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A critical evaluation of logistics performance: A case study on logistics functions of courier industries...

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A critical evaluation of logistics performance: A case study on logistics functions of courier industries

A Project Proposal submitted By Taimoor Jamil (24045) To Department of Business Administration

In partial fulfillment of The requirement for the Degree of MASTER OF BUSINESS ADMINISTRATION In Supply Chain Management

This project has been Accepted by the faculty

FACULTY OF BUSINESS ADMINSTRATION Mr. Sheheryar Malik Advisor

Executive Summary Like most other industries, transportation and logistics (T&L) is currently confronting immense change; and like all change, this brings both risk and opportunity. In this paper we discuss four key areas of disruption logistics companies need to focus on now, and explore some possible futures of the industry. Customer beliefs are increasing greatly. Both individuals and businesses expect to get goods faster, more flexibly, and in the case of consumers at low or no delivery cost. Manufacturing is becoming more and more customized, which is good for customers but hard work for the logistics industry. Add it all up and the sector is under acute and growing pressure to deliver a better service at an ever lower cost. This promises lower costs, improved efficiency, and the opportunity to make genuine breakthroughs in the way the industry works. An increasingly competitive environment is another big factor in the mix. Some of the sector’s own customers are starting up logistics operations of their own, and new entrants to the industry are finding ways to carve out the more profitable elements of the value chain by exploiting digital technology or new ‘sharing’ business models, and they don’t have asset-heavy balance sheets or unwieldly existing systems weighing them down. We hope this paper will help you assess the trends and developments most likely to affect courier business, and start to develop a strategy to ensure continued profitability through this time of intense change.

Table of Contents 1. Introduction………………………………………………………………………..01 1.1 Background 1.2 Project research problem 1.3 Purpose of the research 1.4 Research questions 1.5 Significance of the project 2. Project related literature summary……………………………..………………….07 3. Planned research methodology……………………………………………….…...13 3.1 Method 3.2 Approach 3.3 Data collection 3.4 Ethical considerations 3.5 Schedule of completion 4. Results and Findings………………………………………………………………15 5. Conclusion, Discussion, Implications, Limitations and Recommendations………25 5.1 Conclusion 5.2 Discussion 5.3 Implications 5.4 Limitations 5.5 Recommendations References…………………………….……………………………………………..30

Chapter 1 Introduction 1.1 Background The idea of posting and mailing is as old as the prior improvements men began informing when he came to know the mediums with which he could send those messages the prior specialized apparatuses were voice messages, paper messages and so forth. Today those instruments have been characterized into more straightforward and productive way as in the individuals who can manage the cost of could send the messages all through the world and those messages could be as messenger or in whatever other shape which could fill their needs.. The courier services started in Pakistan route in 1980s and after that these administrations were changed into an expanded scope of items, encouraging the clients in differed fields of organizations. (Sadaf 2006). Dispatch administrations started amid the late nineteenth and mid twentieth hundreds of years, with little organizations in a modest bunch of urban areas over the world. At the point when few homes had phones, individual messages must be conveyed by hand. Some early organizations gave conveyance of gear and different bundles. With the ascent of huge retail and retail chains in the mid twentieth century, bundle conveyance administrations turned out to be considerably more well known. The size of such administrations became throughout the following quite a few years. (Campbell, 2007). Courier services wound up plainly complicated and focused later than 1969 in view of the undeniably distant throw character of business process in the global economy the ubiquity of post arrange retailing and increasing delivery rates. The Postal Service reacted with more prominent accentuation on its overnight Express Mail conveyance and today Priority Mail services (Cohen, 2005). In late 80s the paper postal industry faced new rivalry with the progress of electronic mail and 1

