International Logistics

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
International Logistics

•      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.

Supply-Chain Management

•      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
International Logistics

•      Logistical costs are 10% to 30%
of the total landed cost of an
international order.

•      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
International Logistics

•      Basic differences

–   Distance

–   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 Issues

•       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

–    Availability

–    Adequacy

–    Physical

•       Optimizing the
logistics system

–    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,
and routing.

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.