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Logistics Information Management

Logistics management practices and development in Thailand


Mark Goh Parooj Pinaikul

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Mark Goh Parooj Pinaikul, (1998),"Logistics management practices and development in Thailand", Logistics Information
Management, Vol. 11 Iss 6 pp. 359 - 369
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Eric Sandelands, (1997),"Strategic logistics management", International Journal of Physical Distribution & Logistics
Management, Vol. 27 Iss 2 pp. 73-142 http://dx.doi.org/10.1108/09600039710757736
Willem W. Cilliers, Pieter J.A. Nagel, (1994),"Logistics Trends in South Africa", International Journal of Physical Distribution
& Logistics Management, Vol. 24 Iss 7 pp. 4-14 http://dx.doi.org/10.1108/09600039410070948
John E. Spillan, Michael A. McGinnis, Ali Kara, George Liu Yi, (2013),"A comparison of the effect of logistic strategy and
logistics integration on firm competitiveness in the USA and China", The International Journal of Logistics Management, Vol.
24 Iss 2 pp. 153-179 http://dx.doi.org/10.1108/IJLM-06-2012-0045

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Introduction

Research paper:
logistics management
practices and
development in
Thailand

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Mark Goh and


Parooj Pinaikul

The authors
Mark Goh is Senior Lecturer and Logistics Management
Coordinator in the Department of Decision Sciences,
National University of Singapore, Singapore.
Parooj Pinaikul is a MSc (Transportation Systems)
graduate from the National University of Singapore,
Singapore.
Abstract
Many firms are starting to focus on the effective and
efficient supply chain management in Asia. This empirical
paper reports on the state of existing logistics management practices in Thailand. The main results reveal that
firms prefer agile suppliers. Also, most of the logistics costs
incurred are on transportation and warehousing. Firms
that have instituted logistics departments are making an
effort in upgrading their logistical systems and are more
pervasive in using technology to manage logistics as
compared to firms without formalised logistics departments. The factors hindering logistics development include
inefficient logistics information systems, acute transportation bottlenecks, and the lack of logistics management
expertise. Finally, future logistics managers need to be
competent in modern technology and possess logistics
specific skills.

Logistics Information Management


Volume 11 Number 6 1998 pp. 359369
MCB University Press ISSN 0957-6053

In todays fast paced economic climate, many


firms increasingly realise that globalisation
has made the world smaller and more competitive. A change in one place impacts
another quickly. Also, customers seek products that can respond well to their specific
needs. As such, firms are now looking at
securing cost, quality, technological and other
competitive advantages as a strategy to pursue
in a globally competitive environment. One
currently popular competitive advantage for
firms is to promote and provide value to its
customers by performing its supply chain
activities more efficiently than competition.
As a result, one area of increasing focus is on
the logistical management of a firms set of
operations.
Logistics management can be viewed as the
detailed process of planning, implementing
and controlling the efficient, cost-effective
flow and storage of materials and products,
and related information within a supply chain
to satisfy demand (Christopher, 1993). Effective logistics management provides a major
source of competitive advantage if it can
control cost and enhance service differentiation. This unique role will help firms become
both cost and value leaders. Thus, good
logistics management is increasingly recognised as the key enabler, which allows a company to gain and maintain its competitive
advantage and ensure maximum customer
satisfaction. Truly, logistics is the last frontier
in business competition (Drucker, 1962).
In Asia, many countries are undergoing
rapid economic transformation. Barring the
current financial crisis, the economic waves of
change have propelled a structural metamorphosis in related sectors. Logistics is one of
them. Indigenous companies in these countries have begun to make improvements to
their logistical systems by investing considerable capital in logistical facilities and equipment (e.g. Kim, 1996). This paper examines
the case of logistics management practices
and development in Thailand. Thailand is a
global player in commodities like rice and
rubber, and finished goods like commercial
vehicles and computers. With the weakening
of the Thai baht and the prevailing regional
currency crisis, the stimulus for greater export
potential is strong. Also, air and sea transportation have been growing and will continue to experience growth (see Tables I and II).

