ST Logistics: Strategic Analysis

ST Logistics: Strategic Analysis
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Introduction

The benefits of a logistics diagnosis are generally very largely positive. A diagnosis can lead to the identification, prioritization, programming and implementation of improvement projects leading to a reduction in costs and / or an increase in productivity and / or improved quality of service offered.

S T Logistics is a Singapore based logistics company which was established in 1983 specifically for government and defence sectors and the company is still working in these sectors. However, the company is also expanding its operations in commercial sectors by establishing different subsidiaries at local and international level in Middle East and Asia Pacific region. At Present, S T Logistic company has more than 700 employees all over the world and has an annual turnover of over $300 million.

The Company has the Vision, “To be the regional market leader in integrated and cost-effective supply chain solutions to the defence, government and healthcare sectors” and the mission statement of the company is “To develop and deliver sustainable and innovative solutions by partnering our customers to understand and address their supply chain needs and challenges”.

Currently, S. T. Logistics company is providing services in Defence, Aviation, Healthcare and in Public Sector. All project of the company are used to improve the efficiency of the organization, regardless of its scope (procurement, inventory, warehousing, production, distribution, transportation, etc.) assumes a co-operator Consultant to be completed (Markides & Sosa, 2013).

Discussion
Analysis and review of the logistics operation is frequently reveal surprising differences, even for companies very similar appearance. Staffing, costs are sometimes much higher for a given function as obviously it is identical with other companies. The structures are often too costly legacy of excessive compartmentalization of the company, of excessive sophistication of some functions, a non-adapted computers and causing processing burdens, internal and external benefits that could be either deleted or treated more economic.

Questioning the functioning and manner of operation is one of the objectives of a logistics company, it is necessary to ask the right questions to fit the size, location of the most consistent features to the company's objectives. Review the S T logistics in a more economic sense, it is first to question the value provided by a given function according to the company goals. It is generally seen that companies that decide to solve the inadequacies which are hunting unnecessary costs getting an improvement of their situation and clarification of their operation.

The law of economy of scale fully plays in terms of logistics. We must find ways to achieve mass effects. The costs are directly related to trading volumes. A logistics company is often tripped due to such dysfunctions observed by the company, or through great changes as a strategic developments (adding a new product), consolidation or issues that arise on business all or part of their logistics systems and often expressed or demonstrated by the company. It is then necessary to investigate in the specific area that the company wants to see improvement (Ballou & Srivastava, 2007).

The operational and logistical study cannot be achieved in isolation. A good consultant will lead in the co-production with operational, which will take full account of the reality of the company and all its specificities to validate as and progresses all the data collected and interpretations that we can make, and so to build consensus and to share the exact analysis of the causes and possible avenues for improvement.

The largest of the difficulties is the collection of basic information: it is not so simple to collect and recover the database such as forecasts or orders or deliveries over a period of time. In some cases, the company needs more specific information such as flow time between taking the order and delivery to the point of consumption, to recover the data transport. The company does not necessarily have a complete history and the consultant must reconstruct or reconstitute make series based on observations. Often, the initial framework set at diagnosis is largely exceeded: an expedition to found malfunction may have originated with the order taking, or transport costs may generate by delays in production facilities or suppliers supplies.

Factor One: The stakes for the Company

Because of its importance, Logistics of ST Logistics is part of the corporate strategy. It has an influence on:

• The growth of the company: efficient logistics augment the profitability and flexibility of the company;
• Cost control: better knowledge of the environment, the cost of the product. Logistics avoids any waste, in this case, the integrated logistics is particularly effective;
• The outsourcing of business possibilities: logistic analysis allows the company to focus on its main vocation entrusting specialists certain transactions such as transport or storage of goods;
• The diversification of the company: the mastery of the supply chain allows the company to expand the range of these activities;
• Location decisions, the business arrangement: they aim to reduce the costs of external transport and handling through realistic choice, geographic location and internal organization of production units.

Factor 2: The Stakes for the Entire Company

There is a close link between productivity improvement and project logistics, which is why the constraints and challenges of logistics are taken into account by the state in the development of economic, political, technical etc. S T Logistics has influence on:

• The transport sector: the development of logistics has generated change and restructuring in the transport sector actors;
• Regional development: the more firms locate in areas with solid infrastructure. This contributes to their economic growth and development (Waters, 2003);
• Economic policy: state and local government intensifies interventions: for example improvement of road networks to open up a region;
• Scientific and technical environment: logistics promotes generalization of robotics. They are usually related to the development of IT

Factor 3: The supply

The objectives of the procurement policy have two main tasks:

• Purchase: create and maintain relationships with suppliers to provide the company with goods and services they need;
• Logistics: organizing the flow and storage of goods purchased at lower cost and with maximum guarantee

The procurement function determines the efficiency of production and business and financial services. The objectives are:

• Provide uninterrupted goods and services needed for production;
• Select suppliers able to meet the quality criteria defined by avoiding ruptures;
• Reduce inventory to reduce costs by avoiding ruptures;
• The objectives are not always possible, so you have to prioritize (Lambert et al, 2003)

The success of a procurement policy based on fundamental choices regarding the organization of the purchasing function, vendor selection and adaptation of the procurement process. Some decisions may have serious consequences for the company. The procurement policy of ST Logistics has following four questions:

• Sometimes it is more interesting for reasons of cost or know how to buy a good or served rather than producing it themselves;
• Buying abroad often lowers procurement costs and improve business productivity. Foreign products may be a carrier of technological innovation and open the way for the internationalization of the company but the foreign supplies are not always the safest and the cheapest. There is has equal status, buyers tend to favour domestic suppliers;
• Centralize or decentralize the purchase: The centralized procurement will be carried out by a single service placed near the direction that benefit the company in negotiating with suppliers but purchases tend to be standardized. The decentralized supply is performed independently by each institution it reduces the time and adapt to local needs;
• One or more providers: When the company has a single supplier, it is preferred customer position she can get significant discounts, but there is dependence between the partners if the company fails suppliers during a significant risk. If the company uses external suppliers, it benefits from the superiority of each in his specialty and spread the risks but the condition and price regulations are less favourable

Factor 4: The Purchasing Function

To remain competitive, the company will concentrate on what it does well and it will outsource what is not within its core competence and the purchasing function evolves towards buying subcontracting. The time when the company bought raw materials to final product manufactured everything is over. The large group masters the design and final assembly but outsources the intermediate steps. The purchasing function is critical because the share of purchases in turnover is very important, it can go beyond 50% so a discount on the purchase will have very significant consequences on the outcome (Torre et al, 2012).

Apart from trading on the price, the buyer must meet the objectives concerning the regularity, the innovative capacity, security and quality of supply. Buyer's responsibilities and the impact of its work on the results of the company increases, the buyer becomes a key element in the competitiveness of the firm. The relationship between companies and their suppliers are moving towards a partnership because it is the only way to maintain quality standards.

PESTLE Analysis

In order to understand how the political, economic, social, technological, legal and environmental forces influence and impact the logistic industry, PESTLE framework has been used.

Political
The political situation and the political stability of Singapore play an important role in the operations of ST Logistics company. It is especially important for ST Logistics because the large chunk of their business comes from Defence and Public sector. In other words, ST Logistics headquartered in Singapore and represents the logistics functions of the government. Thus, although S T Logistics is a privately owned company but it receives great support from Singapore government, both within the country and outside. Political stability is important for ST Logistics because it ensures the support the company receives from Singapore government.

Economic
Logistic companies are usually dependent on national and global economies because they work on the resource intensities of local and international economies. The business of logistic companies is dependent on proper transportation and, hence, the oil price is an important factor in the success and failure of a logistic company.

In the past few years, the world has experienced political turmoil in Middle Eastern countries, which ultimately affect the oil price to unprecedented levels (Hakimian 2011). This is challenging for logistics companies like S T Logistics because they have to face the increased oil price as well as to remain competitive in the market.

Social
The business of logistic companies is also affected by the social trends such as Healthcare trends. However, the consumer buying behaviour does not directly impact the business of ST Logistics because the main customer of the company is government of Singapore itself.

Technological
In a competitive world of business, technological innovation is the basic difference between different logistic countries. The steady expansion of S T Logistics revealed that ST Logistics uses technological innovations in their business. This advancement of technology has a huge and direct impact on company.

Legal
Changes to the regulatory framework can have major impacts on logistic companies. Different governments bring with them different political outlooks and strategies, many of which will significantly impact the logistic industry.

Environmental
Sometimes, the environment of the country affects logistic company’s business; however, there is no direct and dire impact of environment on the business of S T Logistic Company.

Recommendations
Following are some of the recommendations for the improvement of S T Logistic business:

• It is recommended that proper diagnosis should be used to identify the causes of malfunctions, establish a prognosis and to propose solutions. The diagnosis often is to allow the realization of a project dimension based on the mobilization of internal company players. The approaches to diagnosis are compared to a given area to search for and detect possible failures and process malfunctions. The field of diagnosis is highly variable. Diagnosis may involve, for example, the distribution-related operations (ordering, launch orders, preparation and shipment) or a more limited field such as transportation of supplies, or storage and storage activities (Wallenburg et al, 2011);
• It is also recommended that a consultant must be hired who is useful in a process of this type; He knows from experience what questions to ask and where to go and how to detect the factors affecting the failed process. It can act transversely in the business and show where the public interest lies;
• The diagnostic addresses the logistical problem in global terms and not by separate functions. This type of holistic approach takes into account the interrelationship of functions with each other. This comprehensive approach is the essence of the logistics process;
• It is also recommended that it is preferable that the person making the logistics diagnosis is truly independent of the functions concerned whether or not it to the company. This independence promotes acceptance of the diagnosis and the axes of the proposed solutions

Conclusion
This paper has examined the business environment, the resources held by the S T Logistic company. Emerging from this analysis is a picture of a company with an excellent reputation in fine financial health.

 

 

References
Ballou, Ronald, H. & Srivastava, Samir, K. (2007). Business Logistics: Supply Chain Management.  Pearson Education
Hakimian, H. (2011). The economic prospects of the ‘Arab Spring’: A bumpy road ahead. CDPR Development ViewPoint , 63 (1), 1-2
Lambert, D., Stock J. & Ellsram L. (1998). Fundamentals of Logistics. McGraw-Hill Markides, C. & Sosa, L. (2013). Pioneering and first mover advantages: the importance of business models. Long Range Planning, 46 (4), 325-334.
Torre, L., Dolinskaya, I.S. & Smilowitz, K.R. (2012). Disaster relief routing: Integrating research and practice. Socio-Economic Planning Sciences,46
Wallenburg, C., Cahill, D., Michael Knemeyer, A. & Goldsby, T. (2011). Commitment and Trust as Drivers of Loyalty in Logistics Outsourcing Relationships: Cultural Differences between the United States and Germany. Journal of Business Logistics, Vol. 32, No. 1, pp. 83-98
Waters, D. (2003). Logistics: An Introduction to Supply Chain Management. Palgrave Macmillan