11.2.2 E-logistics blurs older logistic business categories
Logistics providers tend to be sorted into three main categories (Colin, 2001:36):
- Express delivery services (DHL, UPS) and/or postal services (AustPost), which tend to specialise in single package (books, CDs), low-volume and/or high value delivery. Express delivery services could combine their B2B flows to businesses (sorting and transport at night, morning deliveries) with B2C flows (day-time sorting and transport and evening deliveries) thereby earning a better return on their assets.
- Urban logistics providers or urban courier services (new entrants) tend to specialise in multi-product deliveries in a given urban area (such as district or street) consisting mainly in medium volume and value goods (such as online grocery orders).
- Traditional logistics providers operate more in the urban outskirts and specialise in flows of one or more logistics categories but not in any particular geographical area. They handle mainly large-volume traffic and have a network of national and regional storage facilities. They may develop into Distribution Centres (DCs) that are separate to or part of larger businesses (for instance the development of DC as part of distributions strategies employed by Woolworths or Coles-Myer in Australia).
The most significant changes impelled by e-commerce are changes in how transport businesses manage the imperative to move different products and services across different locations.
E-logistics is propelling how businesses’ value-add. Providers of traditional storage, shipping and tracking services are increasingly able to do inventory management, co-packing, supply payment and information services and even examine how businesses with compatible interests may be united to improve sales (Colin, 2001:37). It is now possible to find vertical integration where transport or logistics companies that once only did such things as shipping are selling to ‘upstream’ retail and manufacturing decision makers. Valuable data concerning product movements, demand scheduling or customer preferences (e.g. data from RFID and customer relationship management – CRM systems).
Beyond the hype of vendor-led case studies and early research showing e-logistics technologies could reduce international logistics costs by 50%, storage costs by 15% or transportation costs by 10-15%, e-commerce has fundamentally changed the perspective of transport and logistics industry managers. The perspective has shifted to encompass the whole of the supply chain. Managers now appreciate that they need to understand all stages in the management of the supply chain. They also appreciate that it is unequivocally good to introduce technologies that ensure logistics maximise process efficiency and customer satisfaction. The more the customers are satisfied, the more they buy, and as a result the greater the volume of goods and services that is being shipped across the whole supply chain.
Reading 2
Hultkrantz, O & Lumsden, K (2001) ‘E-commerce and consequences for the logistics industry’, OECD/ECMT Joint Seminar – The Impact of E-Commerce on Transport, OECD-ECMT: Paris, 15 pages. Available online at http://www1.oecd.org/cem/online/ecom01/Hult.pdf
Activity 2
Reviewing your study guide and readings so far, answer the following:
- Has e-commerce created new flows to the supply chain or are e-commerce ICTs and processes a response to the necessity to change supply chain management?
- Hultkrantz and Lumsden discuss changes to the distribution process and the improved competitiveness if a company can reduce the ‘time to customer’ (2001:8). What does this mean? Does this mean logistics and shipping services will naturally force mergers of companies, alliances or emergence of large ‘integrated’ logistics providers (4PL)? Why?
- Think of an example of a product you have purchased or will need to replace soon. Examine what consequences to you as a consumer if such a product or service was provided through a third party other than the product retailer/manufacturer.
- Would you trade off price against more rapid fulfilment turn around times (slower delivery higher price or quick delivery and higher price)? Under what circumstances?
- Explore and be prepared to explain how e-businesses with an Internet presence can use e-logistics to differentiate their offering to a customer/end consumer.
- Given all of the above, can logistics companies such as shippers and forwarders survive if they do not adopt effective e-commerce strategies?
Table 11. 1 Categories of e-logistic providers (IOMA, 2001:3)