Issues in Supply Chain: Aramex

Issues in Supply Chain: Aramex Free Essay

Abstract

Aramex is a delivery and logistics company based in Dubai, United Arab Emirates. The organization represents a relatively small actor in the global delivery market. Despite a wide range of the offered services, the company still has a poor level of performance due to the lack of technologies and innovations in its supply chain management. The purpose of the present case study is to analyze the supply chain issues of Aramex and provide a set of recommendations focused on the improvement of its performance through the implementation of innovations. In the course of this study, a literature review and analysis of the supply chain performance of the company have been conducted. In addition, the SWOT analysis was aimed at finding a relation between the major problem of the company and its activity. The results have shown that Aramex has huge potential in the delivery market. However, the lack of innovative development jeopardizes the productivity and prosperity of the organization. As a result, a few recommendations focused on the technologies implementation have been provided.

Aramex Case Study

Aramex is one of the largest delivery and logistics companies based in the United Arab Emirates that operates in the Middle East as well as all over the world. The organization offers a wide range of benefits in supply chain and logistics solutions. The Aramex Company claims that it uses the latest innovations and technologies in its operational process to satisfy customers most efficiently. However, the analysis has shown that the organization faces particular difficulties in terms of competition with other delivery giants of the world. Aramex still needs to enhance the technological and innovation basis of supply chain management and operations to have a competitive advantage over its rivals. Since the lack of innovations and technologies has been identified as the most significant challenge of the company, the recommendations are focused on the achievement of high reliability through strengthening technological support and implementing innovations to comply with the changing requirements of the customers and provide high-quality services across the world.

Background

General Information

Aramex is an international delivery and logistics company based in Dubai, United Arab Emirates. The organization was founded by Fadi Ghandour and Bill Kingson in 1982 (Aramex, 2018). It is the first Arab company that was listed on the NASDAQ stock exchange in January 1997. The company has about 13,800 employees in 54 countries and operates in a network of 40 independent companies (Aramex, 2018). In 2002, after a period of successful trading, Aramex returned to private ownership (Aramex, 2018). It continued operating and expanding as a privately owned company. Aramex established global alliances and gained high brand recognition.

Aramex and its global alliance represent an extensive transportation and logistics network, which enables the company to operate worldwide. The company offices are strategically located in large cities. Aramex offers customers a range of transportation solutions, including international and domestic express delivery, specialized shopping services, publication distribution, and many other options. Aramex has 567 offices in 69 countries (Aramex, 2018). In addition, the Global Distribution Alliance embracing 40 independent companies across the world covers unified business procedures and unified standards (Aramex, 2018). The network includes approximately 12,000 offices, 66,000 employees, and 33,000 vehicles serving customers all over the world (Aramex, 2018). The integrated communication technology ensures a steady connection between Aramex and its alliance members and customers. In addition to the Aramex tracking system that empowers all the business processes, the company develops and implements a variety of IT solutions and constantly trains its staff on operating the technology. The Documented Quality Management System (DQMS) designed and implemented by the Aramex Company provides integrated and enhanced services (Aramex, 2018). The system complies with the standard requirements and contains a set of measurements to assess customer satisfaction. Moreover, the company is likely to invest in the creation of a team of skillful workers to provide customers with high-quality services. Aramex managers also encourage their employees to be creative solution-providers in the work process. Aramex operations are always led by innovations and technologies. Whenever the company seeks efficient ways to communicate with its customers or better ways to track shipment, innovations help to make the process integrated and timely. Aramex makes huge contributions to the communities in which it operates and helps its internal environments to grow.

The Services of the Company

Aramex offers an extensive variety of efficient services to satisfy its customers. It includes international express (i.e. worldwide document and parcel expresses, cash on delivery, return services, etc.); domestic express (i.e. same-day and overnight domestic services, document return, distribution, and mailbag services); and freight (including door-to-door, door-to-airport, and airport-to-airport services, wholesale co-loading, etc.) (Aramex, 2018). In addition, Aramex plays a significant role in supply chain and logistics services. The company provides the services of freight-forwarding and custom clearance, warehousing, facility management, distribution, and value-added services (Aramex, 2018). Moreover, Aramex offers consulting services, including the development of Standard Operating Procedures, Job Operating Procedures, installation of Key Performance Indicators, and conducting the Supply Chain Strategy Analysis.

