Write short note on Role in Global Logistics.
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reliable international transportation services. Decreases in transportation costs andincreases in performance reliability expand the scope of business operations andincrease the associated level of international trade and competition.3Second, theuse of appropriate distribution channels in international markets increases the chancesof success dramatically. Its primary objective is to develop a task-effective deliverymechanism for customer satisfaction. Coca-Cola’s success relies largely on its globaldistribution arm, Coca-Cola Enterprises, the world’s largest bottler group. It helpsCoca-Cola market, produce and distribute bottled and canned products all over theworld. The group also purchases and distributes certain non-carbonated beverages suchas isotonics, teas and juice drinks in finished form from the Coca-Cola Company tosatisfy the diverse needs of its consumers.4As far back as 1954, Peter Druckerhad said that logistics would remain‘‘thedarkest continent of business’’5—the least well understood area of business—andhis prediction proved true until well into the 21st century. It is not too difficult todemonstrate the importance of the physicalhandling, moving, storing, and retriev-ing of material. In almost every product, morethan 50 percent of product cost ismaterial related, while less than 10 percent is labor. Yet, over the years this fact hasnot received much attention. In 2006, the total logistics cost represented about 10percent of the GDP, or $1.3 trillion, in the United States. Among them, transpor-tation costs alone accounted for $635 billion in 2006.6As of 2006, Europe’s logisticscost represented 11 percent of GDP. It was some 13 percent of GDP for India. ForChina, the Council of Supply ChainManagement Professionals puts the figure ataround 21 percent of GDP—a huge improvement since 1991, when it was around25 percent.7Since the 1990s, a variety of issues have been driving the increased emphasis onlogistics and distribution management. It was epitomized in 1998 by General Motors’lawsuit against Volkswagen over the defection of Jose Ignacio Lopez, the former vicepresident of purchasing at General Motors and one of the most renowned logisticsmanagers in the automobile industry.8His expertise is said to have saved GeneralMotors several billion dollars from its purchasing and logistic operations, which woulddirectly affect the company’s bottom line. The importance of distribution channels isfurther evidenced by the recent mergers in the auto industry, in which giant multina-tionals are gobbling up smaller manufacturers with strong brand names, but inadequateglobal distribution, such as Ford’s acquisition of Volvo.9As firms start operating on a global basis, logistics managers need to manage theshipping of raw materials, components, and supplies among various manufacturing sitesat the most economical and reliable rates. Simultaneously, these firms need to shipfinished goods to customers in markets around the world at the desired place and time.The development of intermodal transportation and electronic tracking technology hascaused a quantum jump in the efficiency of the logistic methods employed by firms.Intermodal transportation refers to the seamless transfer of goods from one mode oftransport (e.g., aircraft or ship) to another (e.g., truck) and vice versa without the hassleof unpacking and repackaging the goods to suit the dimensions of the mode of transportbeing used. Tracking technology refers to the means for keeping continuous tabs on theexact location of the goods being shipped in the logistic chain—this enables quick3John H. Dunning,‘‘Reappraising the Eclectic Paradigm in an Age of Alliance Capitalism,’’J
❤An international logistics company plays a vital role in transportation. This type of company is responsible for planning, implementing, and controlling both information and physical materials and goods going from one point to another