Tuesday, February 21, 2012

Logistics: More Than Just Moving Goods

I was reading the article “The Threat of Global Gridlock” about the challenges of transportation in a supply chain, one word kept lingering inside my head: logistics. Probably because it reminded me of a series of TV ads by United Parcel Service Inc., or better known as UPS.

I think I started seeing these ads quite frequently sometime around last year. The company was launching a global ad campaign to promote its expanding logistics business to small and medium-sized businesses that wanted to sell their products globally. They cleverly modified the lyrics of “That’s Amore”, a classic Dean Martin tune, and changed it to “That’s Logistics”. 

I’m pretty sure most of you have seen the ad before, but just in case you want to see it again (or never seen it before), just have a look and enjoy the jingle:

(UPS: We ♥ Logistics Commercial via youtube.com)

In an interview with Ogilvy & Mather Worldwide, Scott Davis, UPS chairman and CEO, said that “People often think of logistics simply as moving goods to the right place at the right time”. That’s exactly how I thought of it.

However, after I finished reading the article, it totally changed my point of view. Scott Davis added that “Logistics can be a powerful tool to help businesses get products to market first, gain operational efficiency, save money and improve customer loyalty.  Especially in today’s economy, companies need an edge and UPS’s mastery of logistics can give it to them.”

For small businesses, going global might sound like a tough order. But thanks to third party logistics companies, it opened up the opportunity for small companies to reach out to the global market. Senior transportation analyst at BB&T Capital Markets, Kevin Sterling said that “Third-party logistics is a growing area at a time of globalization and cost-cutting of in-house supply-chain operations”. He added "If you're a small business, would you know how to ship from China to the U.S., or are you going to hire a team to manage your supply chain?”

However, the recent global recession, the rise of oil prices, transportation congestion, have disrupted the transportation network infrastructure worldwide.

It’s also a significant problem in my home country, Indonesia. In terms of logistics, Indonesia is falling behind its fellow ASEAN countries Singapore, Malaysia, Thailand, Philippines, and Vietnam. According to the 2010 Logistics Performance Index (LPI) released by The World Bank, Indonesia is ranked at 75th out of 150 countries surveyed, the second lowest in the ASEAN region (above Cambodia).

2010 Logistics Performance Index (LPI) ranking - via worldbank.org

Recently, the Indonesian government stated that they are focusing on resolving three major problems that are impeding the country’s economic development. The government have identified that the three major problems are high costs in logistics, dependency on imported raw material for industries, and the issue of labor productivity and waging systems.

Hopefully my government back home will soon find a way to resolve these issues, and in terms of logistics, follow some of the best practices that are mentioned in the article.

  1. Stalk Jr., George. “The Threat of Global Gridlock”. Harvard Business Review. July 1, 2009. Prod.#: R0907T-PDF-ENG.
  2. http://online.wsj.com/article/SB10001424052748704621204575487840032479922.html?mod=WSJ_hpp_LEFTWhatsNewsCollection
  3. http://www.youtube.com/watch?v=mRAHa_Po0Kg
  4. http://www.ogilvy.com/News/Press-Releases/September-2010-New-UPS-Campaign.aspx
  5. http://www1.worldbank.org/PREM/LPI/tradesurvey/mode1b.asp#ranking
  6. http://www.bisnis.com/articles/hambatan-industri-hatta-janji-tuntaskan-tiga-masalah-utama

1 comment:

  1. In the Philippines, I could suggest with partnering logistics company that offers more than forwarding freight but catering your warehouse needs as well. Metro Combined. A flexible company that does not only gives you what you expect but exceeds your expectations is quite the catch to grab.


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