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New technology is influencing the way logistics companies are doing business - and cutting their costs. For example, it costs FedEx $ 2.40 to track a package for a ( n ) 1,( )who calls by phone , but only four cents for one who visits its website , says Rob Carter , the firm ' s technology boss . FedEx now gets about three million 2,( )tracking requests a day , compared with only a few tens of thousands by phone .
But the most dramatic gains happen when companies use technology to understand better what they do in order to change how they do it, says Navi Radjou, an analyst at Forrester, a technology research firm. The main issue is " grandma syndrome " reluctance to get rid of tried and 3, ()processes . The brave company fighting this syndrome is probably Dell, the computer maker. It constantly improves the way that it links customers and 4,() through its website, and it regularly revisits its processes . Dell now sends electronic orders to suppliers every few hours and can build a computer in less than 24. One of its managers in Austin, Texas, was recently heard estimating gains of 3 0 % this year, and again next year.
A member of a team from the car maker Ford recently visiting Dell doubted that his employer could ever do anything so drastic. But old - established companies can make similar 5,(). P & G , the consumer 6,() giant , used to think that the most efficient way to get detergent from its 7,() to shops was to load trucks as full as possible . Then , a few years ago , it invested in software , now owned by a company called Nutech Solutions , to simulate what happened to its orders as they moved through the supply 8,(). The unexpected conclusion was that it makes more sense to send trucks less full and to load some toothpaste and other stuff alongside the detergent. As a result, P & G ' s inventory is down by some 30%, and its warehouse workers spend less time idle.
The most obvious, and often the most dangerous, form of competition is price competition. Many competitors make effective 1,()of price competition. The stories of Ford, Apple Computer, Southwest Airlines, and Walmart show 2,()powerful this weapon can be. Note in all these examples demand is price - elastic.

Price competition is dangerous, however, if demand is price - inelastic. Cutting prices in a price - inelastic situation reduces total revenue. Thus, a firm 3,()cuts its price can gain only by taking business away from its competitors and increasing its 4,()of the market . But if the competitors cut prices 5,( )there may be no increase in any firm's market share.

Price competition is most effective and advisable if the firm doing the price cutting is also the low - cost producer. 6,( )the competitors won ' t be able to match the price cuts and still stay in the business, A firm that wants to be the low - cost producer should be aware of two important economic concepts that govern costs of production. One is the concept of economies of scale. Often a firm can lower its average costs of production 7,()increasing the size of production 8,( )and its overall volume of production. It can offer volume discounts to its customers.

9,()cost - related concept is the experience curve . Even without increasing the scale of operation, a firm can nevertheless lower costs as a result of increasing efficiencies gained from experience making the product. To 10,()advantage of efficiencies, management has to deliberately try to learn how to cut costs as the company gains experience in producing the product.

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