THE RELATIONS AND THE IMPACT OF GLOBALIZATION ON LOGISTICS
4 The Impact of Globalization on Logistics
In my opinion Logistics industry can be described as wheels of Globalization and key to the market expansion and competitive product availability to the growing global consumers. Dynamic business conditions and confronting economic conditions are driving globalization. Globalization is resulting due to expanding markets, exploding retail market, product proliferation, ever changing needs of customers, economic downturn, cost pressures, technology, culture integration and government policies around the world. It would be wrong to assume that globalization influences economy and trade only; we are seeing integration in the areas of culture, media, education, research and development, tourism and even climate change. On political front, we see collaboration and collective approach in addressing daunting challenges we face today. Globalization will make our societies more creative and prosperous, but also more vulnerable and in transforms economies more competitive. (Creazza, et. al. 2010)
4.1 Supply Chain Integration
Under the integration of logistics system we can generally understand connecting elements and links of the logistics system and targeted removal:
• Diversity
• Logical inconsistency
• Inadequacy of elements, links, objectives and functions of the system • Non-compliance in the characteristics and parameters of the system.
It is a process leading to improved durability and lasting internal cohesion logistics system. Integrated logistics, in current practice of the leading companies, means:
a) Connection of the company with: - Suppliers
- Distribution and marketing chains (partners) - Final customers
In specific terms it is the horizontal dimension of integration. For integrated Supply chains on this scale is being called the term: The Total Supply Chain. Malindžák and all. (2010)
b) Interconnection and logistics coordination:
- Production with development; creation of marketing strategies that means the linking business (logistics) function from the operational level to the strategic level.
In concrete terms this represents the vertical dimension of integration. Pernica (2004) The global Supply chains functions:
• Implementation of transfers, transformation and transaction within the meaning of search competence and reducing nuclear activities non added value
• The same target businesses as entities in the chain and chain as a system (remove bullwhip effect)
• Participating enterprises must be managed as separate entities and as part of a string • Cost reduction in terms of holistic supplier processes (long chain)
• Carrying competitiveness of enterprises in the chain
• Movement of goods from the natural resources to the consumer and recycling, change layout and property rights, changes in debit and credit, and others.
• Holistic management of risks in terms of ecology. 4.2 Logistics service Providers (LPS)
The Logistics service Provider landscape is characterised by increasing consolidation, pressure to cover the global market (follow the shipper, reactive attitude) and pressure on profits. These elements build a highly fragmented and competitive West- European logistics market. By its nature the demand for transport and logistic activity is a derived demand because of its strong relation to the demand for movement and treatment of goods, driven by internationalisation and economic growth. Next to the growing demand for transport, LSP’s are faced to the growing demand for coordination and management activities of larger parts of the supply chain.
Coordination of the supply chain activities along with the collaboration across agents and LSP’s has become so important that fourth party logistics providers were created to do the job. Most authors classify the LSP’s based upon the level of outsourcing activities, service package and level of collaboration. According to Lemoine and Dagnaes (2003) four types of LSP’s can be identified:
• 1PL: Here we refer to the shipper, organising and executing all of the logistic activities autonomously, all activities are done inhouse (100% in-sourcing).
• 2PL: The shipper (demanding party) uses a subcontractor to execute transport activities. The 2PL is responsible for clearly defined operational tasks.
• 3PL: Following to the outsourcing trend during the eighties 3PL’s entered the LSP arena next to 2PLs. They offer value added services such as governance of the supply chain (the Order management, Custom clearance…) along with solutions for improvement of operational performance. A long-term relationship between the shipper and the LSP is preferable in this setting. Traditional tasks, such as transport is outsourced to 2PL’s. Some 3PL operators supply “downstream” customised activities (postponement tasks).
• 4PL: Both the organisation and the management of logistics is sourced out to 4PLs. In many cases they control the complete supply chain from point of sourcing to point of sale and
point of using. They are non-asset based and the traditional transport and basic logistic services are sourced out. They play an advising role in supply chain design, development and implementation of solutions. Furthermore they take part in strategic decision-making and envisage the sharing of risks and profits with shippers. Recently a new kind of operator has entered the 4PL arena, the ICT-based broker, playing an intermediate role between shippers and their choice of logistic service provider to offer competitive prices.
At present most of the transport companies have a small and medium-sized profile and don’t have enough financial resources to invest in value added logistic services next to the classic transport service. Small companies are therefore forced to fierce survival strategies with a focus on local and niche markets. Medium sized companies also experience fierce competition but seek strong strategic alliances to guarantee their future success and increase their geographical scope. Large companies experience tough competition but can cope with the competitive forces by increasing their network globally (investments). There is clearly a link between size and strategic choice. Further work is necessary to test the insights gained on this topic via this qualitative survey with a quantitative survey. Erhart and al. (2010)
5 Conclusion
The current global processes of the world economy show the up-valuation of the regions, the enterprises within the regions and cooperation. The up-valuation of region's role is speeded up by the practice that nowadays the enterprises concentrate more and more on the primary activities and the partial, secondary functions – built in the regional network system- are dealt with outside the enterprise. The inside organisation of the regions can be regarded as a valuable new resource.
Logistics or more precisely the transportation and forwarding sector is one of the largest employer sectors in the EU. With expanding globalization processes its importance continues to increase. The EU aims to achieve a Single European Transport Network and the countries have reached an appropriate level through the development until about 2030. It is important to enhance IT-related developments of logistics, which is what we are striving for. As a result of globalization, the role of logistics services appreciated and we should take advantage of it.
Modern enterprise management in the time of globalization asks to use new methods and tools to eliminate threats, risks, and constraints and also to maintain the market competitiveness. The permanent conflict between theory and practice penetrates into business management every day. Company management has to be prepared to anticipate future development and direction of the organization in the future by using of theoretical assumptions.
Acknowledgment
We prepared this paper with the support of the project "Education quality and human resources development as the pillars of a knowledge society at the Faculty PEDAS, University of Zilina in Zilina“, ITMS project code 26110230083, University of Zilina.
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