Background of Economic Factors Influencing Logistics Cost of Thailand Steel Industry - Essay Example

The main issue related to logistic is that the whole plan should be chalked out in an appropriate way so that the appropriate decisions related to raw materials; semi-finished and finished goods should be acquired or bought from, stored and delivered to. Many companies face day to day logistic issues, which may even be solved in a day or may even take quite a lot of time to get solved. Logistics are a backbone of any company and therefore it is very necessary for the company to have a fool proof system of logistics to avoid unnecessary costs (COYLE & COYLE, 2009).

The logistics system of the company is made up by a set of onsite facilities that are linked with each other through the transportation services of the company. The onsite facilities of any company are the place where the goods are produced and packaged. The logistic system of any company is responsible for taking care of the following 7R’s. They should ensure the availability of the “Right product in the Right quantity, in the Right condition to the Right place at the Right time to the Right customer at the Right cost” (MULCAHY & SYDOW, 2008). . A steel industry in a country means that the country is self-sufficient in its own main produce, it is the back bone of a country that is planning to progress.

Majority of the third world countries’ first step to start their progress is to establish a steel industry. The steel industry boosts the infrastructure and the construction industry of the country. When a country becomes self-sufficient in the production of steel its economy gets a positive boost. It is the base of all industries and therefore, it is known as the key industry for other industries. It plays a very important role in the country development and the economic stability and sustainability of the developing country.

Thailand and Steel industry Thailand’s government has realized the importance of development of the logistic channels for the steel industry. The economic factors that affect the logistics of the steel industry are factors like oil prices, and the number of labors that have been employed, the current interest rate and the exchange rate. The Thai government has been looking for opportunities to create a more efficient logistic system and at the same time keep the restraining economic factors under control so that they can save costs.

In the early 2000’s the growth of the steel industry was quite high, as the economic factors were all working in support of the industry. The oil prices were at a good rate and therefore the industry got the chance to save on it. They had hired quite a lot of employees as they were on the mode of expansion and had entered an era of economic growth. At that time the economic factors were all working in support of the logistic systems, but due to current sluggish situation of the economy there has been a recent decline in the progress of the steel