359

Logistics management practices and development in Thailand

Logistics Information Management

Mark Goh and Parooj Pinaikul

Volume 11 Number 6 1998 359369

particular practical interest to foreign firms,


logistics managers, third party logistics
providers and consultants keen to enter this
developing country but lack an extensive dayto-day operating experience. We will also
highlight some conclusions and implications
for the future growth and development of
logistics management in Thailand. Hopefully,
the findings of this study can provide prospective international investors with a realistic idea
and informational base of what to expect
when operating in Thailand. The uninitiated
foreign firm would then not have to face a
long learning curve before they are satisfied
with their firms or suppliers logistics performance. Further, the empirical results can
serve to motivate policy makers and the relevant government agencies to shape policies
accordingly to address issues of logistics
concern.

Table I International scheduled traffic Bangkok International Airport


(1985-1994)

Freight (tonnes)
Year

Loaded

Unloaded

1985
1986
1987
1988
1989
1990
1991
1992
1993
1994

102,522
127,702
153,098
184,649
214,151
245,925
244,265
267,192
305,090
356,464

54,829
61,370
73,982
93,668
107,596
127,580
125,886
135,756
160,898
197,890

Total

Percentage
change

157,351
189,072
227,080
278,317
321,747
373,505
370,151
402,948
465,988
554,354

20.16
20.10
22.56
15.6
16.09
0.90
8.86
15.64
18.96

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Source: Department of Commercial Economics, 1996


Table II Containers through Bangkok Port (1992-May 1996)

Container (TEU)
Year

Inbound

Outbound

Total

1992
615,326
687,981
1,303,307
1993
597,856
675,940
1,273,796
1994
659,955
734,812
1,394,768
1995
673,963
758,879
1,432,842
1996
264,238
275,538
539,777
(until May)
Source: Department of Commercial Economics, 1996

Percentage
change

Methodology

2.26
9.50
2.73

A second international airport is slated for


construction to support such growth.
Further, one of four Global TransParks
(GTP) will be set up in Thailand. A GTP is
an area that combines factories and airports
to support Just-in-time (JIT) production.
These GTPs will support the world-wide
network of manufacturing. As a result, logistics management in Thailand will play a big
role in the execution of these GTPs
(Kanaswasdi, 1994).
To date, no recorded empirical research on
the state of logistical management practices in
Thailand has appeared in the literature. This
paper therefore seeks to promote a greater
understanding of logistics management development in Thailand. For this reason, an
exploratory survey was conducted to explore
the status of logistics management development. However, we do not attempt to assess
the features of the economic transition which
have affected logistics management most.
Instead, we target the operational management of logistics. This, we feel, will be of

The information discussed in this article


comes from a postal survey that was sent to a
sample of 150 randomly selected industrial
and commercial firms listed on the Thai
Stock Exchange. The choice of the sample is
rationalised as follows. These listed firms are
indicative of the most progressive firms in
Thailand, and have their headquarters located
in the capital (Bangkok) and its environs.
There will be a severe resource constraint of
time and finances to attempt to reach a wider
and more heterogeneous geographical area.
An exploratory survey instrument is used
to examine as many issues related to logistics
management practices as possible to provide
an extensive coverage. Designed in English,
the survey was translated into Thai and then
re-translated into English to eliminate translation errors. In most question items, a fivepoint Likert scale (with 1 representing
unaffected and 5 critically important) is
used. Following testing with three companies
and subsequent refinement, the survey was
sent by mail and fax to the target firms.
Follow-up calls and visits were made to
ensure that all incomplete returns were filled.
The field collection took about two months. A
total of 80 useable surveys were returned,
yielding a response rate of 53 per cent. Owing
to the nature of the survey instrument, the
data analysis involves primarily frequency
reporting, simple summary statistics and
t-tests, using Microsoft Excel. The question

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Logistics management practices and development in Thailand

Logistics Information Management

Mark Goh and Parooj Pinaikul

Volume 11 Number 6 1998 359369

items were also tested for non-response bias.


