MANAGING INTERNATIONAL LOGISTICSTOPIC 1: INTRODUCTION TO INTERNATIONAL LOGISTICS1.0 Overview of International Loi!ti"! Companies have to deliver products to customers both efficiently and effectively.First of all, global or international logistics (also referred to as global supply chain management) has played a critical role in the growth and development of world trade, and in the integration of business operations on a world-wide scale.Its primary objective is to develop a cost-efficient delivery mechanism.In fact, the level ofworld trade in goods and, to some etent, services, depends to a significant degree on the availability of economical and reliable international transportation services.!ecreases in transportation costs and increases in performance reliability epand the scope of business operations and increase the associatedlevel of international trade and competition."econd, the use of appropriate distribution channels in international mar#ets increases the chances of success dramatically.Its primary objective is to develop a tas#-effective delivery mechanism for customer satisfaction.$s firms start operating on a global basis, logistics managers need to manage the shipping of raw materials, components, and supplies among various manufacturing sites at the most economical and reliable rates."imultaneously, these firms need to ship finished goods to customers in mar#ets around the world at the desired place and time.%he development of intermodal transportation and electronic trac#ing technology has caused a big jump in the efficiency of the logistic methods employed by firms. Intermodal transportation refers to the seamless transfer of goods from one mode of transport (e.g., air-craft or ship) to another (e.g., truc#) and vice versa without the hassle of unpac#ing and repac#aging thegoods to suit the dimensions of the mode of transport being used.%rac#ing technology refers to the means for #eeping continuous chec#s on the eact location of the goods being shipped in the logistics chain & this enables 'uic# reaction to any disruption in the shipments because (a) the shipper #nows eactly where the goods are in real time and (b) the alternative means can be 'uic#ly mobilised.$s the progressive lowering of trade barriers eases the flow of goods worldwide, business survival increasingly hinges on a company(s ability to compete internationally)globally & in eternal and)or internal mar#ets.%his has led an increasing number of companies to become aware that the mar#et-place encompasses the world, not just their respective home countries.For eample, many firms have found that evaluating offshore sourcing alternatives is essential in a well-run logistics and materials management organisation. $lternatively, by developing eport mar#ets, firms in a given country have highlighted the need for effective logistics systems and networ#s throughout the world.In other words, domestic competitors are increasingly loo#ing overseas not only for new mar#ets, but also for new sources of supply.Conversely, companies in other countries have also broadened their sourcing and mar#eting considerations geographically.%hey loo# toward global logistics strategies and operations toprovide competitive advantage through efficiency, effectiveness, and differentiation.%herefore, competitors from overseas are targeting previously secure domestic mar#ets.%his trend has led to global)international logistics management, which includes the procurement of goods and services of foreign origin, manufacturing from any country and distribution of finished products into foreign mar#ets. International logistics conjures up a vision of products flowing seam-lessly from suppliers to customers located anywhere in the world, and a supply networ# that truly spansthe entire globe.International)global logistics management is typically more comple than domestic logistics management.*rganisations must contend with lengthened logistical pipelines, increased rulesand regulations, currency fluctuations, customs re'uirements and a host of other variables such as language and time differences.+$s a practical matter, logistics managers are finding that they need to do much wor# in terms of conceptualising, designing, and implementing logistics initiatives that may be effective globally.,ogically, the development of global logistics approaches a high degree of coordination between logistics groups, mar#eting, and purchasing groups in individual companies. 2.0Un#er!tan#in Loi!ti"! an# Loi!ti"! Manae$ent2.1 Loi!ti"!Loi!ti"! concerns the management of the flow of goods and services between the point of origin and the point of consumption in order to meet the re'uirements of customers.,ogistics involves the integration of information, transportation, inventory, warehousing, material handling, and pac#aging.,ogistics is a channel of the !%&&l' "(ain (to be discussed later in "ection -) which adds the values of time utility and place utility.).1.1 General T'&e! of Loi!ti"!In general, there are two types of logistics. military logistics and business (or non-military) logistics.).1.1.1 Militar' Loi!ti"!,ogistics has a long standing application in military circles (dating from the /apoleonic 0ars) where it was initially applied primarily to the tas#s of. transport, supply and 'uartering of troops1 and organising the supply of weapons, e'uipment, and food to distant military forces. %hese tas#s comprise the 'uartermasters( wor#.!uring the world wars this wor# came to have a broader meaning to cover the art of managing the flow of materials.In military science, maintaining one2s supply lines while disrupting those of the enemy is a crucial & some would say the most crucial & element of $ilitar' !trate', since an armed force without resources and transportation is defenseless.%he importance of military logistics is apparent from a consideration of the enormous problems relating to the supply of forces involved in the $merican 0ar of Independence, the 0orld 0ar II, the Fal#lands 0ar of +345 and the invasions of Ira' in +33+ and 566-.In fact, the defeat of the 7ritish in the A$eri"an *ar of In#e&en#en"e and the defeat of the $is in the $frican theatre of *orl# *ar II are attributed to logistical failure.In $ilitar' loi!ti"!, loi!ti"! offi"er! $anae how and when to move resources to the places they are needed.