Logistics Strategies Utilized within the Motorcycle Industry

Logistics Strategies Utilized within the Motorcycle Industry

The revolution of the internet has led to the advancement of e-commerce all over the world. This has resulted in logistics being recognized as a source of competitive advantage both in academia and in practice (Kihlén, 2007).The past few years has seen the change of logistics from being viewed as an area of cost savings to the view of logistics has an enhancer of the product or service offerings. Logistics can be defined as the science and art of obtaining, producing and distributing material and product in proper place and proper quantities. Logistics management began to receive attention since the early 1980s, yet conceptually the concept of supply chain management is not clearly understoodthus many researchers have highlighted the necessity of precise construction of the definition and conceptual framework in the field (Li, 2014).

Efficient logistics management is one of the significant survival factors in the automotive industry. The flexibility of materials and information being able to flow efficiently into the automobile assembly plants is viewed as the key requirement for growth of the industry. Boysen, Emde, Hoeck, and Kauderer (2015)argue that thousands of parts and supplier, a multitude of diverse equipment, and a large number of logistics workers needs to be coordinated effectively in the automobile industry such that the assembly lines never lacks parts. Vehicle models are becoming highly fragmented; the complexity of customized models and variants is on the rise. Therefore this requires keen management in the working logistics; thus the automotive supply chain needs to be managed more agile and flexible.

Importance of Logistics Strategies

Companies adopt several business improvement methodologies to advance their business performance, hence logistics and supply chain management has been perceived as a vital factor that gives an organization a competitive edge.Ballou (1997)stipulates that logistics is significant because it creates value for consumers, suppliers, and stakeholders of the firm. He further adds that value is expressed via time and place in logistics management. This is because products and services are perceived to have little or no value unless they are in possession of the customer when (time) and where (place)they intend to use them. The International Monetary Fund reported that the world spends approximately 12 percent of their gross domestic products on logistics thus revealing the importance of efficient logistics strategies in the automotiveindustry, which is highly dependent on the distribution of its product across diverse geographical locations (Ballou, 1997).

The automotive industry gives suppliers new responsibilities, who to satisfy theircustomers’demandsthey have to strive to improve their business processes at the same time reducing the cost of production. These demands can result to disruptions of operations of companies that do not have the appropriate logistics strategies in place while on the other hand customer demands can be a cause of disruption for firms that have a logistics system in place (Škerlič & Muha, 2016).The current trend in the globe is towards an integrated world economy where companies are seeking to develop global strategies where either their products are designed for a global market or the products are produced where the low-cost raw materials, components, and labor can be found, or simply the firms produce locally but sell their products globally. In all the cases the supply and distribution are stretched thus revealing the significance of logistics strategies. Internationalization or globalization of industry is dependent on its logistics performance, and costs as more companies take a world view in their operations. Therefore, more and more enterprises are taking on the increased significance of logistics within the firm especially the transportation component due to the substantial part of the total cost structure.

The significance of Logistics for the Motorcycle Industry

The radical reshaping of the marketing, distribution, and selling of automobiles is taking place at an incredible pace and promises to transform the industry that has long been noted to have high costs, meager services and selling processes that are unpleasant. The manufacturers in the industry have fiercely competed amongst themselves to drive out cost and meet the requirementof consumers for cheaper and better cars and trucks. The survivors in the industry are faced with new threats from the outside of the industry where the internet technology has lowered the entry barriers of new entrepreneurswith new disruptive ideas that assist consumers in finding, evaluating and buy new cars (Hirsh, Rodewig, Soliman, & Wheeler, 1999). The patterns identify in this market are consistent with revolutions in other markets that transfer market power from manufacturers to retailers.

