A Definition of International Logistics
• designing and managing of a system that controls the flow of materials into, through, and out of the international corporation (e.g., JIT, EDI,ESI etc.).
The Phases of
• Materials management
– Timely movement of raw
materials, parts, and
supplies through the firm
• Physical distribution
– Movement of the firm’s
product to its customers
The Systems Concept
• System Concept
The extensive and complex materials-flow activities within and outside of the firm must be considered in the context of their interaction.
• Total-cost concept
– Minimizing overall logistics costs by identifying activity-based costs.
• Trade-off concept
– Recognize that logistics activities involve trade-off in areas such as time-saved in delivery versus the increased costs of expedited delivery systems.
• Value-added activities connect the company’s supply side with the demand side.
• Efficient supply chain design
increases customer satisfaction and saves money
– reduces inventory holding costs
– increases inventory turnover cycles
– reduces operating costs
– reduces order handling and mailing costs
– makes firm more price competitive
The Impact of
• Logistical costs are 10% to 30%
of the total landed cost of an
• Factors necessary for the use
of logistics as a competitive tool:
– Close collaboration with suppliers and customers.
– Technologically advanced information processing and communication exchange capabilities.
– An integrated business infrastructure.
New Dimensions of
• Basic differences
– Currency variation and exchange rate differences
– Varying entry regulations
– Different transportation modes
• Country-specific differences
– Transportation systems and intermediaries vary.
– Reliability of carriers may be different.
– Computation of freight rates may be different.
• Transportation infrastructure
– Roads,rail lines, airports, seaports, pipelines
• Availability of transportation modes
– Overland shipping, ocean
shipping, air shipping
• Choice of modes
– Transit time, predictability,
• Noneconomic Factors
– Government involvement,
the UNCTAD and
the 40/40/20 concept
International Shipment Documentation
• Bill of Lading
– acknowledges receipt of goods
• Shipper’s export declaration
– states proper authorization for export under general or special validated export license
• Packing list of contents
• Dock and warehouse receipts
• Collection documents
– commercial invoice
– certificate of origin
– import and foreign exchange licenses
International Inventory Issues
• Factors in deciding on the
level of inventory to maintain:
– Order cycle time
– Desired level of customer service
– Use of Inventory as a strategic tool
Order Cycle Time
The total time that passes between the placement of an order and the receipt of the merchandise.
• Altering cycle times
– Change transportation methods
– Change inventory locations
– Change ordering process
International Storage Issues
• The storage facilities location decision
• Optimizing the
– Rank products by warehousing needs “A” products stocked in all distribution center
• “B” products stored only in selected locations
• “C” products with low demand stocked only at headquarters
International Packaging Issues
• Packaging for domestic shipping may NOT be adequate for international shipping.
• Goods should arrive in a safe, undamaged, maintainable, and presentable condition.
• Packaging should minimize the stress of intermodal movement and storage.
• Protected from climatic conditions.
• Weight based on delivery mode.
• Follow customer instructions for labeling, packaging,
Logistics and the Environment
• Reverse Distribution
– A system responding to environmental concerns that ensures a firm can retrieve a product from the market for subsequent use, recycling, or disposal.