and vehicles. Moreover, it conducts business with advanced management methodologies and performance measurement. All of these resources ensure DHL an unrivalled ability to accomplish any kinds of logistics services perfectly.
Flexibility DHL involves in many parts of logistics market and has strong enough ability in each field. It can offer many kinds of logistics service via different routes. Otherwise, DHL can provide customizing logistics or supply chain solutions to meet their specific demand. Cost As a leader in many of logistics market, the bargaining power of DHL is much higher than most of its competitors which therefore will bring some advantages for DHL. However, for there are lots of companies that can provide similar service or products it may lose the price advantage in some egment market. SWOT analysis of DHL’s operation Strength The biggest strength for DHL is its leader position in logistics field. It is the dominator in the area of freight transportation through air and ocean. DHL’s business covers a larger area of the world; it provides services for over 220 countries. The leading position enable DHL enhance its economy scale and the power of setting price. Secondly, DHL’s diversified business model enable the company to reduce the risks in business activities and discover new opportunities in emerging and existing marketplaces.
DHL devotes itself to the division of mail, supply chain, freight transportation and express. In addition, DHL has the highest employee productivity based on the data from Datamonitor. What’s more, the DHL owns a large airplane fleet that can provide great transportation ability and a long-term emission reduction GOGREEN program which makes DHL as the first mover in this area. Weakness According to the data collected by Datamonitor, DHL has encountered a problem of decline in its cash flow which results from low efficient cost management.
This will reduce its resources availability when it is in pursuit of growing plans. Another problem is due to its huge airplane fleet. As with the rapid climate changing, enterprises are required to undertake their social responsibility for the environment. Large number of aircraft implies lots of emission. Although DHL is trying to apply approaches to reduce aircraft emission such as using higher quality fuel and optimal flight line, reductions on emissions will be still minimal due to the limitations in nowadays aeromechanics implies that airplane efficiency cannot be improve a lot in this aspect.
What’s more, as a forerunner in the area of making effort to reduce emission, DHL will also get the advantage in compliance with new environmental regulations in the future. Opportunities As with the rapid development of e-commerce, online shopping nowadays grows with a steady high speed year by year. Most of consumers will move their shopping habitat from retail to online. Thus deliveries will increase significantly with the step of online sales which will promote the growth of DHL’s business.
Moreover, consumers nowadays require more environmental friendly products and services which result in a growing demand from enterprises to get greener logistics services, higher efficiency transportation and low carbon offerings. The GOGREEN policy of DHL will meet the demand of such companies and the continuation development of this kind of services will help DHL get a good hand in competence with others. Threats DHL currently is in the situation of facing fierce competition in logistics business. The scattered global logistics market brings intense competition to DHL.
These may result in negative effects on the company that potentially will decrease its growth and profits. What’s more, it is said that logistics industry produces a big percent of global emission which lead to governments from all over world aim to reduce the pollution contribution from this market. As a multi-national enterprise DHL always faces the pressure across from governments and NGOs as well. It may affects DHL’s reputation since people nowadays consider more and more about a company’s social responsibility. Conclusions and Recommendations To conclude, logistics is very important for nowadays global intense competitive marketplace.
As is known to all, logistics is an essential part of any companies function. A good logistical operation can enable a company cut the production cost and enhance the efficiency. In this report, DHL was selected as a case study to help analysis logistics theory. DHL owns the biggest logistics network all over the world. It provides any kind of freight transportation via multiple approaches. DHL conducts its great range of logistics activities and solutions for clients across almost 220 countries. It is dedicated to provide customers better performance and low-cost service in today’s highly competitively market.
In order to get the victory in the competition, DHL should set a reasonable price, provide a faster and larger amount of scheduled service, improve the function of tracking goods, enlarge the business geographic area, enhance its dependability and innovate new service for customers. In addition, DHL should make more efforts on emission reduction. The performance management and GOGREEN program may help DHL to accomplish this target. In a word, the art of logistics is essential to every organization while DHL has shown its great management and operations to enable a leading position in the world’s market.
References 1. Ahanori, Y & Nachum, L 2000, Globalization of Services: Some Implications for Theory and Routledg: London 2. Degraeve, Z & Roodhooft, F 1999, “Effectively selecting suppliers using total Cost of Ownership”, The Journal of Supply Chain Management, vol. 35, no. 1, pp. 5-10. 3. Kiely, D 1999, “Synchronizing supply chain operations with consumer demand Using customer data”, The Journal of Business Forecasting Methods & Systems, vol. 17, no. 4, pp. 3-9. 4. Kostecki, M 1996, “Waiting Line as a Marketing Issues”, European Management Journal, vol. 14, no. 3, pp. 295-303.