Sales of motorcycles have been an upward trajectory over the past decade that has been aided by the entry of cheaper models from Asia and the increasing demand from the transport sector. Bhatnagar (2009)stipulates that there are four key drivers of supply chain performance namelytransportation, inventory, information, and facilities. Therefore,managers play a critical role in determining the role of facilities in the international network, identifying the optimal location and the capacity of the facilities in place to gain a competitive edge in the automotive industry and the global market at large, which is highly unpredictable. Efficient logistics strategies help the motorcycle industry access new growth opportunities and lower cost of operations as well as awards them with unrivaled global capacity and adequate experience in emerging markets.

Strengthening a logistics strategy in the motorcycle industry requires that each component of operation to be scrutinized to realize potential cost benefits. These critical components are such as transportation, structural in terms of warehouses and distribution, outsourcing (third-party logistics), logistic systems, competition and, implementation of the strategies.

Types of Logistics Strategies Used Within the Motorcycle Industry

Glistau and Schenk (2015)argue that today companies can hardly succeed without putting the broad range of logistics strategies into consideration. To position itself in the market the firm utilizes these strategies, thus the support of up- and downstream members along the supply chain are very crucial.

Demand-driven planning

Adopting a logistics strategy that is driven by demand and the model of business operation is based on insights, and demand shaping that is real-time is crucial. The models ensure that the firm has the right forecast and useful planning tools thus giving them a complete oversight and boost a positive response to risks such as political upheaval, suppliers withdrawals and other factors that affect manufacturing in the industry. The strategy ensures the companyis flexible enough to adjust pricing and promotions to shape the demand for their products and drive its revenue growth or expand the demand margin. The key is to have adequate foresight and be able to leverage opportunities as they arise and mitigate shocks during the distribution process and ensure that the business not only survives the dynamic market but also succeeds. Cloud supply chain technology is a crucial innovation in the logistics process that ensures that companies can have real-time inventory from the shelf store and back to the manufacturer. Therefore, this logistic strategy requires end-to-end visibility across the business operations from the consumers to the market supply.

Agile and adaptive logistic strategy

Once the firm understands the demand and risk involved in their operation, adopting a plan that allows rapid planning and integration to changing markets opportunities and events can award the automotive firm an edge in the market. The approach requires the company to have a dynamic planning capability and to consistently fine-tune its logistics operation to meet the dynamic business environment (Slade, 2017). This strategy can minimize or reduce shocks that occur at different stages in the supply chain and improve collaboration with stakeholders. The plan allows better visibility, reliability, predictability, accelerated decision making among others. The previous models of logistics involved waiting until the end of the month or quarter to shift operation depending ondata collected such as sales and shipments. However, the modern dynamic environment requires continuous and constant adjustments to the supply chain to respond to the changes in the market. The agility of logistics operation is vital especially if the motorcycle firm ships its products across the globe and thus being able to mitigate challenges in time can save on logistics cost and risk.

Optimization of product designs and management

Innovation is crucial in logistics management within the motorcycle industry to step ahead of the competition. The strategy requires vital consideration of the decision made in the initial cycle of the development of the motorcycle product. The actual cost of supply, manufacturing, and logistics operation need to be genuinely captured and optimized to create a balance across the end-to-end of the business. This can be enhanced by technology and efficient management through proper management of information, processes, people, and decisions made throughout the cycle of the product. To optimize the logistic strategies the product in itself must be manufactured at the right cost, place and time. The selection of logistics technology and management of the supply chain can increase the competitive advantage of the firm (Slade, 2017). This ensures that the firm has a smooth operation from the manufacturing plant to the consumers thus ensuring that operation cost is optimized. Optimized designs ensure that the firm differentiates itself from the broader automotive industry and streamlined product management ensures that the firm minimizes the cost of production as well as improving productivity. This can allow the motorcycle company not only to expands its global market reach but also retain the already existing consumers.