%he scope of logistics in a military sense is reflected in the definition adopted by /$%*.Logistics is the science of planning and carrying out the movement of and maintenance of forces.Inits most comprehensive sense, logistics concerns the aspects of military operations which deal with: design and development, acquisition, storage, transport, distribution, maintenance, evacuation and disposition of material transport of personnel acquisition and construction, maintenance, operation and disposition of facilities acquisition or furnishing of services and medical and health support.5).1.1.) +%!ine!! ,or Non-Militar'. Loi!ti"!Loi!ti"! a! a /%!ine!! "on"e&t evolved in the +386s due to the increasing compleity of supplyingbusinesses with materials and shipping out products in an increasingly globalised supply chain, leading to a call for eperts called !%&&l' "(ain loi!ti"ian!.7usiness logistics can be defined as having the right item in the right quantity at the right time at the right place for the right price in the right condition to the right customer, and is the science of process and incorporates all industry sectors.%hegoal of logistics wor# is to manage the fruition of &ro0e"t life "'"le!, !%&&l' "(ain! and resultant efficiencies.In business, the term logistics has been defined differently by many authors and professional bodies."ome of these definitions are as follows. 9dward : Fra;elle states that. Logistics is the flow of material, money, and information between consumers and suppliers. s are described as follows1. Material! $%!t /e t(e right products.%his means that materials must be the eact products re'uired.For eample, if ?roduct ? is re'uired, eactly ?roduct ? and not ?roduct @ must be delivered."imilarly, if ?roduct A is re'uired, eactly ?roduct A and not ?roduct B must be delivered.%herefore, delivering materials that are the right products leads to effective and smooth running of the business because the eact re'uired msterisals areavailed.).Material! $%!t /e of t(e right condition"quality.:ere 'uality is ta#en to mean fitness for use.If they are to be fit for use, materials must be of the standards specified by the buying firm.If the materials are of good 'uality, the output and)or outcome will also be of good 'uality.*n the other hand, if the materials are of poor 'uality, the output and)or outcome will also be of poor 'uality. %herefore, availing materials of the right condition"quality leads to good 'uality business outputs because good 'uality materials)inputs are used.2.eturned goods handling (i.e. reverse logistics) ?arts and service support Field service and maintenance "alvage and scrap disposal ?hysical distribution Dreen logistics >eceiving and inspection 7uying and managing payables "elling and managing collectibles ?urchase order preparation and placing Customer service%he list above is not ehaustive.In fact, the list can be made as long, or as short, as possible.).1.3 Loi!ti"! S'!te$! an# t(eir S"o&eIn general, the logistics activities of the firm and how they are managed ma#e up its logistics system.%he (ow consists of the e'uipment, people, technology, facilities, methods and procedures used.%he logistics system of a particular organisation will vary with the type of industry in which it operates, the types of activities it is engaged in (i.e. what it does), and its si;e.%hus, an organisation(s logistics system will be uni'ue to it./o two organisations, even if they operate in the same industry, will have the same logistics systems. %he logistics systems can only be similar.*ne will encounter hundreds of logistics systems during his)her lifetime & in restaurants, stores, warehouses, and many other places.%his topic describes the general logistics systems1 however, if one understands a simple eample of a logistics system, he)she will be able to understand almost any logistics system. $ restaurant is one eample of a simple logistics system.In this system. %he #itchen is a storage facility1 the food is held there until it is delivered to the customer. 8 0aiters and waitresses provide the transportation1 they carry the food from the #itchen to the customer. %he tables are the service delivery points, where customers sit to order and eat the food. For customers, a restaurant is not a logistics system1 it is a place to eat.$s an individual, you probably never thought of a restaurant as a logistics system.Bour epectations for a restaurant, however, are directly related to logistics.0hat epectations do you have when you go out to a restaurant for a mealEBou may epect that the. restaurant will be attractive and pleasing server will provide ecellent customer service food you order will be available food will be served promptly correct order will be delivered to your table food will be of acceptable 'uality food will be of acceptable 'uantity cost of the meal will correspond to the value. ).1.3.1 General Loi!ti"! S'!te$7allou (+348) emphasises that logistics is a collection of management activities that are repeatedmany times throughout the channel through which raw materials are converted into finishedproducts.,ogistics activities recur many times before a product arrives in the mar#etplace. $ single firm is not generally able to control its entire product flow channel.For practical purposes, themaimum logistics control that can be epected is over the immediate physical supply channel (i.e. the inbound logistics system) and physical distribution channel (i.e. the outbound logistics system), as shown in Figure +.Figure +."cope of 7usiness ,ogistics for the Individual Firm"ource.7allou (+348)%he &('!i"al !%&&l' "(annel refers to the time and space gap between a firm2s immediate material sources and its processing points."imilarly, the &('!i"al #i!tri/%tion "(annel refers to the time and space gap between the firm2s processing points and its customers.!ue to similarities in the activities between the two channels, physical supply and physical distribution comprise those activities that are integrated into business logistics. %hus.F+%!ine!! Loi!ti"! 9 P('!i"al S%&&l' ,or Material! Manae$ent. : P('!i"al Di!tri/%tion ,Mar;etin Loi!ti"!. P('!i"al S%&&l' ,or Material! Manae$ent. ?hysical "upply (or