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Incorporating papers from the 19th NOFOMA Conference held in Reykjavik, Iceland 2007 - Part 2
Edited by Árni Halldórsson and Gunnar Stefánsson
Introduction
During a knowledge transfer research project between Heriot-Watt University and an industrial partner it became clear there were challenges within the focal company's transport management and purchasing processes. The company has enjoyed a 40 per cent growth annually over the last five years. The company processes metal remainders or scrap provided from metals smelters and manufacturers who use such materials and obsolete products. Although it is mainly based in the UK it is also active in continental Europe, China and North America. For reasons of confidentiality, further company details cannot be provided, however we do not consider such details affect this paper as its purpose is to highlight the change in logistics and transport purchasing processes.
As the company has grown its logistics function has not kept up, particularly in the management of its international containerised transport (e.g. inter-modal or deep sea transport) which constitutes approximately 40 per cent of transport volume and cost. During the first year of the research project, the focal company shipped about 300 containers world wide, all of which were outsourced to logistics service providers (LSPs).
Prior to this research project starting there were few procedures and systems in place at the company to help it manage its transport purchasing and management processes effectively. This made the company primarily an order taker as it was not in a position to expect any degree of reasonable service. The problems encountered related to transport cost, reliability and service. This situation is not unique to this type of company since many small and medium size enterprises (SMEs) and indeed larger companies suffer similar problems. However, larger companies usually have more leverage than SMEs to rectify this situation with their LSPs.
SMEs are fundamental economic pillars of European states. The European economy depends heavily on this sector as 99 per cent of all European enterprises are SMEs and provide around 65 million jobs or about two-thirds of all jobs in Europe ([21] Observatory of European SMEs, 2003). Transport is for many companies the largest cost associated with their logistical activities and is a process that is repeated many times throughout the...