            Optimizing logistic tools

            Having the right logistic tools is vital, but the results depend on their utilization. Several publications deal with logistics tools that improve the logistics processes; these tools are wide-ranging covering areas such as analysis, implementation, design, evaluation and controlling of the logistics processes. The strategy requires that the motorcycle firm optimize on the logistics process from development to report to evaluation and finally to the implementation of new logistics processes using the most appropriate and reliable tools in the industry (Glistau & Schenk, 2015). These are such as resourcesanalysis, risk analysis, and benefit/cost analysis of the processes among others to have adequate insight into the process and make the right decisions.

Flexible supply base

Although sourcing from a single supplier allows a firm to reduce costs such as lowering management cost and unit cost due to quantity discounts, this strategy can create issues in terms of market fluctuations and significant disruptions. Therefore, a firm can mitigate the risks associated with sole sourcing through having a flexible supply base and thus can handle regular demand fluctuations more efficiently. Besides enabling a firm to manage demand fluctuations smoothly flexible supply base can help the firm have a continuous supply of motorcycle parts in case significant disruptions occur. Consequently, the firm is at a position to manage its supply chain effectively by ensuring that it has access to a wide range of suppliers and can choose on the suppliers whose product are more accessible, affordable, and available. A flexible supply base also ensures that a firm can shift its production among different suppliers across different countries quickly and without hindrances when market disruptions occur.

Factors Leading to Development of Strategies

Effective logistics strategies have the superior ability to design and administer systems that manage, control movement and geographical position of products, and finish inventories at the lowest cost (Jim Wu, 2002).Tang (2007)argues that it is difficult to reduce the possibility of most unpredictable disruptions in the supply chain; however; there are several ways of mitigating the disruptions to make the operations more resilient.

Information technology

Oláh, Karmazin, Pető, and Popp (2018)conducted research that revealed that information technology investments among the Logistics Service Providers (LSPs) were the primary factor that improved logistics strategies and yielded a competitive advantage and higher financial returns among the logistics companies. The penetration of technology is one of the factors that lead to the development of these strategies. The authors argue that firms are constantly depending on IT to build processes of its supply chain. These IT based investments are enterprise-dependent and hence challenging to replicate between organizations. Better information technology systems in a firm improve product profitability and quality among its logistics operations, therefore, unique capability are vital to achieving a sustained competitive advantage among the enterprises.  The technologies are such as tracking/tracing, availability of computer network, information security, and information accessibility among others. Therefore, technology is one of the main factors that assist in the development of logistics strategies since it contributes to the flexibility of the organizations. However, the information technology in itself is inflexible since it becomes outdated very soon and maintenance cost is steep.

Rising logistics cost

The cost of logistics represents a large percentage of sales in the automotive industry, and the price is higher for global firms. The costs are driven by both internal and external factors, the tendency towards global sourcing has resulted in a great deal of network complexity thus forcing logistic firms to assimilate variables and loads through which they lack the capability to manage (Taylor, 2005). Besides, big firms are highly fragmented in their logistic structures thus making it difficult to apply consistent management tools and processes. Other factors that are external to the companies such as fuel and labor are always on the rise thus outing more pressure on the logistic cost. Finally, the costs and complexities related to government regulations related to the global trade, the different fees and tariffs involved, and managing customs drives up logistics cost that makes it vital to build strategies that leverage economies of scale.

Operating as an on-demand business

Many companies are increasingly supporting On-demand business operations; the transformation requires the firm to make over its logistics operations.An on-demand firm responds to any client on speed, opportunities in the market and external threats; therefore for a company to survive as an On Demand Business, it has to be highly responsive to the changing market environment, focus on its competencies. Understand the cost structure variables and become highly resilient to constant disruptions and market shocks (Taylor, 2005). Therefore, the need for a company to build an effective logistics strategy that is flexible enough to vary its cost in line with its revenue thus making it well positioned to adequately react to geopolitical changes in the market and effectively manage the enterprise.

