Source: International Business (1998). Fifth Edition. Zinkota, M., Ronkainen, I., and Moffett, M. Fort Worth: The Dryden Press
INTERNATIONAL LOGISTICS
I - INTRODUCTION
• Logistics costs comprise between 10% and 30% of the total landed costs of an international order. Thus, international logistics is a competitive tool.
B – International Transportation Issues
¤ Some countries may have excellent inbound and outbound transportation systems but weak internal transportation links. ¤ New routs of commerce have opened up ¤ Extreme variations also exist in the frequency of transportation services.
Close collaboration with suppliers is required to develop a just-in-time inventory system, which in turn may be crucial to maintaining manufacturing costs at globally competitive levels.
B - Physical Distribution: movements of the firm’s finished products to its customers.
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III - SUPPLY MANAGEMENT
Supply-Chain Management: a series of value-adding activities connect a company’s supply side with its demand side.
• For the international firm, customer locations and sourcing opportunities are widely dispersed. The firm can attain a strategically advantageous position only if it is able to successfully manage complex networks, consisting of its vendors, suppliers, other third parties, and its customers.
Basic goal of logistics: effective coordination of:
A – Materials Management: timely movement of raw materials Parts, and supplies into and through the firm; and
In the U.S. 40% of shipments are under a just-intime/quick response regime.
A – Differences between Domestic and International Logistics
¤ Distance ¤ Currency variation ¤ Border-Crossing Process (additional intermediaries) ¤ Transportation modes ¤ Packaging and Labeling requirements ¤ Infrastructure
This approach views the supply chain of the entire extended enterprise, beginning with the supplier’s suppliers and ending with consumers or end users.
• Effective international logistics and supply-chain management can produce higher earnings and greater corporate efficiency.
II - DEFINITION
International Logistics is design and management of a system that controls the flow of materials into, through, and out of the international corporation.
C – Availability of Modes
¤ Ocean Shipping: liner service (regularly scheduled passage); tramp service (available for irregular routes and scheduled on demand) ¤ Container ships, Roll-on-Roll-off (RORO) ¤ Air Shipping
By taking a systems approach, the firm explicitly recognizes the linkages among the traditionally separate logistics components within and outside the corporation