Aramex supply chain management involves both the logistical issues and just in time-based inventory management and optimization system. This process involves the management of the entire value-added chain from the supplier to the manufacturer or service provider on to the retailer and the final customer. In line with the overall primary goal of the supply chain, which involves cost-effective and customized needs management, the just-in-time based scheme ensures the utilization of the smallest capacity warehouse as possible essential in cost management (Balakrishnan 2),.
Furthermore, this inventory management solution is also dependent on the logistical issues of the business. The company operates five logistic segments under lean assets capacity but enhanced by a broad network of alliance ventures to provide flexible deliveries of packages to customers across the globe. This form of supply chain system enhances the firm’s competitive advantage on significant areas of value addition for both retailers and manufacturers including focusing on the customer, finding supply chain agility, embracing technology, and gaining operational efficiency. Thus, this essay presents a clear overview of Aramex, evaluates its operational challenges, and provides alternative solutions to address the problems and enhance its market performance.
Aramex is a global company headquartered in Dubai that offers logistics services to various clients. Since its inception in 1982, Aramex grew gradually and expanded into global markets due to its brand of customized products and innovative services. Despite its global expansion, the Middle East and Northern Africa (MENA) remain the company’s primary market. According to Balakrishnan, Aramex gained its market entrance, penetration, and global expansion through alliances with both significant industry players and start-up companies (4).
The key aspects driving the organization’s performance include the institution of responsible corporate culture that promotes employees innovativeness and adoption of non-asset philosophy essential in business alliances. This value-driven organizational initiative guides Aramex unique and successful business model to fuel its global growth through product line diversification and regional social integration.
Together with its subsidiaries, the logistic company engages in freight, express, logistics, and supply chain management businesses. While the segment of International Express provides services to wholesalers and retailers, the division of Domestic Express deals with the last mile services involving small parcels. On the other hand, the Freight Forwarding segment provides consolidated freight services with the Logistics department offering value-added services involving warehousing, inventory management, distribution, and supply chain services.
Moreover, the Operations segment enhances market fulfillment through catalog shipping, document storage, airline ticketing and travel, Visa, and distribution services. Based on technological advancement, the company has expanded its product line to offer e-commerce solutions such as delivery-fulfillment involving shop and ship services to online customers and records and information management solutions to different businesses including banking, healthcare, government, telecom, and insurance sectors.
Issues/Problems in the Case
Transport and logistics industry is one of the most fragile and dynamic businesses. Despite successful industry growth, Aramex has faced severe problems involving fragile partner relationships, financial constraints, and evolving consumer demands (Balakrishnan 2). The company has suffered from unpredictable partner relationships. Terminated business activities both in its local and global markets have continually turned Aramex associates into first line rivals.
The beneficiaries of Aramex broken relationships right from its initial stage as the last mile courier provider in the Middle East for major international players involves its significant competitors. One of the key factors driving these contractual terminations is market attractiveness. The significant implications associated with this problem involve intense rivalry and structuring new alliances in the same locations such in the Airborne dominated market FedEx interest in the MENA region. However, termination of partner relationships comes with reputational challenges, which along with losing business secrets increases the risk of losing the market share.
Since major industry players hike barriers of entrants for new players to ward off competition, Aramex commenced its courier services under a narrow market opportunity with major players dominating high income generating services. From the analysis, as the last mile provider, the company earned little revenue making it hard to establish itself in the market or source monetary support from existing financial institutions (Balakrishnan 3).
Furthermore, given the crucial role of technological advancement in enhancing consumer satisfaction, adoption of new innovative processes, which requires more capital investment, is inevitable. This dynamic element of the transport industry has continually placed Amarex in severe credit crisis letting the company operate under lean asset capacity depending on alliances that take a more significant toll on its market success.
The logistics industry is not only dynamic but also extremely challenging because it requires companies to employ a flexible, lean, and customer-centered form of the supply chain. Therefore, given the identified market challenges, Amarex must consistently scout for possible partners, invest in technology, and ensure ownership in critical markets. Balakrishnan established that the company had endured a life of broken alliances since its start-up putting it in direct market rivalry with its business partners (8).
To gain full advantage of such collaborative initiatives, the company must build an effective supply chain intelligence to scout for potential partners and replace alliances-turned competitors effectively. This strategic approach ensures the solid reputation in the market and offer additional market share within a short time, and act as a cushion enabling the business to measure and manage its performance against strategic goals.
Investing in technological solutions available in the market offer multiple options to efficiently manage and customize services. With many variables and different parties involved in global logistics, utilizing modern technology ensures consistent quality in all levels of service (Balakrishnan 10). In addition, with consumers adopting various forms of technology to suit their own needs and desires, integrating technology is essential to enhance the organization’s competitive advantage through service transparency, cost-efficiency, and improved data security. Fundamentally, keeping abreast and embracing technological innovativeness allows the organization to isolate key efficiencies, customize product line, consolidation all aspects within its operations, and improves its market performance.
Fitting in the social fabric is a brand-enhancing strategy. Aramex currently runs on a lean asset capacity relying on alliances to promote its market presence. However, based on its market penetration concept in the Middle East (Balakrishnan 9), consumers need a physical presence within their reach. Therefore, the company must establish physical offices within its markets to invest and participate in corporate social responsibilities, and offer support in addressing social problems to fit into the social framework and enhance its brand reputation.
In today’s market of international trade, the emergence of sophisticated technology, transport, and logistics industry act as a crucial component in all business activities. Despite, the global customer base presenting a lucrative business opportunity, it also provides a new set of challenges for logistics service providers accustomed to providing standard logistics solutions to a similar regional customer base.
As the market challenges include intense rivalry, evolving consumer demands, and environmental concerns, organizations must adopt the innovative culture and focus on customized services. Therefore, the main success factors for the industry encompass creating cost-efficient processes while guaranteeing timely delivery, anticipating problems, and developing backup plans. Moreover, organizations must strive to keep knowledgeable employees with entrepreneurship skills to enhance organizational innovativeness and sustained growth.
Balakrishnan, Melodena, S. “Aramex PJSC: Carving a Competitive Advantage in the Global Logistics and Express Transportation Service Industry.” Emerald Emerging Markets Case Studies, vol. 5, no. 3, 2015, pp. 1-41.