Introduction
Successful production and service organizations incorporate into their operations a department that is principally dedicated to conducting logistics management. Such a department is designed to take charge in providing oversight for finances together with information movement from manufacturers all the way to wholesalers, retailers, and finally to the consumers (Houlihan 23).
Hence, logistics management encompasses the flow of goods, information, and other resources, including energy and people, between the point of origin and the point of consumption to meet the requirements of clients. It involves the integration of information, transportation and inventory control, warehousing, material handling, and packaging.
These processes need to be conducted efficiently in an effort to reduce production costs. Efficiency is a critical component in any company that seeks to build its competitive advantage around exploring the low-price strategy. In logistics, different organizations adopt diverse principles and strategies to ensure that the concerns of logistics are realized optimally.
This dissertation paper claims that the best way to understand the principles of logistic management is through considering their application in real-world cases. From this perspective, the paper discusses and analyzes various logistics issues that are apparent in companies such as Turner International Construction and Aramex.
Background to Logistics Management at Aramex
Aramex is a global logistics organization. Since the company has grown from a national organization to a body that does business in the global platforms, it comprises an important case study for successful practical application of logistics management and even logistics principles. Hence, other organizations that seek to build long-term success in their logistics management approaches can benchmark from it. Aramex was established in 1982. It mainly focused on offering express services.
Now, Aramex offers transportation together with logistical services. With its main offices in Jordan, the organization also provides services, including domestic distribution, express services, forwarding, and freight services among others (Aramex Delivery Unlimited 1).
Aramex is now a global brand recognized by customers through its provision of customized supply chain and logistics services. The success of the Aramex Company in its global business depends on the development of effective logistics management principles that are consistent with its strategic goals.
The main goal of Aramex encompasses facilitating effective logistics management on behalf of its clients who are mainly organizations that seek to transport and distribute their products and services across the globe.
Aramex acknowledges consider logistics management an epicenter for operational efficiency. This value helps in the development of an important goal of the company, including ensuring smooth and efficient movement of goods and services from the manufacturers, to retailers, and then to the consumers.
The Aramex Delivery Unlimited reckons that through the customization of logistics solutions, clients now reduce their inventory costs, increase the speed of conducting transactions, and/or improve sales potential through the implementation of customer requirements in an efficient way (par.1).
Hence, Aramex’s main strategic goal involves ensuring that its logistics management system reduces costs that relate to supplies and production operations of its clients. This goal corresponds to the concerns of effective logistics management, which focus on availing products and services exactly when required and in a manner that facilitates optimal organization’s operational capacity (Ritchie and Brindley 304).
Logistics at Tuner International Construction Company
Cahill, Knemeyer, and Goldsby assert that scholars in the discipline of logistics management contend that the overall aim of the logistics arm of organizations entails ensuring a limited accumulation of inventories (84).
Logistics management also aims at ensuring that costs that are associated with urgent replenishment are well mitigated and managed. The primary objective entails ensuring that organizations run smoothly and effectively for optimal profitability. For this goal to be realized, Turner International Construction Company acknowledges the importance and relevance of effective management of logistics.
Henry Chandlee Tuner initiated the Turner Construction Company in 1902 with only an initial startup capital of $25, 000. Since then, the company has grown to become one of the American’s largest international construction companies.
By 2011, the company had grown to the capacity of managing $8 billion volumes of construction projects across the globe. The company bids for contracts to construct a variety of building types, including biotechnology institutions, pharmaceutical buildings, health care buildings, green buildings, public assembly buildings, and aviations among others.
The construction of these facilities involves the assembly of material that are delivered locally and/or from international markets. Such materials are many and of different types. Consequently, arrangements must be made for their sourcing, transportation, storage, and retrieval from the stores before they are utilized at the constructions sites. To enhance these processes, the Turner International Construction Company has invested heavily in logistics management.
The company organizes its principles of logistics management around five aspects. The aspects include, “expanding capital procurement options, controlling construction costs, reducing facility costs, streamlining facility equipment demands, and protecting capital investments” (Turner par. 2).
It believes that the aspects are critical in the determination of success in its logistics management endeavors to yield continued success in its operational industry. In this context, Turner adds that its sourcing specialists, while integrated with it high national buying potential, has made it possible to develop unique opportunity for participating in efficient value chain pacts directly with its manufacturing business partners (par.1).
Hence, its supply chain management and governance (logistics management) are an enormous source of competitive advantage of the Turner International Construction Company. Consequently, an analysis of the principles of logistics management deployed by Turner Construction Company is necessary in benchmarking the best strategies for enhancing the competitive advantage of an organization through effective logistics management approaches.
Evaluation of Logistics Principles at Turner Construction Company and Aramex Company
Aramex provides logistics services to various organizations across the globe. The company has implemented various logistics strategies for ensuring that the client organizations have optimal operational efficiency. This goal is accomplished by treating logistics management as a networked and multidimensional process that entails various valued-added steps with the objective of ensuring holistic and optimal operational efficiency.
