Free «Logistics Management» Essay
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According to Christopher (2007, p. 104), logistics management entails planning, implementing and controlling of the flow and storage of goods and services together with their related information between the producer and the consumer. Thus, the consumer’s requirements are made in an effective and efficient way through logistics management. In the case of the online store, logistics management entails the planning and controlling of purchasing and selling of car accessories, leisure products and electrical appliances through the Internet between consumers and retailers in Australia. As such, the online store will be competing with other online retail stores that have already established themselves in the industry.
This paper discusses how online retail logistics activities contribute to low cost, place utility, and time utility in relation to Singaporean sourcing operations supplier selection, evaluation and procurement, international transportation from Singapore to Australia, and Australian customs, quarantine and inspection clearance.
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Provision of low-cost products by the online store is important for gaining advantage in the business that already has established players. According to Morash & Clinton (2006, p.130), this is ensured through a number of measures that will allow operation costs to remain lower than the return from sales. As such, the Singaporean sourcing operations supplier selection, evaluation, and procurement specify the kind of suppliers that the online store will engage in supplying goods to the online retail store in Australia. Supplier selection is important, because different suppliers charge different rates for their services. Hence, the retailer will be forced to pass on the extra cost to the consumer, thus increasing the cost of the product. As indicated by Morash & Clinton (2006, p.130), supplier selection, evaluation, and procurement is advantageous, as it gives a retailer an opportunity to compare and select a supplier who is not only convenient to the business, but also charges low prices. Proper supplier selection, evaluation, and procurement will enable the online store to get suppliers with capacity and deliver products within the required time.
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Similarly, the cost of dealing with the supplier, including communication, inventory, and verification requirements, will be known prior to selecting a supplier of products from Asian manufacturers. Procurement procedures also can increase the cost of products if they are costly. To maintain low-cost products in the online store, a thorough investigation must be carried out to ascertain the total cost of procuring products through a particular supplier.
Cooper, Lambert and Pagh (1997, p. 10) observe that transport is the most vital component of any business logistics, since it accounts for almost 70% of expenses that businesses incur. They further indicate that transportation costs a third of the total costs of logistics; hence, proper management of transport costs will go a long way in reducing the cost of products. Transportation costs are part of the costs incurred by a store and the same is included in the final prices of a product or service. Several transportation means are available for traders who get their merchandise from abroad.
A transportation means must not be costly to the retailer. International transportation from Singapore to Australia can effectively be done by sea and air, given the good channels between the two regions. An airport would be most efficient, even though it can be costly. According to Lagoudis, Lalwani & Naim (2006, p.360), for an online store to be able to provide goods at low prices, it needs to use the most convenient way of delivering products, while keeping transportation costs as low as possible. The use of sea transport is convenient, because ships can easily deliver large quantity of products. Gibson, Mentzer and Cook (2005, p. 20) note that containers have become a lot more useful for transporting bulk goods to distribution centers and, therefore, help cut down on the cost of transport. Thus, proper transportation will add value to the products by minimizing costs and maximizing service delivery to the consumers in Australia.
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Moreover, Stefansson (2006, p. 80) observes that another logistical management that contributes to the expenses incurred by a business is the legal procedures and requirements that businesses have to undertake before importing products into the country. For instance, Australia, like any other country in the world, requires imported goods to meet certain requirements before they are allowed to enter the country. Costs incurred during this procedure are thus included in the final price that the consumer pays for the goods.
However, ensuring that customs and quarantine regulations are observed within the specified time will lower the costs that a business incurs and, therefore, relieve the consumer of the burden of higher prices. For instance, Stank, Keller and Daugherty (2008, p. 50) observe that Goods and Services Tax (GST) that is applicable on all units and associated costs can be refunded, if the store has an Australian Registered Company and a taxation office Australian Business Number (A.B.N.). This will add value to the product that the consumer buys from the online store.
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According to Korpela & Tuominen (1996, p. 175), transporting products from the manufacturer to the consumer and managing legal procedures in the transfer of the same products ensures that products are availed to the consumer at the place where they need them. In essence, these logistical activities add value to the products, since the customer can access the products at the place where they can easily get them. Place utility refers to the availability of products to the consumer through the movement from a point of lesser value to a point of higher value. Due to the reduction in the manufacturing activities in Australia, the values of car accessories, leisure products, and electrical appliances are higher and, therefore, necessitate the movement of these products to Australia.
