The 8th Biennial IB Institute
June 2009
 The Eli Broad Graduate School of Management,
Michigan State University, 2008
•International Supply Chain
Management
Anthony Ross, PhD
Associate Prof. SCM
Donald Gordon International Scholar,
University of Capetown, South Africa
 The Eli Broad Graduate School of Management,
Michigan State University, 2008
A Map of the New World
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
The World Economy Today… Is Flat
- ‹#› -
Michigan State University, 2008
© Anthony Ross
Aging Populations
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
Clusters of Knowledge
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
Low-Cost Labor Sources (Pre-2008)
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
International Supply Chain
Management
•Historical Development of International Logistics
•Definition of Logistics and Supply Chain Management
•Definition of International Logistics
•Definition of International Supply Chain Management
•Elements of International Logistics
•The Economic Importance of Logistics
•The Economic Importance of International Logistics
 The Eli Broad Graduate School of Management,
Michigan State University, 2008
International Supply Chain
Management
•Historical Development of International Logistics
•Definition of Logistics and Supply Chain Management
•Definition of International Logistics
•Definition of International Supply Chain Management
•Definition of Elements of International Logistics
•The Economic Importance of Logistics
•The Economic Importance of International Logistics
 The Eli Broad Graduate School of Management,
Michigan State University, 2008
Historical Development of International Logistics
Framework
• The term “Logistics” is based on the physical movement of
goods.
• The modern interpretation of the term “logistics” has its origins in
the military.
• Business logistics include all the activities related to the physical
movement of goods (upstream and downstream) and related
paperwork.
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
Historical Development of International Logistics
The Early, "Slow" Days
• Very early international logisticians were traders who bought and
sold goods internationally (Silk Road, for example).
• As trade expanded, international logistics grew.
• In the early days, international logisticians were concerned about
making sure that the goods arrived in good condition and at the
lowest possible cost.
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
Historical Development of International Logistics
The Move Toward Speed
• The advent of containers in ocean trades (mostly 1960s and
1970s) lowered transit times substantially.
• International air shipments became an increasing percentage of
all shipments in the 1980s:
– the number of destinations served by airlines grew.
– air shipments became increasingly cost competitive with
surface alternatives.
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
Historical Development of International Logistics
The Emphasis on Customer Satisfaction
• In the 1980s, with very high interest rates, companies shifted
their emphasis to inventory reductions.
• International logisticians became ever more focused on transit
times in order to minimize inventory costs, raising the
expectations of customers.
• Fast delivery times facilitated the adoption of different inventory
management techniques:
– Just-In-Time
– MRP
– MRP II
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
Historical Development of International Logistics
The Emphasis on Customer Satisfaction
• Just-In-Time
A management philosophy that consists of planning the manufacturing
and shipment of goods in such a way that they are produced and
delivered just before they are needed in the next step of the assembly
process. In the US, JIT is often accomplished with the adoption of MRP
and MRP II systems.
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
Historical Development of International Logistics
The Emphasis on Customer Satisfaction
• Materials Requirement Planning (MRP)
A computer-based management tool that allows a manufacturing firm to
determine what to produce, and in which quantity, in function of what it
sells to its customers.
• Manufacturing Resources Planning (MRP II)
A computer-based management tool that uses MRP at its core, and that
includes other functions in the firm, such as finance and marketing.
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
International Supply Chain
Management
•Historical Development of International Logistics
•Definition of Logistics and Supply Chain Management
•Definition of International Logistics
•Definition of International Supply Chain Management
•Elements of International Logistics
•The Economic Importance of Logistics
•The Economic Importance of International Logistics
 The Eli Broad Graduate School of Management,
Michigan State University, 2008
Definition of Logistics and Supply Chain Management
Logistics
“Logistics is that part of the supply chain process that plans,
implements, and controls the efficient, effective forward and
reverse flow and storage of goods, services, and related
information between the point of origin and the point of
consumption in order to meet customers' requirements.”
