University of Gävle

Department of Industrial Development, IT and Land Management

Strategies and Principles for Effective Logistics Management

Personal Assignment: Literature Review (Revised)

Gävle, Sweden, 14/11/2019

Ebrahim Mohammadi, MSc. Student
ebrahim@[Link]
 Personal Literature Review for Strategies and Principles for Effective Logistics Management 1

1. Introduction
In this assignment, twelve selected papers from the required articles plus four more
research papers will be reviewed and finally compared in accordance with their focus of
the study. For each paper, in the literature review, the core points are extracted and
possible theoretical frameworks and findings are described. In the discussion, the
relationship between the articles are considered in groups and the overall outcome of the
assignment and the activities related are pointed out, in compliance with the course
material.

2. Literature Review
In this section, the following scholarly papers are selected for review:
1. Beyond Fisher’s product–supply chain matrix: illustrating the actual impact of
technological maturity on supply chain design
2. Transportation Mode Choice Based On Total Logistics Costs
3. An analysis of the general benefits of a centralised VMI system based on the EOQ
model
4. Supply chain integration and performance: The effects of long-term relationships,
information technology and sharing, and logistics integration
5. From supply chain to demand chain: the role of lead time reduction in improving
demand chain performance
6. Developing logistics competencies through third-party logistics relationships
7. Selection of logistics service provider: An analytic network process (ANP) approach
8. The dry port concept: connecting container seaports with the hinterland
9. Improving logistics performance in cross-border 3PL relationships
[Link] of intermodal logistics platforms: insights from a Spanish platform
[Link] Scorecard – a Packaging Performance Evaluation Method
[Link] Packaging Suppliers into the Supply/Demand Chain
13.A supply chain performance measurement approach using the internet of things
[Link] of IT in supply chain planning
[Link] Communication Technology and Global Logistic Performance
[Link] 4.0 implications in logistics: an overview
 Personal Literature Review for Strategies and Principles for Effective Logistics Management 2

2.1. Beyond Fisher’s product–supply chain matrix: illustrating the actual impact of
technological maturity on supply chain design

In this article, the author suggests the design of a supply chain model based on product
characteristics, especially when technological maturity and predictability of demand are
considered. The author von Haartman (2012) mentions that considering the increased
amount of changes in the competitive global market, cost pressure has contributed to
more efficient production with more outsourcing and therefore supply chains become
more defragmented. Previously reviewed literature in this paper explains that due to the
predictability of demand when forecasting is difficult, the supply chain should not only be
sufficient but also should be responsive (Christopher et al. 2006; Wong et al. 2006). The
author explains that in two previous studies two key supply chain designs are considered
according to the predictability of demand. Fisher (1997) called them ‘efficient and
responsive’ and Christopher (2000) called them ‘lean and agile’. Then the author explains
that Holweg (2005) suggests an agile supply chain model that is built on the concept of
agile manufacturing, which focuses buffering inventories at main points and considers
postponement. Furthermore, the key difference between lean and agile is that a lean
system focuses on reducing inventory, so it is a pure pull-based system and, on the other
hand, an agile system has buffering inventory in order to quickly assemble semi-finished
modules to order. Therefore, an agile system consists of pull systems for incoming
modules and a push system downstream for the customer order point. Concepts of both
Fisher (1997) and Christopher (2000) assert that the main consequence of having a
favourably innovative product is volatility and demand uncertainty. When the technology is
relatively cutting-edge and the main priority is improving functionality, a more
vertical-integrated supply chain is more advantageous (Christensen et al. 2002). Therefore,
the researcher concludes that mature products require less vertical integration due to a
model or design with a standardized interface, and they require less cost due to low pricing
power.
Von Haartman (2012) suggests two dimensions: ‘predictability of demand’ and the ‘level of
innovation’ and introduces ‘the technological maturity-demand uncertainty matrix’. To
explain this model, von Haartman (2012) discusses that when technological maturity and
predictability of demand is low, a more responsive supply chain is expected and when
 Personal Literature Review for Strategies and Principles for Effective Logistics Management 3

demand is predictable and technology mature, an efficient supply chain is the best choice.
However, responsiveness may denote several matters depending on how the product is
considered along the described dimensions. The paper also studies the mature telecom
industry-leading supplier Ericsson and reveals a sequential fragmentation of the supply
chain and uses a hybrid approach with partially two separate distribution chains based on
the suggested matrix. The conducted study proposes that an efficient or responsive supply
chain depends on demand as its most important component. The connection between
innovative products and responsive supply chain is not as strong as Fisher’s suggested
model. Highly innovative products require not only responsiveness but also supply chains
supporting product development and the demands are changing due to both product
lifecycle and technological dynamics.

