BMO3418 Transport and Logistics Management : Strategy of Cost Reductio

Intermodal capable

This is a feature that occurs as a result of a combination of two or more modes for the purpose of gaining competitive advantage resulting from each mode used in intermodal shipping. For example, piggy backing truck trailers used in Yusen logistics company, are always loaded on rail road cars without unloading the trailer and when the railroad cars reaches at a certain destination, the truck trailers are then off-loaded on to trucks so that they can be delivered to the customers final destination. (Coyle et al., 2012)

Accessibility

This refers to the access of cargo as it reaches its destination. It  is an intermodal feature which allows for final delivery of the cargo on transit to occur at the destination or the location that the customer desires or even where the customer requests for the cargo delivery to be offloaded on to other modes before reaching the destination of the buyer. For instance, most cargo delivery made through air must be loaded on to other modes of transport like trucks before delivery is made to the final customer. (Coyle et al., 2012)

 Capacity

This is the amount of cargo which can be transported through one unit and at the same time. When the capacity is higher the transport cost is more likely to be spread over individual cargos thus leading to a reduced cost of transport per each individual item shipped. (Mentzer, 2012)

Product option

The mode used shipping to be used in transporting selected products is determined by different number and type of products. Some modes are very limited in terms of the type of the cargo which can be shipped while modes such as truck are able to transport a wide range of cargo.

2.Logistic management strategies

Logistic management strategy is the set of principles that guides and drives operations which help coordinate goals, policies and plans in a given supply chain to ensure effective and efficient controlling, planning and implementation of transport procedures and operations within an organization. Some of the logistics strategies include;

Enhancing of product and service value

When logistic operations and management are effective it helps a company gain competitive advantage and outshine other companies through enhancing its value in service provision and products offered. Companies should also initiate the strategy of cost reduction so as to remain competitive. Value enhancement can be done through product diversification since the most effective way of adding value to a product is to bring it closer to customers taste and preferences. This can be done by extending and diversifying products range. Therefore the logistics services should be planned in such a way that ensures products are widely supplied to users to ensure product diversification. Value enhancement can also be achieved through development of higher value products. (Mentzer, 2012)The higher value products are ones which are more fragile and perishable therefore they need to be handled with a lot of care and packaging done on a proper way. This type of products are often more expensive especially the insurance cost while such products are on transit and therefore needs tighter security. The production and distribution systems used for high value products should be developed to reach many geographic areas and to be enhanced to be more complex so as to meet the delivery requirements of high value products to all areas. Yusen Logistics Company has initiated such system since it serves many cities that need the fragile products.

Improved service quality also enhances value of products since it ensures fast delivery of products and ensures reliability during delivery. Customers are always ready to pay more for a more reliable and faster delivery. Products supported with good after sales service are always considered as high value products. Therefore companies should provide improved logistics services to help them be outstanding than their competitors as Yusen Company does.

Reduction in cost

Logistics costs present a large percent of sales revenue according to previous research on logistics strategies. These costs can therefore be reduced by improving on logistics operation productivity. The excess cost can be used in other activities hence lowering prices of such activities. Logistics companies can reduce on costs by using new technology systems to streamline and make all operations efficient and avoiding a lot of manual work and paper work that incurs a lot of money, embracing the use of just in time management so as to ensure quick response, centralizing inventory for easy access and to cut on cost of transport if the location could be in different places, develop supply chain management to ensure effective interconnections for easy movement of products. Substantial improvements should also be made on freight transport operations to make it more efficient. This can be achieved through liberalizing freight market, upgrading the infrastructure sector and improve on design of transport modes. The improvement will in turn help cut on costs involved in freight transportation operations.

 Problems facing current logistic

Logistics operations have currently diverse widely many companies including the Yusen Logistics Company have embraced the operation in Australia. However, current logistics face various problems discussed below;

On time delivery

Over the previous years, most companies in have faced the problem of late deliveries due to work slowdowns. For instance in Yusen company, vessels used to transport products to customers destination that usually takes shortest time possible now take more time offering same services due to increased number of customers the company serves, therefore leading to slowdown on delivery of cargo. As companies continue to become more interconnected, the problem will continue to spread in the coming future.

Ever changing customer needs

In the past years, companies used to offer same service and assume it fits every customer. Recently, customers need keeps on changing and solutions including logistics solution to the changing customer needs should be provided to each customer. Raw materials visibilityfrom first stage to final consumption stage, full order transparency, and reversed logistics have been made standard for commodity products group. However, keeping standard services at times are more challenging due to the involvement of various different parties and many variables needed for global logistics. (Waters and Rinsler, 2012)

Security

Security is another major problem facing the current logistics. The movement of goods currently involves more than seven different receivers, the cargo is first delivered to the local warehouse for temporary storage and handling once it leaves the origin location. From the warehouse, the cargo will then be loaded in trucks and delivered to the recommended port. Before the ship arrives at its final destination, it would have passed through seven or eight different locations hence giving room for theft or other malpractices on the cargo on transit. (Waters and Rinsler, 2012)

Infrastructure

Insufficient infrastructure has become major problem in the current years in Australia. Most terminals are not yet completed their set up so as to accommodate large vessels which already serve the major trade lanes. The large vessels cause a lot of congestion problems at the terminals. If infrastructures will not be constructed to accommodate these vessels, the congestion issue will continue to affect the logistic operations in the coming future. In general, the infrastructure problems mainly in the countries that are still developing in offering intermodal and logistic services, slows down logistics operations posing a serious problem. Demand also is seen to continue increasing leading to increased quantity of vessel to be transported. This increase is expected to continue in the coming future.

