Analysis of Logistics Costs of SMEs and Survey on the Effects of the Iranian Targeted Subsidies Plan on Costs

Subject Areas : Industrial Management

Fahimeh  Kariminejad ¹ (M.A Student in Industrial Engineering, South Tehran Branch, Islamic Azad University, Tehran, Iran.)
Farzad  Haghighi Rad ² (Lecturer at Faculty of Industrial Engineering, South Tehran Branch, Islamic Azad University, Tehran, Iran.)
Sedigh  Raissi ³ (Associate Professor in Industrial Engineering, South Tehran Branch, Islamic Azad University, Tehran, Iran.)

Received: 2018-01-10 Accepted : 2018-01-10 Published : 2012-10-22

Keywords:

Abstract :

Developing a conceptual model to analyze effective costs in logistics process is one of the aims of the present article. By Reliance of literature review in the field of logistics and by using the results derived from the carried out case studies in small and medium-sized food and automotive enterprises, the effects of targeted subsidies plan on Logistics costs and solutions to costs reduction are studied. In this paper, combined qualitative and quantitative methods are used, qualitative methods such as interviews and quantitative methods such as Analytical Hierarchy Process (AHP) and statistical analysis. The result shows that at the macro level logistics costs are divided into seven categories: Transportation costs, Inventory carrying costs, Warehouse costs, Order Processing and Information Systems costs, Handling costs, Lot quantity costs and Customer service costs. Based on the type of industry, some costs are more important than other costs. Applying the Analytical Hierarchy Process on logistic costs shows that transportation and distribution costs besides capital costs are the largest in the logistics costs. Comparison of logistics costs before and after the implementation of the targeted subsidies plan shows that costs at Pegah Company has increased by 1.48% and at Zar-Fanar Company 2.42% in sales revenue. Increasing energy prices and high storage due to varying business conditions are the causes. Developing logistics cost management system besides controlling and optimizing the time and economical orders could act as appropriate solutions for the two companies to reduce their own logistics costs. The relationship between solutions and cost reduction are reviewed by using a nonparametric test (Binomial) and approved solutions are prioritized by using the Friedman test.  

References:

1- Ghadimi Dizaj, K. (2010). Introduction in the Subsidies targeted system (second edition). Human Resource training and equipping the Iranian National Gas Company (management education).

2- Aronsson, H., Ekdahl, B., & Oskarsson, B. (2003). Modern logistik – för ökad lönsamhet. Lund, Sweden: Liber AB.

3- Ayers, J. B. (2001). Hand book of supply chain management (first edition). st.Lucie press & APICS.

4- Behboodi, R. (2003). Industrial Subsidies and Friction in World Trade- Trade policy or trade politics? (second edition). published in the Taylor & Francis e-Library.

5- Bernini, C., & Pellegrini, G. (2011). How are growth and productivity in private firms affected by public subsidy? Evidence from a regional policy. Regional Science and Urban Economics, 41, 253-265.

6- Bertazzi, L., & Speranza, M. G. (1999). Minimizing Logistic Costs in Multistage Supply Chains. Naval Research Logistics, 46, 399-417. 

7- Borgqvist, F., & Hultkrantz, L. (2005). Mapping Logistics Cost And Flow - A case study within the Höganäs Group 2004 (Master's thesis). Luleå University of Technology, MSc Programmes in Engineering.

8- Cesca, L. (2005). Economic Competitiveness in the Global Textile Supply Chain: Examination of Logistics Cost Structures (the Degree of Master of Science). North Carolina State University.

9- Chao-yang, Z., & Hong-rui, F., & Wei, J. (2011). An Model for Supply Chain Logistics Cost Management Based on Analytic Hierarchy Process. IEEE.

10- David, V. (2009). The politics of fossil-fuel subsidies. The Global Subsidies Initiative, 1-34.

11- Frenceschin, F., & Rafele C. (2000). Quality evaluation in logistics services. International Journal of Agile management systems, 2(1), 40-53.

