Chapter 16 Global Logistics and Materials Management.

Chapter 16

Global Logistics and

Materials Management

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

A Definition of International Logistics

• International logistics -

• The systems approach helps the firm explicitly recognize the linkages among the traditionally separate logistics components within and outside of the corporation.

•



• The systems approach also ensures– JIT -

– EDI -

– ESI -

– ECR -



• Phases of international logistics– Materials management -

– Physical distribution -



• The growth of logistics as a field has brought to the forefront three major concepts:– Systems concept -

– Total-cost concept -

– Trade-off concept -


Supply Chain Management

• Supply chain management– An integration of the three system concepts.

–

– Includes coordination and collaboration with channel partners.

–


The Impact of International Logistics

• Logistics costs comprise between 10 and 30 percent of the total landed cost of an international order.

•

• Factors necessary for the use of logistics as a competitive tool:– –

–


The Impact of International Logistics

• New dimensions of international logistics– Basic differences between domestic and international

logistics:• • •


International Transportation Issues

• International transportation is of major concern to the international firm because transportation determines how and when goods will be received.

•



• Transportation infrastructure –

–

–



• Availability of modes - Ocean shipping– Three types of vessels operate in ocean shipping:

– Container ships are used for carrying standardized containers that facilitate the loading and unloading of cargo and intermodal transfers.

–



• Availability of modes - Air shipping– High-value items are mostly shipped by air, particularly

if they have a high density (high weight-to-volume ratio).

–



• Choice of modes is influenced by:– Transit time

•

• •



• Choice of modes is influenced by:– Predictability

•

•

•



• Choice of modes is influenced by:– Cost

•

– Noneconomic factors•

•


Exhibit 16.5 - Evaluating Transportation Choices


The International Shipment

• International shipments involve multiple types of carriers.

•

• Trading regions such as the European Union have greatly simplified their required documentation for shipments.


Exhibit 16.6 - Documentation for an International Shipment


The International Shipment

• Intermediaries which provide assistance with international shipment– International freight forwarder -

– Customs broker -


International Inventory Issues

• Inventory carrying costs can be up to 25% of the value of an inventory.

•

• Factors which determine the level of inventory to be maintained:–

–

–



• Order cycle time–

– Two dimensions of major importance are the length of the total order cycle and the consistency of the order cycle.

– Altering cycle times• • •



• Customer service levels–

– A management-determined constraint within the logistics system.

–

• Inventories are used as strategic tools for dealing with currency valuation changes or hedging against inflation.


International Storage Issues

• Factors determining the location of storage facilities–

–

–

• To optimize the logistics system, products should be ranked according to warehousing needs. –

–

–



• Outsourcing -

• Reasons for outsourcing–

–

–

–



• Foreign trade zones– Special areas used for warehousing, packaging,

inspection, labeling, exhibition, assembly, fabrication, or transshipment of imports without burdening the firm with duties.

–

– Benefits both the government of the respective country as well as the individual firms.

–


International Packaging Issues

• Packaging–

– Responsibility for appropriate packaging rests with the shipper of goods.

–


International Packaging Issues

• Packaging–

– Package weight should be based on delivery mode.

–

– One solution to the packaging problem in international logistics has been the development of intermodal containers.


Exhibit 16.7 - Stresses in Intermodal Movement


Management of International Logistics

• Centralized logistics management -

• Decentralized logistics management–

– Leads to greater local management satisfaction and better adaptation to local market condition.

–


Management of International Logistics

• Contract logistics– Outsourcing logistical management by employing

outside logistical expertise.

–

– Allows marketers to take advantage of an existing network, complete with resources and experience.

–


The Supply Chain and the Internet

• Global net e-commerce revenue is expected to surpass the $1 trillion dollar mark by 2012.

•

• Companies using e-commerce need to be prepared for 24-hour order-taking and customer service.

•


Logistics and Security

• Logistics systems are vulnerable to terrorist attacks and piracy; to prevent them, governments impose security measures (screening of shipments and shippers).

• Security measures:–

–


Logistics and Security

• Strategies employed for reducing security costs:–

– Eliminate the use of vulnerable international transportation.

–


Recycling and Reverse Logistics

• The firm’s ability to develop reverse logistics is a key determinant for market acceptance and profitability.

• Reverse distribution –

– Is a complex customer service, inventory control, information management, cost accounting, and disposal process.

–

Chapter 16 Global Logistics and Materials Management.

Documents

Transcript of Chapter 16 Global Logistics and Materials Management.