None were found. In the questionnaire, executives were asked to address four key topics,
namely, supplier selection and relationship,
extent of logistics management and development, problems and barriers, and future skills
of logistics professionals. Each topic is dealt in
greater detail in subsequent sections.
Demographic characteristics of the respondents reveal that 16 percent are in senior
management positions, namely, general managers and higher. Another 64 percent are in
middle management. The rest are key operating staff involved in various logistics functions, such as materials managers and transport managers. Two of every three respondents work in departments directly related to
logistics, i.e., procurement, warehousing, and
distribution. The biggest group of respondents is from purchasing (23.8 per cent). The
next largest group is in warehousing and
distribution (20.5 per cent).
On the characteristics of the responding
organisation, 73 per cent are manufacturing
firms. Only 11 per cent are logistics providers.
On gross annual revenue, more than two
thirds (69 per cent) of the participating firms
report a turnover of more than US$8 million.
Another sixteen percent replied that their
gross revenues were between US$4 and
8 million while the rest grossed less than
US$ 4 million.

strong customer orientation was considered


critically important by nearly half of the
respondents (43 per cent), only about 19 per
cent feel that commitment to continuous
improvement by suppliers is critical. This
suggests that firms tend to pick suppliers who
can respond quickly to their needs rather than
suppliers who are committed to sustaining
excellence.
Also, good marketing by suppliers is not
ranked too highly, with almost a quarter of the
respondents replying that good marketing and
publicity by the suppliers are either unimportant or they are unaffected by it. Thus, firms
usually either rely only on the choice of suppliers by word-of-mouth or they know what
services/products they need.

Findings and discussion


Supplier selection and relationship
In addressing this topic, respondents were
asked to specify for their firm the critical
criteria for selecting suppliers, what they
perceive to be very important characteristics
of key suppliers, and the current state of the
supplier-customer relationship.
Critical criteria for supplier selection
The results indicate that the five critical
criteria used for selecting suppliers, in
decreasing order of importance, are the quality of the services/products provided, reliability
of delivery of services, supplier flexibility and
responsiveness, customer orientation of the
suppliers and the price of products/services
rendered by the suppliers (Table III). Agile
suppliers who can provide good quality products or services, reliable delivery and are
strongly customer-oriented are always preferred. In this respect, the critical criteria used
for supplier selection are universal. While

Characteristics of key suppliers


Also, about half of the respondents report that
two significant (critical) characteristics of key
suppliers are to be able to respond quickly to
rush orders (56 per cent), and have low
spoilage and delivery delay rates (48 per cent).
Interestingly, almost a quarter of the firms do
not think that higher delivery frequency nor
responding to a JIT mode of delivery by key
suppliers are important (see Table IV). This
can only suggest that firms place a premium
on agile suppliers and recognise that the
success to global competition is agility rather
lean logistics (Goldman et al., 1995). It would
appear too that transport into the interior of
Thailand is difficult and high spoilage rates
contribute significantly. Hence, the need to
search out key suppliers who can overcome
these problems.
Supplier-customer relationship
Generally, the supplier-customer relationship
is healthy. More than half of the respondents
have forged strategic alliances with their
suppliers on customer service implementation
and in improving production schedules
(Table V). This finding is reassuring as it
shows that firms in Thailand recognise that
costs are directly affected by procurement
decisions and long-term strategic supplier
relationships enable firms to identify opportunities for taking costs out of the supply chain
instead of simply transferring them downstream to the customer. Two-thirds of the
firms surveyed have also partnered with suppliers in product development. This is especially so for manufacturing based responding
firms, who tend to see the need for such
traditional win-win tie-ups. This agrees with
Harlands (1996) contention that firms are

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Logistics Information Management

Mark Goh and Parooj Pinaikul

Volume 11 Number 6 1998 359369

Table III Selection criteria for suppliers

Criteria

Very important
or more
(%)

Quality of services/products
Reliability of service delivery
Flexibility/responsiveness
Customer orientation
Price of services/products
Technical expertise
Committed to continuous development
Good marketing/publicity

Unimportant/
unaffected
(%)