fax machines. The need for material post of several item remained, conversely, the courier industry was maintained by the ongoing expansion of the international market place, (Kumar, 2006). recent forms of transportation allow consignments to be delivered very swiftly over immense distances (Wang, 2011). Today’s delivery service is different from a traditional postal service. A large quantity of courier companies, especially the major ones, have begun to offer various services, including inbound shipment, cargo consolidation, reverse logistics, value-added client services, supply, order accomplishment, and outbound cargo. Furthermore, trends such as globalization, online shopping, and urbanization stimulate demands for delivery services (Wang, 2011). It is vital, consequently, to understand and measure courier performance. 1.2 Project research problem Globalization and liberalization of the business environment in numerous divisions of the economy has meant more intense commercial competition both at domestic and international levels. Supply chain doubt and threat is a main barrier to the delivery of better client worth (Davis.J 1994; Mason-Jones & Towill 1997). Courier as a business segment has not been safe of this. Even in their home markets, companies are facing new competitors from around the globe. As a result of increased international competition in courier industry, the market performer is faced with challenges of adjusting to these new business surroundings. There are issues within the organizations that need to be dealt with as they organize to meet these challenges. At the same moment pressure to optimize the quality and costs of services is growing on companies. Another challenge is the emerging high pace of adoption of information and communication technologies in carrying out transactions that were initially done by courier service providers. Globalization is creating new challenges to courier

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services in Pakistan. George Stalk, an American working at the Boston Consulting Group, announced the change from cost- and price-based competition to “time-based competition (Mecham, 1992). In doing so, he summed up a development that had been making for some time: that a company’s achievement was becoming more reliant on its capability to respond instantly to client requests. in addition, new technologies are being developed quicker and faster in many areas. The result, the time structure for technologies or individual products to be commercially successful is becoming shorter. This situation points out that there must be factors as well as intervening strategies that are impacting on the successful performance of the courier firms. Bearing this in mind, it was very important to study the factors affecting the performance of courier services in the country. 1.3 purpose of research project The purpose of the research is to give recommendation for improvement to Create the logistics performance of courier service industry. Set up the link between employee motivation and performance and identify the effects of customer service on performance of delivery service industry. Create the effects of the country’s transport and communications infrastructure on performance of the courier service industry in Pakistan.

1.4 Research questions The main research queries are: 1. What are the key aspects of logistics potential for justifying supply chain insecurity and threat in order to get improved logistics performance in the Pakistan postal industry? 2. How the performance of the logistics behavior can be measured? 3

3. What is the opinion of the employees of the enterprise on the key performance indicator that can greatly contributed to the overall performance of the logistics performance? 1.5 Significance of the project The originality of research is significant. Although logistics performance has been extensively recognized as a significant topic in supply chain management (Zsidisin and Ritchie 2009), awareness of how to achieve this is very restricted (Peck 2006; Rodriguez et al. 2008; Sanchez-Rodrigues, Vasco, Potter & Naim 2010; Waters 2011; Zsidisin & Ritchie 2009). This study makes a involvement to supply chain insecurity and threat management (Simangunsong, E., Hendry, L.C & Stevenson, M. 2012). Insecurity and risk, logistics capability and logistics performance are three important concepts in supply chain management, but little attention has been paid to the links between them. In addition, the research does not only focus on the relationships between them within academic area, but also concern about industrial practices. There is a very limited amount of research into the Pakistan courier industry, although with the rapid development of technology and online shopping, the industry needs to reconfigure outdated content. This research focuses on courier companies; however, its findings may also be implemented in other logistics and transportation industries as it enables a rethinking of the way to manage supply chain risk and achieve better performance.

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Outline of the study In chapter 1 we study the following listed elements 1 Introduction 1.1 background 1.2 project research problem 1.3 purpose of the research project 1.4 research questions 1.5 significant of the project Chapter 2 is the projected related literature summary in this we study about the following 

Cost

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Quality

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Supply chain uncertainty and risk

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Measuring logistics performance

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Key performance indicator

Chapter 3 is the planned research methodology 3.1 Methodology 3.1.1 Single case study 3.2 Approach 3.3 Data collection 3.3.1 Secondary data