Rapid economic changes

The rapid changes in economic state including fluctuation in prices especially transportation costs and increase in taxation rate also subjects logistics operations to find difficulties in forecasting the future. Any successful operation should always have a plan, and this rapid change in the state of the economy makes it difficult for the companies to plan the future well. Moreover, if the transport cost keeps on changing, it eventually makes it difficult to plan on logistics operations and the costs to incur. (Waters and Rinsler, 2012)

Capacity

Pressure on capacity has led to overcapacity and tightening capacity in both ocean shipping and domestic shipping are affecting the logistic field in different ways in Australia. Previous studies conducted found out that the rates charged on freight are in great pressure which is continuous due to delivery of large cargo. The large undelivered vessel occurs as a result of oversupply and lack of demand which was a major problem in the past years. Some common container carriers including the Maersk frequently used in Yusen Company have a capacity of 12 % of their current fleet when combined together. The largest carrier has 20% capacity which is equivalent to their existing fleet. Cargo on transit still faces the problem of less space resulting to a lot of pressure since lack of enough space leads high rates charges for any available space found for the cargo. Shortage of truckers in most of the Australian companies results to tightening capacity problems. The situation also leads to higher truck rate charges. Port congestions too and frequent changes of weather especially in the west coast has led to more problems making the current situation worst. The increased cost of cargo movement, increased regulations and aging workforce has also affected the domestic flow of cargo negatively. (Waters and Rinsler, 2012)

Solutions to problems facing current logistics

Various solutions have been identified to help solve some of the problems discussed. First, security problems can be solved by ensuring logistic companies work with other service providers who uses  supply chain processes which is secured, have put strong security measures in place and practice programs supported by the government. The government can be involved in the situation through enforcing security laws and enforce strict measures to be taken against any service provider that breaks the enacted laws and regulations. The government can also help the logistics companies reduce the cases of theft and other malpractices when cargo is on transit by reducing the long chain involved in shipping of cargo to a short channel of service providers.

Secondly, the ever-changing customer needs problem can be solved through studying the customers behaviors on consumption of different products, then forecast on their future consumption behaviors so that their needs and preferences can be easily predicted according to how they have been behaving previously. Orders made by customers should also be made transparent, raw materials used should be visible as well as the final products coming from the raw materials and reversed logistics to be made standard only for some group of products. The issue of insufficient infrastructure can also be solved by building more cargo terminals in order to reduce congestion. Solving this problem will need the government involvement to help in constructing more terminals in each location that cargo delivery is made. (Supply chain management process standards, 2011)

The issue of on time delivery can be solved through use of well-made vessels that are efficient and cannot break down in case of overload. More vessels should also be purchased to avoid delays on delivery due to lack of enough vessels as seen in the past years. The government might help solve the problem of insufficient vessels by subsidizing the prices of vessels and make them affordable to all involved companies. Rapid change in economy state is also another problem that affects logistics. The government is therefore greatly needed to be involved and help solve this issue. The government can help solve the problem through subsidizing all costs involved in logistics operation so that in case of fluctuations of prices, the costs involved in logistics operation will not be affected and it should also standardize the taxation rates. Lastly, capacity being another major problem that current logistics faces, solution to this problem will be increasing number of ships and trucks used in delivery in order to meet the high demand that keeps on increasing. By increasing trucks and ships used in delivery, companies will be able to meet the need of having enough space for delivery of high volume vessels to different destinations. (SUPPLY CHAIN LOGISTICS MANAGEMENT, 2017)

Recommendations

Intermodal transport is widely used mode of transport in most of Australian companies and other companies from other nations. However, before embracing the use of the transport mode, one should first identify the features of the intermodal and ensure it fits the type of cargo the company deals with. In addition, intermodal transport works in line with logistic management and for effective logistic operations, some logistics management strategies should be put in place for an effective outcome on operations. Having logistics management involved in the company operations, the company should be aware of some problems such as infrastructure, changes in customer needs, economic changes, capacity, on time delivery and security problems and others that faces current logistics and identify long lasting solutions to the problems in order to remain competitive since their operations will be effective and efficient. The government may also take part in providing sustainable solutions to such problems.

References

Coyle, J., Bardi, E. and Langley, C. (2013). The management of business logistics. 1st ed. Mason, Ohio: South-Western/Thomson Learning.

Coyle, J., Langley, C., Novack, R. and Gibson, B. (2012). Supply chain management. 1st ed.

Frazelle, E. (2010). Supply chain strategy. 1st ed. New York: McGraw-Hill.

Greeff, G. and Ghoshal, R. (2009). Practical E-manufacturing and supply chain management. 1st ed. Oxford: Newnes.

Mangan, J. and Lalwani, C. (2016). Global logistics and supply chain management. Chichester: Wiley.

Mentzer, J. (2012). Supply chain management. 1st ed. Thousand Oaks, Calif. [etc.]: Sage.

SUPPLY CHAIN LOGISTICS MANAGEMENT. (2017). 1st ed. [S.l.]: MCGRAW-HILL EDUCATION (AS.

Supply chain management process standards. (2011). 1st ed.

Waters, C. and Rinsler, S. (2012). Global logistics. 1st ed.