Modelling and evaluation of investment strategies in human resources for logistics improvement

Logistics cost is an important factor that affects the competitiveness of nations as well as firms. High logistics costs and low levels of service are a barrier to trade and foreign direct investment and thus to economic growth. Shortening of production cycles, amplification of competition globally, sharing and outsourcing of production processes, shorter delivery times and plethora of choices for customers have made logistics a potential source of competitive advantage. The success of logistics depends on the quality, qualification, skills and commitment of the employees and to excel in future, firms need to attract, retain and develop individuals with the right skills and, capabilities. The paper evaluates various investment strategies for investment in human resources by an Indian-based logistics firm using system dynamics modelling to study the effect of improvement in human resources on the logistics performance index.