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Chapter 4 research and findings Chapter 5 Conclusion, Discussion, implications, limitations and Recommendations 5.1 Discussion 5.2 Conclusion 5.3 Implications 5.4 Limitations 5.5 Recommendations

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Chapter 2: Project related literature summary

The courier company in Pakistan is a viable industry, focused in lofty population districts in and on the capital cities. With a measureless mass of territory to cover, the companies lean to carry by air and road. Different companies are distinguished by their company size, organizational formation, system and customers. Generally, all perform the same job: delivery of a consignment from the point of sender to the point of receiver; and the outcome of delivery is also similar: ensuring the consignment is delivered on time and safely. (Wang 2011). General coordination ought to be the primary target in logistics (P. Anderson, Aaronson, & Storhagen, 1989). Porter (1990) features that redesigning and development would bring about country's intensity. Consequently, measuring the logistics performance is now becoming a lofty main concern (Griffins, Goldsby, & Cooper, 2007), hence taking a confront to the organizations (Forslund, 2007). From the point of logistic functions, it has been ordinarily examined as ahead of schedule as in 1985 at a workshop in Netherland by The Netherlands Association for Logistics Management (NAVEM). In this course, the performance markers display was delivered and the pointers have been connected in a few organizations (MCB University Press, 1992). Logistics performance is classified as study of both efficiency and effectiveness in achieving a given task (Mentzer & Konrad, 1991). Other scholar refers logistics performance as a metric used to quantify the efficiency and or effectiveness of an action (Neely, Gregory, & Platts, 2005). This topic continues and logistics performance has been seen as multi-dimensional and is defined as the degree of efficiency, effectiveness ad differentiation associated with the accomplishment o activities (adapted from Fugate, Mentzer, & Stank, 2010). Researchers have always found it difficult to define logistics performance because

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organizations have multiple and frequently conflicting goals (Chow, Heaver, & Henriksson, 1993). In the context of this study, efficiency is a measure of how economically the firm’s resources are utilized (Mentzer & Konrad, 1991; Neely et al., 2005). Several critical areas in logistics performance effectiveness as described by Langley & Holcomb (1992) are product guarantee, availability and fulfillment time. They also extended the definition of effectiveness by adding differentiation as the ability to create value for the customer through the uniqueness and distinctiveness of logistics services. Logistics performance plays a vital role in achieving the organizational goals. The evaluation is based on how well goal is met (Mentzer & Konrad, 1991) and to what extend the overall productivity ad performance would reflect logistics performance (Stabler, 1992). Consequently, logistics performance logistics performances the fulfillment of the organization’s objectives and strategy (Braz, Scavarda, & Martins, 2011) as well as satisfying the customers (Kayakutlu & Buyukozkan, 2011) Cost Cost has always been the major essential aspect in assessing the logistics performance (Andersson et al., 1989; Banomyong & Supatn, 2011). A few studies only focus on other elements such as lead time, quality and flexibility (Andersson et al, 1989). The vital logistics cost consists of transportation and carrying inventory costs (Forslund, 2007; Kunadhamraks & Hanaoka, 2008).

Across industry, Logistics cost differs

widely among companies (Wallenberg & Weber, 2005), on the other hand, numerous issues raised and discussions have been lacking in curing various issues on costs. The level of competence is influenced by several variables such as cost, time used to deliver the services and levels of risk (M. Andersson & Banomyong, 2010).

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Quality Logistics infrastructure is significant in attracting

