Logistics is the last stage of a product supply chain and this stage is concerned with the movement of the final finished product to the customer. In physical terms, the customer is the final destination of the product which is in turn linked through a marketing channel. This stage includes the co-ordination of order receipts, warehousing management, selecting transport carriers, shipment and distribution of the product to customers and set up an invoicing system to receive payments. UK Logistics Industry
Overview – The UK logistics sector is a fast growing and highly competitive sector which needs to employ highly skilled professionals and staff so that the companies involved in logistics and transport trade do not loose out on a prospective competitive advantage. As per the experts, improving the skills of the sector has proved to be highly rewarding for logistic companies hoping to improve their profits and market position. This report will study the logistics management along with the use of supply chain management within the UK logistics sector which is aimed at improving the profits for the logistics companies.
The entire structure of the UK logistics comprises of over 66,000 enterprises out of which 65. 5% are principally drawn in road freight transport. The logistics and transport sector which also includes the storage and warehousing sector employs 1. 4 million people that cover 5% of the total work force of the country. The sector broadly covers land, water, air and space transport. Even though the companies belong mainly to the private sector, some large logistics and freight organizations were initially part of the nationalized companies in UK and still retain some old employment and process traditions from those days( Lambert & Stock, 2002).
It took some time to accept logistics as a management process, but soon, all progressive companies identified logistics as one of the foundation stones to deliver various services and products with efficiency. Today, management of logistics is acclaimed as a combining process that provides information networks and necessary infrastructure essential for the development and functioning of global supply chains. A good logistics supply chain would include the right resources in the right place, at the right time, right quality/quantity and at the right cost. Virtual Service Provider
While many Logistics Service Providers continue to focus on traditional services within the UK logistics sector, a new breed of service providers has emerged. This includes fourth-party logistics or lead logistics providers (LLPs) ( Lambert & Stock, 2002). Once LLPs emerged that, even LSPs no longer have to concentrate on asset utilization. The new focus concentrates on the development of holistic approach that engulfs on a total supply chain offering. Such functions incorporate sourcing and coordinating total supply chain operations on behalf of all the stakeholders i. e. from buyer to seller.
A survey of logistics directors and senior managers in UK conducted in the year 2000 found that the concept of working with LLP is gathering a lot of favor and fervor. The supply chain visibility and connectivity offered by e-commerce applications has also enabled the LLPs to provide a fulfillment process that has an advantage of huge geographic networks supported by a large number of intermediaries capable of enabling global deliveries and to satisfy the eventual customers’ requirements. Logistics and SCM The ever increasing needs of the UK Logistic market have weakened the original link between the vendor and the customer.
There is a wide network of logistic related information exchange at all levels including it’s finally delivery to the customer. Although many companies have succeeded to a global scale by implementing a supply chain management within the logistic departments as well, but it is depressing to find out that most of them have no knowledge and often seem to have no awareness of the importance of information exchanges and the technology that supports the core issues of information exchange that actually work behind the success of the logistics and transport chains.
They end up in late deliveries, and lower rates of returns and above all loose customer satisfaction. Supply Chain Management can prove to be an asset to the Logistics sector in UK, when combined with modern IT skills which will work to improve the business ways, functions, processes that are a part of a product formation and its delivery. Supply Chain management and logistics can be together prove to be a good combination of various processes that start from the initial phase of the product till the finished consumption of the same product by the end consumer, (Stadtler & Kilger, 2004).
It is a process which involves the planning, implementation of these plans, and controlling of the product manufacture with the intention of providing complete satisfaction to the customer. The basic activities that are encompassed within a logistics chain are resource collection, procurement, warehousing, transport management activities, co-ordination with partners, suppliers and most importantly – the end customers.
The fundamental natures of the Supply Chain Management combined with logistics management studies the complete supply and demand management related to a product and the final delivery to the end customer. For example, the use of Direct Store Delivery (DSD) and other route accounting operations when combined with mobile printing applications saves a lot of time and reduces the cost by a remarkable amount and in turn increases the return on Investment (Simchi, 1997).
Likewise, there are a number of IT applications that can benefit the logistics companies to develop its information system so as to meet the customer requirements. Business information, production reports, warehousing data, inventory problems can be supported with the help of better managed supply chain management solutions coupled with some of these IT solutions (Stadtler & Kilger, 2004). New Challenges and Trends
As the drive towards globalization continues there is a greater need to concentrate on supply chain planning and co-ordination to manage the complexities of longer, more fragmented logistic chains that exist within the UK logistics sector. However, such a strategy requires efficient and reliable supply networks to launch the product into the national distribution centers. Multinational companies are increasingly outsourcing some or all of their physical distribution requirements.
