Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc CHAPTER 8: Logistics

Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. Logistics Defined Logistics  The management of the flow of goods and services both into and out of an organization, from the point of origin to the point of consumption.  It consists of transportation, inventory management, warehousing and storage, and packaging.

Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. Supply Chain Supply chain The sum total of all activities involved in moving raw materials, processed goods, and finished products into an organization, and moving the semi-processed or finished goods out of the organization toward the end-consumer.

Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. Supply Chain The main links in the supply chain are:  Inventory management  Storage  Cash flow  Supplier co-ordination  Information processing  Physical distribution

Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. Supply Chain Inventory Management  For retailers, this requires a system that records sales  Point-of-sale terminal (tracks retail sales by recording the SKU). Storage  Four possible locations for the storage of goods: Place where the goods are made (manufacturers) Warehouse Distribution centre Place that receives the goods (retailers)

Chapter 8: LOGISTICS Supply Chain Cash-flow management Involves negotiating payment terms, setting up the method of payment, and arranging exchange of funds across the supply chain. Letter of credit A financial guarantee, issued by a buyer’s bank, that they have sufficient collateral on deposit to pay for a shipment.

Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. Supply Chain Supplier management The practice of finding reliable sources for the products and services that a business needs (often referred to as sourcing or procurement). Types of sourcing:  Outsourcing  Insourcing  Offshoring  Inshoring

Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. Supply Chain Information management  IT is necessary for effective supply chain management.  Each member of the supply chain requires instant access information, and all members need to be networked to the same information source.

Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. Supply Chain Physical Distribution The movement of the finished product or service to the customer which could either be inbound or outbound.

Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. Methods of Physical Distribution in the Supply Chain The selection of a carrier depends on several different factors:  What is being shipped  Weight of the shipment  Speed of delivery required  Cost of the carrier  Destination of the shipment

Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. Methods of Physical Distribution in the Supply Chain 1.Motorized carriers 2.Rail 3.Ocean freight 4.Air freight 5.Containerization