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
Definition of Logistics and Supply Chain Management
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
Definition of Logistics and Supply Chain Management
Supply Chain Management
• Encompasses the planning and management of all activities
involved in sourcing and procurement, conversion, and all
Logistics Management activities.
• Importantly, it also includes coordination and collaboration
with channel partners, which can be suppliers, intermediaries,
third-party service providers, and customers.
• In essence, Supply Chain Management integrates supply and
demand management within and across companies.
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
Definition of Logistics and Supply Chain Management
Three views on the relationship between logistics and SCM
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
Definition of Logistics and Supply Chain Management
Supply Chain Management
• Supply Chain Management includes more activities than
Logistics Management: the “Inclusionist” viewpoint prevails.
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
International Supply Chain
Management
•Historical Development of International Logistics
•Definition of Logistics and Supply Chain Management
•Definition of International Logistics
•Definition of International Supply Chain Management
•Elements of International Logistics
•The Economic Importance of Logistics
•The Economic Importance of International Logistics
 The Eli Broad Graduate School of Management,
Michigan State University, 2008
Definition of International Logistics
International Logistics
• The process of planning, implementing, and controlling the flow
and storage of goods, services, and related information from a
point of origin to a point of consumption located in a different
country.
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
International Supply Chain
Management
•Historical Development of International Logistics
•Definition of Logistics and Supply Chain Management
•Definition of International Logistics
•Definition of International Supply Chain Management
•Elements of International Logistics
•The Economic Importance of Logistics
•The Economic Importance of International Logistics
 The Eli Broad Graduate School of Management,
Michigan State University, 2008
Definition of International Supply Chain Management
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
Definition of International Supply Chain Management
International Supply Chain Management
• Supply Chain Management is inherently global, with firms buying
from foreign suppliers or selling to foreign customers, but
domestic logistics activities and international logistics activities
are distinct and managed differently.
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
International Supply Chain
Management
•Historical Development of International Logistics
•Definition of Logistics and Supply Chain Management
•Definition of International Logistics
•Definition of International Supply Chain Management
•Elements of International Logistics
•The Economic Importance of Logistics
•The Economic Importance of International Logistics
 The Eli Broad Graduate School of Management,
Michigan State University, 2008
Elements of International Logistics
International Logistics’ Characteristics:
• The environment in which international logisticians operate is
quite different from the domestic environment.
• The decisions regarding international transportation are
eminently more complicated.
• The number of intermediaries involved is greater .
• The inherent risks and hazards of international transportation are
much more significant.
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
Elements of International Logistics
International Logistics’ Characteristics:
•
•
•
•
•
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International insurance is much more complex.
International means of payment are more involved.
Terms of trade are much more complicated.
The crossing of borders represents specific challenges.
Inventory is managed differently.
 The Eli Broad Graduate School of Management,
Michigan State University, 2008
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
International Supply Chain
Management
•Historical Development of International Logistics
•Definition of Logistics and Supply Chain Management
•Definition of International Logistics
•Definition of International Supply Chain Management
•Elements of International Logistics
•The Economic Importance of Logistics
•The Economic Importance of International Logistics
 The Eli Broad Graduate School of Management,
Michigan State University, 2008
The Economic Importance of Logistics
Logistics as a Percentage of U.S. Gross Domestic Product
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
International Supply Chain
Management
•Historical Development of International Logistics
•Definition of Logistics and Supply Chain Management
•Definition of International Logistics
•Definition of International Supply Chain Management
•Elements of International Logistics
•The Economic Importance of Logistics
•The Economic Importance of International Logistics
 The Eli Broad Graduate School of Management,
Michigan State University, 2008
The Economic Importance of International Logistics
• The costs of International Logistics represent about 15% of the
total volume of the international trade; that is about US$ 1.5
trillion world-wide.
• In addition, International logistics generate approximately US
$500 billion in additional government revenues (Customs duty).
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
Our New Realities…
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
The New Supply Chain Environment…
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 The Eli Broad Graduate School of Management,
Michigan State University, 2008
THANK YOU!!!
 The Eli Broad Graduate School of Management,
Michigan State University, 2008