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"Let's create new models of cooperation between the manufacturing and logistics industries"
Yeo Sung-koo, CEO of Pantos Logistics
With analysts predicting that the recent fiscal deficit crisis in Europe, which followed the financial crisis that originated in the U.S., will result in the contraction of trade and a slump in the global economy, many countries are showing keener interest in economic growth than ever before. With regard to economic growth, knowledge capital (which encompasses human resources), R&D capacity, and managerial techniques have been gaining in importance since the 1980s.
In Korea, knowledge capital is being recognized as a very important factor that determines the level of competitiveness of individuals, companies and the nation as a whole. It is attracting ever more attention because it has the potential to pull the Korean economy, which has lost growth momentum due to a contraction in corporate investment, the ageing of the population, and high youth unemployment. Against this backdrop, far-reaching discussions are under way on the promotion of technology development, deregulation, and educational reform as means of cultivating knowledge capital. However, there is another factor of knowledge capital that should not be overlooked, namely, non-tangible industrial capital such as 'models of cooperation between the manufacturing and logistics industries.'
Thus far, relations between the manufacturing and logistics industries were merely regarded as a simple agency relationship in which one side entrusts freight while the other side handles it. This has made it difficult for the two industries to build up constructive cooperation, as well as posing an obstacle to manufacturers' efforts to secure cost competitiveness and to logistics companies' drive to advance. However, we must realize that establishing a model of cooperation between the manufacturing and logistics industries on the basis of mutual trust is a kind of knowledge, for which labor and capital are fused in a novel way, and that it can serve as a catalyst to boosting national competitiveness.
If we change the fixed perception, we can find many ways to develop cooperation between the manufacturing and logistics sectors. For example, a leading RFID manufacturer could form an export/import partnership with a logistics company armed with extensive overseas operational networks. If this were to happen, the two companies would be able to share strategic business information, jointly use their overseas networks, and assist each other's marketing activities, thereby cutting diverse managerial costs and assuring co-development. The logistics company could purchase RFIDs from the partner company, while the two sides could jointly develop diverse RFID application models related to logistics services. They could also cooperate to carry out logistics operation for RFID business, which in turn would cut RFID production costs and help expand the market base, while promoting the excellence of the logistics company concerned. Furthermore, if quality RFIDs were installed on cargoes, it would increase the quality of logistics services - including the visibility of real-time supply chains, enhance efficiency in inventory management, and help the partner RFID company to expand its sales networks.
Thus, as competition heats up between companies and countries in the global market, industries and the government must make concerted efforts to develop models of cooperation between the manufacturing and logistics sectors, and to help discover a new scope of growth for the national economy and industries. What is important here is experience of success, and its spread through learning effects. Both the manufacturing and logistics industries must change their perception on the basis of mutual trust. The government also needs to lead the industries to develop a consensus for their cooperation, and form a physical and institutional environment in which the two sides can accumulate and spread experience of success.