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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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  • Number of pages: 2

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Problem Statement

The ZTO Express is a B2B company, which is a leading delivery company across the globe especially within the market of China. The company has been serving for Alibaba for the delivery of its products worldwide. In real time the company is having vast service offerings such as logistics of hard and soft goods, storage of the material and transportation of the products on behalf of its partner company (Cision, 2018). However, the main issue in the customer services was the lack of digitalization in the existing facilities, due to which, the supply chain of the company was facing delays. This was not only in the external environment but also in their internal operations. It caused issues such as delay in deliveries, mixing up of goods, poor tracking system of items, theft. Thus, it was affecting the credibility and service quality of the companies it was dealing with such as Ali Baba (Cision, 2018). The network partners were held liable for stolen and damages. There have also been cases of unintentional damaging of the goods while transporting. Moreover, ZTO has faced claims in regard to these damages that in certain cases have exceeded the amount of their insurance coverage (SECURITIES AND EXCHANGE COMMISSION,WASHINGTON, DC 20549, 2016). Before the year 2018, the company was not using any specific portal or automated system for tracking the orders and managing its supply chain. In order to enhance its business competency and improve customer services up to a significant level, this paper suggests ZTO to implement Big Data and Radio Frequency Identification technology. Thereby, test their acceptance with the help of the Technology Acceptance Model.

Analysis of the situation

Currently, the dimension and scope for e-marketing and e-commerce are increasing rapidly. In this context, the business of e-commerce companies such as Amazon and Alibaba is increasing up to a significant manner. For facilitating their customers, such companies are required to have B2B logistic partners. Owing to this reason, competition is increasing rapidly in the logistics industry. To sustain in this competitive environment ZTO needs to effectively deliver the services (Cision, 2018). In this case, the lack of digitalization is directly or indirectly affecting long-term orientation and quality of services delivered to the client. Every single delayed service delivery or missed delivery ultimately affects the client company's goodwill and business value proposition. Due to this reason, lack of effective IT-based service tracking and supply chain management tool can be proved quite critical for the company. It can affect ZTO's trust-based relationships with large groups such as Alibaba. Moreover, it can also be proved critical in maintaining long-term sustainability in the existing marketplace. In this way, lack of digitalization can be considered as a concrete issue in front of the company

Suggested Solution

As per the study of Laasch and Conaway (2017), the theory of servitization is mainly considered as the efficient process of developing values to the products by integrating additional services. The process of servitization mainly focuses on three types of services which includes primarily Base services, Intermediate services, and Advanced services. In order to improve the logistics services, intermediate services can be applied within the services of ZTO Express that enhance the delivery of logistics services and management of the goods. The implementation of this services will contribute to achieving a competitive advantage within the global market.

   In the views of Cabanillas et al,.(2013), to achieve success in the logistics market and to sustain in the midst of market competition, it is essential to provide the services as per the requirement of the clients and customers. The most effective way to achieve this is by digitalizing the existing services. Big data and Radio Frequency Identification technology can be the most effective intermediate services that will enhance the quality of services within the logistics company.

   The sources of data associated with ZTO are found to be significantly complicated which is challenging to manage with the help of traditional software. Installation of Big data will contribute to the analysis of the data necessary for the logistics services and maintaining the optimization of the supply chain. The automation of data will help in the movement of the goods and cargo delivery effectively. Moreover, it will reduce waste by optimal utilization of resources and integrating lean operations within the services.

   According to Bhandari (2014), it is essential to adopt the digitalization technology to meet global competence in the logistics market. As the industry of logistics is considered to be critical including various effective sub-areas of logistic services that mainly consists of warehousing, transportation, material handling, inventory, security, and packaging. Therefore, in order to manage these sub-areas collectively the adoption of Big Data is considered to play a significant role.

   As per the study of Waller and Fawcett (2013), the efficiency of the data processing and analysis is enhanced by the implementation of Big Data. This will thus improve logistics, distribution and production networks. Integration of big data will help ZTO to share and manage the data of the customers within the service partners. Thus, improving forecasting accuracy in the services to the customers. Moreover, with the help of big data, the company can integrate the network optimization model. This model can help in the analysis of the services with the interconnected businesses in the market.

   In the views of Kaur et al,.(2011), the adoption of digital technology for storage, processing, and retrieval of the organizational data is regarded as the most effective way to render growth to logistics businesses such as ZTO. The RFID is known as the Radio Frequency Identification which is helpful in transmitting the data in the services of logistics. It is mainly observed as the wireless use of radio frequency electromagnetic field that is helpful in transferring the data in order to identify and track the goods and services. It is the most effective way to maintain the effectiveness of the supply chain of logistics. The main aspect of the integration of wireless RFID technology is to prevent the loss of data.

