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Copyright © 2002, MCB UP Limited
Benchmarking in logistics
Benchmarking in logistics
Globalization has emerged as a major force shaping business strategies, leading firms to develop products designed for a global market, and to source components globally (Cooper, 1993). Moreover, e-commerce places higher emphasis on time-based competition that tremendously impacts logistics. Operations concepts such as just-in-time, flexible manufacturing, computer-integrated manufacturing and business process reengineering have significantly contributed to reducing manufacturing cycle time. However, the overall competitiveness lies in reducing time to reach the market with the right products. This could be achieved by reducing the material flow time on the upstream side of the supply chain (sales and reverse logistics). Furthermore, it requires speeding up the flow of information on orders to upstream organizational entities and expediting logistics like storage and delivery of materials/products through the entire supply chain. Therefore, logistics is a key factor in organizational competitiveness (Bhatnagar et al., 1999).
Companies have difficulties in managing their logistics in the new economy due to the complex nature of operations. There are different types of logistics operations that include: self-managed logistics (1PL); asset-based logistics (2PL); contractual logistics (3PL); supply chain management (4PL); and e-logistics network (5PL). Logistics, similar to manufacturing, requires decision making at different levels such as strategic, tactical and operational. Nowadays, Internet-based logistics information systems are gaining ground in delivering goods on time and hence in improving the overall customer service level.
Efficient logistics operations require effectively managing warehousing, transportation, inventory, order processing, product assembly/installation, information systems and packaging. In recent years, 3PL has become very popular, as it focuses on core strengths, provides real-time information, globalizes service demand, and emphasizes key performance indicators and collaboration in supply chain operations, and e-commerce development (Fung, 2002). The purpose of outsourcing logistics, as in 3PL operations, is to reduce operating costs, meet demand fluctuations, and reduce capital investment. Considering the implications of 3PL in global competitiveness, it is determining the best practices of logistics using benchmarking to improve organizational performance.
Performance measures, metrics and benchmarking are essential for identifying the best practices of logistics including 3PL. Logistics performance measures include financial and non-financial measures including tangible and intangibles. Since the logistics industry is making efforts to develop real-time information systems, it is essential to benchmark the performance of logistics operations with the objective of identifying best practices and their implementation strategies, techniques and technologies for enhanced organizational responsiveness and hence competitiveness.
The primary step in the benchmarking of strategies, tactics and operations in logistics is to determine suitable performance measures and metrics in the following logistic areas:
electronic logistics information management; and
E-logistics has a tremendous potential in the new economy and hence is a promising area for benchmarking (Fung, 2002).
The editors of BIJ welcome articles and Special Issue proposals covering the performance measures, metrics, and benchmarking and best practices in logistics operations, that can include self-managed logistics, asset-based logistics, contractual logistics, supply chain management and e-logistics network.
ReferencesBhatnagar, R, Sohal, A. and Millen, R. (1999) "Third-party logistics services: a Singapore perspective", International Journal of Physical Distribution & Logistics Management, Vol. 29 No. 9, pp. 569-87.Cooper, J.C. (1993), "Logistics strategies for global businesses", International Journal of Physical Distribution & Logistics Management, Vol. 23 No. 4, pp. 12-23.Fung, E. (2002), E-commerce Logistics Limited, ecL, Hong Kong.