Transport Logistics

Impact of integrated logistics on global business practice

The progressive integration of logistics across supply chains has had profound effects on business

practices. These include the following trends, noted by Scary (1999):

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Higher interdependency between firms interlinked within the business network, which has

become the new reality of industry. Performance by an individual firm affects the

performance of all, and determines the ultimate performance of the network as a whole.

•

 

A more globalised economy links the sourcing of material and product components with

production and markets across national boundaries, invoking problems of time, distance,

cultures and diverse market preferences. It intensifies competition and increases the

complexity of supply by expanding product variety, searching for higher efficiency while

responding to diverse and rapidly changing markets.

•

 

Changing the concept of corporate enterprise. Organisations have shed peripheral activities

to concentrate on core competencies that offer the promise of unique value. Greater external

dependence therefore forces attention to inter-organisational relationships for co-ordinating

activities and processes. In some cases, the shift towards core business has led to the creation

of “virtual” organisations, where the majority of business operations have been outsourced to

external parties, including third and fourth party logistics.

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•

 

Transformation of organisational structure of the corporation from a hierarchy, in which the

manager dispenses knowledge and workers perform, to the point where knowledge is widely

diffused throughout the organisation and workers manage their own activities. This places

collaborative decisions closer to the point of action. In a logistics framework, it places a

premium on inter-organisational relationships through formal and informal contact, as well

as on data and information systems across organisational boundaries.

•

 

Changing the government environment, creating both problems and opportunities. Much of

the economic regulation of transport and telecommunications has been liberated, leading to

new market-based combinations of service providers who offer transport combined with

warehousing, telecommunications, product assembly and related services. Other forms of

regulations to cover consumer protection, environment and safety are replacing the former

economic restraints.