Value Added Services In Logistics Operations Marketing Essay

Value Added serve In Logistics Operations Marketing EssayLogistics is a procedure to optimise all activities to ensure the spoken language of charge by dint of a send off chain from one end to the some other. The comparative qualification of a inelegants change logistics chain is of vital imembrasureance in enhancing competitiveness of its industry and commerce. In this regard, international differences in trade logistics efficiency de conditionine in super extent the efficiency and sustainability of the economies. In highly-developed countries much(prenominal) as the U.S. and Japan, logistics follow argon about 10 per cen sequence of GDP. For some less developed economies, these cost exceed 30 per cent. Moreover, these differences among countries appear to be widening. match to the European Logistics Association, the logistics cost in relation to annual turnover shadow touchstone to to a greater extent than 30 per cent in the food industry, 27 per cent in the metal industry, 23 per cent in the chemical industry, 15 per cent in the automotive sector. The percentages whitethorn differ from solid ground to country and industry by industry, plainly universey of the critical cost factors argon influenced by public policy. The logistics chain consists of activities that facilitate the accomplishment of goods from tot to demand. As m each such activities require the use of ports, port authorities afford taken a discovericular interest in the various port activities involved in logistics. Logistics costs argon not limited to costs consumed in carrying out logistics activities. Rather, they should be dumb as all costs input into a given logistics system of rules for the provision of logistics usefulness.According to the US Department of Transportation, logistics is defined to be the method that profit groups position themselves to get a great(p) activities such as acid, w behousing, inventories, information touch on and guest relati ons. Advanced logistics is the term used when the firms make use of technologies and permits to reduce costs by modify large inventories, multiple warehouses and client military attend to outlets with transportation, e-commerce and just-in-time deliveries. To reap the bring ins of advanced logistics, firms put one crossways restructured themselves in relation to transporting of goods from one point to another and improving infrastructure.During the mid-seventies typical logistics turns focused on traditionalistic physical distri howeverion activities, including the movement and storage of finished goods between the producer and consumer. Those specific functions were identified in the 1985 A.T. Kearney study of logistics organizations as outbound transportation, logistics administration, intra familiarity transportation, logistics control, finished goods field warehousing, and logistics systems planning. These activities were eventually resolute to be quite narrow in terms of meeting node ask. thitherfore, they submitd the put upation for broader interpretation of logistics, which led to inclusion of various activities like the processing of orders and development of node relations, finished goods plant warehousing, finished goods inventory centering, and inbound transportation. The ternary phase in this evolutionary process was identified to complicate logistics engineering, production planning, sourcing or purchasing, raw materials or work-in-process inventory management, gross revenue forecasting, and international logistics. This evolutionary process moves logistics from its traditional physical responsibility to an integrative observe added role in the business. As logistics becomes more important in an organization, it encompasses more functional areas within a single responsibility center to provide more coordination and more highly integrate the logistics channel. Because of the evolution of the logistics functions, its responsibil ity travels march on back through the supply chain to the raw material source. When logistics operations is linked with manufacturing operations, it skunk be seen that the aspects of manufacturing activities with logistics operations activities address the common fundamental foundations that contribute to the measure out of the products and run tenderizeed to customers.According to a study conducted by Frost Sullivan in 2009, about logistics operations in ASEAN countries, it was found that capital of Singapore accounts for the small- scale leafest percentage of logistics as a part of total sales at 8 percent while Indonesia has the highest at 19 percent. According to this 2009 study, Malaysia and Thailand accounts for 17 and 12 percent, respectively. It has been noted that the high logistics costs may be attributed to inefficiency in operations. The inefficiency may be linked to the lack of trained man power and inadequate support to facilities and infrastructure, which has led to the slow flow of cargo and distribution of goods. Based from this study it can be deducted that an efficient operation is due to the presence of trained professionals, high quality and an array of logistics expediencys offered and an excellent infrastructure and communications or information system. As of redeem date, studies give birth shown that transportation is the largest contributing factor to the cost acquired by nigh companies.Currently, the primary reason of most consumers for engaging in a third party logistics provider or what is k straightn to be a transport utility is to enhance the efficiency of logistics operations through professional intervention. piquant in a trucking assist to a fault has its cost advantages and thereby acts as a cost saving move for most companies. An system with a logistics company also provides the consumer the ability to focus on other concerns such as their own competency and reliability. It is no surprise thus that the main criterion evaluated by most companies engaging in this service is the cost savings factor. there is only Malaysia that evaluates the go offered and the condition of the equipments when choosing their logistics service provider. Meanwhile, it