Global Logistics and Supply Chain Management Strategy

International Logistics Fundamentals

International Logistics is the design and management of a system that controls the flow of materials into, within, and outside the international corporation.

The International Logistics Environment

International logistics involves the concept of exchange systems and the definition of total cost. The impact of international logistics is significant:

• Costs represent between 10% and 15% of the total import cost of an international order.
• Globalization has increased the length of the value chain.
• Currency fluctuation is a basic weakness in international logistics.
• Most national or domestic transportation is conducted by truck or rail.
• Multinational corporations frequently send their goods by air or sea.

Key Components of Global Transport

There are four primary components to consider in transport:

• Time in Transit: Lower transport time reduces storage costs and inventory held abroad.
• Predictability: Ensuring consistent delivery schedules.
• Cost: Based on the cost of service and the value of the service provided.
• Packaging: Essential for protecting goods during transit.

International Storage and Warehousing Issues

Managing international storage involves several critical factors:

• Efficient delivery systems.
• Managing expensive overheads.
• Maintaining appropriate facilities.

Strategic Outsourcing in Logistics

Outsourcing involves subcontracting by firms in order to move and facilitate their activities. The primary advantages include:

• Reducing and controlling operating costs.
• Improving company focus.
• Gaining access to world-class capabilities.
• Freeing up internal resources for other purposes.

Management Structures and Administration

Centralized Management

In a centralized system, the staff is located at the headquarters and consists of a single person.

Decentralized Administration

This approach achieves better adaptation to local market conditions; however, it deprives the logistics function of the benefits of coordination.

Contract Logistics and Security

Contract Logistics Management involves outsourcing at least one important logistics role. These companies are experts in their industry and focus only on their operations.

Logistics is the set of means and methods necessary to carry out the organization of a company or service, especially regarding distribution and security.

Reservation Distribution Systems

Logistics is the set of means and methods necessary to carry out the organization of a company or service, especially in distribution. The objectives of a distribution reserve include:

• Recovering the greatest value from returns.
• Maintaining customer loyalty.
• Controlling costs.