2.2. Transportation Mode Choice Based On Total Logistics Costs

Sheffi et al. (1988) use an MIT-developed computer model called ‘ShipSmart’ for the
marketing agent of the Burlington Northern Railroad. The paper explains the case in which
the rail transportation share in the US plunged from 75% in 1930 to less than 50% in 1985
and therefore the company suffered forty years of erosion of traffic. To tackle that, the
railroad company realized to realign its organization around customer service. So for better
conduction, the research reviewed the transportation cost from the shipper’s perspective
that was less considered by carriers. Choosing transportation mode options can be
compared based on the total logistics cost. The total logistic cost finally is calculated by
considering the main parameters as the transportation, stationary inventory and in-transit
inventory costs. It is very similar to the well-known economic order quantity derivation, but
in this case, the trade-off between the transportation costs and inventory holding costs is
considered to calculate the optimal shipment size. Moreover, the authors explain that
according to this formulation several concerns should be considered. For example, origin
inventory carrying costs are neglected, the shipment size may be constrained by the
capacity of the vehicle or/and the time between shipments, and, for transit time reliability,
it might be considered a proper safety stock regarding time as protected time more or less
than its average. The article then demonstrated the software screen tables and possible
suggestive changes and ease of revising the data parameters using certain logistics
 Personal Literature Review for Strategies and Principles for Effective Logistics Management 4

options. The software afterwards is used in the logistic company to explain to the
customer, the significance of customer service and the cost of long transit times or
unreliable services.

2.3. An analysis of the general benefits of a centralised VMI system based on the EOQ
model

The paper studies the benefits of a vendor-managed inventory (VMI) based on the
economic order quantity (EOQ). Kannan et al. (2013) at first, explain in comparison to
traditional supply chain which covers raw material supply until finished product in several
chains, a VMI supply chain is a replenishment skill whereas the upstream member (the
vendor) takes responsibility for managing the inventory to the downstream member (the
buyer/buyers), within the determined and predefined levels, without the order details of
customers. The key benefit of VMI supply chain is that the vendor focuses on optimizing
efficient production and capacity planning, and the customer improves forecast accuracy.
The research then reviews previous literature pointing out in a comparable and tabular
manner the positive characteristics where VMI supply chains are implemented. For cost
partitions, in a VMI supply chain order-issuing and transportation costs incurred by the
vendor compared to the traditional supply chain which is borne by the buyer.
Then the study extends previous works, acknowledging demand variability and integrating
preventive actions, comparing traditional versus VMI supply chains on EOQ models. The
article proves that the order-issuing and transportation costs would be reduced by the
vendor because the vendor can make centralised decisions, the vendor can also
consolidate several buyers’ demands and produce them together, and immediately ship
them to the buyers. This also will reduce the inventory-carrying costs of the vendor’s total
cost. In this study, the case study is in a leading pharmaceutical manufacturing company
consisting of more than thirteen thousand products in about twenty production sites. The
model introduced is applied to three categories of products, covering all range of stock
keeping units to consider higher benefits under VMI application. The study concludes the
overall costs depend on the category of the stock keeping units. On the other hand,
hopefully, the analysis proves that VMI in the pharmaceutical industry under the specific
condition will lead to considerable overall supply chain cost reduction. Moreover, the feat
of a VMI supply chain is reliant on communication, coordination, sharing data, and
 Personal Literature Review for Strategies and Principles for Effective Logistics Management 5

collaboration between the partners, and an information technology system which enables
access to data in order to approach a higher standard decision making efficiency.

