Significance of Logistic Optimization

Question: Explain Significance of Logistic Optimization in Minimizing Operational Costs and Improving Organizational Profitability: NZ Express Transport. Answer: Introduction One of the biggest problems that NZ Express Transport dealing with empty containers. Repositioning of empty container costs the company as much as as moving a full load container. This is critical issue for transport and logistics companies as for moving empty trucks would not make any money on shipping. The industry has to spend on an average $16 billion per year. This translates to 15 % of all the operational costs related to container assets. Additionally, the longer the truck has to wait to be filled, the higher is the cost of maintaining and repositioning (Dekker et al., 2013). The purpose of this study, therefore, is to access the impact of logistic optimization on increasing organizational efficiency and profitability. Background of the research and scope of study NZ Express Transport is locally owned business firm that provides Road Transport, Warehousing, International Forwarding and Container Services. The transportation industry is a highly competitive industry and in order to run a profitably sustainable business NZ Express Transport has to devise strategies to decrease operational cost without affecting the business and increase profit margins. Other strategy that can be implemented by logistic company is Logistics Optimization that aims to reduce operational costs and achieving high delivery standards. Logistic optimization provides great opportunity for NZ Express Transport to attain significant reduction in the operational cost. With the effective implementation of logistics operations optimization NZ Express can save up to 10% to 40% on operational costs by improving decision such as the optimal selection of inventory placement and transportation modes (Simchi et al., 2013). Research aim The key aim of this research is to analyze the effect of logistic optimization on operating cost and profitability of NZ Express Transport. This research also intends to improve the efficiency and profitability of the company by means of devising mechanisms to reduce operational costs. One of the strategies under logistic optimization is to formulate and implement vehicle routing plan in order to minimize transportation costs and to minimize inventory carrying cost at the warehouses. Other strategy can be to convert all Less than Truck Loads (LTL) into Full Truck Loads (FTL). In addition, it is important to develop a plan to minimize instances of moving empty truck (containers) form one place to another (Robson McCartan, 2016). Research objectives To investigate the role of operating costs on companys profitability To understand the effect of logistic optimization on reducing operational costs Research questions How operating cost affects the financial position of NZ Express Transport? What logistic optimization strategies can be implemented to reduce operating costs? What is the relation between operating cost of the company and its operational efficiency and profitability? Structure of the research paper The research paper consists of five chapters. The chapter one is the research paper would be the research proposal that is discussed in this paper, the background of the research topic organization, research aims and research questions is discussed. The second chapter would be the literature review of the topic. It will describe important concepts and theories of the selected topic area as well as conceptual framework of the selected research topics. The third chapter would describe the research methodology and data collection methods. The fourth chapter of the research paper would discuss data analysis and findings of the study. The final chapter would be the concluding parts of the study. How research objectives are linked with the research findings are discussed. In addition, limitations of the study and future scope of the study is discussed (Flick, 2015). Literature review and conceptual framework This chapter consists of critical review of the research proposal topic and factors affecting the research topic are underlined. For this study, the impact of operational cost on the organizational efficiency and profitability of NZ Express Transport has been discussed (Caunhye et al., 2012). Conceptual framework (Source: as created by author) Research methodology Outline of the research methodology Research methodology provides a basic framework for the research study and acts as a guiding force for the research activities. It comprises of research approach, research design and data collection methods. It enables the researcher to reach a firm conclusion and fulfill the research objectives. For this study the research methodology has been develop on the components influencing operational costs and profitability of the NZ Express Transport. The study aims at finding the implications of the of operational cost on the profitability of NZ Express Transport, deductive methodology and descriptive research design is used. Both qualitative and quantitative methods of data collection are used. Non-probabilistic sampling methods are used for collecting primary data (Panneerselvam, 2014). Research approach Two of the most common research approaches are deductive and inductive research designs. For this study deductive research design is used. Deductive research aims at selecting the relevant theories, hypothesis testing and data analysis to achieve firm conclusion. The deductive research approach would help in developing mechanisms to reduce operational costs in the selected logistic organization and studying the effect of operation cost on the organizations profitability (Neuman Robson, 2012). Research design Research design assists in the interpretation of findings of data analysis. The three basic research design used are exploratory, explanatory and descriptive. For this research study descriptive research design is used. Descriptive research design helps in establishing the relation between research objectives and research findings (Yin, 2013). Data collection methods For this research study both primary and secondary data would be collected. With the help of primary and secondary the research objective can be achieved and validity of the research can be established. The purpose of this research is to access the relation between operating costs and the profitability if NZ Express Transport, therefore, relevant primary data needs to be collected from the company employees and the management. For secondary data collection review of previous researchers work is analyzed (Numbers Time, 2012). Research method For this research both qualitative and quantitative research method is employed. Quantitative analysis would be conducted by collecting large number of data from the respondents through the survey questionnaire. On the other hand qualitative research design aims improving the quality of product and services. It is important to keep the operational cost to a minimum level and develop strategies to minimize the lead time and also to avoid the situations of moving empty containers. Therefore, observation and study of competitors strategy can provide solutions to these problems. Hence, both qualitative and quantitative research is found suitable for this study. Research timeline The total time that would be required to successfully complete the research is depicted with the help of Gantt chart (Baker Trietsch, 2013). Research tasks 30.05.16 06.06. 16 07.06.16 13.06.16 14.06.16 21.06.16 22.06.16 29.06.16 30.06.16 06.07.16 07.07.16 - 15.07.16 16.07.16 25.07.16 Selection of research topic and analysis of scope of study Deciding secondary data sources Literature Review Research Methodology formulation Devising survey questions Primary data collection Analysis of data Findings Conclusion and recommendation Final report submission (Source: as created by author) References Baker, K. R., Trietsch, D. (2013). Principles of sequencing and scheduling. John Wiley Sons. Caunhye, A. M., Nie, X., Pokharel, S. (2012). Optimization models in emergency logistics: A literature review. Socio-economic planning sciences, 46(1), 4-13. Dekker, R., Fleischmann, M., Inderfurth, K., van Wassenhove, L. N. (Eds.). (2013). Reverse logistics: quantitative models for closed-loop supply chains. Springer Science Business Media. Flick, U. (2015). Introducing research methodology: A beginner's guide to doing a research project. Sage. Neuman, W. L., Robson, K. (2012). Basics of social research: Qualitative and quantitative approaches. Numbers, C., Time, C. (2012). Data Collection Methods. Review of Sociology, 17, 225-249. Panneerselvam, R. (2014). Research methodology. PHI Learning Pvt. Ltd.. Robson, C., McCartan, K. (2016). Real world research. Wiley. Simchi-Levi, D., Chen, X., Bramel, J. (2013). The logic of logistics: theory, algorithms, and applications for logistics management. Springer Science Business Media. Yin, R. K. (2013). Case study research: Design and methods. Sage publications.