Source: eKapija | Wednesday, 27.11.2019.| 16:44
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Efficient logistics is a prerequisite for the competitiveness and survival of logistics companies – Biggest challenges coming from the market

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Developed infrastructure is an important prerequisite for efficient operations of all participants in the chain of transport and logistics. However, companies which operate in this segment also face numerous challenges and problems. As Milorad Kilibarda, a professor at the Faculty of Transport and Traffic Engineering, says for eKapija, logistics has recorded considerable growth in the past years.

– Domestic logistics companies are developing, foreign ones are coming, logistics centers are being built and so is the accompanying infrastructure. However, this intensive development is mostly noticeable in the Belgrade area and in larger cities, whereas a major part of Serbia is still insufficiently developed in terms of logistics – says professor Milorad Kilibarda.

When it comes to the transport subsystem, the situation is much worse, according to professor Kilibarda.

– Aside from road transport, which has reached peak development, other forms of transport (rail, water and air) are at a very low degree of development when it comes to the transport of goods. That is a serious obstacle to an efficient and economic realization of international and global supply chains. This situation makes things difficult for logistics providers and forwarders and makes operations in international logistics more expensive. For example, the number of containers in the Serbian market is growing considerably year after year, and we still don't have a single fully built and developed container terminal, not to mention other technologies of intermodal transport – our interviewee points out.

In addition to the undeveloped forms of transport, logistics faces another important problem, namely, regulations, according to professor Kilibarda.

– Slow and complicated border procedures, trade and non-trade barriers cause considerable delays and losses in transport and logistics. There's another regulations-related problem, which is distribution and delivery of goods in larger cities. We are currently witnesses to a great worry in trade chains, distributors and logistics companies due to the regulation pertaining to the time schedule for the supplying of urban zones in Belgrade. All this shows that the development of logistics is accompanied by considerable restrictions and problems, but the industry is still growing intensively. In the upcoming years, it is realistic to expect this growth to be even higher.

Professor Kilibarda says that the biggest challenges for transport and logistics companies come from the market.

– New strategies of production and sales without stock put very strict demands on logistics and supply chains. Increasingly smaller and more frequent deliveries, with very short and strict deadlines and high penalties, are expected in logistics. Frequently, all this needs to be realized in spatially dispersed logistics networks, at the lowest possible cost. Online sales and digitization of business operations are putting an additional stress on logistics. The insufficiently developed logistics infrastructure, the non-harmonized regulations, the lack of development in certain forms of transport and other restrictions make an efficient realization of such logistics demands, processes and supply chain considerably more difficult – he emphasizes.

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Innovations and digitization as opportunity for upgrade

All these challenges come from the market and the environment. However, as eKapija's interviewee says, big problems come from companies themselves.

– Our companies, which used to realize very large growth in the past, have not managed to build the necessary internal structure, organization and systemic solutions. This primarily pertains to logistics, which was completely neglected, unlike other functions within a company (sales, production, procurement). This lack of development when it comes to logistics is now a serious obstacle to efficient development and operations of companies. Another problem in companies is the lack of cooperation and connection of all the functions in the supply chain. The cause of the problem often lies in the area of sales, procurement and production, and the consequences fall on the logistics. The partial solutions which some companies resort to will never bring any substantial benefits. The third problem is the serious lack of workforce on all levels, from management to drivers and storage workers. Logistics is essentially a labor-intensive activity and relies on human resources and workforce. For a long time, Serbia was seen as a location of cheap, but qualified labor force, which was the main motive for certain foreign companies to come to this market. Our companies also counted on cheap labor force and didn't look for or implement other solutions. This is now changing considerably and it is realistic to expect that it will be an increasingly big problem in the upcoming years – Kilibarda points out.

It is in these problems that he also sees opportunities for improvement.

– Companies need to dedicate themselves to developing logistics solutions, implementing innovations, digitization and building a systemic support to the business operations. The lack of labor force will initiate a quicker development and the implementation of solutions based on new technologies and automation. There need to be serious efforts to develop solutions whereby humans will be replaced in the process of the execution of tasks. Such solutions are already being implemented in the world. For example, the automation of storage operations, where human workers only manage the activities, whereas all operations are realized through certain technologies. On the other hand, standards, processes and work procedures need to be implemented, which most of our companies completely lack at the moment. We need to put the growth and development under control, that is, to fully manage all the functions, logistics included. This requires concrete knowledge and skills, so it is necessary to carry out knowledge innovation and training sessions for employees. Investments in workers and knowledge always pay off.

Numerous effects, which can be seen through two key perspectives, can be achieved through the development and improvement of logistics.

– The first is that logistics is an area where substantial savings can be achieved, as it has been neglected for years, which for the most part hasn't been the case with other functions in companies. Also, efficient logistics is a prerequisite for competitiveness and survival in the market. Only those companies which have complete logistics solutions will be successful in the market – professor Milorad Kilibarda concludes.

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