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THE IMPACT OF GLOBAL LOGISTICS

The global logistics management process

1. Environmental analysis2. Planning 3. Structure4. Plan implementation and5. Controlling the logistics program

Cost-service trade off analysis

i. Order completenessii. Shipping accuracy andiii. 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

1. Controllable elements2. Uncontrollable elements

Uncontrollable elements

i. Political and legal systems of foreign markets

ii. Economic conditionsiii. Degree of competition in each marketiv. Level of distribution technology available or

accessiblev. Geographic structure of the foreign marketvi. Social and cultural norms of various target

markets

Controllable elements

i. Customer serviceii. International Inventory issuesiii. International Packaging issuesiv. Transportationv. Warehousing and storagevi. Other activities like global sourcing of

materials

Issues related to global logistics

1. International customer service issues2. International inventory issues3. International packaging issues4. International transportation issues5. International warehousing and storage

issues

1. International customer service issues

Consumes longer timeRequires different types of transport carriers,Multiple transfers and handlingCrossing of many international bordersTime 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 productsClimatePotential for pilferageCommunication and language differencesFreight ratesCustoms dutiesCustomer’s requirements

Containers - advantages

Reduced cost due to loss or damageIncreased use of automated or mechanized

material handling equipmentsLower warehousing and transportation costsAvailable in variety of sizesServe 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

1. Infrastructure2. Availability of modes 3. 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 carried1. Conventional cargo vessels-oversized and

unusual cargo2. Container ships-standardised containers3. 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 terminalsSpeedier settlement of invoices Eliminates excess need of intermodal

transportationFacilitates JITConvenience and ease of administration

c. Rail and road transport

‘International consignment note’

Choice of transport method

1. Transit time2. Predictability3. Cost of transportation4. Non economic factors- govt pressure-

UNCTAD- United Nations Conference for Trade and Development

5. International warehousing and storage issues

Storage facilities- bonded warehouseFree ports- wider area at sea port and free zones- near air ports

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