International logistics


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International logistics

  1. 1. International Logistics 1
  2. 2. International Logistics International logistics is the design and management of a system that controls the forward and reverse flow of materials, services, and information into, through, and out of the international corporation. 2
  3. 3. International Logistics (cont.)Through the implementation of internationallogistics, the firm can implement cost-savingprograms such as just-in-time (JIT), electronicdata interchange (EDI) etc.The two phases of the movement of materialsinclude: Timely movement of materials, parts, and supplies. Timely movement of the firm’s physical product to its customers. 3
  4. 4. Transportation InfrastructureA firm’s logistics platform is determined by alocation’s ease and convenience of marketreach under favorable cost circumstances.The public sector’s investment priorities,safety regulations, tax incentives, andtransport policies can have major effects onthe international logistics decisions of firms.The logistics manager must learn aboutexisting and planned infrastructures abroadand at home and factor them into the firm’sstrategy. 4
  5. 5. Vessels Used in Ocean Shipping Liner ServiceBulk Service Tramp Service 5
  6. 6. Liner Service – is a service that operates within aschedule and has a fixed port rotation withpublished dates of calls at the advertised portsA Tramp Service or tramper on the other hand isa ship that has no fixed routing or itinerary orschedule and is available at short notice (orfixture) to load any cargo from any port to anyport.. Bulk Service: It is engaged in the transfer of dry bulk commodities from rail and truck to dock. 6
  7. 7. AirfreightAirfreight is available to and from mostcountries, including the developing world.Forty percent of the world’s manufactured travelby air.Items that are high-value or high in size tend totravel by air. 7
  8. 8. Considerations for Selecting a Mode of TransportTransit Time Predictability Cost Non-economic Factors 8
  9. 9. Export DocumentationA bill of lading is a contract between the exporterand the carrier indicating that the carrier hasaccepted responsibility for the goods and will providetransportation in return for payment.A commercial invoice is a bill for the goods statingbasic information about the transaction, including adescription of the merchandise, total cost of thegoods sold, addresses of the shipper and seller, anddelivery and payment terms.A freight forwarder specializes in handling exportdocumentation. 9
  10. 10. International Inventory IssuesInventories tie up a major portion of corporatefunds, therefore proper inventory policiesshould be a major concern to the internationallogistician.Just-in-time inventory policies minimize thevolume of inventory by making it availableonly when needed.The purpose of establishing inventory systemsare: to maintain product movement in the delivery pipeline to have a cushion to absorb demand fluctuations 10
  11. 11. International Packaging IssuesPackaging is instrumental in getting the merchandiseto the destination in a safe, presentable condition.Because of the added stress of international shipping,packaging that is adequate for domestic shippingmay be inadequate for international shipping.Packaging considerations that should be taken intoaccount are environmental conditions and weight.One solution to the packaging problem has been thedevelopment of inter-modal containers.Cost attention must be paid to internationalpackaging. 11
  12. 12. Storage FacilitiesA stationary period is involved when merchandisebecomes inventory stored in warehouses.The location decision addresses how manydistribution centers to have and where to locatethem.Storage facilities abroad can differ in availability andquality.The logistician should analyze international productsales and then rank order products according towarehousing needs. 12
  13. 13. Special Trade ZonesForeign trade zones are areaswhere foreign goods may be held orprocessed and then re-exportedwithout incurring duties.Trade zones can be useful astransshipment points to reducelogistics cost and redesign marketingapproaches.Governments and firms benefit fromforeign trade zones. 13
  14. 14. Export Processing Zones and Economic ZonesIn export processing zones, special rules applythat are different in other regions of the country.These zones usually provide tax-free and duty-freetreatment for production facilities whose output isdestined abroad.Through the creation of special economic zones,the Chinese government has attracted many foreigninvestors bringing in millions of dollars. 14
  15. 15. Centralized Logistics ManagementIn international logistics, the existence of aheadquarters staff that retains decision-making power over logistics is important.To avoid internal problems, both headquartersstaff and local management should report toone person.This individual can contribute an objectiveview when inevitable conflicts arise ininternational logistics coordination. 15
  16. 16. Decentralized Logistics ManagementWhen a firm serves many diverse internationalmarkets, total centralization might leave thefirm unresponsive to local adaptation needs.If each subsidiary is made a profit center initself, each one carries the full responsibilityfor its performance.Once products are within a specific market,increased input from local logistics operationsshould be expected and encouraged. 16
  17. 17. Outsourcing Logistics ServicesThe systematic outsourcing oflogistics capabilities is a third option.By collaborating with transportationfirms, private warehouses, or otherspecialists, corporate resources canbe concentrated on the firm’s coreproduct. 17
  18. 18. The Supply Chain and the InternetBecause of the internet, firms are able toconduct many more global comparisons amongsuppliers and select from a wider variety ofchoices.When customers have the ability to access acompany through the internet, the companymust be prepared for 24-hour order-taking andcustomer service.For all countries, but particularly in developingnations, the issue of universal access to theinternet is crucial. 18
  19. 19. Logistics and SecurityLogistics systems and modern transportationsystems are often the targets of attacks.The need to institute new safeguards forinternational shipments will affect the abilityof firms to efficiently plan their internationalshipments. 19
  20. 20. Logistics and the Environment Since environmental laws and regulations differ across the globe, the firm’s efforts need to be responsive to a wide variety of requirements. Reverse distribution systems are instrumental in ensuring that the firm not only delivers the product to the market, but also can retrieve it from the market for subsequent use, recycling, or disposal. Companies need to learn how to simultaneously achieve environmental and economic goals. 20