Hence, one of the best practices in logistics management deployed by Aramex involves considering logistics management from a multidimensional approach instead of a one-dimensional approach to maximizing a firm’s overall efficiency. This practice entails considering an appropriate match of various processes that are involved from the time of sourcing, transporting, and using materials in the productions processes.
For the match to occur, Aramex ensures that client organizations receive their right raw materials, right finished products, or right in-process products and support services in the correct proportions, quality, at the correct place, in the right time, and in the right manner. The company also ensures that right products are delivered to the right customers.
Aramex Company organizes its supply chains according to various facets that comprise the tasks of effective logistics management arm of an organization. The facets include the transportation of products from the manufacturing locations to warehouses, tracking of the products in the warehouses and their subsequent distribution until they reach the consumer. To ensure that clients possess direct control and ability to track their products, Aramex deploys innovative technological interventions in its supply chain management.
Consistent with the above best practice approaches, Aramex stores clients’ products in its different warehouses that are located across the globe. This process involves providing bonded offerings together with duty-paid solutions, which caters for the demands and needs of various customers who also operate in a range of industries in different nations (Aramex Delivery Unlimited 8).
While client products are in Aramex’s stores, incorporation of technology into logistics management ensures that clients have a real-time visibility of stocks. Technology also provides them with the capacity to control the level of stocks in the effort to streamline order cycles together with purchases.
In case clients have their stores, Aramex logistics services are also important. The company’s dedicated experts offer services such as warehouse facility management to such clients. The main goal here encompasses waste minimization, optimal space use, cost streamlining, and correct equipment selection (Aramex Delivery Unlimited 8) at the client-owned warehouses.
The provision of support services enhanced by technology comprises an important aspect of best practices in logistics management, as they are apparent in successful organizations such as Aramex. The company offers value-added services, freight forwarding, customer clearance, distributing, consulting services, IT services, and professional engineering design among others.
In the distribution process, client visibility is provided through GPRS devices that are installed in the company’s trucks. Aramex offers consulting services as part of the organization’s logistics management services to clients, including facility evaluation and analysis of organizations’ supply chain strategies. The aim is to make recommendations on how an organization can improve its logistics abilities to minimize costs that are associated with these tasks.
Through the professional engineering design, Aramex provides clients with complete warehouse design plans to facilitate ease of material handling together with the provision of adequate operational areas. Hence, one of the best practices of logistics management entails the allocation and monitoring of critical resources, especially money, by reducing logistics costs, optimizing the use of limited space, and minimizing material handling.
Activities of logistics involve interacting with the natural environment’s flora and fauna and different people. Consequently, an organization should uphold the concepts of environmental responsibility by participating in sustainability programs as one of the best practices in logistics management. Attempts to align Aramex’s logistics management strategies with its strategic goals have compelled it to embrace the perspectives of sustainability.
For example, Aramex engages in activities such as planting trees in various arid and semi-arid areas. It also uses trucks in enhancing its logistics, which are greener in terms of carbon dioxide gas emission. This strategy aids in the reduction of excessive costs on the environment that would have been incurred if individual organizations transported their products from the point of production and/or across the distribution channels until they reach the consumers using non-green trucks.
On the other hand, Turner Construction Company’s logistics processes involve gathering raw materials and natural resources combined with various components that while assembled together constitute a whole. These materials are processed and assembled to form a finished product, which is taken to the customer for consumption.
The supplies constitute building materials such as roofing tiles, raw materials, for instance cement, building blocks, and sand among others. Logistics at the company constitutes people who are in charge of processing these materials and ensuring they are availed at the construction sites at the right place and at the right time. Indeed, to uphold the best practices in logistics management, materials are managed to guarantee free flow through the right channels and at the right pace (Hajdul and Kolinska 237).
In the context of the Turner International Construction Company, logistics involves the integration of various information flow processes to facilitate effective material handling, security, efficient production of the building materials, packaging the materials, transportation, and warehousing among other activities that are done on the materials before they are ready for use at various construction sites across the globe.
The Turner International Construction Company endeavors to provide accessibility to all information that is relevant to help in executing various logistics tasks in an effective manner. Hence, efficiency and effectiveness are important parameters for any logistics system that is deployed by an organization that seeks to build its competitive advantage around the overall operational competence and efficacy of its operations. This concern is critical for Turner International Construction Company’s logistics due to the need for optimizing all logistics chains (Gokhan and Needy 21).
At Turner International Construction Company, logistics management facilitates production planning together with the distribution processes in the effort to minimize the final costs of products. This process ensures that the company can place slow bids for construction contracts internationally and yet deliver on quality standards as established by the clients in the contractual terms.
All activities in logistics management need to consider customer perspectives. At Turner Construction Company, customers are the key initiators of logistics management initiatives when they place bids for contracts. They set timelines in which they would want their projects completed.
Deploying the information, the Turner Construction Company develops plans and strategies for recruiting the appropriate number of personnel to meet the customer demands. Plans are developed for sourcing materials together with their transportation to the site.
The overall goal of the best practices in logistics management entails enhancing customer satisfaction through customer services. As a logistics element, customer service entails the “customer-oriented philosophy, which integrates and manages all elements of customer interlace within predetermined optimum cost-service mix” (Kouvelis, Chambers, and Wang 451).