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However, Yazdanparast, Manuj & Swartz (2010, p. 380) argue that place utility is limited by space, since products have to be moved at a cost. Consequently, place utility is a function of transportation that depends on such factors as time and distance. Providing the product at the place where the consumer needs it will ensure that, the consumer is not only willing to buy the product, but also pay a higher price for the same product. Similarly, place utility adds value to the product, since the consumer can easily identify the product in the local stores and, therefore, become willing to buy the product regardless of the price. Invariably, the consumer will not be obliged to travel to purchase a product and will thus feels confident while making a purchase.
Consequently, Gundlach & Bolumole (2006, p.432) observe that place utility can further be enhanced through opening of retail centers across the country to ensure that products are found wherever the consumer needs them. Additionally, effective Singaporean sourcing operations supplier selection, evaluation, and procurement procedures will provide a more competent supplier to deliver goods at the place where they are required at the minimal cost. Using the quickest and most efficient mode of transport to deliver products from Asia to Australian retail stores enhances the convenience that the consumer will enjoy while making orders online, as the products can be delivered within the shortest possible time. Similarly, customs, quarantine, and clearance procedures will necessitate a faster delivery of products to the stores, and thereby establish consumer loyalty to the online store due to the variety of available products, as compared to other related businesses in the field.
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Time utility involves the availability of products to the consumer whenever they need it. Thus timeframe is an important factor when consumer satisfaction is to be considered seriously. Singaporean sourcing operations supplier selection, evaluation and procurement will enhance time utility, if proper procedures and channels are followed to secure a competent supplier. As such, Stank, Keller and Daugherty (2008, p. 56) argue that time utility can be enhanced by having the right supplying mechanisms, proper evaluation of delivery systems and secure and faster procurement procedures that will ensure that products are not delayed on the way from the point of origin to the consumer. Ensuring time utility will thus depend on the amount of Singaporean sourcing operations, as well as procedures involved in each stage. Similarly, the evaluation mechanisms that are used to select products for the stores should ensure that products are not delayed on the way because of evaluation at the point of origin.
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International transportation from Singapore to Australia is also important for enhancing availability of products to the customers at the right time and in the right place. Stefansson (2006, p. 84) notes that the use of air to transport goods would provide the most convenient means to beat time utility, but this may not be feasible, given the costs that are involved in transporting products by air. However, shipping by sea is arguably reliable, because it enables to deliver a large quantity of goods, which can then be stored in warehouses awaiting delivery to distribution stores at the right time.
Furthermore, Christopher (2007, p. 103) observes that international transportation of products by sea can be less advantageous than time utility, because it requires more time for transporting and can also be affected by weather conditions. Nevertheless, these limitations are offset by competitiveness with large ships and enhanced cooperative operation techniques. Moreover, Kotler & Gertner (2002, p. 253) note that contemporary consumers tend to focus more on the quality of a product, rather than delivery time, even though that does not mean that the stores can be empty at any given time. Thus, international transportation from Singapore to Australia builds along the lines of real-time information, precise time windows, and goods tracking systems
Procedures at the customs, quarantine, and inspection clearance point must be accommodative in terms of service delivery, so that products are not delayed at the port waiting for clearance. Such procedures can be stimulated with technology, so that when products are ordered from the point of origin, clearance starts immediately. Therefore, by the time they arrive at the port, most of the procedures are cleared to facilitate faster movement of products to distribution stores (Gibson, Mentzer and Cook, 2005, p. 23).
Additionally, time utility can be enhanced by ensuring that products are delivered to the customer on a 24-hour basis and that the stores are located at the most convenient places, where consumers can easily access them. For instance, placing collection centers in other urban centers like Hong Kong, Melbourne and Brisbane other than Sydney will ensure that consumers in those areas do not necessarily need to travel to Sydney to get the products that they have ordered online. Similarly, the online store can arrange for home-based delivery.
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From the above discussion, it follows that online retail stores are a booming business in Australia, especially with the decline in the manufacturing activities in the country. The situation has consequently created a region of higher value compared to the regions of Asia, where manufacturing is still thriving. However, logistical procedures can cause a hindrance to the delivery of products to consumers, who need low-cost products and variety at convenient time. Thus, proper managing of logistical issues, such as international transportation, supplier selection, evaluation, time utility, and place utility, will go a long way in enhancing the price and adding value to products that consumers order through online stores.