Turning now to China, the authorities there also realized that an efficient
logistics system is of paramount importance for the further economic growth and
modernization of the country. The Chinese Government has designated Logistics
as a strategic industry. China invested heavily in the development and improvement
of logistics infrastructure such as multi-modal transportation networks and
distribution centers (Trunick 2003). The average annual growth rate of the
logistics industry in China between 1994 and 2004 was 22.2 % (China’s Logistics
Report 2005). In spite of such impressive growth, the logistics market remains
highly fragmented, and the largest providers have less than 2 % market share.
Logistics costs account for around 20 % of GDP, compared to 9 % in Australia
and the USA, and 11 % in Japan (Jones Lang LaSalle 2007).
The logistics industry was also impacted during the 1980s by the increased
emphasis on time-based competition. This refers to the speed with which products
are manufactured, delivered to the market, and serviced. The ability to compete on
the basis of time has become an important source of competitive advantage for
many corporations. This is especially the case in markets where organizations can
achieve technological parity on the various aspects of product processing.
During the 1980s and 1990s, in their quest for time-based competence, many
firms adopted a variety of new manufacturing methods and technologies such as
just-in-time production, flexible manufacturing systems, and computer-aided
manufacturing. These delivered significant improvements in manufacturing performance
through their focus on lead-time reduction and improved quality.
However, it was realized that further enhancements in time-based competitiveness
required a focus on the logistics function and the entire supply chain. Improving
the flow of information amongst both upstream and downstream was recognized as
a key activity; supply chains could then become more responsive to changes in
demand and supply. Expediting logistics activities, such as storage and delivery of materials/products through the entire supply chain, received extra attention in
satisfying customers.