Chapter 16
Global
Logistics and
Materials
Management
A Definition of International Logistics
• International logistics -
• The systems approach helps the firm explicitly
recognize the linkages among the traditionally
separate logistics components within and outside of
the corporation.
•
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A Definition of International Logistics
• The systems approach also ensures
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JIT EDI ESI ECR -
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A Definition of International Logistics
• Phases of international logistics
– Materials management – Physical distribution -
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A Definition of International Logistics
• The growth of logistics as a field has brought to the
forefront three major concepts:
– Systems concept -
– Total-cost concept -
– Trade-off concept -
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Supply Chain Management
• Supply chain management
– An integration of the three system concepts.
–
– Includes coordination and collaboration with channel
partners.
–
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The Impact of International Logistics
• Logistics costs comprise between 10 and 30 percent of the total
landed cost of an international order.
•
• Factors necessary for the use of logistics as a competitive tool:
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The Impact of International Logistics
• New dimensions of international logistics
– Basic differences between domestic and international
logistics:
•
•
•
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International Transportation Issues
• International transportation is of major concern to the
international firm because transportation determines
how and when goods will be received.
•
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International Transportation Issues
• Transportation infrastructure
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International Transportation Issues
• Availability of modes - Ocean shipping
– Three types of vessels operate in ocean shipping:
– Container ships are used for carrying standardized
containers that facilitate the loading and unloading of
cargo and intermodal transfers.
–
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International Transportation Issues
• Availability of modes - Air shipping
– High-value items are mostly shipped by air, particularly
if they have a high density (high weight-to-volume
ratio).
–
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International Transportation Issues
• Choice of modes is influenced by:
– Transit time
•
•
•
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International Transportation Issues
• Choice of modes is influenced by:
– Predictability
•
•
•
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International Transportation Issues
• Choice of modes is influenced by:
– Cost
•
– Noneconomic factors
•
•
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Exhibit 16.5 - Evaluating Transportation
Choices
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The International Shipment
• International shipments involve multiple types of
carriers.
•
• Trading regions such as the European Union have
greatly simplified their required documentation for
shipments.
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Exhibit 16.6 - Documentation for an
International Shipment
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The International Shipment
• Intermediaries which provide assistance with
international shipment
– International freight forwarder -
– Customs broker -
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International Inventory Issues
• Inventory carrying costs can be up to 25% of the
value of an inventory.
•
• Factors which determine the level of inventory to be
maintained:
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International Inventory Issues
• Order cycle time
–
– Two dimensions of major importance are the length of
the total order cycle and the consistency of the order
cycle.
– Altering cycle times
•
•
•
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International Inventory Issues
• Customer service levels
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– A management-determined constraint within the
logistics system.
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• Inventories are used as strategic tools for dealing
with currency valuation changes or hedging against
inflation.
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International Storage Issues
• Factors determining the location of storage facilities
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• To optimize the logistics system, products should be
ranked according to warehousing needs.
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–
–
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International Storage Issues
• Outsourcing -
• Reasons for outsourcing
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International Storage Issues
• Foreign trade zones
– Special areas used for warehousing, packaging,
inspection, labeling, exhibition, assembly, fabrication,
or transshipment of imports without burdening the firm
with duties.
–
– Benefits both the government of the respective country
as well as the individual firms.
–
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International Packaging Issues
• Packaging
–
– Responsibility for appropriate packaging rests with the
shipper of goods.
–
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International Packaging Issues
• Packaging
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– Package weight should be based on delivery mode.
–
– One solution to the packaging problem in international
logistics has been the development of intermodal
containers.
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Exhibit 16.7 - Stresses in Intermodal
Movement
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Management of International Logistics
• Centralized logistics management -
• Decentralized logistics management
–
– Leads to greater local management satisfaction and
better adaptation to local market condition.
–
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Management of International Logistics
• Contract logistics
– Outsourcing logistical management by employing
outside logistical expertise.
–
– Allows marketers to take advantage of an existing
network, complete with resources and experience.
–
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The Supply Chain and the Internet
• Global net e-commerce revenue is expected to
surpass the $1 trillion dollar mark by 2012.
•
• Companies using e-commerce need to be prepared
for 24-hour order-taking and customer service.
•
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Logistics and Security
• Logistics systems are vulnerable to terrorist attacks
and piracy; to prevent them, governments impose
security measures (screening of shipments and
shippers).
• Security measures:
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–
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Logistics and Security
• Strategies employed for reducing security costs:
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– Eliminate the use of vulnerable international
transportation.
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Recycling and Reverse Logistics
• The firm’s ability to develop reverse logistics is a key
determinant for market acceptance and profitability.
• Reverse distribution
–
– Is a complex customer service, inventory control,
information management, cost accounting, and
disposal process.
–
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