Management
Executive summary
This report analyzes the logistics industry. The Australian based company Panalpina is selected for the reader to achieve an internal view of the operations of such companies. Specifically, this study focuses on the value added services popular in the industry. The value added services offered by Panalpina are analyzed and assessed to determine if they are up to standard in the global industry. The report shows that Panalpina is company that is worth of the global recognition that it receives since its services are unique and complementary to meet the needs of diverse customers. The general procedure used in this research was the internet and viewing the company reports and websites. Finally, logistics companies should constantly keep an eye on new and upcoming technology. This is because it is the sole differentiating factor of growing and loosing companies.
Introduction
Integrated logistics is the ultimate solution for the shipping and transportation industry. Fast, secure, and convenient transportation is the key and basis to any credible transportation industry. However, value added services like kitting, state-of-the art warehousing, and configurations are some of the key note differences in successful businesses (Kilic and Durmusoglu 2012, p.333). These are the support services that keep a logistics company relevant throughout its lifetime. An effective logistics operation management requires a strong team, tailored specific operations, and coordinated responses by the management team for effective outstanding services. For its success, companies anticipate the customer’s needs as well as enhancing the already existent services to fulfill and surpass a customer’s request in a timely manner.
Value added services are an investment that companies partakes in order to impress the client and also create a niche in the competitive business world. Companies need to weigh the risk and access the results from the impression made in order to make the changes. In the logistics industry, value added services are the integrated actions that help move goods from the manufacturer to the customer with no alteration. The VAS in this industry aim at making the making the goods reach the customer in an even better condition despite issues affecting transport like weather, rain and road conditions.
Background of the case
In this case, we will review an Australian logistics company which has incorporate value added services in their shipping services. Panalpina on 6 continents is a global air freight network based in Australia that delivers shipping anywhere in the world. The offer chartered air services for the convenient timely delivery fashion.It has a network of both road transport and ocean freight to supplement the fright delivery transport system where necessary. Because of its success in logistics and procurement, it is very beneficial to analyze their efficient value added services that secure them dominance and success in the industry.
Panalpina offers one of the largest ocean freights in the world. it transports more than 1.2million units a year placing it as the fourth busiest freight company globally. It is also one of the few companies that offers Intelligent Carrier Portfolio (Solakivi, et.al. 2011, p.136). To maintain dominance, they employ experts on all fields of transportation and other industries that may be associated with their customers. It also partners with other fright companies to ensure that they always have credible alternatives (Soinio, Tanskanen and Finne 2012, 37). This company has maintained credibility in such a long time and to maintain it, they have secured themselves a uniquely large shipping capacity.
They also do business with large manufacturing and industrial companies. This requires the transfer of large and oversized plant parts and bulky goods all year round. To satisfy this niche of customers, they have tailored specific transporting solutions meant to benefit this line of customers. They have invested in transportation equipment that is suited for constructing refineries, chemical treatments, mining placements, power plants and other types of industrial plants. It has also offices all over the world therefore enable to meet the needs of investors in and out of Australia. They have dedicated a team of expert that manages complicated and sensitive procurements therefore able to satisfy all their customers.
Their supply chain management is excellently designed to comfortable manage all angles of supply chain management (Kovács and Spens 2011, p.9). They have ensured complete control of logistics activities that satisfy a customer because it is end-to-end based. They have achieved this by establishing a complete infrastructure that satisfies an entire supply chain to involve all supply partners. To completely control their supply chain business, they have perfected series of phases that ensure the smooth flow of business (Wallenburg et.al. 2010, p.7). The first is the analysis phase. In this stage, a consulting team is consulted on the required process of the entire flow of materials and transportation. It then goes to the project phase whereby a project management team is educated by the analysis team on the technical handling of the shipping and other processes. The final stage is the implementation phase. After the project has been approved and the project team comfortable with the knowledge impacted on them, they embark on implementing whatever is on the proposal. They are entrusted with handling of the process.
Since Panalpina has been in the business for quite some time, it understands that there are risks involved with the shipping and logistics industry. Every other day, new risks and concerns are unveiled and they have to stay ahead of the curve to impress their customers. To ensure security, they offer their clients insurance services that support the safety and loss of materials transported. It has also partnered with various governments to learn their security regulations and initiatives in order to inform their clients who conduct inter-global businesses.
Analysis of the situation
Panalpina offers diverse form of transportation alternatives according to urgency and delivery points. These vary from Priority which takes one to two days, Standard which is three to four days, and Economy which is five to six days and finally Now which can feature helicopter of any other immediate mode of transport. In delivery options, they offer door to door, airport to airport, door to airport, and airport to door. They could also integrate ocean fright cargo for the least urgent. From this analysis, the company offers quite traditional freight services but management has tailored other comprehensive services that aim to make the goods more suitable for the customer recipient (Olander and Norrman 2012, p.687).
