Freight logistics services for rural economies: User needs and future challenges
Angela Cristina Marqui
Martin J. Kollingbaum
Liang Chen
Timothy J. Norman
Peter Edwards
John D. Nelson
Dot.rural RCUK Digital Economy Research Hub, University of Aberdeen
Abstract: The purpose of this paper is to identify requirements for logistics and transport services of small and micro rural businesses. This paper explores the empirical findings of two case studies of small rural business. These findings suggest that businesses are confined to small-scale commercial activities due to a basic communication and information sharing problem. We argue that, in order for businesses to operate on a larger scale, appropriate support for the logistics requirements of rural businesses calls for intelligent software platforms that provide solutions to this basic problem. We suggest the use of Electronic Logistics Markets (ELM) for choosing services and infrastructures to manage trans-shipments in an efficient manner and to allow service providers to offer certified services, via trusted third parties.
Key words: Logistics and transport solutions, freight transport, digital economies, intelligent
agents.
1 Introduction
Todayrsquo;s rural economy is a complex mix of commercial activities, where food production coexists with tourism, recreation, and various public and private services . A significant potential for growth has been recognised for the rural economy and with the advent of the digital economy, online sales systems and information platforms become enablers, in particular, for small and micro rural businesses to expand their commercial activities beyond local and regional areas.
Although selling products to consumers without geographical boundaries is now a reality, there is generally no straightforward strategy for how businesses handle the logistics of distributing their products globally. We, therefore conducted a detailed study into how small rural businesses operate and, in particular, how the delivery of goods to customers is planned and managed. We identified the phenomenon of small businesses establishing localised “eco systems” – a company producing goods is working together with one or two trusted transport service providers for delivery and, often, are serving only a small clientele with their products.
The purpose of this paper is to identify logistics and transport needs of micro and small rural businesses. The paper also seeks to examine the use of existing logistics solutions and their applicability in a rural business context. Ultimately, we aim to elicit the features required of a software solution that aids businesses within the rural economy to overcome logistics issues.
With businesses delivering to wider target markets, there is also now a growing need to consider the environmental impact of their logistics operations. An example of how technology can help in tackling such issues is the MIT m-Logistics initiative (MIT Center for Transportation Logistics, 2010), which presents a mobile software platform that can enable distribution of products to low-income markets with substantially lower overhead. The remainder of this paper will outline the theoretical background to the empirical investigation; address the method for data collection; show the results of the fieldwork followed by discussions pointing out key requirements for logistics services faced by small rural business. Finally, future challenges and conclusions provide some insights into the kinds of digital technologies that could be applied in order to establish solutions to these requirements.
2 Logistics Customer Service
“Customer service is a process for providing significant value-added benefits to the supply chain in a cost effective way” (La Londe et al., 1988, p. 5). From a logistic perspective, customer service is the result (output) of all logistics activities or processes within the supply chain (logistics system) (Ballou, 2004, Lambert, Stock and Ellram, 1998). Over the years, the meaning of customer service presented here has been identified in different ways, including logistics customer service (Huiskonen and Pirttilauml;, 1998) and physical distribution service (Mentzer el al., 1989). In this study we use the term Logistics Customer Service (LCS).
La Londe and Zinszerrsquo;s work (1976) is among those seminal in the discipline of logistics. They classify the elements of LCS in terms of pre-transaction elements, transaction elements, and post-transaction elements (Figure 1). This classification was used as the basis for the development of our study. This perspective of the logistic system is particularly useful in this research for grouping into one single model the key elements of interest. Other frameworks based on the principle of integrated business processes across the supply chain (Lambert, Cooper and Pagh, 1998) would add complexity that is not relevant to small rural business, even though they are important to LCS in general.
It is worth mentioning that LCS models agree that the degree of importance attached to each service element varies from case to case. In other words, different groups of customers tend to have specific needs, which should result in different services. Fisherrsquo;s work (1997) can be used as an example of how to address different needs. He classifies products as functional versus innovative, which would require a physically efficient process and a market-responsive process respectively. The discussion of the possible categorizations of products and the relationship with the supply chain design are beyond the scope of this paper.
3 Research Method
The research design
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