A11 Andersson & Norrman Flashcards
What is the difference between basic and advanced logistics services in procurement?
Basic logistics services are simple, standard, and transactional (e.g., transportation, warehousing),
advanced logistics services involve complex solutions, bundling, and strategic partnerships (e.g., third-party logistics, supply chain management).
How does globalization affect logistics procurement?
Globalization increases complexity by expanding supply and demand markets, introducing new logistics challenges such as infrastructure, regulations, and supplier reliability in different regions.
Example: A company sourcing products from Asia must navigate customs regulations, transport infrastructure, and risk management.
Why has the logistics service provider market consolidated?
Mergers and acquisitions have created large “mega-carriers” with extensive global networks, reducing the number of competitors and increasing the bargaining power of providers.
How has IT and e-commerce influenced logistics procurement?
IT advancements enable better system integration between shippers and providers, and online freight exchanges have simplified spot-market transactions for basic logistics services.
What are the key steps in the logistics procurement process?
- Define/specify service
- Understand volume bought
- Simplify/standardize
- Market survey
- Request for Information (RfI)
- Request for Proposal (RfP)
- Negotiations
- Contracting
How does defining logistics services differ for basic and advanced procurement?
Basic services have well-defined specifications (e.g., transporting goods from A to B), while advanced services require functional definitions (e.g., “ensure optimal distribution efficiency”), which may be unclear at the start.
Why is the market survey phase different for basic vs. advanced logistics procurement?
Basic services use established providers or freight exchanges, while advanced logistics requires identifying capable suppliers who may need development or training.
What factors are evaluated in a Request for Proposal (RfP) for advanced logistics services?
In addition to cost, factors include cultural fit, management quality, flexibility, IT capabilities, and financial stability.
Why are contracts more detailed in advanced logistics procurement?
Advanced services involve long-term commitments, risk-sharing, and performance incentives/penalties, requiring detailed terms to ensure accountability.