domestic and international

financiers in setting up and spread outs their business activities (Zuraimi et al., 2012). The efficiency of infrastructure enables country to attain large economies of scales, reducing the average time shipments spent at sea and in ports (Brooks & Stone, 2010). In the context of Pakistan, the logistics infrastructures have improved gradually. With exception to Sgouridis (2003), studies focusing the logistics infrastructure in Pakistan are lacking. Sgouridis (2003) found some delays in the delivery of goods to and from the port. The delay was due to congestion as 95% of the freight transported to and from Karachi port is carried by truck and the railway performance was not adequate. Recently, Zuraimi, Mohd Rafi, & Dahlan (2013), who examine the current logistics infrastructure in Pakistan found that most firms, who have been in the business for more than 10 years rated neutral on the quality of infrastructure. Supply Chain Uncertainty and Risk Intense competition in the courier industry market globalization, increased supply chain network difficulty, higher client expectations, shorter product and technology life cycles, and uneven situation, mean that courier industries providers face more uncertainties and risks than ever (Marasco 2008). Many businesses do not have a supply chain risk management strategy (Andreas 2013), and one strategy is to transfer their uncertainties and risks to courier industries providers (Zsidisin & Ritchie 2009). The uncertainties and risks still exist, but now courier industries providers have to manage them. There are managers who are experienced, knowledgeable and have appropriate altitudes in their industries but are not effective (Carmichael et al. 2011). Doing right things in the right way makes an capable manager. (Carmichael et al. 2011). Unsuccessful companies have a reliable profile; they are functionally oriented 9

and narrowly focused. The problem is a lack of ideas, not about what to do but about how to coordinate the efforts (Holmberg 2000). Successful managers in courier industries need to be aware of effective supply chain risk management. A few studies look at uncertainty and risk in the transport and logistics industries (Joseph 2004; Rodrigues, Potter & Naim 2010; Rodrigues et al. 2008), concentrating on identifying and investigating the sources of uncertainties and risks. One of the major distinctions between courier industries and other firms is that insufficient and ineffective management of uncertainty and risk in courier industries may cause chaos along a supply chain, as it directly links the several parties (Zsidisin 2003). Changes to a supply chain system are therefore essential. This study proposes an approach which focuses on a firm’s ability to manage supply chain uncertainties and risks and minimize changes to other parties in the chain, so that the negative effects of change may be minimized. The measurement tool used to assess supply chain uncertainties and risks in this study has not yet been well developed. (Rodrigues, Potter and Naim 2010) determine and assess the different causes and sources of supply chain uncertainty that impact on the sustainability of UK road freight transport, demonstrating that uncertainty can be evaluated in logistics and transport. Simangunsong, E., Hendry, L.C and Stevenson, M. (2012) systemically review uncertainty and risk in supply chains, providing a holistic view of the relevant literature. Further, the study identifies several sources of uncertainties in the supply chain. Another study by Murugesan, Natarajan and Lakshminarayanan (2013) provides a reliable and accurate instrument to assess supply chain risk in heavy engineering industries. The supply uncertainty and risk scale which is developed for use in the present research is based on these studies, and draws some of its measures from them.

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Measuring Logistics Performance From the resource-based view (RBV), each firm is a particular collection of resources and capabilities. Furthermore, each firm may have distinct objectives and strategies. Therefore, performance measurement may be different in different companies. In general, performance can be measured in hard (objective) measures and soft (perceptual or responsiveness) measures [Chow, Heaver, and Henriksson, 1994]. Hard measures include raw financial statistics, costs statistics, commissions, and services provided. In contrast, soft measures include supervisor appraisals and self-perception. Performance analysis is the measurement and comparison of real intensities of achievement of particular objectives [Yang, 2012]. When analyzing system performance, it is difficult to use qualitative assessments that are unclear. Though, the selected numerical performance measure may not sufficiently describe the system’s performance [Benita, 1999].

Hudson, Haas, and Uddin [1997] showed that

performance measures are the quantities that confine the level to which the system performed and the results achieved in the process. Performance procedures also can be used for other business purposes. Such performance measures have to be identified as the first task in risk analysis [Aven, 2012]. The informative performance measures could logistics performance companies to prevent the growth of, and reduce the consequences of, a hazardous situation [Aven, 2012]. Moreover, performance measures may avoid and keep an eye on the risks in risk analysis [Aven, 2012]. Key Performance Indicator There is no general agreement on how firm volume should be measured and thus there is a large variation on the growth variables used by researchers. A firm size may be measured according to its profits or by the amount of human and physical capital it employs (Barkham, 1996...