A strategy for third-party logistics systems: A case analysis using the blue ocean strategy
One of today's most frequently discussed topics in the business world is how to escape from the intense Red Ocean and how to create an uncontested Blue Ocean. However, because there are few practical guidelines available on this topic, we will introduce a case study of a third-party logistics (3PL) provider, CJ-Global Logistics Service (CJ-GLS), to show how it aspires to be a leader in the newly introduced 3PL industry in South Korea. CJ-GLS is a latecomer in the logistics industry, and its resources, such as the number of trucks and warehouses, are relatively small in comparison to those of established companies. But, it has achieved a distinct competitive advantage through innovative information technology (i.e., RFID--radio frequency identification), which has enabled it to create an uncontested market space, electronic logistics business. One remarkable fact about CJ-GLS is that its swift growth comes not from attracting competitors' customers from the existing Red Ocean market but from creating a Blue Ocean market (3PL market), which previously existing incumbents ignored, and also from constructing a new business model founded on a RFID-based, ubiquitous-oriented 3PL system. Analyzed through a Four Actions Framework and characterized as Blue Ocean, this case study provides valuable information on how a company reinforces its competitive advantage from the Red Ocean while it transitions into a Blue Ocean by utilizing advanced information communication technologies.
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Volume (Year): 36 (2008)
Issue (Month): 4 (August)
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- Krumwiede, Dennis W. & Sheu, Chwen, 2002. "A model for reverse logistics entry by third-party providers," Omega, Elsevier, vol. 30(5), pages 325-333, October.
- Marchand, Donald, 2004. "Extracting the business value of IT: It is usage, not just deployment that counts!," Journal of Financial Transformation, Capco Institute, vol. 11, pages 125-131.
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- Chen, Yuh-Wen & Wang, Chi-Hwang & Lin, Sain-Ju, 2008. "A multi-objective geographic information system for route selection of nuclear waste transport," Omega, Elsevier, vol. 36(3), pages 363-372, June.
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