Sustainable Development of Modern Logistics Industry under the Condition of Industrial Cluster

3 2 ' M. L. Zhang , M. Jiang , W. B. Wang School of Economic and Management, Yanshan University, Qinhuangdao city, P. R. China ([email protected], Jiangming_l l @126.com)

Abstract

From the characteristics and advantages of

industrial cluster we can see that the cluster is actually a large transportation system. Interlinked with each other on the lower reaches of the integrated enterprise, it contains of product packaging, transportation, handling, storage, custody, as well as what happened in all the process of information management and delivery. Every element of logistics chain can serve as a node, connected with the relationship between supply and demand in different enterprises, and form a distribution network within clusters. As a result, modern transportation industry has played an important role in industrial clusters. However, the scientific development is a huge and complex systems engineering. This paper based on the scientific concept of development tries to guide the conduct of the transportation industry cluster. And we also analyzed systematic exploration of transportation industry development model, to enhance the sustainable capacity. On this basis, we proposed service for modern transportation of industry in industry cluster, including modernization of technology, network services, globalization markets, large-scale industries, co-distribution, development of excelsior, and so on.

Keywords

Industrial cluster, modern logistics industry,

sustainable development

empirical analysis and the corresponding conclusion r31, According to the data and documents in China, many essays focusing on regional logistics, urban logistics, logistics park and logistics center are available, and research findings are abundant. The Planning and Constructing of R egional Logistics r41 , The Construction of Logistics System in China r51, Analyzing the Linkage between the Development of Organization of Supply chain in Industrial cluster and the Development of Logistics Park L6J, Analyzing Empirical Examples of Urban Planning and Constructing in Regional Logistics Center L7J, and so on. All of these findings lay a good foundation for the further study and research on the logistics development of industrial clusters. But from the point of sustainable development, the systematic research on its scientific development mode is rare. According to the scientific view on development, this paper analyzes the logistics industry of the industrial clusters, and explains how to achieve the socialized and specialized intensive logistics industry with low cost, high efficiency and high profit so as to promote the sustainable development of industrial clusters.

I.

INTRODUCTION

II.

INDUSTRIAL CLUSTERS: IMPLICIT LOGISTICS SYSTEM

The number of domestic and international research literatures on the logistics development of the industrial cluster in not so abundant. Though there are many innovative ideas, the theoretical relevancy among the research literatures is loose, and the research system is far from perfect. The demonstration in this point is that Albino analyzed the internal logistics process in an industrial cluster using an enterprise input-output model. In the meanwhile, according to his analysis, he also illustrated the coordination strategy of the logistics flow during the formation of the product Ill. Additionally, Sumila Gulyani pointed out that the inferior transportation can increase the unit cost of freight, which can exert adverse impact on the competitiveness of the industrial clusters and lead to relevant problems, such as the increase of freight damage, overstocked products, the delay of the order and sharp rising cost. And even worse, external diseconomics which are caused by inefficiency, leads to that the organizers in the supply chain can not carry out the lean workshop project r21, In conclusion, foreign scholars have studied the industrial clusters from different aspects, but they have not form a completed theoretical system as they lay particular stress on 978-1-4244-3672-9/09/$25.00 2009
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The previous studies of industrial clusters suggest that all the industries involve the same requirements during the establishment of industrial clusters, that is to say, there is no difference for any industry to become an industrial cluster. As a matter of fact, whether an industry is good at clustering can be measured within certain requirements. The requirements include: on one hand, the separability of production flow, which means any activity in the industrial value chain can be fully specialized. Only under the condition that the production process can be divided into different parts, the division of labor based on specialization can come into being, thus generating the interrelated upriver and downriver corporations of the same industry chain as well as the competition and cooperation among them. Besides, hey can learn from each other. On the other hand, the final product of the industry has to be transportable; otherwise, it is supposed that, the industry where the geography location of the product providers has to be decided by that of the consumers, whose needs and wants are usually dispersed, apparently finds it difficult to assemble in space and form