Globalization

Sumets (2014) argues that the growth of international trade that has continued to advance more rapidly than world production has resulted in increased interactions among different nations. The global trading environment can be perceived as an open, equitable, non-discriminatory multilateral trading system that is continually developing, highly competitive and beneficial to all traders. Therefore, a trader interested in the global industry with a useful logistics strategy can achieve the highest results from its activities. Two-thirds of the company’s logistics capability is negatively influenced by poor transportation networks, which is a significant issue, particularly in the emerging markets. Globalization, on the other hand, amplifies these issue and makes them more complex; thus appropriate logistics strategies improve on the cost of production.

Conclusion

Adaptable and flexible logistics networks and systems have the highest probability of innovation and improve on the delivery of products to the clients by firms in the highly complex and competitive motorcycle industry. The automotive industry is in continuous motion, the cost of manufacturing in acceleration and the demand of the products is shifting thuschanging the competitive landscape in the global market. These dynamic changes prompt manufacturers, dealers, and distributors to respond to the challenges and build or create different means of adapting and expanding in the market. Therefore, due to the fragmentation of the industry, it is more than necessary to be successful in managing the logistics in the motorcycle industry.

Although robust supply chain management strategies help firms to deploy plans that mitigate disruptions in the logistics operation when they occur, these firms would be less vulnerable if they reduce their exposure to risk through the several means that are available that make the supply chain more resilient. The advancement of technology and improvement of infrastructure across the globe helps to heed the process of creating the logistics strategies that are highly optimized to reduce the cost of transportation of motorcycles across the world and supports the firms maintain and improve their market share. However, the market is highly competitive, and only the best have the capability of remaining profitable or even increase market share.

 

 

References

Ballou, R. (1997). Business logistics: importance and some research opportunities. Gestão & Produção, 4(2), 117-129.

Bhatnagar, R. (2009). Role of logistics in enhancing competitive advantage: A value chain framework for global supply chains. International Journal Of Physical Distribution & Logistics Management, 39(3), 202-226.

Boysen, N., Emde, S., Hoeck, M., & Kauderer, M. (2015). Part logistics in the automotive industry: Decision problems, literature review and research agenda. European Journal of Operational Research, 107-120.

Glistau, E., & Schenk, M. (2015). Logistics Strategies And Tools. 1-8.

Hirsh, E., Rodewig, L., Soliman, P., & Wheeler, S. (1999). Changing Channels In The Automotive Industry: The Future of Automotive Marketing and Distribution. Manufacturing(14).

Jim Wu, Y. (2002). Effective Lean Logistics Strategy for the Auto Industry. The International Journal of Logistics Management, 13(2), 19-38.

Kihlén, T. (2007). Logistics-based Competition -A Business Model Approach. Dissertations from the International, 1-228.

Li, X. (2014). Operations Management of Logistics and Supply Chain: Issues and Directions. Discrete Dynamics in Nature and Society, 7.

Oláh, J., Karmazin, G., Pető, K., & Popp, J. (2018). Information technology developments of logistics service providers in Hungary. International Journal of Logistics Research and Applications, 21(3), 332-344.

Škerlič, S., & Muha, R. (2016). The Importance of Systems for Controlling Logistics Costs in the Supply Chain: A Case Study from the Slovenian Automotive Industry. PROMET – Traffic&Transportation, 28(3).

Slade, S. (2017). 6 Strategies for Better Supply Chain Management in the Current Economy. Retrieved Feb 21, 2019, from Logistics: https://blogs.oracle.com/scm/5-strategies-for-better-supply-chain-management-in-the-current-economy

Sumets, O. (2014). Factors Of Logistics Development At The Present Stage Of Market Transformations.Petro Vasilenko Kharkiv National Technical University of Agriculture, 1-7.

Tang, C. (2007). Robust strategies for mitigating supply chain disruptions. International Journal of Logistics: Research and Applications, 1-14.

Taylor, C. (2005). Five reasons why global logistics is moving from the basement to the boardroom — and five steps to transformation. IBM Global Business Services, 1-16.

 
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