Global Logistics - Literature review Example

Global Logistics Student’s Name Institutional Affiliation Course Name Date of Submission Global Logistics Introduction Globalization of world economies has transformed the business landscape in a big way. Globalization has particularly had a huge influence on the logical operations of most companies. Waters (2010, p. 7) observed that because of the globalization of trade, production, labor and markets, firms are increasingly undertaking global logistic operation as a source of competitive advantage. The aim of this report is threefold. First, the paper will examine the globalization factors that have influenced companies to undertake global logistics operations. The second part of the report will explore the factors that have triggered the move from domestic logistics to global logistics. Finally, the report will discuss the benefits that a firms and customers derive from global logistics. Drivers of Global Logistics Globalization of world economies is one of the greatest things that have happened in the recent past. Globalization, however, is a broad concept that has no single agreeable definition. Waters (2010, p. 6) defines globalization as the integration of world economies, trade, communication and finances. Branch (2009, p. 11), however, defines globalization as the movement of business, and finances beyond domestic markets to the international markets. Globalization has particularly impacted hugely on the supply chain logistical operations of most countries across the globe. However, the increased growth of global logistics across the globe has been attributed to a number of salient factors. According to Branch (2009, p. 20), most firms across the globe have been influenced to undertake global logistics by recent technological advancements. The author notes that the advancements in information technology (IT) have made it easy for firms to communicate and transmit data easily from one part of the world to another. Accordingly, this has opened up market opportunities by enabling firms to easily outsource their manufacturing; assembling and distribution operations. Branch (2009, p. 21) proceeded to note that, because global logistics is computer-based, the rapid development in IT has influenced most firms to adopt global logistics. Secondly, firms are being influenced to adopt global logistics by the increased development of free trade zones, free ports and distriparks. According to Branch (2009, p. 21), globalization of world economies has resulted in the development of free ports and free trade zones across the globe. These developments have opened up new market opportunities of trade distribution for multinational companies, thereby promoting the development of global logistics. In fact, Waters (2010, p. 11) noted that, because free trade zones and free ports allow services and goods to enter the domestic market without being subjected to customs examination and revenue collections, this has encouraged most large firms to adopt global logistics. Thirdly, Bookbinder (2012, p. 17) noted that most firms are influenced to adopt global logistics based on the belief that global logistics allow value to be added to the services or products via global logistical network. According to Branch (2009, p. 22), global logistic network add value to a product through better packaging arrangements, better quality, as well as allow for outsourcing of product components at a lower cost. Additionally, firms are also influenced to adopt global logistics on belief that global logistical networks allow for value addition on products through mixing of foods as is seen in the disparks in the Port of Rotterdam. Fourthly, Bookbinder (2012, p. 19) noted that, because most multinational companies are driven by the logistics departments, they are influenced to adopt global logistic operation to enable them have easy time launching products across all market simultaneously. This is meant to help a company earn early cash on the capital expenditures instead of focusing only on the national or regional launch for a long time. Fifthly, the growth in international trade is another factor that has influenced most firms to adopt global logistics. One of the greatest impacts of globalization is that it has promoted the growth in international trade. Waters (2010, p. 14) noted that companies are finding it suitable to adopt global logistic operation so as to enable them take advantage of market opportunities available in other countries. For instance, the growth in international trade has allowed firms to outsource labor from low-cost countries, thereby helping lower the cost of production, thus profits. Other factors that have influenced firms to adopt global logistics include growth in satellite production that demands a network of logistics; emergence of fashion-conscious global markets and the fact that global logistics operations encourage distribution networks rationalization. Further, companies are influenced to adopt global logistics operations because of the belief that global logistics operation provides a one-stop operation, as well as the opportunity to deal with account executive. Enablers of Global Logistics The increased trend towards the adoption of global logistics by firms has been facilitated by a number of factors. Firstly, the advancements in information technology have enabled firms to collaborate easily with retailers and suppliers of products from all parts of the world Perret and Jaffeux 2007, p. 241). The development of the internet, for example, has made it easy for companies to collaborate with suppliers and customers from different parts of the world easily, thereby promoting the adoption of global logistics. Secondly, global logistics is enabled by the increased globalization of markets and international trade environment. This is because they help in generating business confidence globally. For instance, the creation of the World Trade Organization that brings countries together to trade has enabled the adoption of global logistics possible. Thirdly, the continued expansion of integrators, such as DHL and TNT has promoted the adoption of global logistics in a big way. According to Branch (2009, p. 22), the continued expansion of these generators has helped open up new market opportunities in service and manufacturing industries, thereby promoting the adoption of global logistics. Fourthly, the increased adoption of global logistics has been enabled by the continued improvements that are being made to the global infrastructures across the globe (Perret and Jaffeux 2007, p. 241). Such modernization projects include the modernization of ports, the creation of inland clearance depots and the development of free trade zones. Others include the creation and the enlargement of airports, development of good infrastructural networks, such as roads and rail networks and airports among others, all of which promote the adoption of global logistics. Other notable enablers of global logistics include the development of 3PL contractors, and the continuous improvements to the supply chain software. Advantages of Global Logistics to Firms and Customers Global logistics has many benefits that a company can derive from its adoption. In fact, today, most large companies use global logistics as a source of competitive advantage. In particular, the adoption of global logistics is beneficial to a firm since it opens up numerous opportunities for a firm, including increased markets, market differentiation, increased customer penetration, low cost sourcing, and reduced cost pressures, increased economies of scale and high profits. For instance, Bookbinder (2012, p. 24) observed that firms that adopt an effective global logistics operations can benefit a great deal through low cost sourcing for materials, expertise and labor. Similarly, global logistics is beneficial to a firm because it enables a firm to exploit new market opportunities in the international market, thereby resulting in increased market share and profits (Perret and Jaffeux 2007, p. 246). Additionally, global logistics is beneficial to a firm because it results in cycle time reduction, as well as increase speed and efficiency in logistic operations. Global logistics operations are also beneficial to customers because it results in the provision of quality goods and services (Waters 2010, p. 14). Accordingly, this results in the satisfaction of customer needs, which is in turn beneficial to a company as it helps in building customer loyalty. Conclusion Globalization of the world economies is one of the greatest events that have happened in the recent past. However, supply chain management and logistics is amongst the activities that have been greatly by globalization. Globalization has caused increased adoption of global logistic operation in many firms. As discussed in the literature, there are quite a number of factors that have influenced firms to adopt global logistics operations, including development of IT, increased development of free trade zones and ports, and growth in international trade among others. Global logistics, however, is enabled by factors such as advancements in IT, and globalization of markets and international trade among others. Overall, global logistics is a trend that any company that intends to succeed in the future must adopt as a source of competitive advantage. References Waters, D 2010, Global logistics: New directions in supply chain management. Kogan Page Publishers, New York, NY. Bookbinder, J. H 2012, Global logistics. Springer Science & Business Media, London. Branch, A. E 2009, Global supply chain management and international logistics. Routledge, London. Perret, F., & Jaffeux, C 2007, "Factors influencing global supply chain efficiency: implications for information systems." Supply Chain Management: An International Journal, Vol. 8 Iss. 3, pp.241 – 250. Read More

 

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