At Turner International Construction Company, the most credible customer service approach constitutes one that guarantees raw material delivery at the appropriate place, at the appropriate time, and at minimal costs to reduce the overall cost of a project. In fact, cost-effectiveness is the main business strategy for Turner International Construction Company. Hence, Turner’s logistics management strategies are aligned with the principles of cost management and mitigation of high-cost risks.
A decision of Turner International Construction Company logistics management approaches that an organization can benchmark from is incomplete without a discussion of the principles of inventory control. Inventory encompasses the “trading of the level of inventory held to achieve high customer service levels with the costs of holding inventory, including capital tied up in inventory, variable storage costs, and obsolescence” (Kouvelis, Chambers, and Wang 451).
Logistics arrangements for delivery of products (raw materials for the case of Turner International Construction Company) are made such that these costs remain minimal. Suppliers deliver raw materials to Turner International Construction Company. After inspection, they are transferred to warehouses where they are retrieved in the right quantities when required during the building process. Inventories may be controlled from different approaches.
However, Turner International Construction Company only deploys those practices that are recommended in global accounting standards. This strategy ensures compliance with the acceptable international standards in inventory control so that the organization’s inventory control practices agree with those deployed in different jurisdictions within which the company bids contracts.
Lessons from Turner and Aramex
The discussion of logistics approaches in Turner and Aramex highlights the adoption of various approaches to solving logistics management problems in global contexts. Therefore, any best practices in logistics management should incorporate the mechanisms for resolving standard problems in logistics management.
As evidenced by the cases of Turner International Construction Company and Aramex, these problems entail reducing the cost of materials and product flows, increased objective values for company operation, and enhancing logistics system sustainability and adaptability.
Flow cost problems in logistics involve aspects such as distribution costs, procurement flows, production flows, and various administrative processes, including inventory control. Through customer support logistics services, Aramex resolves these challenges through reducing logistics chains, simplified logistical networks and structural components, ensuring smooth flow of materials and products, and increasing the degree of network integration.
Likewise, Turner International Construction Company increases its efficiency through similar approaches. The challenge of the organizations’ objective value involves potential ways of increasing the availability and speed of logistics operations. This problem requires network rationalization in a stringent manner (Hajdul and Kolinska 239).
In this context, Aramex’s logistics support services for various organizations across the globe involve eliminating disruptions that occur at the interface points together with the implementation of strategies for detecting errors in real-time throughout the logistics processes, including tracking of cargo through technological approaches such as GPRS.
Therefore, it is necessary for any organization that seeks to increase the availability of its logical systems to apply technology to help in real-time surveillance to curb errors that may lower systems availability and reliability.
A major concern of organizations in their logical management approaches involves enhancing sustainability and adaptability. This issue raises the question of how to utilize lean logistical structures, increasing the degree of responsiveness, and/or avoiding objective inventories.
As an important benchmark organization, Turner addresses these concerns through continuous logistics system control such as taking bottleneck and demand-oriented solutions. Aramex resolves the problems through the reduction of impulses and/or easing the flow of customer materials and products across its logistics chains.
Considering the cases of Turner and Aramex, in the practical environment, sustainability comprises the inevitable principles of logistics management. For example, in the effort to align its supply chain with its strategic goals, the Aramex Company goes an extra mile to support communities.
Aramex Delivery Unlimited reveals how Aramex pays critical attention to boosting its citizenship practices by increasing its services to communities and the environment (11). It supports entrepreneurial initiatives in the societies where it bases its operations across the globe.
Aramex also engages in youth empowerment programs coupled with sponsoring various sports. All these activities help to develop the perception of organizational value to the communities.
From the case of Aramex, sustainability of the best practices in logistics management should incorporate the stakeholder theory. For example, organizations should identify people as one of the major issues of concern in logistics operations.
For Turner and Aramex or any other company’s logistics operations, people refer to clients, employees, consumers of the distributed products, and those who are influenced by the consumption of products through effects such as environmental landfills.
Concerns of these people in logistics management should be addressed through approaches such as the adoption of strategies that enhance waste reduction, reduction of the cost of handling inventories, and/or ensuring environmental friendliness during product distribution.
Conclusion
Logistics management is a critical component for an organization that seeks to remain competitive in the market. In a real practical logistics environment, a good management of the buying process and all other processes encountered until a product has reached the target customer can incredibly aid in the reduction of the cost of the final product.
Therefore, by increasing the efficiency of logistics processes as it is witnessed in the case of Turner and Aramex, an organization can build its competitive advantage around low-cost strategies. Consequently, when responding to various practical environment problems, the paper recommends an upcoming logistics organizations or any company that is developing its logistic management department to benchmark from Aramex and Turner logistics management approaches.
Works Cited
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- Ritchie, Bernard, and Clare Brindley. “Supply chain risk management and performance: A guiding framework for future development.” International Journal of Operations and Production Management 27.3(2007): 303–322. Print.
- Turner. Turner Logistics, 2013. Web.