   According to the study of Azevedo and Carvalho (2012), the transport system that is used for the movement of the goods and logistics can be easily tracked using RFID, which allows the organization to maintain a scheduled delivery of services, as well as efficient service management. The customers will also be provided with the tracking feature with the help of which, they can easily track their goods and can also update the required details in case any modification with the transportation of goods is required. In order to track the shipment of the goods using the RFID, an effective 3D printer is used that mainly generates recognizable sensor tags, which are attached to the cargo.

   In order to apply a meaningful solution to the integration of effective technology, the acceptance of the solution provided for the growth of logistics services is essential. ZTO can further analyze the acceptance of Big Data and RFID by the customers with the help of the Technology Acceptance Model by Richard Bagozzi and Fred Davis. This model mainly deals with the explanation of various aspects that are associated with the technology (Mair, 2018).

   As per views of Surendran (2012), the acceptance of any new technology is mainly dependent on the two significant factors:

Perceived usefulness: It is mainly focused on the belief of the technology user for the enhancement of efficiency, as well as the performance of the logistic services. It is considered as the degree which determines the level of trust an individual or any customer has for the improvement of performance as per their requirements.

   Perceived ease of use: ‘ease of use' is mainly considered as the comfort level of the customers with the features of the new technology. It deals with the user acceptance of the integrated technology for the development of the logistics and goods services.

   According to Chen, Shing-Han, and Chien-Yi (2011), the perceived usefulness and ease of use are considered as the two major factors that help in examining the attitude of the customers towards the acceptance of the technology. Thus it will help ZTO to understand the effective relationship between technology and human beings. This can be implemented by taking feedback from the regular business partners such as Ali Baba. Moreover, these factors also contribute to the determination of the effective behaviour of the customers who are concerned with the future of technology.

Advantages and Disadvantages

With the incorporation of Big Data and RFID for the improvement of ZTO's logistics services and goods transportation, there are various other benefits. It enables ZTO express to grow and develop in the global market with different logistics partner. RFID's scan codes have an effective range of reading. This means, the scanners can be several feet away and can still pick up the code.

   The RFID tags consist of memory capability which can be modified as per the requirements. Therefore, these tags can be easily combined with the sensors to track cargo transport. (Ramanathan et al., 2014). As compared to barcodes, information can be read faster from RFID.

   Automated materials handling is another application of the RFID technology. It enables sorting the goods in different categories which saves time for the staff (Narayanan, Singh and Somasekharan, 2005). It ensures that there will be no stealing, thus no disruption in the operations of ZTO. It will enhance transparency in the operations by providing real-time information for every operation involved in the logistics and goods services department of ZTO.

   The most significant benefit is gaining a competitive advantage over the other competitors such as Expeditors International of Washington and C.H. Robinson Worldwide (Gatlin, 2018)

   The implementation of big data analytics will help ZTO to further capture new technologies in the future and the best available opportunities for improving the logistics services. Therefore, Big data and RFID will enhance productivity and improve the efficiency of the company thus, meet the requirement of the clients (BBN, 2018).

   Implementation of Big Data analytics requires huge financial and expert human resources. Understanding the interpretation of Big Data analytics is a complex process, and it can slow down the operational process of an organization (Trivedi et al., 2017). This will also lead to degradation in the performance level of an organization in the market.

   It has been analyzed that the implementation of RFID in an organization is a highly costly process and it limits the organizations to use this technology for the purpose of enhancing the services of an organization. Sometimes, the RFID technology reads different tags, which leads to the loss of data and thus has an adverse impact on the service performance of the organization (Kaur et al., 2011).

   RFID is an enhanced technology; however, it has some scanning issues. There is a chance of tag collision if the reader identifies multiple tags (Namboodiri and Gao, 2010). Eventually, it will thus mix up all the data and result in slow operations, moreover create a chaos in the department.

   There is another challenge with RFID that is related to privacy and security. The side-channel attacks and hackers can access the data of individuals and can easily produce another similar tag to access a particular place (Grover and Berghel, 2011). Moreover, the tags cannot be concealed on the goods and are exposed to removal, therefore, it might pose a threat to the company (Narayanan et al., 2005).

   Therefore, we conclude that Big Data and Radio Frequency Identification can be incorporated in the Logistic services. Thus overall enhance the operations of ZTO express for efficient and effective delivery of goods and services.

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