THE IMPACT OF GLOBAL LOGISTICS 3

The global logistics management process Environmental analysis Planning Structure Plan implementation and Controlling the logistics program

Cost-service trade off analysis Order completeness Shipping accuracy and Shipment condition

Guidelines for developing a global logistics strategy Logistics planning should be integrated into the firm’s strategic planning process Logistics departments must be guided by a clear vision and must measure output regularly Import-export management should try to ensure integrated management of all elements of the logistics supply chain from origin to destination Opportunities to integrate domestic and international operations should be pursued to leverage total company volumes with globally oriented carriers

The global logistics environment Controllable elements Uncontrollable elements

Uncontrollable elements Political and legal systems of foreign markets Economic conditions Degree of competition in each market Level of distribution technology available or accessible Geographic structure of the foreign market Social and cultural norms of various target markets

Controllable elements Customer service International Inventory issues International Packaging issues Transportation Warehousing and storage Other activities like global sourcing of materials

Issues related to global logistics International customer service issues International inventory issues International packaging issues International transportation issues International warehousing and storage issues

1. International customer service issues Consumes longer time Requires different types of transport carriers, Multiple transfers and handling Crossing of many international borders Time in transit vary from shipment to shipment

2. International inventory issues International business have 50% or more of their assets in inventory Inventory levels differ depending on the length of the transit Includes unique factors such as currency exchange rates, greater distances and custom duties In case of high inflation, large inventories provide inflation hedge

3. International packaging issues Handling of products Climate Potential for pilferage Communication and language differences Freight rates Customs duties Customer’s requirements

Containers - advantages Reduced cost due to loss or damage Increased use of automated or mechanized material handling equipments Lower warehousing and transportation costs Available in variety of sizes Serve as temporary storage facilities at ports and terminals

Containers- disadvantages Delay caused in in-bound and out-bound cargo Large capital expenditures are required to initiate a container

4. International transportation issues Infrastructure Availability of modes Choice of modes among the given alternatives

a. Ocean or Sea transport Liner service-regular scheduled passage on established routes Bulk service-contractual services for individual voyages Tramp service- irregular routes and scheduled only on demand Based on the type of cargo carried Conventional cargo vessels-oversized and unusual cargo Container ships-standardised containers Roll-on roll-off vessels-ocean going ferries

Shipping documents used in ocean shipping The standard shipping note(SSN)- what is to happen to the goods on arrival at the foreign port The bill of lading-shipping company’s receipt for the goods loaded

b. Air transport or Air freight- advantages Useful for transportation of perishable products, high value, high density products Less stock holding in loading terminals Speedier settlement of invoices Eliminates excess need of intermodal transportation Facilitates JIT Convenience and ease of administration

c. Rail and road transport ‘International consignment note’

Choice of transport method Transit time Predictability Cost of transportation Non economic factors- govt pressure-UNCTAD- United Nations Conference for Trade and Development

5. International warehousing and storage issues Storage facilities- bonded warehouse Free ports- wider area at sea port and free zones- near air ports

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