In recent years the importance of logistics activities has increased exponentially. Macro environmental factors such as Globalisation and Technologies have contribute to higher the level of customer expectation and at the same time they are putting an ever-increasing pressure to managers in order to lower costs and improve quality and utility to their products so as to achieve a competitive advantage in the market place. Furthermore, thanks to the fall of boundaries in the global market, companies are able to outsource their manufacturing activities in other Countries, such as China, where the labour and commodities costs are relatively inexpensive. Nevertheless the costs saving in production, companies are facing the challenges to move their product from the Country of origin to the Country of consumption. This task required managers to strategically planning and coordinating with other functional areas of the firm all the logistics activities involved and trade-off related. The following chapters’ focus on the supplier selection process, international transportation and import clearance (Appendix 1). Furthermore, they outline how the logistics activities in these processes may contribute an online store to lower costs and add value to time and place utility.
Chinese sourcing operations supplier selection, evaluation and procurement. Murphy & Wood (2011) define procurement as the commodities, semi-finished or finished goods that a company buys from external sources in supporting the firm’s operations. Moreover, Routroy (2008) argues that given the fierce competition created by the fall of boundaries in the global market, which has contributed to increase costumer expectation, companies are force to outsource some of their operations in order to gain a competitive advantage. Consequently, the supplier selection process is becoming a critical issue and therefore, organisations are called not only to outsource but to do it with a strategic approach in order to lower costs and add value to the product in terms of place and time utility. Considering supplier selection, evaluation and procurement, it is important that the new start-up company will have a clear and in-depth understanding of the risks and challenges that the firm will undertake by outsourcing in a foreign country as China. Subsequently, it is fundamental that the logistics activities in the supplier selection are not exclusively low cost oriented but the online store managers must look at the big picture and they should consider the potential trade-offs of different possible strategies. De Boer et al. (2001) represented the complexity and importance of the purchasing decision (see Appendix 2) where a set of opportunities and threats are correlated. In order to lower costs and at the same time add value to place and time utility Ordoobadi (2009), Routroy (2008) and Murphy & Wood (2011) all agree that the selection, and evaluation process requires various steps before a company would be able to strategically choose the best supplier. The first step is to align the procurement objectives with the company’s ones. For instance, given that, the organisation is an online retailer, which would probably set low level of inventory as a goal, it should be reasonable not to obstinate in minimizing total procurement costs. This step would allow the company to manage the process effectively and efficiently, in other words, the company will keep its promise to customers using the right amount of resources. Second step consists in understanding the outsourcing environment both internal and external. In terms of internal factors Routroy (2008) argues that companies should analyse the outsourcing organisations for what concern the type, culture, constraints. In the other hand, external factors cover arguments such as regulatory and legal framework, economic and political considerations surrounding the marketplace in which the purchase takes place. For...
Please join StudyMode to read the full document