The Role of Logistics Communication Technologies
Logistic can be described as connective tissue which makes global economy to work. It can be a big source of the competitive advantage that can help business to expand and also launch new models of business. With rapid technology growth in the modern world, our life and economic society are significantly changing. The way of capturing competitive advantage of these technologies has become an issue which is most important for business enterprises in this uncertain and rapidly changing business environment. Technology adoption has been pointed out by many researchers as a tool, which is most important for the enterprises so as to keep the enterprise’s competitive advantage. Enterprise survival in the knowledge-based economy age depends on the means they can use to improve technological capability in their enterprises (Azevedo, et al, 2007). At this perspective, adequate methodologies need to be developed by enterprises so that they can adopt in successful way the technologies which are new in field of logistics, so as to integrate the logistics into corporate strategy to enable them become more competitive.
With the Increasing number of business enterprises and advancement of technology, pressure is building for various businesses to make changes on their traditional style of management in both the organization and their operation and replace them with the integrated systems that can help them to increase the fluidity and speed of information and physical flows (Azevedo, et al, 2007). In order for them to arrive at this type of integration, these enterprises are investing in the current information and communication technologies (ICT). ICT are important to the logistics as they make the right information available, at the right place and at right time (Azevedo, et al, 2007). This logistical paradigm, which refers to the physical goods, has relevance into the information management. Logistical system can convert materials into finished products through creation of the customer value, whereas communication and information systems can convert data to information to help or facilitate decision making in management.
Information is a resource which is used in making decision and it subsequently enhances effectiveness, flexibility and efficiency of logistics (Kokkinaki, et al, 2003). Logistics has several trends which currently affect it; they include the explosion of the global production and global trade due to toppling of political orders which were old, and more especially the communism fall. Furthermore custom barriers also have fallen, particularly in European countries, and trade is now at advanced stages between the western and eastern parts. In addition, North America Free Trade Agreement (NAFTA), Organization of world trade, General Agreement on Trade and Tariffs (GATT) and the South American Free Trade Pact are creating international trade wave. As this continues to happen, there will be more need of logistics. The more the people will continue to use internet, the more business will be in the internet, and the heavier the packages will be and also a greater need of letters to go around the globe.
Second trend is transition to the post-industrial society. Western countries population is stagnating and the average age is said to be increasing and more money are spent on health and communication whereas less money is spent on products which are produced in mass (Finley et al, 1997). This trend is for goods of wide variety, which should be transported in ways which are more specialized directly to the consumers or users. Logistics industry will have to specialize in the niches, for example, the textile industry which needs to have players who are responsive to the fashion trend.
Another trend can be described by the world we live today. We live in a “time-is-money society” and also in the “on-demand world”. We are also moving in the time-based competition. The speed is more important that it does not need a cheap price. For instance, we can see in the micro electronics which has phones and personal computers, game consuls and chips, using the term of agility, which means ability of first getting the market (Kokkinaki, et al, 2003). Demand is thus changing the world of logistics.
The environment sensibility, which is much growing, is another trend. The question which is often asked by people is: how can they transport less, with more efficiency? How can they recycle more? Trucks are becoming more restricted on high ways in Europe. In Australia some of truck traffic is being banned on weekends (Finley et al, 1997). Goods are often transported through rails because it uses less energy. Also there is much concern about the noisy airplanes. The logistic industry is being much shaped by the environmental concern.
The rediscovery of organizations which have structural process which are based on better organization and greater efficiency have also applied logistics (Azevedo et al, 2007). Privatization and deregulation in the services of public in transport and communication is also another trend in logistic. An example is the DHL, which used to be Germany postal system which was inefficient at that time. After being privatized and also modernized, it started being profitable. It wondered what it could do since it could not sell stamps through out its life. It changed from postal services into integrated transport and logistic company.
Still, orientation towards the shareholder value applies logistics. Logistics is stepping towards focus on the core competences (Finley et al, 1997). Companies divest in order to concentrate on the core business. The transport function has more outsourcing and helps a provider who is third party such as DHL to expand as well as fuels growth of logistic companies which are specialized in transport.
Another trend is communication technologies, which may have come as new (Azevedo et al, 2007). Now with the use of internet one can find his or her shipment and contact his or her call center to know if the shipment is stuck. One can also use mobile phone to do that. Tracing and tracking is also becoming more common. Logistic companies can now trace shipments automatically to detect whether it has been stuck even before the customer has realized the shipment has not yet arrived. The radio frequency identification tags (RFID) is very important in this sector. It would have been hard to detect and find the location of shipment especially in the logistic transport companies which has huge warehouses.
The future trends in logistics will much focus on environmental impact and reduction of congestion, economy support, public transport and accessibility improvement, and also improving security and safety (Kokkinaki et al, 2003). On the matter of environment, sustainable development is supposed to meet the present demands without the ability of compromising future generation to meet their needs. This will have to influence the transport system development, economic strategies and spatial planning, which will include improved understanding on interaction between land use and transport. It is much important for transport planners today to have wider consideration on transport issues such as air quality, social inclusion, security and crime. With regard to freight, increasing pressure by many fronts needing the sector to be environmentally conscious and also have concern from packaging up to fuel efficiency. Since transport is said to be a significant contributor to emissions of carbon dioxide. This is much likely to accelerate the momentum of more sustainable development in transport forms and also a continuing research on production of vehicles and fuels which are clean.
Another future trend will be on fuel costs. Transport costs for passengers keep on increasing due to increase in the prices of fuels. This has impact on decisions of travel since increase if cost of fuels results to increase in use of public transport (Finley, et al, 1997). This in turn pressurizes the provider. Freight sector is also affected by the fuel costs and impact much on the profit margins.
Legislation is also a factor which will make logistic to have another trend. The way freight will be transported will be subjected to much international legislation which will be complex. There is also a potential of more pressure which may result to sourcing products from local so as to reduce footprint of carbon, and also use the alternative transports such as water ways and rail.
Terrorism is also likely to continue threatening this transport and logistic company. New technologies in the security measures which are already seen in the airports and the ports are much likely to be introduced and tested on underground and rail systems. These steps which are designed to reduce terrorism threats are also accompanied by the new methods of dealing with terrorism if it may occur.
Technological developments may have a great impact. Real-time information of the users of public transport about their devices that may be hand held may be by use of automation in the distribution centers. Increasing fuel costs is also likely to create much dependency on information technology so as to increase efficiency and reduce costs (Kokkinaki et al, 2003). The new entrants in this sector will have to embrace the IT on how it could be used to help in achievement of this solution.
Azevedo, G., et al. (2007). The Role of Logistics’ Information and Communication Technologies in Promoting Competitive Advantages of the Firm. Retrieved July 26, 2010, from http://mpra.ub.uni-muenchen.de/1359/1/MPRA_paper_1359.pdf
Finley, T., et al. (1997). Logistics Integration: The Effect of Information Technology, Team Composition, and Corporate Competitive Positioning. Journal of Business Logistics. Retrieved July 26, 2010, from http://findarticles.com/p/articles/mi_qa3705/is_199701/ai_n8738449/
Kokkinaki, A., et al. (2003). Information and Communication Technology Enabling Reverse Logistics. Retrieved July 26, 2010, from http://www.fbk.eur.nl/OZ/REVLOG/CLAS/REVLOG-BOOK/revlog16.pdf