AN ANALYSIS OF BANANA SUPPLY CHAIN IN AUSTRALIA USING E-LOGISTICS FRAMEWORK
Advantages and Disadvantages of the Implementation of e-logistics
The choice of the e-logistics in the banana supply chain is seen as a solution to the problem of transporting bananas to China. Ideally, there are several challenges and disadvantages related to the transportation of bananas from Australia to far off countries such as China. To increase the market share for the Australian bananas, quality standards must be observed during the transportation of the bananas. As such, it is imperative to ensure better solutions to mitigate the transportation problems. According to Lawrence et al. (2013), the e-logistics systems have provided better solutions to most customers around the world. Idyllically, the e-logistics concept has shaped most businesses to fit into the future market. Nevertheless, the company understands the advantages and the disadvantages of the solutions.
Figure 1: E-logistics chart
Figure 1: E-logistics chart
Source: Cook et al. (2012)
In the current global economy, the levels of competition have increased forcing most companies to adopt economic methods of carrying out their activities. Cook et al. (2012) acknowledge that the globalization of the companies has forced most of the companies to come up with supply strategies including the electronic logistics. E-logistics has enabled companies to conduct businesses electronically without engaging in unnecessary physical movements. Hastings and Lawley (2015) reiterate that the methodology has enabled most companies to save on costs by greater margins. Major companies have reaped the benefits of e-logistics making it one of the best supply methods for international businesses.
While considering the sensitivity and perishability of bananas, e-logistics can help this company to cut costs on losses. Cook et al. (2015) acknowledge that bananas are sensitive to extreme temperatures that might affect their qualities. On the other side, the transportation processes might subject the bananas to severe mechanical damages. Wind, rain, and friction during transportation are common events affecting the quality of bananas. To prevent loss due to such mechanical damages, it is important to adopt an e-logistics method. A growing body of research has indicated that the e-logistics concept remains the most competitive logistics services globally. Through this service, Hastings and Lawley (2015) contend that the customers can get the commodities that they need at the right time. Through the third-party supply chains, the companies can maintain a good quality of commodities. This phenomenon increases the benefits of the e-logistics services in the banana supply chain.
Through e-logistics, expenses towards warehousing, purchase of large transit vehicles, equipment for the warehouses as well as the packaging materials will be reduced. The company will be able to reduce the costs of transporting bananas to China. An alternative means of providing bananas through the third-party logistics company will enhance timeliness and economy.
On the other side, e-logistics will not only ensure timeliness but will also ensure that there is a planned cash flow for the company. Managing cash flows from companies that supply commodities physically is difficult compared to the management of commodity supplies through e-logistics. Hastings and Lawley (2015) noted that e-logistics help companies to ensure that the commodities are delivered to the customers on time. Conversely, the e-logistics reduces the inventory for the company. The reduction of the inventory reduces the errors in financial calculations to give the company flawless cash flows leading to increased profits. Additionally, the solution helps in speeding up the ordering processes for the customers. It helps the customers to quickly identify the items that they need. Additionally, it allows for faster processing of the orders, which improves the levels of satisfaction among the customers. Daniells et al. (2001) opine that unlike the mainstream logistics services, e-logistics helps in shortening the delivery time. Goods delivered at the right time to the customers lead to satisfaction among the customers.
Figure 1: Advantages of e-logistics
Figure 1: Advantages of e-logistics
Source: Hastings and Lawley (2015)
In as much as there are several advantages, there are certain disadvantages that affect the e-logistics services. Several challenges accompany the e-logistics services. For instance, there is the language barrier between the Chinese and the Australians. The language barrier is seen as one of the challenges making it difficult for the users to use the electronic methods efficiently. Hastings and Lawley (2015) acknowledge that the developing nations have experienced challenges using such logistics services, especially where the users are unable to comprehend other foreign languages. Additionally, Hastings and Lawley (2015) noted that cultural differences might affect the stages of infrastructure development. With this, the internet infrastructure may not be very effective in offering the required services to the customers and end-users (Lawrence, Richards and Lyons 2013).
