What factors caused American companies to broaden their perspective from physical distribution to Integrated Logistics .
In order to produce significant cost savings and provide customers with added value, American companies have evolved from physical distribution to Integrated Logistics. Many elements caused this change: deregulation of transportation/government policy, globalization of the economy and markets, foreign sources of supply, various economic factors, changing marketplace, proactive channel structure, and technology. .
Deregulation of transportation/government policies - allowed for airlines, rail, and motor carriers to better negotiate rates with shippers, establish long-term relationships, and serve a broader geographic area. This expansion levied freedom for shippers to provide improved service for their customers while cutting costs in the value chain process (i.e. inventory storage costs). While transportation lines are more freed than in the past, other regulations have intensified, such as safety and environmental issues. Today, reverse logistics systems (disposal and recycling of waste) make-up a large chuck of firms" budgets. .
Internet and Technology Advances - The speed my which manufactures and retailers can access logistical information has increased dramatically since the popularization on the internet and advanced technologies, such as Electronic Data Interfaces (EDI). These advances have attributed to quicker response times as well as reduced costs, making logistics as a % of GDP decline steadily during the 80s and early 90s. .
Globalization of economy and markets- with JIT and TQM popping up in Japan and western Europe, American companies were forced to begin practicing similar programs to ensure competitive product and customer service standards. Plus, U.S. firms must now deal with regional trading (i.e. NAFTA and the EU), further closing the business distance between economic leaders by means of electronic interface.
