Investigating the Logistics Industry: Transportation Management - Essay Sample

Overview of the Resource/Function Under Investigation

The logistics industry is developing at a rapid speed, which has an irreplaceable impact on other industries and has huge development potential. Logistics can be divided into four parts, which are procurement, warehouse, distribution and transportation, among which transportation management is one of the most important parts in the development of logistics. The development trend of today's society is to realize automated logistics transportation. The transportation management system (TMS) can help companies shorten transportation time, reduce logistics costs, improve customer service and simplify operating procedures, in order to achieve high shipment rates, low costs, and greatly promote the global economic development (Robinson, 2020).

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For most companies, reducing transportation costs is one of the most important links in logistics transportation. Therefore, every enterprise is looking for a better TMS to reduce logistics costs and get more revenue. TMS can help companies better plan and execute, including purchase order management, customer relationship management, supplier relationship management, and warehouse management. Among them, the TMS can reduce paperwork, reduce the probability of erroneous invoices and receipts, and achieve efficient operation of the enterprise (10 Reasons to Consider a Transportation Management System (TMS) - The Network Effect, 2020). Through TMS, enterprises can get order update and inventory forecast results at any time, solve problems as soon as possible, improve the transportation accuracy of the whole process, achieve higher overall efficiency of the supply chain, and also get more customer satisfaction (H&M and digitization of supply chain trends, 2020).

This paper will analyze the logistics and transportation management system of ZARA and H&M, point out the problems and solutions they are facing.

Objective

The theoretical analysis and real-life examples through the Zara and H&M act as a vital tool for the examination and understanding of the various factors underlying transportation and logistics. The paper takes a holistic approach by examining two of the most successful international organization. A comparison of the two companies in terms of their implementation and application of the concept of transportation and logistics provides coherent information on the best approach to transportation and logistics. The primary objective of the paper is to determine the various transport and logistics systems that Zara and H&M apply in their operations. The paper further aims at establishing challenging environments in these two companies. Some of the elements of analysis to achieve these objectives include the essentials of supply chain management, transportation management, and logistic costs. The current trends in the industry such as the application of advanced technology in the two companies, form the foundation for the achievement of the primary goals and objectives of the study. Automated logistics transportation is one of the significant development in the transport management system of logistics. It is vital in the study as it helps in achieving the primary goal of the research of understanding the effects of technology on the topic.

Theoretical AnalysisIn the supply chain, transportation is the spatial displacement of products in order to transfer goods from raw materials to the customers. Transportation management creates the spatial and temporal utility of goods and expands the market rang. Transportation management can guarantee the stability of price and promote the potential development in supply chain. Logistics costs are generally one of the highest cost items in the business, second only to the cost of materials in the manufacturing process.( Achahchah, Mohamed,2019)

Intelligent transportation system can improve the level of road traffic safety and the capacity of the highway network, therefore, it reduces the environmental pollution caused by road transportation. In addition, intelligent transportation improves the productivity and economic benefits of road transportation. Logistics transportation information management, transportation vehicle control technology, transportation safety technology will greatly improve the capacity of the highway network.

In the next five years, the smart transport system will be built with the help of Internet of things technology. In addition, the Internet of vehicles will extend to each system of the vehicle itself to realize the functions of active safe driving assistance, fuel-saving driving assistance, driver driving behavior analysis and improvement, and transportation path optimization, etc.

transportation management mainly includes order management, scheduling and distribution, traffic management, GPS vehicle positioning system, vehicle management, personnel management, data report and basic information maintenance, which can significantly improve the operation efficiency and reduce the transportation cost. Therefore, the company can take the lead in the fierce market competition.

Transportation management can enhance the value of the enterprise through two aspects: one is to improve the response speed of the enterprise and reduce the lead time of ordering. The other is to change the process, such as Dell computer's direct selling model, which is in order to achieve 'zero inventory'. In addition, organizing production with the customer's money.

Logistics is the third source of profit for enterprises besides reducing energy consumption and improving productivity. (Anonymous ,2009) Researches show that the manufacturing cost of products is less than 10% of the total cost, however, storage, transportation, packaging, sales, etc. account for about 90%. Intelligent logistics management improves the market competitiveness of enterprises by effectively controlling costs, integrating information and improving service quality.

H&M is a Swedish fashion company founded in 1947. Its goal is to let people get high-end fashion at low prices. Its products are mainly clothing and cosmetics, and it has more than 4,000 stores in many countries and regions in the world. Among them, H&M has more than 171000 employees in the world, and the United States, China and Europe account for a large proportionGermany is one of the largest target markets. Because it has stores all over the world, logistics plays a vital role for it, and transportation management is one of the most important parts. Therefore, H&M must have an efficient and fast transportation system that will ship the correct amount of products to stores around the world in the least amount of time.

1. Reduce delivery time and Low-cost transportation
2. Flexible procurement and high-speed distribution system

H&M does not have any factory of its own but sells goods through outsourcing. Among them, it has 22 production offices around the world and cooperates with more than 800 suppliers. About 60% of its products are produced in Asia, and the other 40% are in Europe. This can ensure that H&M controls production costs and shortens the delivery time. Global manufacturers, suppliers, and sales stores have connected ERP systems and use IT systems for production and sales. In order to control transportation costs, an economic and environmentally friendly transportation system is adopted. H&M European products are mainly transported by rail, while Asian products are transported by sea. Among them, goods that are directly delivered to the store through the warehouse are transported by truck, providing an efficient and timely supply of goods.

In contrast, Zara designs its own logistics system. Orders from each store are placed in separate boxes and transported to the distribution center via conveyor belts after product packaging is checked. To ensure that each order arrives at its destination on time and accurately, Zara uses RFID that allows it to select and sort more than 60,000 items of clothing per hour. Zara headquarters also has a two-lane highway leading to the distribution center.

The 'last mile' distribution model is the driving force behind the rapid replenishment. All ZARA products are delivered through the logistics center in La Coruna. The transport trucks of the logistics center go to different places according to a fixed schedule. The company also has two airlift bases, one in La Coruna and a larger one in Santiago, Chile. Another point is that the delivery accuracy reached 98.9% and the error rate is less than 0.5%. ( Strategic Direction,2005)

Zara pursues the philosophy of 'speed first, cost second'. Compared to H&M, Zara transports the goods to Asia and the USA by air and then send them to the stores by third-party logistics trucks, as well as shipping goods by truck to Europe. Generally, it takes only 24 hours to get to store in Europe, while it takes only 36 to 72 hours in other parts of the world. Zara stores always give consumers a fresh feeling after goods arrive in the stores. However, many other brands logistics delivery to each store is up to 15 days.

However, this pursuit of speed has made costs too high and margins have been lower than at H&M, which outsources logistics.

H&M Zara

Outsourcing low-cost transportation: ship products by rail to Europe and by sea to Asia Developed its own logistics system,

'Speed first, cost second': transport goods by truck to Eu...