economical-scale. By contrast, if the supply can not be relocated while the final product can be easily distributed or transportable, in this form, each part of the whole production process intends to cluster, which will promote the clustering of the whole industry. Since the industrial cluster meets the requirements, reparability of the production and the transportability of the product, it has the competitive advantages as follows: Firstly, distinctive resources and competence are the basis of the long-term competitive advantages of the cluster. The special endowment of resources and the resource integration constitute the long-term competitive advantages of the cluster. Secondly, the spatial structure of the resources appears in two fields: cluster economy and external economy of scale. Cluster economy: by means of using common facilities, corporations in the cluster reduce the extra investment in the scattered distribution and save the shipping and transmitting expenses of the products and information by taking advantage of the close geographical locations, thus reducing the cost of production. E xternal economy of scale: the corporations of the clusters make use of the close geographical location and human network to conduct value activities, procurement, production, marketing and governmental relationship, etc. Through joint venture, cooperation and the establishment of alliance, etcetera. A good case in point is the mass purchase of the raw materials on the collaborative basis, which not only promotes the negotiation skills of the clusters, reducing the cost of raw materials and saving the unit cost for transportation and procurement costs, but also contributes to the good relationship with the suppliers; the establishment of the common distribution center, wholesale and retail markets can lower the cost of transporting finished goods and FP inventory of the enterprises in the industrial cluster. Evidently, the average cost is reduced. Thirdly, it can not be neglected that the personal connection and networks of the industrial cluster, which grows by the blood relations and geographical locations, has far-reaching effects on resource composition; nor that the flow of resources among the enterprises of the industrial cluster, which uses personal connection and networks as a mediator, greatly influences the resources composition of the industrial cluster. The dependence of the logistics and capital flow on the personal connection and networks is often cited as an example. In the industrial clusters, the psychological contract takes shape depending on the personal connection and networks, where physical assets and funds can be allocated efficiently. At the last, cluster is a kind of networking organization with different structures and connections. It shows the possession and distribution of the resources, inter-organizational co-operations and the ways of transmission of knowledge and information. The enterprises in the industrial cluster can take advantage of the network to raise their competitiveness in the competition, cooperation and coordination. The

competitiveness established by certain structure is called "Structure Competitiveness", with witch the enterprise, for one part, can indirectly make good use of resources that are not of its own while directly utilizing its own possessions of resources. For individual enterprise, this kind of activity expands its resource margin. For another apart, the enterprise can found the rapid reaction mechanism on the basis of longer connection in the industrial cluster and enlarge its efficiency frontier. In terms of its characteristics and superiorities, the industrial cluster is in fact an enormous logistics system. Upriver enterprises and downriver enterprises, which are connected with each other, combine all the process in the logistics system, including packing, transporting, loading and unloading, warehousing and storing of the products as well as the related information management and transferring. The networking structure of the industrial cluster brings about an integrative network of transportation and logistics distribution; special clustering effect reduces the transportation and inventory cost of the products; trust and contract mechanism derived from the human network of the industrial cluster accelerates the transmission of the capital flow and information flow. The example in this point is calculation of charges of the logistics distribution system on car-selling. From the global cars market, the component of cost of the exporting cars can be indicated with (1):
COS t1

C + aA + bB + dD + eE + fF +

gG + S (I)

In which, C is purchasing cost, A is expense on packing, processing and preparing, B is warehousing charges, D is domestic insurance expense, E is expenses on arranging export license and clearance, F is banking and postage expenses, G is internal charges and shipping charges, and S is expected loss. Accordingly, a, b, C, d, e,1, g is the expected profits of each related industry. In automobile industrial cluster, every auto-component enterprise organically combines in together to form an integrative operational process. The cost of assembling cars can be illustrated by (2):
COS t2
=