12- Fröderberg, A. (2006). Cutting Logistics Costs with a Centralized Distribution Model for ABB’s Distribution of LV Products in Asia Pacific (Master's thesis). Luleå University of Technology, MSc Programmes in Engineering.

13- Gudehus, T., & Kotzab, H. (2009). Comprehensive Logistics (first edition). Springer.

14- Hancock, D. R., & Algozzine, B. (2006). Doing Case Study Research- A Practical Guide for Beginning Researchers (first edition). Teachers College Press.

15- Havenga, J. (2010). Logistics Costs In South Africa – The Case For Macro Economic Measurement. South African Journal of Economics, 78.

16- Houri Jafari, H., & Baratimalayeri, A. (2008). The crisis of gasoline consumption in the Iran’s transportation sector. Energy Policy, 36, 2536-2543.

17- Hsu, C.-I., & Tsai, I.-J. (1999). Logistics cost, consumer demand, and retail establishment density. Papers Reg. Sci., 78, 243-263.

18- Juntunen, J., & Juntunen, M. (2010). External economies and confidence: a way to reduce logistics costs. International Journal of Logistics, 13(5), 329-337.

19- Lambert, D., & Stock, J. (1999). Strategic Logistics Management (3rd ed.). Singapore: Irwin McGraw-Hill.

20- Lin, B., & Jiang, Z. (2011). Estimates of energy subsidies in China and impact of energy subsidy reform. Energy Economics, 33, 273-283.

21- Liu, Y., & Cao, Q. (2011). Analysis on the Causes of High Social Logistics Cost of China. IEEE.

22- Michael, P. T., & Smith, S. C. (2009). Economic Development (10th ed.). Addison Wesley.      

23- Nwachukwu, M. U., & Chike, H. (2011). Fuel subsidy in Nigeria: Fact or fallacy. Energy, 36, 2796-2801.

24- Rushton, A., Croucher, P., & Baker, P. (2010) the handbook of logistics & distribution management (4th ed.). Koganpage.

25- Somuyiwa, A. O. (2010). Analysis of Transportation Cost in Overall Logistics Cost Management of Manufacturing Companies in Southwestern, Nigeria. European Journal of Scientific Research, 44(3), 420-429.

26- Somuyiwa, A. O. (2010) Impact of Inventory and Warehousing Costs in Total Logistics Cost of Manufacturing Companies in Southwestern Nigeria. International Business Managment, 4(1), 14-19.

27- Somuyiwa, A. O. (2010). Modeling Outbound Logistics Cost Measurement System of Manufacturing Companies in Southwestern, Nigeria. European Journal of Social Sciences, 15(3).

28- Somuyiwa, A. O. (2010). Problems and Prospects of Logistics in Nigeria: Explorative Analysis. Journal of Management and Society, 1(2), 17-26.

29- Somuyiwa, B., & Oyesiku, K. (2010). Analysis of Performance of Collaborative Information Sharing Cost in Outbound Logistics. Current Research Journal of Social Sciences, 2(3), 181-186.

30- Song, H., & Wang, L. (2009). The status and development of logistics cost management: evidence from Mainland China. Benchmarking: An International Journal, 16(5), 657-670.

31- Turkensteen, M., & Sierksma, G., & Wieringa, J. E. (2011). Balancing the fit and logistics costs of market segmentations. European Journal of Operational Research, 213(1), 340-348.

32- Zahariadis, N. (2008). State Subsidies in the Global Economy (first edition). published in the PALGRAVE MACMILLAN™.

33- Ministry of Economic Affairs and Finance (MEAF). (2009). Introduction of targeted subsidies plan. Available from http://www.tahavolateeghtesadi.ir.

34- Ec.europa. (2003). The new SME definition- User guide and model declaration. Available from http://ec.europa.eu

35- Establishinc. (2010). Logistics Cost and Service. Available from http://www.establishinc.com.