2.4. Supply chain integration and performance: The effects of long-term

relationships, information technology and sharing, and logistics integration

This research paper studies the integration of material and information flows between
supply chain partners and reaching operational performance. Prajogo and Olhager (2012),
the authors of this paper explain that two main flows are principal in the supply chain:
‘material’ and ‘information’. One of the key aims of information integration to supply chains
is to attain real-time transmission and processing of data required for supply change
decision making like lower cost through a decrease in inventory and shortages. To explain
it more, the material flow is a forward integration from suppliers to manufacturers, known
as logistics integration, and backward integration which flows information from the
manufacturer to suppliers. Many previous studies are mentioned that showing the
information technology integration resulted in significant effects on the supply chain and
indirectly on its performance.
The paper suggests that the first step is logistic integration, with market competition
between firms, pushing them to build competitive capacities in a strong coordination flow
of material from suppliers for fairly easier production procedure guidelines. The authors
conclude that it is required for all participant to act as a single entity, consequently to
improve performance throughout the chain, like uptrend in sales, distribution, customer
service, and service levels, and downtrend in costs, lead time, and risk. So the first
assumption is that Logistics integration has a direct impact on operational performance.
The scholarly paper reviews previous studies and suggest that upstream flow information
is significant technically (through information technology connection) and socially (through
information sharing and trust). Accordingly, the next two hypotheses are that the strength
of information technology connection between firms and their suppliers ​has a positive
relationship with logistics integration, ​and the volume of information sharing between
firms and their suppliers has also a positive relationship with logistic integration. ​In several
pieces of literature, the study derives that it is preferable for firms to build a long-term
relationship with suppliers rather than short-term contracts. And the firms can use fewer
suppliers over a long period of time. Finally, these relationships have enhanced into a
 Personal Literature Review for Strategies and Principles for Effective Logistics Management 6

strategic level that suppliers are now regarded as an integral part of the firm's operations.
Therefore, the authors formulate that long-term relationship with suppliers has a positive
relationship with information technology connection between firms and their suppliers. In
addition, the key hypothesis is that the long term relationship with suppliers has a positive
relationship with performance.
The study then suggests a model diagram built upon the aforementioned hypotheses,
connecting long-term relationship, information integration, logistics integration and
performance, with respect to information technology connection and information sharing
are antecedents of logistics integrations not a direct relation to operations performance.
The research mentions its method as an email survey of nearly two thousand Australian
firms which more than two hundred firms participated and then confirms its results with
introducing its scale validity and reliability factors and finally the structural equation model.
The study finds the correlation between technical and social information sections is low
and hence both are required for the higher performance.

2.5. From supply chain to demand chain: the role of lead time reduction in improving
demand chain performance

This article reviews the demand chain management which is similar to supply change
management but with special regard to the customers, in other words, it stressed market
mediation to a higher degree than its role of certifying efficient physical supply of the
product. De Treville et al. (2004) explain that it is important for parties in a supply chain to
focus on enhancing the transfer of demand information upstream in the chain. The paper,
studies demand chain in a Nordic pulp and paper manufacturer, as the company expensed
more than one and a half year, and hundreds of thousands of dollars in supply chain
improvement project expanding its enterprise resource planning systems. The paper
describes that the management of the firm realized its failure, therefore decided to focus
on their core businesses instead. The authors also recognize the downside of these
companies in which many products have a long lead time that it makes it hard for a retailer
to propose any alteration in the product specification. To handle this scenario, first, the
research reviews previous literature and then to consider the complexity of empirical data,
the research suggests a typology of supply chains according to relative lead times and the
demand information transferred from the customer to the manufacturer. In the literature
 Personal Literature Review for Strategies and Principles for Effective Logistics Management 7

review section, one of the main points is that a supply chain can be decoupled into a pair in
which an upstream chain focused on supply integration and a downstream chain subjected
to on-demand integration by a decoupling point.’
Finally, In the suggested demand chain typology, the authors explain relative supply lead
time in three types of demands as ‘no observed’, ‘estimated’, and ‘fully observed’ and the
demand information transfer divided into none, partial and full, and partitioning the table
into three regions. Then it is explained the first region, in a no market mediation supply
chain the transfer of information supports efficient manufacture and supply of the product
such as vendor-managed inventory or just-in-time production to reduce process variability,
explicitly trading market mediation opportunities for manufacturing stability. The second
region is explained as chains in partial market mediation which avoid the temptation to
respond to full demand information that arrives after production has been committed. And
at the end, regain three, full market meditation is the ideal demand chain in which lead
times permit the chain to respond to variable demand.