Inbound services
These services enable the supplier assurance the transported materials reach the production site. Since Panalpina is involved with the complete transportation, they provide inventory that is used by both Panalpina and the company (Integrated Logistics Management 2012). They also provide ware houses that are close to tha production and delivery site in the name of the contracting company instead of Panalpina. In addition, they plan activities for the company by anticipating amount of shipment according to the required production needs (Hanson, Medbo and Medbo 2012, p.317). Most companies that use these services are the automotive, fashion, telecom, and manufacturing industries (Trappey et.al 2010, p. 735). This reduces inventory for the contracting company, improves economy of scale, and leaner supply times.
Value-added warehousing
This is the coordinated services where Panalpina handles the customer’s end to end manufacturing process. This involves order picking, packaging, and outbound transport. They also support e-commerce for the customer (Su et.al. 2008 p.361). Panalpina also offers services where they delay separation of a product to the last possible moment to minimize risk (Min 2009, p.275). In addition they also repackage to meet the client and shipment needs. Finally, they offer fashion logistic where they make the transported clothing items more desirable to the eye (Panalpina on 6 Continments 2013). This includes retagging, steaming and display. It promotes service flexibility and reduced investment in motor and brick infrastructure. It as well improves market penetration of a product (Integrated Logistics Management 2012).
Production service
This involves kitting, light assembly and provision of technical services. In kitting, Panalpina groups and packages goods transported to create a new product (a2b Fulfillment INC 2010). Light assembly is whereby the final assembly process is completed by Panalpina to create a more flexible customized good (Panalpina on 6 Continments 2013). The technical services are the last minute configurations of goods just before shipping after order. This reduces inventory, improves market infiltration, improves economies of scale and reduces costs
Distribution services
This is the transportation of finished goods out of Panalpina’s warehouses.Panalpina could provide the transport services or could invite a third party (Panalpina on 6 Continments 2013). It mostly involves specialized equipment that includes order processing, technical alignment, sanitized services, installation, and waste disposal. They improve high level services for the customer and improve their network as well. This is most suited for the Hi-Tech and telecom services.
After market services
This enables customers manage flow of goods from manufacturing to the distribution centers. It also manages the flow of surplus goods and services (Chopra &Meindl 2009, p.60). They also offer support services like repairs and returns, spare part distribution and product exchange. In addition, it also manages the return flow in the warehouses and resale of goods (Integrated Logistics Management 2012). This benefits the customer companies to recapture worth of the returned goods, increase customer satisfaction, reduce repair costs, and provide a one stop shop for the customers.
Key findings
Panalpina have invested immensely to stay ahead of the logistics industry (Panalpina on 6 Continments 2013). They have ensured that all clientele needs are met within the company if possible. This investment has surely paid off since customers clearly return to do business with them. They have understood that consistency is the key to any accomplishments. Their integrated logistics management has become more of a standard than a company policy. To do so, they have established complete control over the lifecycles of hardware and software (Fabbe-Costes, Jahre and Roussat 2009, p.80).
Whereas most logistics companies offer quite ordinary value added services like kitting, packing and light assembly, Panalpina are a cut above the niche. They offer services that were inexistent there before. This has grossed in large profits that has enable the company expand all over the world. The final winning factor is the introduction of technology to its operation (Caputo and Pelagagge 2011, p. 84). Research has shown that many logistics companies have collapsed due to the late introduction of technology to their systems and operations.
Conclusion
The logistics industry began two centuries ago. This industry has progressed to unimaginable capabilities that have surpassed the first initiators. It has progressed due to the inventions and the creativity and personnel of the industry (Shi and Zhu 2010, p. 111). Integrated logistics management business is a cutthroat industry where imagination comes to reality (Randall, Nowicki and Hawkins 2011, p.330). Companies with low creative and imaginative management will quickly fail and disappear in this industry (Tatham 2012, p.111). Those that remain must researchintensely and invest wisely as well to avoid colliding with the law or collecting major losses (Sople 2009, p. 144). They must also have an award winning customer service to make the customers feel at ease while conducting business with them. This are some of the factors that enable Panalpina excel in the industry.
Conclusively, the logistics industry has to grow inevitably with the extensive globalization taking place worldwide. However, due to the growth of the industry, companies have to create a niche above the rest in order to survive the cutthroat competition. Governments should also create ministries or departments to deal with this industry since it is the sole reason that import and exporting takes place. Without the presence of this industry, there would be very little interaction of countries and also their major income earnings which are exporting would collapse thus governments collapsing.
Investors should also invest in the industry. It has many expansion arenas and investors should not view the global arena as a risk but a challenge (MBA Knowledge Base 2013). however, investment should only take place after rigorous research of the base country and all the countries it intends to supply its services. Finally, the logistics companies should constantly be involved with environmental projects to minimize the carbon footprint after their activities (Ghodrati, Benjevic and Jardine 2012, p.443).
