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Development of logistics industry
In the recent decade, "logistics"
has become a common business term with different interpretation. Originally,
"logistics" is a military term since World War II, describing the
distribution and transportation system on human and materials. The
term was being used later to characterize some business operations,
such as goods transportation, consolidation, warehousing and inventory
control. Here, "logistics" is defined as a process of transporting
goods and services, and information from suppliers to consumers, so
as to fulfill the demand of the latter. The logistics process may
include planning, implementing and managing on goods and services,
information flows and storages.
We will offer some reasons contributing to the prosperous development
of the logistics industry.
- Demand pull: customers
need
The ease of gaining immediate knowledge on products may influence
consumer's behaviours. In the past, consumers spent time to filter
through product information from advertisement on TV, newspaper
or magazine and even appraisal from other customers. Internet
services and electronic media indeed change the products promotion
practices nowadays. Consumers may simply stay at their home, distinguish
the most price-effective product and the best services provider
online, and make optimized purchasing choices immediately. They
are empowered to request for the best quality services.
Also, the demographic environment changes the consumer behaviour.
Modern society mainly consists of small-sized families, which
are willing to spend money on goods but with a tense living pace.
They request for effective, quick response sales services. This
changing consumer demand provokes an evolution on the way of goods
and services and information supply.
- Supply push: supply
chain and business process
In traditional supply chain management, manufacturers were the
designers, producers, promoters, and distributors. The secondary
parties would be suppliers, wholesalers and retailers, warehouse
service providers and so on. Enterprises would focus on developing
their products and promoting their brand names, instead of improving
the logistics and distribution flows. As every enterprise has
their own logistics department, overlapping resources, huge operating
and logistics costs lower the effectiveness of the supply chain
as a whole.
The establishment of giant retail chain stores has re-shuffled
the partner dominance in modern supply chain. Market supply of
those retail stores may match with the market demand accurately
from analyzing the sales reports and customers' responses directly,
applying appropriate inventory controls and pursuing competitive
sales strategies. The success on integration between sales and
logistics management is confirmed in the supply chain strategies.
- Globalization
Geographical factor is no longer the limit of enterprise development,
with the aid of openness of international trade market and technological
breakthrough. Multinational companies may synchronize their products
and services information among their branches and partners all
over the world. Also, medium- and small-scale enterprises may
enter to the borderless market because of the Internet as well.
To facilitate physical flows according to information flows, capability
to handle effective logistics management would be the competitive
edge of enterprises.
- New Web Technology
New technology breakthrough promotes information transparency
within industry and among industries. The 24/7 availability of
data and information demands the same for logistics services.
With efficient processing of information, partners that are more
e-ready will dominate the market, and competitions will no doubt
be sharpened by the use of IT. The logistics industry that is
characterized by intense information exchange will unavoidably
be affected by the widespread shift to Web technology.
The
Center of Cyber Logistics (or Cyber Logistics Research Center),
is a research center under Li & Fung Institute of Supply Chain
Management & Logistics, The
Chinese University of Hong Kong. The Center was first established
in early 2000 affiliated with the Department
of Decision Sciences & Managerial Economics (DSE), Faculty
of Business Administration, The
Chinese University of Hong Kong and Department
of Management Sciences, Faculty
of Business, The City University
of Hong Kong
© Center of Cyber Logistics,
2000-2007.
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