2.6. Developing logistics competencies through third-party logistics relationships

In this paper, ​Halldorsson and Skjott-Larsen (2004) ​attempt to find a relationship focusing
on the concept of ‘joint logistics solutions’ with the aim of encouraging competence
development in the reciprocal relationship between logistics providers and their shippers.
The research aims to explain the strategic use of third-party logistics when opportunities
and weaknesses are considered. The research develops Cox’s (1996) study to propose
several types of third-party logistics relationships and hence agreements. In the proposed
model, the degree of integration increases according to skill competency level, therefore,
the third-party logistics provider’s competencies are complementary to the shipper’s core
competencies. The paper, for the theoretical framework, uses a competence-based
perspective which extends the resource-based perspective and it is considered for the
long-term competitiveness. The main motives among some reviewed drivers in this paper
are suggested as knowledge gained from other parties, and joint learning. For the first
alternative, which also the authors mention it as a ‘network competence’, practical data
from a leading supplier platform is studied and then it is shown that sharing learning
between the dyadic parties lead to improve the buyer's competencies within performance
and moreover, the providers are able to improve the performance measurements and
 Personal Literature Review for Strategies and Principles for Effective Logistics Management 8

relationship management. Therefore the third-party logistics provider helps the customer
in the process. For the second alternative, joint learning, the study considers a leading
logistics provider in a joint project where a poor lead-time performance was detected
between a Danish manufacturing site and its overseas sales subsidiary. The logistics
provider tries to decrease the lead time to half of the previous condition. Then the
third-party logistics provider conducts a notable learning process, it serves as a supplier of
experience and knowledge, in addition to the basic logistics service delivery. In other
words, as well as an asset-based partnership, it was also a skill-based partnership. Finally,
the research concludes that the concept of learning underlines the developing
competencies in the relationship. The study points out some managerial implications and
suggests that their theoretical approach is a proper supplement to the cost-efficient
transaction cost theory. The authors find that most outsourcing processes in logistics have
prosperous performances, although, as an adverse case, the eminent shoe manufacturer,
Ecco, has decided to establish its own global distribution network following failure in
outsourcing its logistics and therefore the pater requires more empirical study in this area.

2.7. Selection of logistics service provider: An analytic network process (ANP)

approach

The study aims to suggest the best way to opt for a logistic service provider. There are
several core competencies for outsourcing logistics like cost reduction, development of
supply chain partnerships, globalization, development of services and efficient operations.
However, selecting a proper provider is a complex decision and depends on some selection
criteria. Then the paper defines ANP as the analytic hierarchy process which is a
comprehensive decision-making approach while the various decision-making criteria are
independent. But, for more intricate situations, the analytic network process, allows more
systematic analysis considering dependent or even interdependent decision-making
criteria. Jharkharia and Shankar (2007), from the literature review, explain several selection
criteria considering logistics outsourcing, the main items as compatibility, cost of service,
quality, and reputation. The suggested methodology for the opting a third-party logistics is,
first, an initial screening framework of the providers and, then, an analytic network
process-based approach for its final selection. Besides the mentioned four determinants,
 Personal Literature Review for Strategies and Principles for Effective Logistics Management 9

long-term relationships, operational performance, financial performance, and risk

management are weighed as the dimensions of the model and uses an ‘overall weighted
index’ calculation. After couple comparison of determinants and dimensions, it compares
enablers in pairs and then forms matrices for interdependencies, and then constructs the
super-matrix and finally overall weighted index calculation for long-term relationships,
operational performance, financial performance, and risk management. The authors
mention that the study compares three third-party logistics providers, however, the model
is capable to compare more providers.

2.8. The dry port concept: connecting container seaports with the hinterland

This paper extends, the dry port or inland port which is an inland intermodal terminal
directly connected by road or rail to a seaport and operates as a centre for the
transportation of sea cargo to inland destinations. The scholars Roso et al. (2009) in this
paper also define three categories: close, mid-range and distant. Sea transportation is the
backbone of global trade undoubtedly. While the leading vessels can move 14,000
Twenty-foot equivalent units at the same time, the improvement of the inland ports would
be a must. The authors point out that road transport has the biggest market share of 76%
among different modes of transportation. The article introduces the freight transport
network and intermodal and intramodal situations. The research proposes with a
combination of the three types of dry ports and the port and its surrounding city can be
relieved of all road connections to locations outside the city area. In other words, different
shippers would refer to their nearest dry port based on the distance. There are chances to
transfer activities causing congestion out of the seaport ports, into the dry ports, like,
customs clearance, security checks and information handling, stuffing and stripping as well
as buffering laden and empty container. As an implication, the authors also conclude more
precious space is saved in the seaports.
 Personal Literature Review for Strategies and Principles for Effective Logistics Management 10