has also been found out that across ASEAN countries, technology is the least considered factor. On the other hand, it can be noted that the most efficient country in logistics operations, Singapore, is firmly focused in the communications area. This countrys most prestigious consideration factor is the network coverage employed by the logistics service provider since Singaporean companies are main players in the international foodstuff. engine room wise, there are sixty percent of consumers adopting technology are heavily rely on warehouse management and the bar coding system. On the other hand, transportation planning system and vehicle tracking system are yet to be embraced by more than sixty percent of the end-users. The use of the smar t labeling system or RFID for public vehicles is still low. The toleration and usage for RFID or smart labeling system are still low mainly because of the high cost of implementation and the less mature technologies across South East Asia.Among all the activities in logistics operations, transportation is the most dupe activity accounting for more than seventy percent of end users outsourcing such logistics activities to service providers. Freight forwarding comes to a close second to transportation followed by inbound warehousing accounting for more than fifty percent. On the other hand, processes like the packing and labeling of goods and management of fleet are the lever added services that are most utilized.DISCUSSION AND ANALYSISValue Added service (VAS), which is loosely defined as a collection of specific requirements mandated by customers involving additive processing of a product or an order beyond the simple picking of the product for an order, is an specially common practice in the retail supply chain and is estimated to consume +10% (and growing) of total labor party hours. According to Logistics Managements 2nd Annual Warehouse Operations Survey, 80% of respondents are treating with some form of VAS in their DCs. This was confirmed during in-depth interviews conducted by Distribution Digest for our report on Automated Case cream (ACP). Value added services are offered by the logistics companies in order for customers to benefit from their full use and application. This may include anything from routine maintenance and customer technical support to customization and application training to real-time inventory management and state-of-the-art channel support. It refers to the process of developing relationships with customers through the provision of an increase offer, which may encompass many aspects of value-added activities. Value added services are aimed at ensuring that special requirements of customers are met and that product is rece ived as ordered. These services are integrated with logistics operations through a orbiculate network of agents and organise at either point of origin or final delivery location. These services may include complete shipping documentation from deject to finish cooperation with convention/trade show coordinator pickup and delivery of time definitive freight unpacking and setup assistance including the removal of packing materials repackaging of materials at end of trade show pickup and return logistics consulting performance report and distribution services.Through out the years, an evolution to the terminologies relating to the consumer has been witnessed in the logistics industry. Logistics initially gave behave to the concept of customer relations which represents the combined output of the various processes in logistics. Eventually, end products of marketing and logistics activities were connected to customer relations to create customer satisfaction. Most recently, the conce pt of customer success has been introduced to link the service provided by the firm not only with the satisfaction of the customer, but with the success that the customer realizes in attaining its organizational objectives. Since, transportation, warehousing and freight forwarding are activities that are most likely to continue in the next 2-3 years, there is an change magnitude trend for consumers to look for companies that can supply value added services. The value added service employed by the logistics companies are created through the eyes of the logistics executive. It is critical that the strategies and play used influence the perception that the customer has of the organization and has the potential of consummation creation during the short term as well as the long term. Therefore, the logistics executives perception of value is directly linked to the firms ability to carry through the customer. This can result in customer satisfaction, which can ultimately lead to a posi tive attitude by the customer towards the service provider. The value of the logistics service provided is measured by an assessment of the logistics executives perception of how customers perceive the service provided by the firm and how they react, or respond to this service. This measure, called customer answer, include the level of comprehend satisfaction with the existing service levels, whether customers are inclined to reduce or increase their business with the firm if the service levels change relative to their expectations, and whether customers can recognize changes in the service levels provided by the firm.These days, the commercial success of a logistics operation could stem from a productivity advantage in traditional cargo-handling service, from value-added service, or from a combination of the two. Productivity advantages come mainly from economies of scale and economies of scope, suggesting that the most productive ports will be those that are equipped to continu e large cargo volumes and significantly reduce unit costs through efficient management. Shippers and carriers engage private ports not only based on their cargo handling service capabilities, but also on the benefits they are capable of delivering. Unless a port can deliver benefits that are hypernym to those provided by its competitors in a functional aspect, customers are likely to select logistics providers based merely on price. This fact raises the question of how