C + a" (A + B + D + E +

F + G) + S

(2)

Where, a" represents the comprehensive anticipated profit rate in the wake of coordinating very link in the industry cluster. Under the influence of integrated planning, every enterprise in the industrial cluster forms an operational process, which combines transporting, warehousing, packing and processing. Therefore, less than the average of the sum

a" is
of

+b+

d +e+f +

g . So by means of the operation of

the industrial cluster, the cost of assembling the whole-vehicle is lower than that of exporting, which

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means COS t2 < COS t1. Thus, this kind of the clustering operation definitely reduces the operation cost of the enterprise. In an industrial cluster, it is easy to form a logistics chain of comprehensive operational system, which is running through with transporting, warehousing, packing and processing. The supply chain relations, formed by every enterprise in the industrial cluster, is a process that the raw materials are transferred from the supplier to the manufacturer to become the product, and then transferred to the distributor and latter the retailer and finally to the customer. This kind of process makes every enterprise of the industrial cluster synchronically cooperate and coordinate with one another and ensure the consistency of every link on the logistics train. At the same time, every link of this logistics chain is regarded as a contact point that connects the suppliers with the demanders to form a distribution system in the cluster and establish closer links between the production and the demand of each enterprise. Then, the cluster-based logistics distribution system is formed by the coordination.

information, risk and creditability.

A. The Supporting Function of Modern Logistics to the Industrial Cluster

III.

THE FUNCTION OF THE MODERN

LOGISTICS ON THE DEVELOPMENT OF INDUSTRIAL CLUSTER During the development of theory of Regional Economy, there were once some other theories, such as Unbalanced Development Theory, Gradient Shift Theory, Growth Pole Theory, etc. These theories focused on different parts. No matter what the theory is, the growth of the regional economy requires the exchange and communication of the materials and information inside and outside of the cluster. If there were no exchange and flow of the material goods, the polarization and the spread effect would not exist, the Growth pole would not be produced, and the gradient shift would not be achieved, and then the basis operation of the regional economy would be disrupted. During the different stage of economic development, the function of logistics may different but indispensable. The purpose of modern logistics is a kind of economic behavior, which means providing the right goods of right quantity to the right customers in the right way and the cost at the right time and place. This is so-called 7R's-right goods, right quantity, right condition, right place, right time, right customer and right cost. These seven "right" suggest the basic activities of the logistics, and highlight the importance of time and space. As for the specific content, it includes the transportation, storage, packing, processing, and distribution of the goods, as well as logistic consultancy service; when it comes to the surface of its mode, it is a coordinating and integrating process of the flow of workforce, commercial fluxion and information fluxion, in which seven utilities are realized-time, place, diversity, batch quantity,

The modernization and systematization of the logistics in the cluster can solve road congestion, ease the traffic pressure of the industrial cluster and to some extent, eliminate the waste gas and noise pollution and ensure the basic material requisite of the people in the cluster and the full supply of the material. Besides that, it can guarantee the orderly disposal of the waste, maintain the normal operation of the industrial cluster, improve the living environment in the cluster and promote the standard of living condition; in the meantime, it also meliorate the logistics management of the business enterprise, reduce its logistics cost, promote the business program reengineering and enforce its competitiveness. The two-way supply chain platform with high quality and high efficiency can promote the image of industry, improve the environment for investment and attract more investments and taxation. The market economy requires the company to operate on the basis of the ideas of supply chain management and to implement ECR and QR. Accordingly, the entrance of the investors is not limited to the land premium and the preferential policy of the taxation. What they are more concerned is the comprehensive logistics environment for the arrangement of the enterprises, including timely import of the outsourcing materials, the cost performance of the distribution of the products and the fact that whether the talents of logistic technology and management exist in the investment destinations; making the logistics into the core competitiveness of the industrial cluster definitely promote the related industries, spur the development of industrial chain and drive new job creation. From the analysis of the qualifications of the industry, which is necessary for forming industrial clusters, and the nature of the modern logistics, we can see that the construction of the logistics system supports the divisibility of the production process, which is required during the aggregation of the industrial cluster, and the transportability of the final products to a large degree.
B. Forming New Types of Industry and Modifying Industrial Structure of Industrial Clusters