2.9. Improving logistics performance in cross-border 3PL relationships

In this paper, the researchers suggest recommendations for improving logistics

performance in terms of cost efficiency and on-time delivery in shipper third-party logistics
relationship. Jazairy et al. (2017) mention that several previous study papers call for more
research on how third-party logistics relationship can reduce supply chain risks. The
authors bring up that conceptual framework demonstrates a logical order for practising
the main factors on performance: communication, trust, culture, system compliance, work
agreements, and standardisation. Then they find that the parameters are connected with
each other along two dimensions: prerequisites and catalysts. After that, the author forms
the factor connection matrix. The paper proposes a conceptual framework based on time
and performance. The authors collect the imperial data within a case study examining the
third-party logistics relationship between Ericsson and Aramex. In addition, the developing
relationship including some obstacles is conducted based on the conceptual framework
and each of the six factors and eventually, the proposed conceptual framework is revised.
The results show that both parties have to spend significant effort on communication,
culture, work agreements, and standardisation in order to approach a common business
understanding within these areas. Based on this comprehension, the parties should
develop standardised communication channels, a mutual organisational culture, developed
contract, and standardised work procedures as a basis for execution. At the execution
stage, the focus should be shifted to enriching performance through communicating
performance, adjusting work standards, and considering system compliance possibilities.
Last, trust has a tendency to improve over time, based on the correct implementation of
the other parameters everywhere in the relationship. Therefore, the guidelines in this
manner enhance long-term performance.

2.10. Advantages of intermodal logistics platforms: insights from a Spanish platform

This paper studies a new logistics infrastructure platform, called PLAZA, in Zaragoza, Spain.
Cambra-Fierro and Ruiz-Bentiez (2009) declare that business operations including
purchasing, inbound logistics, manufacturing, and outbound logistics, and its connection
with agents within the supply chain becomes a strategic concern. Therefore, firms should
 Personal Literature Review for Strategies and Principles for Effective Logistics Management 11

realign their competitive priorities by focusing on accessibility, warehouse location,

adaptation to customers, quality, routing constraints, types of transportation modes,
delivery time, reliability, and costs. The authors mention that intermodality offers
companies a full range of transportation modes and routing options, thus allowing them to
coordination supply, production storage, finance, and distribution functions in order to
achieve efficient relationships with all of the participants involved in their supply chain. The
study reveals several leading companies’ benefits from the mentioned infrastructure. For
example, this infrastructure expands the intermodal opportunities for Inditex clothing
company as the agility in delivering its store all over the world as well as Europe to Asia.
Therefore the authors conclude that regarding integration, the emergence of
globally-oriented production structures requires a high level of coordination between its
elements, from the suppliers of raw material to the final distribution to end-consumers.

2.11. Packaging Scorecard – a Packaging Performance Evaluation Method

This study proposes a packaging performance evaluation method and uses a systematic
evaluation with packaging balanced scorecard strategy. The authors, Olsmats and Dominic
(2003), explain that a previous study proposes a system called ‘balanced scorecard’ which
endorsed the need for a broader view on business performance than the traditional
financial perspective, by considering other concepts like customers, suppliers, employees,
processes, technology, and innovation. So the authors developed a theoretical framework
to the packaging scorecard based on the packaging functionality. The paper summarizes
functional criteria that are typically the most significant ones for different actors along the
supply chain and can serve as a base for the creation of the applied packaging scorecard.
After that, the framework is tested and refined in an integrated process using two case
studies. Two different types of products and packaging systems are selected in the
fast-moving consumer goods sector. The selected packages are cardboard containers for
breakfast cereals and a plastic refill package for jam. The results show that the packaging
scorecard method is useful as a planning tool for the parties in the supply chain. Moreover,
in a comprehensive approach, the strengths and weaknesses of the packaging system are
systematically identified. Finally, they find that product suppliers in this research
apparently got a better insight into the packaging system performance in every part of the
supply chain.
 Personal Literature Review for Strategies and Principles for Effective Logistics Management 12