to one logistics company can stand out from the rest of the companies that are in the market or what is known to be value differentiation.In the 1970s, almost all(prenominal) logistics company provided the same basic package of services to almost every customer. Nowadays, however, it is more difficult for service providers to compete on the basis of cargo-handling service. There has been a convergence of technology within cargo-handling service categories. This means that though new technology may sometimes provid e a windowpane of opportunity for productivity improvement, in many cases that same technology is also available to competitors. It is no longer possible to compete effectively on the basis of basic, traditional functions. Thus, there is a need for logistics service providers to render out new means of gaining a competitive edge. The late eighties saw the emergence of major changes. Consumers began to ask service providers to provide a greater variety of services. Providing value-added services is a powerful way for logistics companies to pretend a sustainable competitive advantage. Shippers and customers are fair increasingly demanding. Customers now tend to look at value-added logistics services as an integral part of their supply chain. As a result, service providers must attempt to satisfy these needs by offering differentiated services. This poses a particular challenge for logistics operators in the industry. Studies show that the most successful logistics service provider s are those that not only have a productivity advantage in cargo-handling services, but that also offer value-added services because operators who do not provide additional services are indistinguishable to their competitors. Although there have been researches that have found that there continues to be a need for operators to provide the basic, traditional cargo-handling function and that there continue to be many customers for such services, it is clear that, in the future of the logistics operations industry, there will be fewer ports that fly high only in this area. Rather, we will see the dominance of superior service leaders that possess both a productivity advantage and a value-added service advantage. Logistics companies that provide value-added services are on their way to becoming the more superior logistics company. The advanced ports around the world have constantly emphasized the function of logistics centres mainly due to the high degree of global production and the need for value added services. These trends in international logistics strongly suggest that the trend toward value added services is likely to continue into the future. Currently, the logistics discipline continues to override itself with the adaptation of various e-business practices and forms of just in time delivery. The nature of these adjustments may result to more single package deliveries requiring additional transport services. place RECOMMENDATIONSTherefore, for logistic operations to have an edge, it is recommended that logistics companies incorporate valued added services to the array of services that they provide in a matter that is cost efficient. There is also a need for service providers to be able to offer services of high quality and as well as cost reducing solutions. Service providers must also take a nearer look at the activities in operations and ensure that there are no repetitions of activities for upper limit optimization. The elimination of redundant acti vities results in more efficiency and cost reductions. Providing trainings for inexperienced personnel is also vital in achieving maximum customer satisfaction in the future. The ultimate output of the quality confinement by the logistics organization should be through the customers reaction in the market. This reaction is continually perceived by the logistics executive in the form of individual customer sales, business in specific traffic lanes, changes in easiness inventory levels, or changes in the volume of customer complaints to the customer service department.However, the simple truth is that when you are processing thousands of cases an hour and shipping hemorrhoid of trailers per day, there just isnt a lot of time for value added services, especially that which doesnt provide real benefit. In the end engaging in value added services is a business decision. A customer can be told that the service provider can do just about anything they want, but the customer must also kno w that its not free. Value added services make the services provided by the logistics service providers more expensive. The customer needs to gauge how important it is to its business. Sometimes retailers are surprised that their requests dont add any value. As an example, in a certain logistics company, one Vice death chair of Operations, described a situation where an existing customer ordered criterion 12 packs last year, however this year all their orders were in 6 packs. The Operations VP went back to the customer explaining that when youre handling 80,000 cases verses 40,000 there is a big difference in handling and processing cost. That particular customer unders overlyd the logistics cost impact for the DC, as well as for them, and immediately changed their leveraging Order back to 12 packs. Still, for some companies the consequences of value added services have been more frequent shipments and in smaller quantities, forcing many of them into piece-pick operations where t hey had antecedently been a full case-based pick. Or, at the very least, having to open full cases to apply tickets and other paperwork and then manually applying a special shipping label. If it is contumacious that the cost absorption for a specified value added service is too great, the logistics company has the option to try and work out a deal with the customer to obtain waivers, or in some extreme situations scraps to comply. On the other hand, a major component of an efficient supply chain is getting everything done on the first touch. Therefore, it can be logically argued that in many cases moving value added services upstream to the manufacturing level is moving it in the right direction.