Logistics Industry Analysis Essay
Logistics Industry Analysis
Logistics and Supply Chain Management (SCM) as an area of research has been getting increasing attention from academicians and practitioners over the last two decades since it may lead to reduced operational costs, improved delivery performance and increased customer satisfaction levels, thereby making an organization more competitive in terms of cost, quality, delivery and flexibility. The importance of logistics and SCM is increasing also due to globalization as more and more multi-national companies (MNC) are sourcing, manufacturing and distributing on a global scale, making their supply chains very complex to manage. However, Outsourcing Logistics activities to experienced logistics service providers (LSP), also known as Third-party logistics (3PL) providers, may enable companies get very efficient and customized logistical support while themselves focusing on the core organizational activities.
Today, there are many large multi-national LSPs that offer complete supply chain solutions across many diverse countries in terms of their socio-economic and political environments. Apart from core logistical activities such as transportation and warehousing, LSPs also offer value-added services such as customs clearance, freight forwarding, import/export management, inventory management, assembly/installation, packaging and labeling, distribution, after sales support, reverse logistics and so on. By outsourcing logistics, companies can leverage the expertise of LSPs while concentrating on their core competencies. With the rapid advance of globalization over the last century, now more than ever is our world interconnected; every day, millions of people, ideas, culture, and goods move across international borders, creating more diverse societies and more efficient economies. As global business competition expands, companies large and small are finding the advantages of sourcing, trading, and selling their products and services across vast distances, both nationally and internationally – a process made possible through effective supply chain management.
Supply Chain Management
Supply Chain management is a cross-functional industry that includes international trade, transportation, and logistics. It comprises all of the activities that take place to get a product in a consumer’s hands – from the time raw materials are extracted to the minute a consumer takes the final product home. Supply chain management links major business functions and processes within and across companies into a cohesive, high-performing business model. Logistics is the part of a supply chain that plans, implements, and controls the efficient flow and storage of goods between the point of origin and the point of destination in order to meet the requirements of customers or corporations.
For individual companies an effective supply chain management system requires careful planning and operations administration, and often involves sophisticated coordination and communication between a diversity of partners. As such, supply chain management professionals can be engaged in every facet of the business process – planning, purchasing, production, storage, distribution, information technology (IT), and customer service.
India is emerging as one of the world’s leading consumer market. India is expecting to sustain a strong growth over the coming years and strives to become one of the top three economies in the world by the year 2050. The logistics sector plays a major role to support this cause and the connectivity and convenience in operations is the key for sustaining the global trade growth. The recent economic changes are proof enough to establish India as an evolving super power. The seventh-largest nation in terms of geographical area and a prominent force among emerging countries in terms of technology and infrastructure, India is now well ahead on the growing curve of the world economy. In wake of this, India is witnessing a renaissance of sorts across all sectors, especially manufacturing, telecommunications, retail and services, as global as well as local players converge to cater to the world’s biggest marketplace.
As India surges ahead on transforming itself from a ‘developing’ nation to a ‘developed’ state, one of the core sectors that is a crucial part of an upward swing is – Logistics. As big money gets pumped into manufacturing and other growth-centric sectors, especially retail -the role and potential of logistics companies is on the upswing as crucial business operations like supply chain management and contract logistics become key issues of managing the titanic surge in national business, both locally, nationally and globally. Currently India’s logistic sector is valued at around US$110 billion and is expected to touch US$200 billion by 2020. The cost of logistics in India is valued at 13 – 14% of GDP where as in developed nations the cost is in the range of 7-8% of their GDP. Since the cost of logistics is a key component in the overall cost of a product or service, manufacturers and providers of various services are always on a constant search for more efficient and cost effective logistics solutions, which would make them more competitive in the national and international markets.
Today in India, the concept of effective Logistics is still not understood and given proper due in most of the industries and large part of the industry still operates in unorganized sector. There is an urgent need to address issues related Logistics to make it more efficient, organized and cost effective. This will benefit the Indian Industry to reduce the time and cost of Logistics. Another fact is that transport and logistics services in India, consume a large portion of energy, especially petroleum products. This share increases even more in India with the growth of economy and population. Urbanization and fast industrialization also increase this consumption because of higher demand in freight and passenger transport. Additionally, higher income and government liberalization measures led to a rapid growth in the number of automobiles, two- and three-wheelers, private and public buses and urban rail networks, as well as an increased demand for leisure-related travel. But despite the growth of the population of India and its economy in general the transport and logistics sector faces accompanying challenges with its infrastructure, environment pollution, increasing traffic density, policies and other inefficiencies in the system.
Logistics is part of supply chains. It connects the relationship between producing and consumption. It is essential for planning and operating a distribution system successfully. The objectives are supplying the right products to the right places at the right times for the least costs. Logistics appears with the development of the economy and the appearance of goods and products, therefore logistics a traditional and old economic activity. Logistics process is a key to execution and achieving results. The objectives are accomplishing things and creating value. Detailed speaking, logistics process coordinates all activities involved in acquiring, converting and distributing goods from raw materials source to target group to satisfy customers need. And deliver the required levels of customer service in an efficient, cost effective manner.