Mean

Standard
deviation

4
4
5
5
6
10
13
23

4.500
4.225
4.100
4.088
4.038
3.738
3.438
3.250

0.118
0.121
0.123
0.125
0.129
0.129
0.126
0.135

Mean

Standard
deviation

4.263
4.138
3.813
3.825
3.750
3.300
3.350

0.128
0.128
0.136
0.128
0.140
0.142
0.141

91
85
81
79
75
71
45
41

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Table IV Main attributes of key suppliers

Criteria

Very important Unimportant/


or more
no concern at all
(%)
(%)

Quick response to rush orders


Low spoilage and delivery delay rate
Low order picking error rate
Shorter order cycle time
Low stockout rate
Higher delivery frequency
JIT delivery

84
78
68
66
64
54
46

6
5
9
8
11
24
19

Table V Areas of strategic alliance with suppliers

With logistics
department

Without logistics
department

Total

Product development

73

60

66

Improve production schedule

53

45

49

Customer service implementation

53

40

46

Business forecasting

50

35

43

Market research
Linking information system

30
30

40
15

35
23

Areas

externally focused, i.e., they recognise the


need to rely on and the necessary contribution
of such outside resources in the total supply
network to compete successfully. Further, in
the area of information systems, firms with
formalised logistics departments tend to cooperate more with suppliers; they link their
systems with suppliers and are more
information aware.

Extent of logistics management and


development
The next topic investigates the extent of
logistics management and development in the

overall organisational operations.


Respondents were asked for information
related to the profile of the logistics department, the key objectives, the nature of the
logistics operations, and logistics expenditure.
Profile of logistics departments
Enlightened logistics management is a fairly
recent development in Thailand. The organisational presence and demographics of the
logistics department set up attest to this. Half
of the respondents replied having a logistics
department in their firms. The median
number of employees employed by these
departments is less than ten, of which most

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Mark Goh and Parooj Pinaikul

Volume 11 Number 6 1998 359369

are engaged in warehousing activities either


for the firm or for other companies (see
Table VI). The median age of the logistics
department is only three years, suggesting a
recent push to formalise logistics as an
integral part of the organisations structure. In
fact, 15 per cent of the replies have formally
established a logistics department for less
than a year. All these suggest that corporate
decision makers understand and appreciate
the role and importance of logistics as a distinct management function, and as such,
support the establishment of such a department in their organisations.
Also, many departments tend to focus on
the traditional aspects of logistics operations
such as warehousing and procurement. About
half of all those with logistics departments use
the department to manage warehousing
operations and inventory reduction. Only a
few (15 per cent) focus on using the logistics
department to manage their international
distribution operations as part of the overall
supply chain. Moreover, nearly four times as
many respondents are involved in local distribution as compared to international distribution. This suggests that logistics departments
are still focused on intra-country distribution
and little attention is given to global logistics
operations as yet. This hints at physical distribution in Thailand as being a considerable
management challenge.

accuracy, turnaround time and reduce delivery costs. On a more assuring note, it is heartening to see that firms are taking customer
service seriously and setting up a logistics
department is a direct response to that concern (Gilmour et al., 1995). Interestingly,
about half of the respondents feel that business productivity can be improved after the
logistics department has been set up.

Key objectives of logistics departments


At least three of the four firms with logistics
departments report that enhancing customer
service, delivery accuracy, quality of services
and delivery turnaround time are key
objectives in setting up a logistics outfit in
their organisation. In fact, 50 per cent of
them replied that improving customer service
is critical. Other reasons are found in Table
VII.
The physical distribution aspect of logistics
is still viewed as highly cost oriented, and
hence the perception to improve delivery

Table VI Main function of logistics department

Area
Warehousing
Purchasing
Local distribution
Materials planning
International distribution