According to the evolutional laws of the development of the industrial structure, the development of regional industry structure is toward rationalization and advancement. The rationalization of industrial structure is measured by the level of development of the tertiary industry. The advancement of the industrial structure is an evolution that the primary industry is promoted to a higher grade toward the secondary and the tertiary industry shifting the labor-intensive industries to the capital-intensive and skill-intensive industries. The essence of the modern logistics industry is the tertiary

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industry, the skill-intensive and high added-value and high-tech industry, which is the product of economic division and highly developed specialization. It is characterized by the high degree of assets structure, technical structure and the structure of labor force, etc. The development of the logistics development can modify the industrial structure and promote the development of regional economy.

C. Contributing to the Formation and Development of the Cluster-Centered Regional Market

The growth pole is a kind of regional economies which is formed by the combination of cluster economy and disperses economy. The system of the growth pole must be based on the excellent logistics connection inside and outside because the logistics system provides the condition of space assembling to its activities, and takes advantage of the surrounding resources to ensure it a good linkage of environment so as to affiliate it with the market closely. The modern logistics promote the formation of cluster-centered regional economy and the rationalization of regional economic structure and transform the industrial clusters to the polarized areas in the spreading areas of the logistics.

IV.

THE GUIDANCE OF SCIENTIFIC VIE W ON

DEVELOPMENT TOWARD DEVELOPMENT OF LOGISTICS IN INDUSTRIAL CLUSTER The unreasonable freight site and the arrangement of distribution center in the industrial cluster leads to the roundabout transportation add car fuel consumption and aggravate the air and noise pollution; more vehicles in road increase the demand for road areas and accelerate the traffic jam in the cluster. Most structures of supply chain is traditional, that is to say, the upriver and downriver principal-agent relation is endogenous and the principal and the agent and the interests of them are inconsistent. Additionally, the incomplete information, the limitations of the contract and the absence of effective incentive mechanism result in the selection of the profit objective and the outcome of the "game". Finally, it brings on frequent logistics operation of the inner-cluster enterprises, the complexion of the logistics direction, large existence of the reverse logistics and roundabout logistics, as well as the long-time of material down, high storage cost and excessive redundancy; the inbound logistics of the supply chain in the industrial cluster finds it hard to balance between the cost and the benefit, at the same time, the outbound distribution logistics is scattered, disordered, and less specialized, as a result, the distribution logistics is with high cost and poor benefit. The scientific view on development brings the important strategic guiding sense for the development of the logistics on the bases of the industrial cluster. The

scientific development of the logistics of the industrial cluster is a huge and complicated systematic project. Such as following: A well-coordinated overall plan: for example, the automobile industrial cluster should set out to establish the appropriate logistics system according to its real condition. To integrate logistics resources, expand specialized logistics service, strengthen the KPI supply chain management, raise the awareness of the quality of logistics service (like to press on with the introduction of the IS09000 certification and Six Sigma Management, etc.), improve the standards of the management of logistics enterprises. To construct logistics parks, logistics centers and distribution centers, and pay attention to the intensively complementary function. To attract the third-party or forth-party enterprise, shippers and the new type of trading corporations, logistics equipments enterprises, ASP providers, logistic consultancy enterprises, industrial associations, logistics training institutions, industrial associations and institutes and the customs, which can increase the local jobs and promote the economic development. To intensify the commercial transaction and distribution, convention and exhibition, value-added services, financial settlement, information junction, logistics research and development and training and custom clearance and inspection, etc. To construct common-information platform, establish common websites on the logistics information, connect E-commerce and E-government affairs with the website, force the implementation of the electronic data interchange, strive for improving management efficiency of the supply chain and make the logistics system operate smoothly. To advocate the reverse logistics, the lean logistics and the environmental logistics, strengthen the management of logistics impact in the industrial cluster, make efforts to reduce the external diseconomy caused by the logistics vehicles and realize the sustainable development of logistics in the industrial cluster.

