The Benefits And Challenges Of Elogistics

The increased competition in all sectors due to globalization has forced the companies to reduce business costs. To reduce cost the companies are forming new management strategies like supply chain management and e- logistics. E- logistics means applying the concept of logistics electronically via the internet in order to conduct the business electronically. According to AMR Research( Challenger,2001), E- logistics helps to reduce cost by 10%. According to Sahay,B.S.(2003) logistics contribute to 10 to 12% of GDP . Based on two references e-logistics helps to save about 1.2% of GDP. That is why the companies like Dell, Compaq, Hewlett Packard is favourable to the E- logistics and supply chain management.

E- commerce logistics are the activities that ensures that customers get what they need at right time at right place and at minimum cost. E-commerce logistics face many challenges in developing countries like higher tariffs, Complicated global trade rules, Global Terrorism and Geographical Barriers. The lack of knowledge of total cost in online merchant is the main cause for the failure of many electronic commerce in past decades.

According to Hesse 2002, Gunasekaran et al 2003, E- logistics is an internet enabled logistics value chain that offer competitive logistics services like contract warehousing, public warehousing, distribution management, target consolidation and transport management.E- logistics consist of four components like one stop value added services, information management, automation in warehousing network and a transportation network.

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The one stop value added services helps to improve customer satisfaction .For example in government service one stop value added services like making queries and application, to search council services and to make payment can be done all at one time. Information management is where the information is exchanged through electronic media`s like WWW, Internet and EDI. Automation in warehousing operation will reduce human involvement in updating consolidation, loading and unloading. A Transportation network helps to increase flexibility and reduce transportation costs.

The difference between traditional logistics and e- logistics are as follows. In case of traditional logistics the volume is very low because large amounts of goods are sent to lesser location like retail stores. But in case of e- logistics the lesser amount of materials are sent to many customers quickly. In case of traditional logistics the objective is that it is efficient and cost effective but in case of e- logistics it is more speed and can meet customer expectation.In case of traditional logistics the information is gathered through fax, paperwork and Management Information System(MIS) but in case of e- logistics the information is gathered through Internet, Electronic Data Interchange (EDI), Radio Frequency Identification (RFID) and Integrated IS. The E- logistics is more reliable and fast than traditional logistics.

In Traditional logistics accountability of shipments is linked to limited supply chain but in e- logistics the accountability is expanded in whole supply chain. In E- logistics the customers have high expectation about quality of service and delivery of shipments but in case of traditional logistics the delivery of products is taking long time as the expectation of customer is not met because today`s customer needs faster delivery of goods. In case of traditional logistics there is less complexity in fulfilling international trade but in case of e- logistics there is larger complexity in fulfilling international trade. In e- logistics it is possible to place direct orders with distributors and producers and also helps in accessing more sellers globally but in case of traditional logistics it is mainly done through fax and paper works as it takes expensive and takes long time in getting reply from producers and distributors. In case of E- logistics the demand for shipment is lacking stability and also not predictable due to huge number of customers but in case of traditional logistics the demand for shipment is predictable .

The challenges of e- logistics in developing countries are economic and educational barriers, lack of infrastructure, security, trust and privacy, channel conflicts, delivery logistics, security problems and global terrorism and geographical barriers. In economic and educational barriers the main obstacles for e- logistics is the lack of economic resources, internet usage and standard of education. Most of e- logistics are used by advanced users in developing countries because of lack of resources to use the internet and shop online. Lack of infrastructure means developing countries poor telecommunication infrastructure and short access of computers create barrier in e- logistics .Internet access cost also result in barrier to e- logistics. Security,privacy and trust is different in different countries and there is no provision in many countries govt rules that e- logistics should be legally binding and trust worthy as such it create barriers in E- logistics.

According to survey conducted by Forrester Research said that they turned off global trade because of difficulty in process in e- logistics. The main barrier for e- logistics for this is the language and cultural barriers that destroys the different stages of internet infrastructure and adoption and also incapable to deal with direct global orders.

According to Leung et al 2000, Gunasekaran and Ngai (2004b), the benefits of e- logistics are enhancing customer service, minimizing cost and also meeting product delivery deadlines. It helps to develop web based inventory control and also helps in building relationship with large logistics companies like DHL,UPS and FedEx. It help to concentrate and understand the customers more readily. It helps in B2B2C —commerce for third part logistics (3PL) , it helps to SME`S to develop strategic alliance and also help to meet growing demand.

In conclusion due to globalisation the importance of e- logistics is growing eventhough there are many challenges in e- logistics the significance of e- logistics cannot be ignored. In order to use e- logistics effectively we should understand the strength and weakness of e- logistics effectively and we should use in a proper way and should not misuse it. Last but not least in the coming future the importance of e- logistics will be higher and it will be used by many people in the future.