2.12. Integrating Packaging Suppliers into the Supply/Demand Chain

The study shows the research implication form qualitative studies conducted in leading
companies in supply/demand chain management. Dominic (2005) asserts that limited
research from a logistics perspective has been conducted on the packaging suppliers. A
packaging member who is passionately integrated into the supply-demand chain can
deliver fresher and innovative packaging and this leads to higher customer satisfaction and
reduction in logistics cost in supply-demand chain. The study aims to have a logistics
perspective with the role of pushing into the supply chain rather than pull requests from
the customer. The author explains that supply-demand chain management is a fairly new
concept in the packaging industry with a flexible global market and a wide range of
products due to information and communication technology major role. The author
recognizes supply chain management as having a comprehensive view of the activities and
operations of the supply chain that delivers the products services and information to the
customer. The researcher uses agility, system integrator, network integrator, fourth-party
logistics, third party logistics and VMI concepts as well. Then five leading firms are analyzed.
The study asserts that the packaging supplier should add intangible values expanding the
packaging which can create services in several directions. When the demands from the
consumers are high in order to win the race, the packaging supplier should encompass
proficiency insight from a network integrator. And finally, the author suggests that more
standardization is required to deliver fixed sizes of packaging to the market.

2.13. A supply chain performance measurement approach using the internet of

things: Toward more practical SCPM Systems

This article suggests an empirical approach for supply chain performance measurement
and the positive functionality of the internet of things (IoT) technologies in supply chain
performance. Dweekat et al. (2017) point out ‘balanced scorecard’ and ‘supply chain
operation reference’ models for efficiency measurement in supply chain, nevertheless,
many barriers exist due to the complex nature of supply chain. Moreover, previously
reviewed literature of this article remarks the lack of a ubiquitous perspective in supply
chain performance measurement. Next, the paper concentrates on two key roles: process
 Personal Literature Review for Strategies and Principles for Effective Logistics Management 13

modelling and performance measurement. The authors mention that IoT has a
life-changing trend in human life like the advent of personal computers had. As an
example, exploiting radio frequency identification system suggests a remarkable control in
supply chain. IoT encompasses key connections to cloud computing and mobile
communications as well as effective data analysis. For clarifying the structure of IoT, the
authors also suggest a supply chain IoT architecture into four tiers: ‘sensing and
perception’, ‘communication and network’, ‘management service’, and ‘application’. Then
for the method of the research, a case study of a supply chain of a beverage manufacturer
is considered. First, the supply chain key attributes are identified and then a balanced
measure is supposed. After that, the performance measures are analysed and by online
data sensing and perception the performance is controlled, and finally, for validating the
research information, simulation models are built and executed. The method is
straightforward indeed, since the products are supposed to contain their identity in a tag
with the expiry information which is valuable for controlling the processes. In the following,
two categories of retailers are introduced, first active retailers, who have a high level of
demands, and non-active retailers with lower demands. Considering the mentioned
structure, for better performance, most of the expired products (with three remaining
days) are transferred from non-active to active retailers to safeguard the high-demand
stores. The two-bin or (s, Q) inventory policy, in which “s” is the order point and “Q” is the
order quantity, is used for all supply chain players with one-day lead time. Therefore,
orders are placed when the inventories reach their lowest levels, with consideration to the
safety stock, in order to meet a high level of customer satisfaction. Finally, regarding the
beverage company, in this case, the study shows that the amount of the gathered waste is
significantly decreased after implementation of IoT.

2.14. Value of IT in supply chain planning

The article discusses that information technology (IT) can efficiently improve the
competitive advantage of a company’s supply chain procedure. Moreover, Fuchs and Otto
(2015) explain that when proper information flow is achieved, the supply chain becomes
more enriched and flexible, whilst preserving its preliminary characteristics. The literature
which is reviewed by the authors in this article concludes that advanced planning systems,
enhance enterprise resource planning application by preparing IT functionality for
 Personal Literature Review for Strategies and Principles for Effective Logistics Management 14

elements of supply chain, however, the research in advanced planning systems is at an