Figure: Logistics process spans most functions of the business
From figure, we can find Logistics process to include four big parts. They are Purchasing and Ordering, Warehousing, Transportation and Delivery, Reverse logistics at last.
The Fairmacs Group of Companies was founded in 1956. It established its Logistics wing in 1989 and thereafter has grown to offer complete door-to-door services to its Customers. The Vision of Fairmacs Logistics division is to be a leading logistics service provider by constantly innovating to build and operate an integrated world of logistics services that provides absolute customer satisfaction. We work with a mission to provide to the customer, a one-stop logistics solution. Fairmacs services have the technology, dedication and quality to satisfy their customer’s requirements. As experienced Freight Forwarders & consolidators, they have the reach, reliability and resources to offer customized services at the most competitive prices.
With offices and dedicated partners across the world, they affirm that ‘Nothing is impossible’. The Network of Fairmacs offices and its dedicated partners is one that is spread all over the world. This network enables the Company to offer its customers a “ONE COMPANY – ONE SYSTEM NETWORK”. In this highly complex but extremely efficient environment, the need of the hour is to have a one-stop logistics solution and Fairmacs offers its customers just that. The Company is led by 3 full-time Directors, Mr.S.R.Shete, Mr.Sunil.R.Shete and Mr.Anil.P.Bakle who brings in their vision coupled with rich & extensive experience in the field of Logistics, Trading and Contract operations. They are supported by a team of highly dedicated and motivated professionals, as well as committed staffs who work in close tandem to fulfill the ever-changing needs of customers while adapting themselves to trends and changes in the field.
Fairmacs vision is to work in tandem with your business. Whatever the need and however small the order, we work to give you the best possible solutions at the most reasonable and legitimate prices.
Fairmacs mission is to provide to the customer, a one-stop logistics solution.
Fairmacs is connected globally through a very proactive network of offices and overseas partners that are leading names in the industry in their respective countries. This allows them to provide a truly global and integrated logistics and supply chain service.
Fairmacs Logistics is known for its reliable and efficient service. Whatever customers transportation needs, from arranging pickups, warehousing, packing & labeling, export clearances, transportation, handling, to loading, Fairmacs handles them. Fairmacs Logistics has put into place, ERP systems that are second to none, allowing customers a great degree of visibility and flexibility in monitoring their individual business. Fairmacs specialize in Cross Country Shipments. For example: Sitting in India they can move customer cargo from any country to any other country viz. from Japan to China, or from Rotterdam to Dammam. Fairmacs evaluate and offer customized Logistics solutions based on their clients’ requirements, which may include the following: •Cargo Pick-up & Door Delivery Services
•Import & Export Customs Clearance formalities
•FCL and LCL Ocean Shipments
•Economy and Express Air Freight
•Hazmat Movements (air/ocean)
•Multi-Modal Ocean Transport (Road – Rail – Barge – Air & or Ocean)
•Packing, Crating & Palletisation, Labeling, Blocking, Bracing and Stuffing
•Warehousing & Inventory Management
•Coordinate Fumigations for Agricultural Products
•Project Cargo, Turnkey Projects Management
•Over Sized and Over Weight cargo Movements
•Barge, Rail, RORO, Reefers, Special Equipment including Tank Containers
•Charted Vessels and Aircrafts
•Purchase Order Management
•Foreign Import/Export Asset Management Consultancy
Today, Fairmacs’ strength comes from innovative solutions and a range of services that deliver excellent value. They employ over 720 people at their business establishments. Every employee is skilled and well-trained. Ongoing training programs, working in challenging environments and a dynamic workforce have seen Fairmacs’ business grow and succeed. At Fairmacs, they believe in the power of technology. Their systems, networks, and operations are meshed to give a dynamic view of their activities. The result – you have the benefit of enhanced connectivity and a link to a world of people who care about their business.
Provides an end-to-end supply chain solution around the world. Provides all kinds of transportation and shipment activities under one roof. Provide only single point of contact for various services/ points. Operates through its experience and stronghold of the established network. Always has a strong financial resource.
Logistic companies have a strong base of quality processes and procedures.
Slow Technology upgrade.
Communication problems between the employees or with the company and its customer. Accessibility to various areas.
Timely delivery of items as per the requirements may face problems due to technical as well as unpredictable reasons.
Since logistics service can be provided without assets, there is growing interest among entrepreneurs to venture into this business. The online market offers Logistics Company the ability to greatly expand their business. Infrastructure development would boost investments in the logistics sector. In India, 100% FDI is allowed in logistics whereas in China, until recently, foreign investment was not allowed in domestic logistics. Greater Innovation can help Logistics Company to produce unique products and services that meet customer’s needs.
A bad economy can hurt Logistics Company’s business by decreasing the number of potential customers. Lack of trust and awareness among Indian shippers with regard to outsourcing logistics. Indian freight forwarders face stiff competition from multi-national freight forwarders for International freight movement. Poor physical and communications infrastructure is another deterrent to attracting investments in the logistics sector. Lack of skilled and knowledgeable manpower in this sector.