Critical Success Factors in the Maritime Logistics Sector

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Table of Contents

Introduction
Critical Success Factors (CSFs) in Maritime Logistic Sector
A diagram illustrating the PDSA cycle
Effects of these CSFs to COSCO and its Competitors
Conclusion
References

Introduction

Starting and maintaining any operation in today’s business environment is a process that requires determination, motivation and general know-how in regards to how to operate a business and ensure that it remains profitable despite the present challenges and risks. As such, there are several considerations that should be carried out to ensure that all details regarding the business are addressed and well planned for.

The considerations include but are not limited to: the identification of the business opportunity, development of the product or service, evaluations of the suppliers, clients and business environment and market analysis among others. A recurrent and most important concept that must be considered is the quality of the output produced by all processes within the business. This can only be guaranteed by evaluating and utilizing the critical success factors that affect a particular business.

This report sets out to explore the critical success factors that affect the maritime logistics sector. This shall aim at exploring various factors that hinder or facilitate the success of COSCO group in this sector. To this end, the most prominent CSFs shall be evaluated in regards to how they affect the company’s success and competitive advantage.

My research indicated that customer satisfaction, supplier satisfaction, support from top management and motivation of employees are among the key critical success factors that affect the maritime logistic sector. As such, this report shall shed some light on these factors. To guarantee the credibility of the information provided herein, I shall apply organizational theories and principles that connect the factors to this sector.

Critical Success Factors (CSFs) in Maritime Logistic Sector

Throughout their existence, organizations and businesses are considerably under a lot of pressured to raise their levels of performance and productivity. This is especially so in the modern-day business environment which is characterized by aggression and excessive competition. This constantly forces businesses to exhibit innovativeness and enhanced performance so as to remain relevant and profitable in the ever increasingly competitive arena.

With these undertones, it is important to understand factors that are critical to a business if it is to succeed. Shenhar et al (2002) state that in most cases, CSFs help organizations to instigate change in business processes, strategies and productivity. As such, CSFs aim at improving business performance, profit margins, expenditure, products and services and market position.

Zwikael and Globerson (2005) assert that organizational success can be assessed by evaluating the critical success factors considered while running the business.

They include commitment to the business, support from top management, personnel welfare, clarity in defining project and organizational goals and objectives, strategy and communication among others. These factors are very important to maritime logistic organizations and enable the managers to make the right decisions and plans which lead to the success of a given operation.

The authors also contend that CSFs are important because they enables business managers to figure out the deliverables of the business, anticipate risks and effectively delegate roles to organizational members (Zwikael and Globerson 2005). CSFs therefore ensure that a businesses runs according to expected standards and achieves the set goals with little to no complications. Some of the CSFs that affect the maritime logistic sector include:

Customer satisfaction

Customer satisfaction often refers to the ability of a product or service to fully satisfy the needs of the intended consumer. This should be the primary concern of any organization willing to survive the aggressive nature of today’s business environment. This is mainly because satisfied clients mean more sales, increased market share and unwavering consumer loyalty. These elements ensure that an organization makes profits which can be used to research for cheaper and better ways of production, expanding an organization’s market base and expand the business.

Bagad (2008) states that consumer satisfaction can only be achieved through total quality management (TQM). He defines TQM as a broad and continuous approach that businesses implement to ensure quality and performance improvement that guarantees customer satisfaction.

According to the author, this guarantee is achieved by “integrating all quality-related functions and processes throughout the company (Bagad 2008, p.12)”. Similarly, Gilmore (1998) argues that TQM focuses on identifying the potential areas that may cause problems, and solve them before a product or service is made available to the market. Considering the definition of quality provided herein, we could argue that quality is consumer driven.

This means that an organization must identify the needs of the clients and formulate the best means of meeting them satisfactorily. Gilmore (1998), states that a perfectly produced product or service is of no benefit to the organization if it fails to meet the needs of the client. As such, the author contends that TQM tools enable organizations to identify such needs by outlining market research methodologies and production processes that enhance accuracy and efficiency in various consumer-supplier interfaces.

Personnel welfare

For the manager to be of greatest benefit to the organization, he/she must be able to obtain optimum results from his/her staff. This can be obtained through various means amongst which is the possession of exemplary leadership skills by the manager.

However, the manager must also possess sound theoretic knowhow on relevant subjects which should then be converted to practical application. This paper shall set out to argue that sound in-depth knowledge of motivational theories by the manager will in fact enable him/her to be a better manager.

Motivation is defined as a “process of stimulating people to action to accomplish desired goals” (Kondalkar 2002, p.245). Bearing in mind the fact that the manager is tasked with marshaling the organization’s resources to accomplish some organizational goal, it can be rightfully stated that part of the role of the manager is to motivate his staff to achieve certain desired goals. It is the role of the manager to ensure that the employees have a high degree of motivation in their performance.

There are various aspects that one has to take into consideration when motivating employees. The two factor theory of motivation advanced by Frederick Herzberg suggests that job satisfaction has two dimensions which include hygiene factors which are work conditions and the motivation factors which include work incentives (Griffin 2007, p.296).

A manager who has knowledge of this knowledge will realize that for motivation to be achieved, two particular angles must be considered. The hygiene factors which include working conditions, supervisors, pay security and interpersonal relations must not be deficient. The motivation factors which include achievement and recognition, advancement and growth and responsibility must be present since these are the factors that create a drive in the employee.