early phase. The conceptual framework of IT value introduced in the paper is that the
supply chain consists of IT functionalities in two sections, functional domains and
optimization type. Moreover, the metrics are categorized in two manners, penetration level
and performance of IT. Supply chain operations have four main functionalities which are
source, make, deliver and plan. The authors mention these functionalities are recognized
by the supply chain council. In addition, the optimization type can be intra-functional,
cross-functional and cross-company. Therefore, as a metric of supply chain, the
penetration level is measured as the deployment and diffusion of the innovation. In other
words, it can be stated that IT functionality has now been developed in the organization.
Three primary performance measurements are favourable which are customer service,
inventory costs and operational costs. After the literature which was reviewed by the
authors and analysis of a conceptual framework, the research methodology is explained
where a web survey within 193 supply chain or IT managers of German companies were
included. In conclusion, the study demonstrates that information technology possesses an
indispensable role in supply chain. The functionality of Information technology in supply
chain planning is a new-born concept and therefore needs more attention. Performance in
demand fulfilment have the highest value creation capability, however, its current
penetration level is low. Then the authors suggest that standard software packages also
should be considered as the first option and can even be more optimized. Meanwhile, less
inter-functional or cross-company process optimization of IT functionality has been
implemented. The result section of this article accredits previously reviewed studies in the
same area. However, this paper’s result has attributed development in customer service
integration as well as intra-functional and cross-functional approaches to successful supply
chain planning.

2.15. Information Communication Technology (ICT) and Global Logistic Performance

The study is conducted to research the impact of information and communication

technology on global logistics performance using logistic performance index which from
now onwards is called LPI. LPI is introduced by the World Bank Organization and includes
customs, trade-related infrastructure, inland transit, logistics services, information systems,
and port efficiency. Kim and Lu (2019) mention that the value of information technology
 Personal Literature Review for Strategies and Principles for Effective Logistics Management 15

can be enhanced when it is embedded throughout the supply chain. The authors explain
that information and communication technology provides the right information at the right
time and place to logistics by helping automate routine logistics activities, enabling
managers to focus on strategies and core competencies. The study suggests that
information and communication technology can have a positive impact on the global
competitiveness index (GPI) and gross domestic product (GDP). Afterwards, the study uses
the LPI for more than one hundred countries. The analysis uses a multivariable regression
and finds a linear relation between LPI and information and communication technology
indices like fixed telephone penetration, mobile cellular phone penetration, internet
penetration, fixed internet penetration. By using LPI and information and communication
technology penetration data, the paper analyzes how information and communication
technology factors influence countries’ logistics performance. The result shows that fixed
telephone investment doesn’t improve to logistic performance considerably, but
investment in mobile phones, fixed internet, and internet more generally are positively
associated with LPI.

2.16. Industry 4.0 implications in logistics: an overview

This paper studies the consequences of industry 4.0 or smart industry in logistics. Batteto
et al. (2019) explain that the emergence of the industry of the internet of things promoted
new challenges in logistics playground, which might require technological changes such as
considerable need for transparency (supply chain visibility) and integrity control (right
products, at the right time, place, quantity condition and at the right cost) in the supply
chains. The authors then explain that these evolvements in smart industry introduce the
concept of Logistics 4.0. In other words, the paper reviews the cyber-physical systems and
expands the Industry 4.0 concept. In conclusion, the authors suggest the term Logistics 4.0
referring the combination of logistics with the innovation and applications addy by
cyber-physical systems in which ‘Smart Products’ and ‘Smart Services’ are considered. The
research explains that ‘Smart Logistics’ can enrich the flexibility, the adaption to the market
changes in order to force the company to meet the customer needs. Therefore, the
considerable results of Logistics 4.0 are enhanced resource planning, more powerful
warehouse management system, intelligent transportation management system and
finally, intelligent transportation systems backed with information security.
 Personal Literature Review for Strategies and Principles for Effective Logistics Management 16

