What is cost competence of a company? What are major costs and cost structure in a GLS, Which types of cost competence can be won by GLS?
As we know, a company deals with manyother competitors in the same market and needs to reach some competitive advantages in order to become more powerful and strength its position in that market segment. Roughly, there are four groupsof possible competitive priorities in operations strategy: cost, quality, time and flexibility.
Sometimes, companies implement strategies based on lowering the prize to increase demand, it isone of the most popular and profitable ones but a reduction in prizes leads to a reduction in profits margin if costs are not lowered in the same way. To avoid that, companies must address costs toreach a suitable cost per unit of the product or service, which is the main goal of cost competence. Often, this kind of strategies not only lies in avoiding some costs but also in investing somebudget keeping an eye in the long term.
Cost competence acquires importance in very competitive markets such as commodities or low margin businesses but that does not mean that it is not one ofthe main sources of competence for any firm.
Regarding global logistics strategies, the mainly implemented ones have to do with locating abroad or signing strategic alliances with foreignfirms. Nowadays, costs can vary dramatically throughout the world and that is which stimulates the GLS. As we all know, countries like China and India have acquired a main role in world market because ofthis reason. China represents the first manufacturer in the world and, what China is to manufacturing, India is to service. Figures show that a company may save approximately 40% in workforce costsby establishing in these countries. In the 1990’s China and India could offer cheap labor but it was only suitable for low-quality items, not many years after that Chinese produce high-value items...