Supply Chain Management

Fundamentally, Aramex does not differ from other delivery and logistics companies. Its supply chain management represents a set of operational and managerial processes within the value-added chain, beginning from a supplier, going through a manufacturer and retailer, and reaching the final customer (Ansari & Kant, 2017). This system involves three ultimate purposes: the reduction of inventory, an increase in transaction speed, and an increase of the sales volume using the elaboration of customer requirements in a more effective manner (Ansari & Kant, 2017). To achieve these goals, the company combines local know-how and international standards in its operations (Ansari & Kant, 2017). Through the end-to-end supply chain and developed logistics solutions, Aramex manages the transfer of the necessary products. In addition, Aramex Shop & Ship services allow the provision of a range of opportunities and benefits of personal address in the United States or the United Kingdom without living there (Aramex, 2018). This mailbox service enables one to receive correspondence and personal and business packages to a personalized address in the mentioned destination. Furthermore, Shop & Ship services provide customers with an opportunity to shop online even at Internet stores that do not allow international shipping (Aramex, 2018). In addition, US or UK residents take advantage of special rate offerings by online merchants.

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Optimization of Supply Chain Processes

Aramex has also found ways to optimize the delivery processes. Their system optimization is based on the ability to up and minimize costs on the last mile (Donati, 2016). The company bulks shipments together at the shipping stage or air freight (Gally, 2015). However, the organization still has operational problems at the end of the supply chain because the delivered items usually have individual addresses. Therefore, more extensive delivery networks are needed (Greasley & Assi, 2012). Nevertheless, Aramex has partially solved this issue. Using research on the hub and spoke distribution systems, the company adopted digitalization in the home region and installed collection boxes integrated with the application that enables managing and tracking items (Greasley & Assi, 2012; Ansari & Kant, 2017; Gally, 2015). The application is available for the personnel as well as the customers. The technology has simplified the delivery processes through the optimization of routes and package groups (Balasubramanian & Shukla, 2017). Therefore, it has allowed the person to control operations by following the instructions and reducing delays (Balasubramanian & Shukla, 2017). Moreover, the final customers can receive their items at home or the nearest delivery box once they get the notification.

In addition, Aramex attempts to achieve reliability and effectiveness in another way. The company made a breakthrough due to its recent partnership with Australia Post (Gally, 2015). Contrary to international competitors such as FedEx and DHL, which spend their capital to expand to new regions, Aramex found this initiative wasteful (Gally, 2015). The organization decided to use underutilized post offices which mainly have good last-mile dynamics and delivery coverage. The major obstacle was expensive and ineffective last-mile outsourcing caused by the local government laws in most countries (Gally, 2015). Thus, Aramex and Australia Post combined their efforts, including bulk shipping, control over line haul speed, absence of weight restrictions by the first partner, and alliance network, allowing delivery to every address at minimal costs by the second partner (Gally, 2015). Therefore, such deliveries appeared to be cheaper and faster.

SWOT Analysis

Supply chain management of the organization plays an essential role in the overall performance. SWOT analysis of the Aramex Company is an important part of the present study because it helps to identify the advantages and the most problematic issues to which the organization should pay attention. In this manner, the analysis will provide an opportunity to focus on the supply chain challenges more comprehensively. The SWOT analysis of the company is presented in Table 1 below.

Strengths

• Brand recognition and strong distribution channel.
• Resourceful people.
• Availability of environmental facilities.
• Net income and net sales growth.
• Decent reputation.
• Diversified and dynamic workforce and skillful management team which provides intensive supervision.
• Strong marketing capability in the Middle East market.
• Transportation facilities are quite high.
• Relatively high customer loyalty.
• Constant desire to succeed.

Weaknesses

• The company is not a market leader.
• The number of bad debts is high.
• Lack of coordination between departments.
• Unacceptable behavior at the workplace.
• Obsolete or insufficient equipment.
• Aramex does not offer insurance.
• Marketing strategies are poorly implemented.
• The level of innovations is staggering.
• The price for services is higher than that of rivals.
• There are still delivery delays.

Opportunities

• Improvement of the brand image.
• Expansion of the international distribution channel.
• Putting efforts into research and development of innovations and technologies.
• Strengthening the company’s economy.
• Aramex still has opportunities to expand its business.
• Being more flexible to customer preferences and ready to shift the operation course.
• Improvement of the communication channels between the network members.
• Proper usage of the favorable location.
• Exploration of the local and international innovative market.
• The collection of technologies and techniques and their development takes less money and sources than hiring more employees.