3. Discussion
In the first relation, Sheffi et al. (1988) propose the total cost logistics formula and the study
tries to present multiple choices for shippers in order to convince them for choosing the
rail option mostly, however, this study mostly expands the marketing perspective of the
company under the case study. On the other hand, the provided solution convinces the
company to apply it for a long-term strategy in order to be more customer-oriented
according to their demand. It can be stated that this approach matches the demand
predictability concept which von Haartman (2012) points out on hybrid supply chain
strategies.
Another relation which I found mathematically interesting to mention is about economic
order quantity calculation which Sheffi et al. (1988) use a similar equation to find optimal
shipment size when calculating total logistics cost for shippers, and Kannan et al. (2013)
optimise the total cost function for more effective vendor’s decision-making.
Roso et al. (2009) have reviewed the importance of intermodal transportation, which
emphasizes the significance of connecting sea transportation to other modes of transport
expanding the dry (inland) concept. The infrastructure of the landmark platforms raises the
role of proficient third-party logistics providers as well. This is also investigated from the
article of Cambra-Fierro and Ruiz-Bentiez (2009) in which they discuss that intermodal
transportation can be expanded through activities in regard to changing shippers’ insight
to more efficient performance and production.
Prajogo and Olhager (2012) study the supply chain integration and performance and
conclude that the central significance of information and communication technology
should be accompanied by a tight relationship and trust between the supply chain parties.
Like what has been studied by Jazairy et al. (2017), trust and communication mostly affect
the relationship between third-party logistics providers and other supply chains.
In the last part, I would try to discuss the information and communication technology (ICT)
implications in logistics and innovations advert in logistics and supply chain, which appears
noteworthy to me. No doubt that the improvement of the logistics in the physical
infrastructures is remarkable, but the influence of ICT is worthy in the competitive global
marketplace, specifically in operations and logistics. The information technology can
efficiently improve competitive advantage for the supply chain in the companies (Fuchs and
 Personal Literature Review for Strategies and Principles for Effective Logistics Management 17

Otto 2015). Similarly to this, Dweekat et al. (2017) explain that with proper information
flow, the supply chain becomes more enriched and flexible, and even better at keeping its
preliminary characteristics.
Global competition has forced companies to the limits of internal operations optimization
and accordingly there is a requirement to integrate suppliers and customers into the
overall value chain processes (Prajogo and Olhager, 2012). Moreover, information
technology can reveal many concealed aspects of logistics for different supply chain
participants. When trust is formed in a relationship, sharing data, in a proper manner, can
mitigate the risks of suppliers in the supply chain, fulfilling more optimization supply chain
mentioned by the paper of Fuchs and Otto (2015). In addition to that, this approach in
which as much as the level of information technology penetration affects the supply chain
complies with the study of von Haartman (2012) that conclude fast-changing industries
need a more agile supply chain and the requirement for a more agile supply chain can be
met with the application of information and communication in the logistics.
Moreover, Prajogo and Olhager (2012) mention that one of the key objectives of
information integration is to approach effective data flow for more accurate decisions.
Corresponding to this, Dweekat et al. (2017), show a distinguished result in supply chain
performance according to the use of internet of things which is known as one of the
straightforward consequences of Industry 4.0. or ‘smart industry’. Moreover, Kim and Lu
(2019) which studied the logistics performance index state a similar idea that the
information systems have a direct impact on logistics performance. Batteto et al. (2019)
suggest supply chain transparency and visibility, integrity control including the right
products, at the right time, place, quantity condition and at the right cost, in the supply
chains are logistics 4.0 implications. Logistics is a core competency provided by third-party
logistics to every industrial firm as a participant in the supply chain.
According to this discussion, the causal effect from the tradeoffs between value creation of
information and communication technology is noticeable and lead to higher performance
in supply chain and logistics. So I think the use of information technology which nowadays
in industry and especially in logistics which is known respectively industry 4.0 and logistics
4.0, considerably enhance the supply chain and logistics. More ICT utilization can lead to
smarter industry and smarter supply chain and logistics.
 Personal Literature Review for Strategies and Principles for Effective Logistics Management 18

4. Research Questions
There are several questions that I think I need to review more literature, but at this
moment, these questions appeal to me regarding the reviewed literature:
● How trust between the supply chain participants can be raised especially between
the TPL providers and shippers? Does ICT applications and approaches can make
sensible convergence?
● How ICT and Industry 4.0 can improve the Logistics 4.0 concept and what are the
strengths and threats and opportunities?

5. References
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Fisher, M. (1997) ‘What is the right supply chain for your product?’, Harvard Business Review,
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 Personal Literature Review for Strategies and Principles for Effective Logistics Management 20

Wong, Y.W., Stentoft-Arlbjörn, J., Hvolby, H.H. and Johansen, J. (2006) ‘Assessing
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