Percentage
65.0
62.5
55.0
35.0
15.0

Level of expenditure
The average annual logistics costs expended
by a firm is about 10.5 per cent of the gross
annual turnover. This is less than the average
logistics costs of firms in the USA. The higher
and longer investment in high-technology
(e.g. IT, material handling equipment
automation) in US-based firms is one reason
to explain this trend. Three out of five firms
with logistics departments incur less than 10
per cent of their gross revenue on logistics
related activities. Only 7.9 per cent report that
their logistics costs form more than a quarter
of their gross revenue. Also, more than 60 per
cent of firms with logistics departments incur
less than 20 per cent of their logistics costs on
procurement and information systems, again
suggesting an inertia in investing in logistics
hardware and technologies. Most of the costs
are spent on either transportation or
warehousing, with half of the firms incurring
more than 30 per cent of their logistics costs
on transportation. The fact that Thai firms
spend more on physical distribution is a result
of the worsening traffic condition on trunk
routes especially in the capital, and a pressing
need for better distribution infrastructure.
A further reason is that many of them (78 per
cent) have started consolidating their warehouses (by reducing the number of regional
warehouses) in a bid to centralise their stocks
and control inventory holding costs, and
lower fixed costs. The trade-off has necessitated a higher distribution cost and sometimes
even a longer lead time. Thus, the transportation cost increases owing to the longer
haulage needed. The costs for operating
warehouses are also high due to the higher
cost of facility maintenance. These results are
shown in Figure 1.
Warehousing
Most firms prefer to rely on private warehouses rather than public warehouses. Nearly two
thirds of them (65 per cent) own one or two
warehouses. Only 9 per cent use solely public
warehouses while a third rely on both private

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Mark Goh and Parooj Pinaikul

Volume 11 Number 6 1998 359369

Table VII Objectives of firms with logistics departments

Objectives

Very important
or more
(%)

Unimportant/
unaffected
(%)

Mean

Standard
deviation

90
78
75
78
73
75
63
55

3
0
5
3
3
8
13
13

4.350
4.225
4.150
4.075
4.000
3.950
3.725
3.600

0.139
0.127
0.146
0.126
0.129
0.152
0.186
0.182

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Improve customer service


Improve accuracy of delivery
Improve quality of services
Reduce delivery time
Increase competitive advantage
Reduce delivery cost
Reduce inventory level
Improve productivity

and public warehouses. This finding suggests


that respondents have not really accepted or
appreciated the benefits of outsourcing.
Also, 91 per cent of the respondents use
mainly simple materials handling equipment
such as fork lifts and hand lifts (Table VIII).
In contrast, the percentage of firms using
sophisticated high-technology equipment like
automatic guided vehicles (AGVs) for their
warehousing operations is relatively small.
This finding falls short of Andels (1995)
assertion that warehousings future is tied to
more continuous product flow, cross
docking, and automated material handling.
Nevertheless, firms with logistics departments
tend to invest more in AGVs to manage their
warehouse operations.
On storage and retrieval systems, again
firms with logistics departments are more
proactive and inclined to employ an AS/RS in
warehousing as compared to firms without
logistics departments (28 per cent against

8 per cent). Also, these firms have scanning


technology embedded in their computerised
systems. Firms without logistics units apparently either do not see the need or do not have
the funds to invest in such capital-intensive
equipment. In all, over half of the respondents
(55 per cent) do not use any form of storage
and retrieval system. Finally, computerised
inventory control systems are widely used in
warehousing operations (90 per cent).
Table VIII Materials handling equipment

Type
Conveyors
Carts
AGVs
Forklifts
Cranes

With
logistics
department
(%)

Without
logistics
department
(%)

Total

13
30
13
93
28

15
45
5
85
15

14
38
9
89
22

Figure 1 Logistics costs distribution


Percent
40
35
30
25

Key
<20%

20

21-30
15

31-40
41-50

10

>50%
5
0
Purchasing

Warehousing

Transportation

364

Information
system

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Logistics management practices and development in Thailand

Logistics Information Management

Mark Goh and Parooj Pinaikul

Volume 11 Number 6 1998 359369

Distribution
While Table IX shows that nearly three quarters of the firms (72.5 per cent) own their fleet
of vehicles to handle physical distribution,
some still use a combination namely own,
leasing and third party providers to distribute
their goods as is evidenced by the 60 per cent
of replies for leased and third party providers.
Firms with logistics departments tend to lease
or use third party providers to assist in physical distribution. On fleet assignment, 23.8 per
cent of the respondents assign their fleets by
customer while 74.4 per cent do so by zone.
Another eight firms assign by considering the
urgency of shipments or rotating priority of
their services to customers. Only four firms
assign their fleets by both customer and zone.
Further investigation reveals that the average
number of transportation providers used by
firms is five, with some 24 per cent using more
than ten transportation providers. Thus,
outsourcing is more frequently utilised in the
area of transportation and less in warehousing, similar to Korean companies (Kim,
1996). However, firms also tend not to rely
solely on a dedicated third party transportation provider, suggesting on the need for such
providers to improve their service offerings
and provide better contract management.
Trucks are by far the most popular form of
vehicle used in physical distribution. Two out
of every three trucks engaged in distribution
are either leased or provided for by a third
party transportation provider.

