Page 393 - Introduction to Business

CHAPTER 10 Developing the Promotion and Distribution Mixes 367

Technology and Business

Logistics Relies on Technology to Cut Cost and Provide
Better Levels of Customer Service

Over the last fifty years, the logistics mated inventory retrieval systems in concert with
industry has relied on technology to computers allow for overhead, safe, and rapid
cut costs and provide higher levels of customer serv- retrieval of products to fill customer orders. Comput-
ice. The 1950s saw the advent of containerization, in ers are also used in electronic data interchange (EDI)
which shipments are put in trailer-sized containers, systems where supplier and customer computers link
usually 40 x 8 x 8 feet. The containers can then be up to automatically reorder products that are needed
moved from one type of transportation to another on a regular basis. Bar codes enable inventory levels
without having to have their contents unloaded and to be maintained and shipments to be tracked.
reloaded. In this intermodal transport, containers can The terrorist attack on the United States on Sep-
be shipped via truck, train, airplane, or ocean-going tember 11, 2001, has created security concerns. The
vessel and moved from one to the other. Huge con- bad news is that bombs, such as a small, low-yield
tainer cranes were developed that allow heavy con- nuclear device, can be hidden in containers and got-
tainers to be loaded on or off ships without capsizing ten into the United States through a port. It would be
them. Containerization reduces handling costs, exorbitantly expensive and time-consuming to hand-
spoilage, and pilferage. check the tens of thousands of containers that arrive
Slip sheets have been replacing more expensive in the United States each week. The good news is
wooden pallets that were prone to damage and were that scanner devices have been developed that allow
hard to keep track of. Stretch film wrappers help sta- the monitoring of entire container contents without
bilize loads. Huge oil tankers carry millions of gallons the containers having to be opened.
of oil at low cost per gallon. Satellite tracking devices
allow companies to keep track of where their trucks
are, enable deliveries to be diverted to better service Questions
customers when last-minute needs arise, and monitor 1. What are the advantages of the use of technology
the safety of trucks, such as engine temperatures. applications to the logistics areas of firms’
Technology has improved warehouse operations. operations?
Forklift trucks can quickly and effectively move inven- 2. What are intermodal shipments?
tory into storage areas or out to leading docks, as can 3. Have you seen any examples of stretch film
mechanized conveyor belts. State-of-the-art auto- wrappers in use?

The greater distances increase the logistics costs for international shipments. containerization The placement of
Whereas truck and rail shipments dominate domestic shipments, air and water are products in trailer-sized containers that
can be shipped by rail, air, ship, or truck
the most important for international shipments. Shipments by air account for only
1 percent of all international shipments, but represent 20 percent of their value.
High-value perishable items and those that need to quickly reach customers, like
cut flowers, personal computers, and emergency machine parts, are examples of
goods that are usually transported on airplanes.
Companies beginning to market their products overseas are tempted to use the
same logistics strategies in the international markets as employed in the domestic
market. In so doing, they can begin operating quickly in foreign countries and can
probably minimize their logistics costs. However, the differences encountered in
overseas markets suggest that such a decision should be reached only after a great
deal of thought.
Companies selling products overseas usually have to engage the services of a
freight forwarder. Freight forwarders act as an agent for companies shipping prod- freight forwarder Agents that perform a
wide variety of services for companies
ucts to international customers. They arrange for moving products to domestic ports
shipping products to international
or airports, negotiate with ships or airlines to transport products, expedite clearing customers

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