INTRODUCTION AND DESIGN OF THE STUDY
1. INTRODUCTION TO THE STUDY
The globalization of markets is generally understood as a recent phenomenon, triggered by the economic development explosion after World War II; however, while international trade has certainly increased drastically in the second half of the last century, nations have engaged in international trade for eons. However before twentieth century and the advent of modern transportation, trade between nations had always relied on courageous trader who ventured in far away places in the hope of earning a living.
1.1.1 MEANING AND DEFINITION OF LOGISTICS
Generally “business logistics” was based on the military concept and encompassed mostly the physical movement of goods (1970s). The term is now much broader and includes not only all the activities related to the physical movement of goods, both upstream (procurement activities) and down stream (sales) activities, but also the management of relationships with suppliers and customers. As it stands today, the term “logistics” is defined by the council of Logistics Management as:
Logistics is that part of Supply chain process that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers’ requirements1
Contrast this definition to what the council thought the term meant in 1986:
Logistics is the process of planning, implementing and controlling the efficient, cost-effective flow and storage of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements2.
It becomes very evident that the term is quite fluid and increase in scope; services and reverse logistics were added and the concept of “supply chain”, yet a broader term, was incorporated.
Supply Chain Management (SCM) encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all Logistics Management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies.
The following are the boundaries and relationships of Supply Chain Management adopted by the Council of Logistics Management:
Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. It includes all of the Logistics Management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance and information technology3.
1.1.2 LOGISTICS IN INDIA
After independence logistics service in India has grown-up rapidly. All forms of transportations roads, railways, air, sea and inland waterways are now available throughout the country. The industry is in fact an assortment of international shipping line, worldwide logistics companies big Indian private business houses, government owned public sector undertakings, small to medium private companies and individuals, all contributing to its development. Without this spirited and dynamic logistics services, growth of India’s foreign trade in the year 1990’s and beyond would have never been possible.
India spends nearly thirteen percent of its Gross Domestic Product (GDP) on its logistics compared to an average of ten percentages in other developing countries. This has created a need for a range of logistics and...