enhancement. Quicker response and shorter


order lead times can help to smooth the interface between firms and suppliers or
customers. This objective is confirmed by a
key finding in this study which reveals that the
main reasons for implementing an LIS
include quicker response time, shorter cycle
time and greater order convenience (Table
X). In fact, more than half felt that implementing an LIS to ensure a quicker response
time to customers was critical. Almost two
thirds of the respondents mention that an LIS
enhances communication with customers.
Only 27 per cent replied that an LIS has
resulted in fewer staff.
However, the cost savings from using an
LIS are at best only moderate. Eighty five per
cent of the firms said that they enjoy a cost
saving of at most 20 per cent. Few (5 per cent)
agreed that an LIS has helped save more than
30 per cent cost savings in their logistics
operations This is probably due to the fact
that the majority of the LIS are outsourced,
incurring a certain amount of capital investment. This tendency towards outsourcing
suggests a couple of trends. One, the state of
logistics hardware and software is not
sophisticated as the West. Second, firms
realise the need to rely on timely information,
even if it is largely confined to the warehousing function, to achieve logistical excellence.
In this regard, slightly more than half (51.3
per cent) use an LIS to manage information
flow. Of these, all use the LIS as a warehouse
management system and 73 per cent operate
the LIS through local area networks. Very few
use the LIS as a means of external communication to link it to their EDI for supplier/customer interfacing (15 per cent) or for delivery
requirements planning (20 per cent). Modern
intelligent supplier-linking technologies with
complete informatisation like EDI have not
really caught on in Thailand as evidenced by
only four firms having a complete EDI linkage
in their supply chain. Most firms (95 per cent)
still rely on traditional methods of communication, like calling, mailing and faxing in
order processing. The pace of complete information connectivity in the supply chain network is slow, a sharp contrast to that of the US
and European suppliers (Kim, 1996). The
high initial costs and lack of expert personnel
to operate the system can probably explain the
current low technology level link-up with
suppliers.

Logistics information systems (LIS)


A good LIS reduces the dependence on
forecasts by improving information on
demand and by creating systems capable of
real time response to that demand. This is the
principle that underpins quick response
logistics and enables firms to achieve the twin
strategic goals of cost reduction and service

Table IX Fleet ownership

Fleet

With
logistics
department
(%)

Own
Do not own
Leased or third party
providers
Do not lease

Without
logistics
department
(%)

Total

65
35

80
20

72.5
27.5

70
30

50
50

60
40

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Volume 11 Number 6 1998 359369

Table X Reasons for implementing LIS

Reasons

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Quicker response time


Shorter order cycle time
Greater order convenience
Better communication
Faster stock turnover
Economies of scale of supply chain
Project good business image
Employ fewer employees

Very important
or more
(%)

Unimportant/
unaffected
(%)

Mean

Standard
deviation

92.7
78.1
70.7
63.4
56.1
48.8
41.5
26.8

0.0
7.3
2.4
12.2
12.2
12.2
22.0
26.8

4.463
4.146
4.098
3.682
3.659
3.537
3.342
3.049

0.099
0.170
0.139
0.154
0.162
0.157
0.187
0.167

In terms of development, 32 per cent of the


respondents developed the LIS in-house
while 65 per cent outsourced the development
of the LIS. Only 24 per cent of the respondents mention that their LIS development
was done both in-house and externally.
Problems and barriers
External environmental factors, personnel
and technology are three areas selected as
being problematic for logistics management
and development in Thailand. External
factors, such as traffic jams, are difficult for
firms, with or without formalised logistics
departments, to eradicate.
The lack of modern logistics management
techniques and expertise, and the current
inefficiency of the logistics information
systems are also presenting potential problems to logistics development (Table XI).
This twin finding of delivery delays due to
constant traffic jams (particularly in Bangkok)
and lack of logistics management expertise is
also supported by Huans (1995) results,

though not necessarily in the same rank order.


