Research Proposal Example - A Case Study of Information Technology to Create Value and Competitive Advantages in Logistics Business
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Chapter 1: Introduction
1. Logistics – Logistics is the movement of goods from the customers to their final destination. This involves the complex task from planning to packaging, labeling, warehousing, control and delivery to ensure that the products are in good original form until it reaches the point of delivery. It is very important that the goods are delivered on time without any wastages or pilferage to create less stress for both the customers and to the logistics. Having the right product at the right place at the right time is the effective task of logistics (Voortman, 2004, p13).
1.1 Value Creation in Logistics – according to Ferrel & Hartline (2014, pp 13-14) logistics can add value and competitive advantage in several ways, especially if the products to be delivered are perishable, it can add savings that this will be consumed exactly as needed when on time delivery is achieved.
· Time Utility – the availability of the products when the customers need them is adding time utility, they don’t need to wait longer to maximize time. For instance, in the grocery or warehouse, if certain brands are available it can be converted easily to sales, but the non availability of the product produces losses to the store. It is the role of the logistics that the delivery is on time.
· Form Utility – logistics are also adding form utility value, for instance, instead of delivering the whole car it can be disabled by piece according to the raw materials needed by the customer. Logistic is also adding value in form utility, for instance, Dell computer assembles the finest products in China, but some of their parts are imported in India or Japan, logistics company can give them savings that they do not have to deliver the whole computer but only the delicate parts (Palit, 2012, p 82).
· Place Utility – logistics add place utility value where hard to find products can now be purchased from the other parts of the world because of logistics intelligence. Most importantly logistics are adding sales increases because of the availability of goods are delivered at the place where it is needed.
· Possession and Savings Utility - possession utility is one of the key factors that differentiate cost efficiency and savings, most of the companies and individuals can save huge discounts by buying in bulk directly to the manufacturer with the help of logistics rather than buying in retail in the nearby stores.
· Psychological Utility – logistics contributes to psychological utility value creation of the positive experience and the warm appreciation. When an individual finally received the original watch that they bought or the dress that comes from the famous couturier is creating a psychological excitement reaction among customers that they are likely to pay regardless of the price consideration just to gain the products they want (Albaran, Olmsted & Wirth, 2008, p 658). This is how logistics are creating value to customers.
1.2 Information and Communication Technology (ICT) - ICT plays a major role to leverage value and competitive advantages in the logistics industry where large amount of different products is critically collected, evaluated and delivered with exact details from the point of collection, coding, storage, routing to dropping point to answer the costumer’s expectation to the firm. Customers can even track their storage, shipping and transportation of their deliveries in real-time system management or GPS or GPRS (Russameesawang & Keeratiwintakom, 2008, p 393-396).
These complex tasks can significantly be simplified to aid the Logistics and Supply Chain Management (SCM) locally and internationally with the help of ICT competitive support (Haughton, 2006, p 17-20). Logistic risks are minimized and controlled using routing and mobile technology that further add value and competitive advantages to the firm (Giaglist G.M. et al, 2004, p 749-764).
Since the 18th century the dynamic improvement of logistics and the rapid expansion of deliveries and enhancement of their performance in internal and external operations are attributed to MIS in increase competence to streamline global competitiveness. From automation, order processing, supply chain, inventory, tracking and all processes involved are all integrated with technology (Lai & Li, et al, 2009, p 22-25).
Customers expect efficiency, good quality and on time delivery without error or omission to be satisfied. Logistics companies are able to meet their customers demand consistently. According to Mr Dough Kimmerly, President of DSN Chemicals Transportation says that by having the 3PL system they can manage what they can track, but if deliveries do not reach the customers safely and on time, then the low charge will be irrelevant (DSN, 2015). To create value and competitive advantages, logistics companies ensure that products occur on time and with quality as expected.
With all these features, logistics companies can still maintain their cost charge considerable to customers. They are able to achieve cost efficient utilization using different logistics management software, inventory management, tracking device, online communication and 24 hours customer support. For instance Norvanco International Logistics have at least 10,000 orders a month, but using all these features mentioned above plus a website reporting and scheduling visibility, which is complete for customer’s request in a readable format are provided to ensure logistics cycle are well maintained (Accellos, 2015).
The advantage is that the most complete and relevant information is provided in every step. All these processes and structures require the use of Communication and Information Technology to meet the challenges and demand using inventory model system. RFID and bar-coding allows them to monitor goods for instant inventory and retrieval of information needed what is in the warehouse and what was delivered including movement and errors are classified with the help of different ICT system and devices like Accellos (2015). They can even provide customers with logistics alerts if required. With this advancement, it is therefore meaningful to examine the role of communication and information technology in creating value and competitive advantages to the logistics industry.
According to Rushton, Croucher & Baker (2014, p505) Information Technology is becoming the lifeblood among logistics companies and they are entirely dependent on technology that favors, speed, delivery and cost efficiency while customers are highly benefitting with their strategies. Companies and organizations should highly use the most innovative technology, including RFID, TPL or 3PL in their operations to offer value and increase competitive advantage. Through technology they can experience the high customer’s satisfaction and growth.
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