1. Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

2. Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. What We Are Striving To Accomplish 1.To understand the escalating importance of global logistics and supply chain management as crucial tools for competitiveness 2.To learn about physical distribution and understand the importance of transportation mode choice 3.To explore ways in which inventory strategies provide firms with flexibility, and a means of adding value for customers 4.To understand issues relating to the reverse flow of goods and logistics outsourcing 5.To learn about issues relating to storage, including the benefits offered by special trade zones

3. Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Supply Chain A complex global network created by a firm to connect its vendors, suppliers, other third parties, and its customers in order to achieve greater cost efficiencies and to enhance competitiveness. Higher earnings and greater corporate efficiencies can be achieved through effective international logistics and supply-chain management.

4. Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Global Logistics Global logistics: the design and management of a system that controls the flow of materials into, through, and out of the international corporation.

5. Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. International Firm Material Movement and Business Logistics Material management - the timely movement of raw materials, parts and supplies into and through the firm Physical distribution - the movement of finished goods from suppliers to customers Business logistic key concepts: Systems concept - the notion that materials-flow activities are so complex that they can be considered only in the context of their interaction. Total-cost concept - identifies and links expenditures in order to evaluate and optimize logistical activities. Trade-off concept - recognizes interactions within the decision system.

6. Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Supply-Chain Management The integration of the three business logistic concepts have resulted in supply-chain management. Supply-chain management connects the value- adding activities of a company’s supply side with its demand side. Efficient supply-chain design can: increase customer satisfaction save money reduce delivery lead times eliminate waste

7. Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Global Transportation Infrastructur e Mode availability Mode choice Global transportation issue Vital to a firm’s competitive position is its logistic platform - determined by a location’s ease and convenience of market reach under favorable cost circumstances. Transport Web

8. Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Modes of Transportation Land bridges and sea bridges may need to be used to accomplish intermodal movements of freight. Water transportation is a key mode for international freight movement - utilizing liner service, bulk service, and tramp or charter service. Airfreight is a common mode of transportation due to the availability of air transportation into and out of most countries.

9. Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Transportation Mode Selection Needs of the firm and its customer will influence the international logistics manager on the mode of transportation selected. Each mode of transportation will be evaluated based on four dimensions: transit time predictability cost noneconomic factors

10. Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Selected Trade Terms Ex-works (EXW)- point of origin, seller’s cost responsibility ends when material is made available to buyer at agree upon shipping point. Free carrier (FCA)- new Incoterm replacing a variety of FOB terms, designated inland shipping point only. Free alongside ship (FAS)- exporter quotes delivered price for goods, seller handles the cost of unloading and wharfage only. Free on board (FOB)- applies to vessels only, seller quotes price for delivery of goods including shipping and delivery. Cost and freight (CFR)- seller’s quote includes cost of transportation to named port. Cost, insurance, and freight (CIF)- non-waterway transport only, seller’s quote includes transportation, insurance and miscellaneous charges to point of debarkation from the vessel. Delivery duty paid (DDP)- seller arranges and pays for delivery of goods to buyer’s premises. Delivery duty unpaid (DDU)- buyer pays for destination customs duty and taxes.

11. Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Global Inventory Issues High levels of inventory and the cost to carry it, sometimes up to 15 percent or more of the value, can tie up major portions of corporate funds. Inventory levels can be decided based on: order cycle time - total time the passes between the placement of the order and receipt of the merchandise. desired customer service levels - set by market expectations of the firm (past performance, product desirability, customer sophistication, competitive status of firm). use of inventories as a strategic tool - balance the cost of maintaining high levels of inventories against the benefits accrued hedging against inflation and deflation.

12. Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Global Packaging Issues Shipper packaging decisions include: safety, maintainability, and presentation of goods stresses encountered during shipment climate weight of packaging customer instructions dual packaging (shipment/display) Stresses in Intermodal Movement

13. Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Global Storage Issues Service Cost to Supply Chain Tradeoffs in determining international warehousing requirements - keeping a delicate balance Product to store internationally? Use foreign trade zone, export processing zones or special economic zones? Product to store internationally - low lead time? Packaging and product viability?