LOGISTICS MANAGEMENT

Submission date: 23rd May 2021

 National University of Modern Languages

Islamabad, Pakistan

2020

GLOBAL LOGISTICS
International trade is continuing to grow very quickly. This trade is based on the recognition that
an organization can buy things from a supplier in one country, use logistics to move them, and
then sell them at a profit to a customer in another country. All of this trade depends on efficient
logistics to move materials around the world.

Global Logistics
Global Logistics occur when supply chains cross national frontiers. It is the design and
management of a system that directs and controls the flows of materials into, through and out of
the firm across national boundaries to achieve its corporate objectives at a minimum total cost.
For Example Car Manufacturers they buy materials and components from suppliers around the
world, bring everything to central assembly plants, and then ship finished cars out to customers,
who again might be anywhere around the world.
One factor that is always important for logistics is the economic strength of a region:
● move more materials, as they can afford to consume more products
● have more efficient logistics, due to better infrastructure, systems and support.

Factors that encourage international trade

There are many factors that encourage international trade like growing demand in new markets,
demand for foreign products. Removal of trade barriers, integration of the supply chain,
improved communications, transport, financial arrangements, trading agreements, changing
practices in logistics, manufacturers aiming for economies of scale, growing demand in new
markets, demand for foreign products and so on. Means that organizations search the world to
find the best location for their operations.
Globalization helped in doing business beyond the national boundary. The world has become
global village in real sense. Internet has made easy to do business across the globe. Speed and
efficiency in the movement of goods is focused more. A computer manufacturer, for example,
might make keyboards in Brazil, monitors in the UK, speakers in France, motherboards in
Singapore, disc drives in Japan, cases in China, and so on. The reason why these companies can
work internationally is that logistics is efficient enough to have a relatively small impact on the
overall cost of the final product.

Problems with International Logistics

There can be many problems for international logistics. Key issue for organizations deciding to
expand their operations into new area is that the product must be attractive in international
markets, and its suitability for international trade.  
Many of the problems are caused by the different conditions on either side of international
borders like currency exchange, one government’s regulations on exports and another
government’s regulations on imports, customs clearance with duties and taxes, transport
operations in both countries, compensation for the cost and difficulties of transport, managing
large variations in the demand, increased number of intermediaries, such as freight forwarders
and customs agents, distances involved make relations with customers, difficulty in
communicating at a distance and across cultures , terms of trade that vary and may be unfamiliar,
financial arrangements that can be less certain, difficulty in documentation, importance of any
market and a vital concern is the flow of information as it may be difficult to co-ordinate
activities or assign responsibilities therefore it is more important to have efficient information
systems for long international supply chains. Some of these problems can be overcome by simple
administrative arrangements others are only solved by major initiatives, such as customs unions.
Drivers of Success in Global Logistics
Time, cost and quality are key drivers of success in global logistics. As a consequence, location
is a leading consideration. Other considerations include cost and availability of suitable labor;
presence and reliability of essential business partners, geopolitical and geographic risk and
stability. Because global logistics connects critical components of the supply chain from a
product’s point of origin to its point of consumption to ensure timely and efficient distribution,
location is a key success factor for distribution centers, transport hubs, terminals and other
infrastructure. Typically, the most functional and compelling infrastructure is located near or
adjacent to highly trafficked transport routes and dense population centers to serve large numbers
of consumers.

Ways of reaching foreign markets

There are several ways of entering international markets. An organization does not have to work
internationally itself to have a presence in overseas markets. It might, for example, export or use
local distributors, through licensing or franchising, export finished goods, exporting parts and
using local assembly and finishing, set up some form of joint venture with a local company, full
local production with new manufacturing facilities.

Advantages of Working Globally

There are clearly advantages in working globally, from both a logistics and operations point of
view. Global organizations limit the range of products, concentrate research and development,
ensure economies of scale, remove duplicated functions, simplify management structures,
simplify the product design function, use standard processes, generate widespread expertise in
products, give a unified marketing view, and so on. From a logistics point of view global
operations can ensure that facilities are in the best locations, and that the same products move
between any combination of facilities and customers. If there is a shortage of products in Sri
Lanka the standard products can be shipped from stocks in Brazil rather than wait for the usual
suppliers.
Managing the logistics of a global organization is immensely complicated. It can involve the
movement of huge quantities of materials around the world. Unfortunately, there is no single best
model for a global supply chain that can be used by every organization. Different companies can
organise their international operations in different ways depending on its strengths.