The delivery delays caused by the poor transportation infrastructure poses a major problem to distribution. More than half (55 per
cent) consider the present delivery delays as a
critical problem, both on the supply side
and demand side. Generally, as with any big
city positioned as a distribution node,
Bangkok presents problems in in-bound and
out-bound logistics flow creating delivery
delays in distribution. Timely delivery is
basic to keep customer satisfaction and
loyalty.
The high cost of acquiring and installing
automated logistics equipment is perceived by
firms as a barrier to logistics development in
Thailand too. This can devolve into a vicious
spiral, given the present economic crisis in
Thailand. Such logistics problems threaten
continued foreign investment, which in turn
deny badly needed capital, technology and
managerial expertise. Without sufficient
capital input into state of the art equipment,
firms cannot be agile and compete with the

Table XI Perceived barriers/problems

Concerns

Very serious Not serious/


or more
unaffected
(%)
(%)

Delivery delay due to constant traffic jams


Lack of logistics management expertise
Inefficient logistics information system
High cost of acquiring and installing automated
logistics equipment
Inadequate existing rules and regulations
Industry-specific EDI standard unavailable
Low usage of universal product code
Poor relationship with suppliers and partners
No scale economies due to limited domestic market
Employee resistance to new management methods
366

Standard
Mean deviation

82.5
75.0
50.0

7.5
18.8
16.3

4.300
3.575
3.488

0.104
0.127
0.105

43.8
41.3
30.0
23.8
20.0
17.5
13.8

18.8
18.8
30.0
35.0
45.0
52.5
66.3

3.388
3.275
2.975
2.825
2.675
2.488
2.275

0.115
0.092
0.107
0.111
0.124
0.125
0.118

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Logistics management practices and development in Thailand

Logistics Information Management

Mark Goh and Parooj Pinaikul

Volume 11 Number 6 1998 359369

leaders in distribution and warehousing.


However, employee resistance to new logistics
management methods is not perceived as a
serious problem. This augurs well for new
training and development programmes in
logistics management.
The general management skills of
existing logistics managers, such as communication and planning skills, are found to be
satisfactory by nearly 62 per cent of the
respondents (Table XII). In spite of that,
about a third of the respondents recognise
that the logistics specific operations skills and
formal training received by existing managers
can be improved. This mood is generally
consistent with that experienced by firms in
other developing countries (Razzaque, 1997).

between existing and desired skills of logistics


managers show that good communication
skills (t-value = 6.22) will still be needed by
logistics managers while demand for good
logistics operations skills (t-value = 11) and
competence in technology (t-value = 8.2) will
rise. Thus, technical and relationship skills are
imperatives for the logistics manager of the
next century.
This augurs well for the industry as firms
now realise the need to tap into cutting edge
technology to leap frog current logistics management practices and foster faster development. However, only 35 per cent regard a
formal logistics education as very important
or more for the industry, suggesting perhaps a
holding on to the traditional view that logistics management is a learning by doing trade.

Future skills of logistics managers


Not surprising, then, good communication
skills, logistics operations skills, understanding of new technology and the ability of logistics managers to plan and forecast for the
supply chain are highly regarded as desired
skills of future logistics managers. In fact,
good communications skills and logistics
operations skills are ranked as very important
or more by 91.3 per cent of the respondents
(see Table XIII). All respondents replied that
a good grounding in new technology is important or more for the logistics manager to
acquire. The results of a pairwise t-test

Some conclusions and implications


A good logistics system can increase a
countrys competitiveness and ability to
attract foreign investments relative to its
neighbours (Cilliers and Nagel, 1994). This
initial study has found that logistics managers
in Thailand lack in modern technology and
logistics operations skills. Contrary to
Richardson (1994), the traditional view of
logistics as being transport and warehousing
still persists in Thailand. While some firms
have set up formalised logistics departments,