Threats

• The courier market expands rapidly, so working in the accustomed rhythm and obsolete and ineffective equipment will negatively impact the performance of the company (Donati, 2016).
• Competitors are much stronger due to their innovations and marketing strategies.
• Market malpractice.
• Not dynamic enough to catch the current business.
• Lack of advertising.
• High risk of administrative barriers (Donati, 2016).
• Huge dependence on local suppliers (Donati, 2016).
• The company cannot reduce the threat of rivals.

One can conclude that Aramex does not make full use of its potential. The organization represents a weak competitor due to the lack of innovations and technologies in the supply chain operations (Aserkar, Kumthekar, & Aserkar, 2014). A poor level of innovative implementations burdens Aramex and does not allow it to become a market leader (Aserkar et al., 2014). Moreover, the lack of technologies is caused by an inefficient level of coordination between departments (Aserkar et al., 2014). Therefore, the company has to implement a detailed strategic plan to address the major issues comprehensively.

Findings

The Aramex Company has a large potential in the delivery and logistics market. The organization takes particular but small steps toward its global success. The courier and delivery market is rapidly growing and developing innovations to gain customer loyalty (Balasubramanian & Shukla, 2017). However, Aramex does not seem to follow international trends. While digitalization is gradually transforming the courier and logistics industry, Aramex may not endure such strong competition because of being a relatively small actor (Sundarakani, Tan, & Over, 2012). Although the company asserts that it adheres to and implements innovation, its performance does not bring the desired outcomes (Donati, 2016). Moreover, despite the variety of services offered by Aramex, the company’s operations still leave much to be desired due to inefficient equipment and lack of coordination between departments (Sundarakani et al., 2012). Furthermore, sometimes the relationships between employees pose an obstacle to the company’s growth. However, improvement in innovations would allow the company to survive rivalry.

At the present moment, the company spends additional costs to provide delivery services. The organization does not have a strong marketing strategy to make the brand more recognizable not only in the Middle East region but also across the world (Aserkar et al., 2014). Although Aramex strives to succeed, delivery delays have been evident. Therefore, the adopted technologies have to be improved and new ones should be implemented to solve the problem of delays (Sundarakani et al., 2012). If the organization does not take efforts to enhance its internal and external performance, it will be defeated by the delivery giants.

Recommendations

1. First of all, Aramex should encourage investments in inventory and equipment improvement through effective utilization of space, existing equipment, and personnel. As the recent partnership with Australia Post has shown positive outcomes, the company should establish partnerships with other delivery and logistics companies.

2. The company should make online communication more integrated through a specific system to ensure the status and real-time position reports (Sundarakani et al., 2012). This action will help to operate quickly and productively.

3. The accustomed way of service delivery does not allow Aramex to attract new customers but only maintains the old ones. However, new technologies in supply chain management would help to achieve this objective (Greasley & Assi, 2012). Moreover, they will bring the organization to a new level in its operations.

4. Since the technology basis should be stronger, the company should implement radio technology to avoid the impact of anomalies when the items are being shipped. For example, Radio Frequency Identification will help to monitor every item effectively (Aserkar et al., 2014). In addition, this tool is useful in minimizing losses and increasing brand reliability.

5. The organization still uses obsolete truck scales, which makes the operating process inefficient. Aramex can optimize its weighting process through the establishment of onboard truck scales (Greasley & Assi, 2012). It would increase productivity by ensuring the truck transports maximum weight without additional costs and time.

6. Training and development of the personnel need significant improvement. Employees should be able to provide services using technologies appropriately to avoid any delivery delays.

7. The company should gather a specific group of employees or managers who would be responsible for the changes and innovations in the operating process (Aserkar et al., 2014). The whole process of implementation should be tracked and controlled.

Conclusion

Aramex has huge potential in the logistics market. However, many factors impede its growth into a world leader. Although the company provides a wide range of services, they remain quite inconvenient due to the lack of efforts to improve innovation and technology basis. This situation also jeopardizes the attraction of new potential customers; nevertheless, it allows us to retain the old ones. Aramex is too small to compete and outperform its rivals. The analysis has shown that a particular part of the equipment is inefficient, so it negatively impacts the operational processes of the company. Although the organization has established a partnership with Australia Post and made the first steps to digitalize its services, the attempts have to be constant. Therefore, the recommendations for Aramex focus on constant improvement of technologies and other facilities to achieve a competitive advantage, increase sales, minimize costs, and attract new customers, who will enjoy delivery of the new age.

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