Management

Management entails the effective and efficient utilization of resources that are available to an organization with an aim of achieving organizational goals and objectives. It involves planning, organizing, leading and controlling of the organizations activities and resources. Managers are the people taxed with the role of marshaling the human resource in the organization for its growth and expansion.

Griffin (2007) contends that the success of any organization depends mainly on the effectiveness and ability to inspire of their leaders. Studies have it that the stock prices of well led companies increased by over 900% in a 10 year period as opposed to a bare 74% growth recorded by those companies that lacked good leadership.

This fact effectively underscores the importance of good leadership in any organization. Capt. Wei Jiafu who is the president and CEO of COSCO group has a proven track record of Excellency in the international shipping management and operation business (COSCO GROUP, 2011). His knowledge of this sector has enabled him to manage the company towards success unlike the management of rival companies such as Maritime Logistics Group which offers fewer services and products to its clients.

Continuous Improvement of the Organization’s Processes

This is an important CSF that has been undermined by most companies in this sector. According to Rahman (2001), this principle is founded on the assumption that organizations must always improve their processes, strategies and methodologies if they are to keep up with the dynamic nature of the business environment.

Rahman (2001) supports this assertion by contending that competition, technology and consumer preferences are improving and growing faster each day. As such, it is always wise for an organization to improve its methods if it aims at staying ahead of the game. Similarly, this principle encourages managers and employees to work smart rather than doing hard work.

The Plan-Do-Study-Act cycle (PDSA) has been cited as being among the most effective models to implement if continuous improvement of organizational processes is to be achieved. Below is a diagram elaborating the cycle.

A diagram illustrating the PDSA cycle

This cycle promotes quality in the sense that the management plans for what needs to be improved and makes decisions on how best such improvements can be implemented. The second step requires the implementation of the improvements that have been recommended. This simply means that the organization does what it has planed to do. Thirdly, after implementing/doing what was planned, the management and other concerned parties monitor how the improvements impact business processes.

In this stage, information can be collected regarding the problems, effectiveness and further improvements (recommendations and suggestions) that need to be addressed. The information collected from the third stage is used to improve the strategy or process such that it remains without any flaws. Lynch and Keating II (1995), state that this model has proven to be of great importance in effective decision-making processes, problem solving and risk management in many organizations.

Effects of these CSFs to COSCO and its Competitors

Arguably, an organization that focuses on customer satisfaction has a competitive edge over its rivals. In most cases, maritime logistic companies focus on operational efficiency (competing through price reduction). This has in the past proven to be a risky move in the long-run. However, COSCO’s focus on customer satisfaction has enabled it to maintain its clients and bring in new services that attract new clients.

On the other hand, ensuring that employees are motivated ensures that they exhibit the best performance in all they do. A company that guarantees job and personal satisfaction to its employees often has a competitive edge in regards to productivity, performance and employee retention. This is the case with COSCO which ensures that its employees work in safe working conditions and enjoy various benefits and allowances.

In regards to management, it is a known fact that business success is achieved through strategizing and foresight. These are qualities of a good manager. However, a company with poor management is bound to fail whenever the company faces some difficulties.

As per the Continuous Improvement of the Organization’s Processes, it goes without saying that an organization that focuses on a brighter future will always have a competitive edge over its rivals. For example, COSCO group may decide to embark on a project that will guarantee security for their clients. After the completion of this project, COSCO will be the preferred company by most clients requiring services in this sector.

Conclusion

Managing the quality levels exhibited by an organization in terms of products, services and processes is seldom an easy undertaking and in many situations, businesses have failed in this regard due to lack of know-how by the business owners.

As such, it is always important to ensure that the philosophy of CSFs is implemented before an organization initiates a project, process or before pouring all its investments into it. On this note, this report has provided a detailed and informative guideline as to how business entities in the maritime logistic sector can apply TQM concepts in all their activities.

Notably, most businesses aim at increasing their profitability by either sales or profit maximization. These strategies may be effective in the short-run, but may fail to guarantee the organization its survival in trivial times. However, focusing all efforts towards meeting or exceeding the needs and expectations of the consumers ensures that the organization is on the first row in terms of sustainable growth, marketing and management strategies, and supply of quality products and services.

References

Bagad, V 2008, Total Quality Management, Technical Publications, USA.

COSCO GROUP 2011, Wei Jiafu. Web.

Gilmore, H 1998, ‘Product and Service Quality-The South Pacific Way, Fiji Islands: A Case Study’, Quality Engineering vol. 11, no. 2, pp. 207 – 212.

Griffin, RW 2007, Fundamentals of management, Cengage Learning, New York.

Kondalkar, PF 2002, Organization effectiveness and change management, PHI learning Pvt. Ltd, USA.

Lynch, R & Keating II, R 1995, ‘Problem Solving Workshop Based on Total Quality Management (TQM) Principles’, The Serials Librarian, vol. 25, no. 4, pp. 353 – 356.

Rahman, S 2001, ‘Total quality management practices and business outcome: Evidence from small and medium enterprises in Western Australia’, Total Quality Management & Business Excellence, vol. 12, no. 2, pp. 201 – 210.

Shenhar, A, Dvir, D, Levy, O & Maltz, AC 2001, ‘Project Success: A Multidimensional Strategic Concept’, Long Range Planning, vol. 34, pp. 699 – 725.

Zwikael, O & Globerson, S 2006, ‘From Critical Success Factors to Critical Success Processes’, International Journal of Production Research, vol. 44, no. 17, pp. 3433-3449.

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