The Logistics and Posts industry sector has become a truly global business. This results in the consolidation of logistic providers, regionalisation of European Distribution structures, increased level of supply chain optimisation and increased competition on value added logistics activities.
Postal operators who are facing global competition and an erosion of their local domestic monopolies follow an aggressive approach: entering new markets with integrated express, logistics and transportation service packages. This results in a transformation to global logistics providers. Transportation volumes are growing worldwide with transportation streams to and from the Far East region reaching record heights.
The successful logistics and postal companies of the future need to have global reach, flexible financing structures and have to be able to operate with favourable cost structures.
Liberalisation of the Postal sector is officially adopted through the third postal directive in Europe, imposing most of the member states to open their postal market to competition at the latest by year-end 2010 and for the new member states year-end 2012. Liberalisation will have a considerable impact on the incumbent postal operators. They will have to increase their efficiency and quality in order to keep enough market-share to maintain economics of scale.
Service offering and prices must better reflect customer needs. Regulation will have to move from price control avoiding cross-subsidisation to searching a balance between allowing market entry and maintaining universal service provision, possibly with public or sector funding.
Congestion is one of the most important business issues within the logistics sector of today. As fuel prices strongly affect profitability, increased congestion translates into wasted fuel, wasted time and angry motorists, consequently impeding further growth of road haulage.
Traffic management as applied to the ground transportation industry is crucial and encompasses a variety of processes, technology, and cooperative ventures, measures aimed at making more efficient use of existing roads by controlling the volume and speed of traffic. Such measures tackle a number of problems, including road safety and public transport penetration, to list just a few examples.
More vehicles travelling the roadways result in a corresponding rise in greenhouse gas emissions, including CO2 which has been attributed to global ambient air temperature increases. Government policies are being drafted and implemented to address this issue, and one of the means to address the problem is through various traffic management schemes.
Traffic management solutions are being imposed by governmental agencies but increasingly involve private enterprises in the solution. Public-Private Partnerships (PPPs) have been an effective method to implement some of the proposals put forth to handle traffic management challenges.
The business environment is rapidly changing. Customers are more demanding, product life cycles are shortening, globalisation is increasing, and companies are trying to realise revenue growth by industry consolidation and tapping into new sources of revenue.
According to the European Working Group on Reverse Logistics (2004), Reverse Logistics is:
“The process of planning, implementing, and controlling flows of raw materials, in-process inventory, and finished goods, from a manufacturing, distribution or use point-to-point of recovery or point of proper disposal.”
Reverse Logistics remain one of the main unexplored areas for potential revenue growth.
Recalls, commercial returns, wrong deliveries, warranties, repairs and refurbishment and end-of-life return are some of the many examples of Reverse Logistics - historically an undervalued part of supply chain management - that is today gaining much more attention due to its direct impact on profit margins, companies’ environmental image and corporate social responsibility.
Corporate Governance, Corporate Social Responsibility and Environmental Issues have a rising impact on operations. The industry is more competitive than ever and there is an ever-growing pressure for cost reduction. Consequently it is essential to address both operational and tax aspects simultaneously when optimising the cost effectiveness of the supply chain.
The design of a reverse chain strategy is challenging. Embedding that strategy into an organisation, processes and technology is the following hurdle to take. Ensuring integration of that strategy with tax policies and processes is the final challenge.
To reach this stage requires an optimised reverse chain with a maximum capacity to release the financial benefits.
Increasingly stricter security requirements call for accurate identifiability and traceability of products in the distribution chain. Radio Frequency Identification (RFID) is one of the technologies available for this purpose.
RFID promises to further automate inventory tracking and provide valuable buying information and information on promotion performance. Its technology holds great promise because of its ability to provide real time information, reduce inventory levels and improve customer service.
With the use of RFID, retailers can track the amount of inventory on shelves at all times, rather than having to physically inspect and read bar codes. This real-time information can prevent stock-outs while reducing inventory levels and provide valuable information on buying trends. The information can also be used to track inventory movements and prevent theft.
RFID technology also holds great promise for manufacturers. RFID systems automatically provide valuable information about a product as it moves through the manufacturing facility. The technology can also be used to capture information after the product leaves the plant.
In the foreseeable future, RFID technology promises to greatly improve an organization's ability to track products, parts or shipping containers and provide an unprecedented view into product life cycles. Over time, the technology may provide companies with the ability to follow a product from the factory floor, to the store, into consumers' homes, and eventually to their ultimate disposal.
The European Union has embedded the initiative of the World Custom Organisation to improve security of the supply chain in the ‘Authorised Economic Operator’ programme. This initiative was converted into the legislation of the different EU member states.
Certified Economic Operators will be treated as reliable trade partners and will have access to ‘green lanes’ which will increase safety, efficiency and speed of the supply chain. The ‘AEO’ status will become an undeniable need for all companies who envisage to participate efficiently and cost-minded in the supply chain.
In return for AEO certification, companies will need to benchmark and adjust their internal control processes affecting the supply chain against the EU member state ‘AEO’ requirements. In order to live up to the standards imposed by the custom authorities, companies will carefully need to review control processes in place and to act as pioneers in the use of innovative techniques.