Recommendation
- Managers should be equipped with crisis management skills to deal with unforeseen complications.
- The logistics companies should minimize risk by reducing the time a product spends before distribution.
- They should invest in market research in different countries in order to advice customers on the do and don’ts acting a value added service.
- Logistics companies should employ personnel that can forecast accurately the demand of products to avoid wastage and a lot of storage space.
- Logistic companies should construct ware houses in areas near the customers industry to make the transportation easier and cheaper for them to cut cost on transportation thus increasing profits.
- Logistics companies should not neglect either of the logistics processes that make up the whole process.
- Logistic companies should make the safety of the customer’s materials their ultimate and absolute priority.
Reference list
a2b Fulfillment INC. 2010. Kitting, assembly, and value-add solutions: order management.http://www.a2bfulfillment.com/logistics-services.php
Caputo, AC &Pelagagge, PM 2011, ‘A methodology for selecting assembly systems feeding policy’, Industrial Management & Data Systems, Vol. 111, no. 1, pp.84 – 112
Chopra, S &Meindl, P. 2009. Supply chain management, Pearson education, 4thedn, New York.
Fabbe-Costes, N, Jahre, M, &Roussat, C 2009, ‘Supply chain integration: the role of logistics service providers’, International Journal of Productivity and Performance Management, Vol. 58, no. 1, pp.71 – 91
Ghodrati, B, Benjevic, D, &Jardine, A 2012, ‘Product support improvement by considering system operating environment: A case study on spare parts procurement’, International Journal of Quality & Reliability Management, Vol. 29, no. 4, pp.436 – 450
Hanson, R, Medbo, L, &Medbo, P 2012, ‘Assembly station design: a quantitative comparison of the effects of kitting and continuous supply’, Journal of Manufacturing Technology Management, Vol. 23, no. 3, pp.315 – 327
Integrated Logistics Management. 2012. Integrated logistics.http://integrated-logistics.blogspot.com/
Kilic, HS &Durmusoglu, MB 2012, ‘Design of kitting system in lean- based assembly lines’, Assembly Automation, Vol. 32, no. 3, pp.226 – 234
Kovács, G &Spens, KM 2011, ‘Humanitarian logistics and supply chain management: the start of a new journal’, Journal of Humanitarian Logistics and Supply Chain Management, Vol. 1, no. 1, pp.5 – 14
MBA Knowledge Base. 2013. Integrated logistics management.http://www.mbaknol.com/logistics-management/integrated-logistics-management/
Min, H 2009, ‘Application of a decision support system to strategic warehousing decisions’, International Journal of Physical Distribution & Logistics Management, Vol. 39, no. 4, pp.270 – 281
Olander, M &Norrman, A 2012, ‘Legal analysis of a contract for advanced logistics services’, International Journal of Physical Distribution & Logistics Management, Vol. 42, no. 7, pp.673 – 696
Panalpina on 6 Continments. 2013. Home products logistics.http://www.panalpina.com/www/global/en/home.html
Randall, WS, Nowicki, DR, & Hawkins, TG 2011, ‘Explaining the effectiveness of performance-based logistics: a quantitative examination’, International Journal of Logistics Management, , Vol. 22, no. 3, pp.324 – 348
Shi, T & Zhu, J. S. 2010.Intergrated management of intelligent return in logistics center of book industry, computer society Washington, Washington.
Soinio,J, Tanskanen, K, &Finne, M 2012, ‘How logistics-service providers can develop value-added services for SMEs: a dyadic perspective’, International Journal of Logistics Management, Vol. 23, no. 1, pp.31 – 49
Solakivi, T, Töyli, J, Engblom, J, &Ojala, L 2011, ‘Logistics outsourcing and company performance of SMEs: Evidence from 223 firms operating in Finland’, Strategic Outsourcing: An International Journal, Vol. 4, no. 2, pp.131 – 151
Sople, V.V. 2009. Logistics management: The supply chain imperative, 2ndedn, Pearson education India, India.
Su, Q, Li, Z, Song, Y, & Chen, T 2008, ‘Conceptualizing consumers' perceptions of e- commerce quality’, International Journal of Retail & Distribution Management, Vol. 36, no. 5, pp.360 – 374
Tatham, P 2012, ‘Some reflections on the breadth and depth of the field of humanitarian logistics and supply chain management’, Journal of Humanitarian Logistics and Supply Chain Management, Vol. 2, no. 2, pp.108 – 111
Trappey, CV, Trappey, AJC, Chang, AC, & Huang, AYL 2010, ‘Clustering analysis prioritization of automobile logistics services’, Industrial Management & Data Systems, Vol. 110, no. 5, pp.731 – 743
Wallenburg, CM, Knemeyer, AM, Goldsby, TJ, & Cahill, DL 2010, ‘Developing a scale for proactive improvement within logistics outsourcing relationships’, International Journal of Logistics Management, Vol. 21, no. 1, pp.5 – 21