V.

LOGISTICS STRATEGIES IN SERVICE OF

DEVELOPMENT IN INDUSTRIAL CLUSTERS

A.

Logistics Technology Modernization Strategy

In order to speed up the development of modern logistics, some innovative and high-tech skills should be used, such as EDI, the internet and the technology of modern information network. Besides that, we also should optimize the allocation of resources of the supply chain in the industrial cluster, achieve the resources sharing, strengthen the real-time tracking of every link in the logistics and realize the information-based and intelligence-based logistics management.

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B.

Logistics Network Strategy

The characteristics of speeding up the development of modem logistics (certain products exists in certain villages and towns) require that we not only provide high-quality services with low cost, but also redesign logistics channels, optimize logistics network system, reduce logistics links and improve the quick-action of the logistics service system in order to improve the efficiency and reduce the cost.

C. Logistics Market Globalization Strategy

In order to provide comprehensive logistics service in a more extensive and changing global market and achieve the core development capacity, we need to establish a new idea of international logistics on the basis of supply chain in the global logistics operation. We also need to cooperate with the advanced logistics enterprises abroad, complement each other's advantages, make active use of foreign funds, facilities, technologies, advanced operating concepts and management modes to fully improve the degree of the whole logistics.

and unloading, warehousing and storing of the products as well as the related infonnation management and transferring. The scientific view on development brings the important strategic guiding sense for the development of the logistics on the bases of the industrial cluster. The scientific development of the logistics in the industrial cluster is a huge and complicated systematic project. Therefore, under the condition of the industrial cluster, modern logistics industry must have its own characteristics, including modernized technology, networking service, global market, large-scale integration of industry, joint distribution and lean development, etc.

ACKNOWLEDGMENT The authors are very grateful to the anonymous reviewers for their helpful suggestions.

REFERENCES llJ Albino, V. Dietzenbacher, and E. Kuhtz S, "Economic systems research," 2003, 15, pp. 457-450. r21 Sumila Gulyani. "Elsevier science-pergamon-world development," 2001, 29, pp. ll 57-ll77. 31 Chen Jianfeng, "Abroad and foreign economic r management," 2002, 8, pp. 21-23. r41 Li G ang. "Journal of northeast university of finance and economics," 2004, 2, pp. 13-16. r51 Wang Jin. "Nanjing normal university PHD thesis," 2005, pp. 56-59. l6J Li Jizi. "Huazhong agricultural university PHD thesis," 2006, pp. 36-39. l7J Gao Wenhai, "Modern shopping centers," 2006, I, pp.118-119.

D. Large-Scaled Logistics Strategy

We need to actively guide and strong support the development of industry groups on the comprehensive logistics services and speed up the large-scaled integration of the logistics and the industrialization process.
E.

Joint Logistics Distribution Strategy

Every production companies and trading enterprises in the industrial cluster should adjust separate storing and transporting facilities to increase the efficiency of the distribution facilities furthest.
F.

Lean Logistics Development Strategy

The lean logistic theory is in accordance with the developing trend of modem logistics. It stresses the elimination of extravagance and the persistent improvement. It also transforms the traditional customer-centered concepts of logistics operation into the modem logistics operation concepts, which focus on the pursuit of saving cost and added value of the logistics services through the punctual and automated production. The lean logistics service, which is on the basis of cost and time, is high-quality, low-cost and consistent improving logistics system.

VI.

CONCLUSION

The industrial cluster is actually an enormous logistics system, which combines all the process in the logistics system, including packing, transporting, loading

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