Table XII Existing skills level of logistics managers

Skills

Satisfied or more
(%)

Can improve
(%)

Mean
(%)

Standard deviation
(%)

61.3
61.3
45.0
22.5
17.5

2.5
3.8
7.5
31.3
35.0

3.863
3.600
3.438
3.038
2.788

0.728
0.446
0.604
1.075
0.904

Good communication skills


Ability to plan and forecast
Grounded in technology
Logistics operations specific skills
Formal qualification in logistics

Table XIII Desired skills of logistics managers

Skills
Good communication skills
Logistics operations specific skills
Ability to plan and forecast
Grounded in new technology
Formal qualification in logistics

Very important
or more
(%)
91.3
90.3
87.5
86.3
35.0

Unimportant/
unaffected Mean
(%)
(%)
1.3
1.3
2.5
0.0
20.0

367

4.550
4.488
4.375
4.325
3.275

Standard
deviation
(%)
0.475
0.481
0.592
0.500
1.164

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Logistics management practices and development in Thailand

Logistics Information Management

Mark Goh and Parooj Pinaikul

Volume 11 Number 6 1998 359369

they have not fully appreciated the integrative


logistics concept and as such do not operate
under an integrated logistics umbrella. An
ineffective organisational structure can be a
major obstacle to the development and management of logistics. Firms are still parochial
in their thinking, trying to maximise utilising
their resources instead of investing productively on new technology and equipment like
EDI. EDI and information systems are the
keys to superior logistics management and are
instrumental in some of the recent developments in logistics in the West, like the quick
customer response systems. However, these
systems are under developed in the case of
Thailand. The logistics information capability
to facilitate seamless flows of timely information is crucial in improving the efficiency of
logistics activities and it can even reduce the
demand for better transport infrastructure
(Kang and Kwong, 1997).
While Thailand has not reached the level of
logistics excellence that the USA and some of
the European countries (Davis and Gibson,
1993) have achieved, it is promising to note
some of the developments. First, the demand
for logistics expertise is high. This reflects well
on the training and development aspects of
logistics. Universities and training institutes
can position themselves appropriately to fill
this gap, to prepare and train an adequate
pool of logistics professionals to help
implement modern methods of logistics
management.
Second, while firms battle with cost containment in logistics, they too realise the need
for service improvement. Although the level
of existing partnerships with suppliers is
good, the current relationship with distributors can be better cultivated. Thus, opportunities exist for new and existing third party
providers to market themselves in this direction. Based on the present findings, a likely
formula for success for the foreign integrated
logistics providers trying to enter the Thai
market is to form close strategic partnerships
with entrenched local firms anxious to
upgrade their logistics capabilities, and
expand their regional and international networks. This creates synergy for both parties.
Likewise, there is potential for technology
solution providers and enablers to enter the
Thai logistics sector to inject greater technological prowess into logistics management and
practices.

As there are significant and pressing


demands on improving logistics management,
firms and the public sector need to collaborate with each other to improve logistics performance. A conducive environment is a
prerequisite to an efficient system. In this
regard, the government can hasten the state of
logistics development by accelerating the
development of key logistics infrastructure
like the proposed new airport and seaport.
The challenge of increasing traffic will always
exist for growing mega-cities but the government can take proactive steps to ensure the
efficient physical flow of materials. Only by
overcoming the infrastructure related challenges can the flexibility of developing a desirable supply chain network for the firm be
vastly increased. Also, recognising that integrated logistics information systems are
pivotal to the development of logistics, the
government can undertake to popularise the
pace of IT development in the country.
Only when all parties concerned in the
logistics arena recognise that logistics is
indeed the last frontier in business competition and make a vigorous effort to streamline
and upgrade the supply chain process, will
logistics management and the GTP concept
bloom in Thailand and achieve global competitiveness. To respond to these challenges
would require firms and decision makers to
rethink each step of the logistics process and
devise appropriate and sustainable strategies
that will enhance quality, reduce costs,
increase efficiency, and add value to
customers in the value chain. Only then will
logistics management practices blossom into
maturity.

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