Every country has its specific security and privacy issues that affect individuals engaged in online activities. The privacy and security rules in different countries might limit the operations through the e-logistics service. Pattison et al. (2008) indicate that China is one of the countries with stringent internet laws. Such laws might affect the use of e-logistics in China by the Australian company. On the other side, lack of proper security might make the internet users afraid of engaging in any internet-based purchases. Other researchers have reported difficulty in the use of e-logistics services. According to Cook et al. (2001), some traders noted that using e-logistics to supply the customers with the right products can be difficult in areas where individuals are not literate. Ideally, the use of e-logistics requires the traders and the customers to be literate and informed of the choices that they make while using the systems. Without proper knowledge and information on the e-logistics service systems, individuals may find it difficult to use thus, might not realize its usefulness.
For proper usage, wide access to the internet is necessary both to the traders and the end-users. However, unavailability of the internet in some parts of China might affect the access of the e-logistics services. Since the service is fully internet-dependent, it is necessary to ensure that the customers can access the internet. To this end, companies adopting the e-logistics services system should understand the strengths and the weaknesses of the service before they start using it. On the other side, it is imperative to compare the e-logistics with the current logistics services to identify the best method of transporting commodities globally.
The Benefits of e-logistics to the Banana Supply Chain
The Australian banana industry has had several challenges with its logistics services. Daniells et al. (2001) indicate that one of the major challenges for the international retailers is logistics. The transportation of commodities across countries is not always an easy task to most companies. Properly structured logistics services help companies to increase efficiency and effectiveness in consumer satisfaction. Lawrence et al. (2013) acknowledge that properly managed logistics is a factor of consumer satisfaction and efficiency in companies. Nevertheless, studies have shown that transportation and distribution of commodities tend to create serious challenges to most companies. For instance, the transportation and distribution of commodities require expensive transport mechanisms such as expensive trucks and ships. On the other side, the storage and handling of the commodities require warehousing equipment that might be very expensive to most companies. As such, it is imperative for the Australian banana industry to adopt the e-logistics framework in transporting and distributing their bananas. In this manner, there are many benefits accrued from third-party logistics
One of the positive implications of the e-logistics to the Australian banana industry will be improved efficiency in transportation and distribution of the bananas to China. China is a remote country that will require extensive transportation and distribution equipment. As such, the e-logistics will help in reducing the costs of transportation and distribution of the bananas. According to Pattison et al. (2008), the bananas are prone to mechanical and physical damage from frictions and extreme weather changes. During transportation, the bananas may be damaged leading to serious financial losses to the company. On the other side, the third-party logistics helps the company to reduce the time taken by the transporters. Therefore, there is customer satisfaction resulting from increased efficiency. Customers are able to get their items and commodities at the right time (Millar & Roots 2012)
Additionally, the third-party logistics concept helps the Australian banana industry to gain a competitive advantage in the banana industry. There is effectiveness in using this technology as it reduces the errors in inventory. E-logistics replaces the inventory therefore reducing the amount of work in the company (Cook et al., 2001). This technology ensures effectiveness in keeping the records of the purchases and sales made to the customers. Lawrence et al. (2013), reiterate that technology improves accuracy in the management of data thereby minimizing the losses due to the errors that could result during the transactions. Idyllically, the third-party logistics helps in maintaining a steady flow of commodities into the markets. Considering that banana is an all-season crop, this phenomenon helps in ensuring that there is supply of bananas to the customers throughout the seasons.
Furthermore, e-logistics ensures complete visibility of the transported goods. In the past, the traditional methods of transportation reduced the visibility of the goods on transit. As such, it was difficult to assure the customers of the arrival of the goods. Currently, the e-logistics makes it easier for the banana companies to monitor the movements of the commodities. Therefore, it increases the assurance to customers that the products will arrive safely. There are few customer complaints or reversal of the products to the companies because customers are able to identify the commodities that they need before they purchase them. In this manner, the e-logistics concept has improved the overall efficiency and effectiveness of the company’s operations (Hastings & Lawley 2015).
The Australian banana industry is currently realizing improved sales due to efficiency in its logistics service to the major markets like China. The company increases the amount of commodities supplied through an integrated logistics service. Such efficiency has facilitated increased sales thus, leading to improved profits to the company (Cook et al. 2001). E-logistics has brought tremendous solutions to the banana companies by ensuring that communication between the customers and the sellers is efficient. With efficient communication, it is easier for the companies to share ideas with the customers that help the companies to determine the variety of bananas that the customers want.
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