Typical functions like transport, warehousing and other logistic related activities such as packaging or billing, are being successfully delegated to an independent Logistics Service Provider. Manufacturers and retailers are no longer averse to the idea of shared user services as a means of increasing efficiency and cutting distribution costs. It is the selection of LSPs that will change as companies recognize the strategic importance of logistic service providers with the systems capability to act as supply chain integrators, providing end-to-end visibility.
To meet the new market opportunities, strategic alliances between the larger logistic providers, consultants and software suppliers will become the norm. Apart from the regular business for the logistics and transport sector, outsourcing is fast gaining grounds in the UK logistics business. A large number of big companies are outsourcing their logistics jobs to smaller companies in order to better manage their international supply chain and strive for the cutting competiveness, (Kok & Graves, 2002).
These companies require proficient, low-cost and internationally incorporated logistics services, and the fastest-growing segment of the industry is trying to meet their demand for outsourcing by providing third-party logistics (3PL). The new regulations brought by the UK government has helped the industry to look out for more refined and translucently structured logistics services to support the new outsourcing logistics trend, which is certain to revolutionize UK logistics industry in the times to come.
The third party logistics which originated in the United States during the early 1990’s, has developed into a sector in a short period of time in UK and is in particular being promoted by the deregulation in the logistics industry ( Lambert & Stock, 2002). The authorities have issued new policy approaches in order to promote the structure strengthening of the logistics sector, with the help of sophisticated and completely resourceful information distribution systems.
This also includes diminishing the lag times, improving the just in time service routines, and cutting indigenous costs that impact the benefits of the logistics service providers. The UK government has specified some particular steps to enhance the growing logistics industry with the help of IT driven standards. Use of IT technologies like logistics electronic data interchange (EDI), the intelligent transport system (ITS) and the geographic information system (GIS) will prove to be turning factor for the UK logistics industry.
Other anticipated measures consist of: reinforcing the climate for logistics firms to provide services that include developing proposals to develop their customers’ logistics, and additionally promote deregulation of the logistics sector cutting down on the regulations on entry of international companies in UK and taxation, fares and fee issues, while at the same time making sure that the new regulations tend to produce the desired result for the sector.
The new regulations have also proposed forward to consider third party logistics as a policy concern. In this regulation, 3PL training is provided to the small logistic companies to help them enter the industry without apprehensions. The shipping industry has also enthusiastic about the promotion being given to the 3PL business, which they believe will lead to higher efficiency in logistics. Future of UK Logistics Sector Modern technology can prove to be profitable for the logistics companies who have a strong financial backup.
Utilization of new technology will support the supervision of efficient flow of supply, as a result of which, the process of handling and processing of goods can be speeded up. The transformations in technology will impact the service continuum in the logistics industry. The improvement of e-commerce, as well as home shopping systems with the help of internet can prove to be a main driver for the UK logistics industry as it offers client comfort, ( Lambert & Stock, 2002). On the other hand, the pace of development and the scope of expansion of e-commerce for the logistics sector are still indecisive.
‘E-tailing’ will show the way to a number of revolutions for the logistics and freight industry, together with cost savings and easier admittance to logistics data as the use of E-tailing as it cuts out the ‘middleman’. This new improved procedure is expected to guide to a renovation of the role of the store, along with supplementary blurring that existed between retail, distribution and ware housing.
References 1. H. Stadtler and C. Kilger: Supply Chain Management and Advanced Planning: Concepts, Models, Software and Case Studies, Indiana University Press, 2004, p. 25. 2. D. Simchi-Levi et al. : Designing and Managing the Supply Chain: Concepts, Strategies, and Test Studies, Harvard University Press, March-April 1997, pp. 105-116. 3. A. G. de Kok and S. C. Graves (Editors): Supply Chain Management: Design, Coordination and Operation, Cambridge University Press, Cambridge, England, 2002. 4. D. M. Lambert and J. R. Stock: Strategic Logistics Management J. J Coyle, E. J. Bardi and C. J. Langley: The Management of Business Logistics. Indiana University Press, 2002, p. 342