Learning Activity 12

Evidence 1: Writing and essay about logistics costs

TEACHER Genniffer Aldana

Presented by: Kelly Johanna López Rubiano

INTERNATIONAL NEGOTIATION

FILE: 2104848

IBAGUE - TOLIMA

2021
INTERNATIONAL PHYSICAL DISTRIBUTION

INTRODUCTION
International Physical Distribution is of vital importance since no modern company can
operate without the movement of its raw materials or finished products, another
important factor for organizations is the fact of creating value for customers, suppliers
and shareholders of the company. herself. Value is expressed primarily in terms of time
and place; Products and services have no value unless they are in the possession of
customers, when and where they want to have them.

Therefore, physical distribution is the set of activities necessary to move the

merchandise between the supplier and the customer, it can be from the factory, to the
point of sale and / or consumption. On the other hand, one of the characteristics of
modern organizations is that they have incorporated management indexes into their
processes, which allow them to evaluate all areas and processes within companies,
pointing out shortcomings and weaknesses in order to apply corrective measures and
improvement plans.
Known by its acronym DFI, the distribution international physical corresponds to the
logistics process developed to place a product X in the international market, fully
complying with terms previously agreed between seller and buyer. Among its
objectives are reduce times as much as possible, reduce costs and minimize the risk
generated during the path of product X, from the point of departure at origin to
destination point Of the delivery.

When looking for the most satisfactory solution for achieve these objectives, the
logistics process will be optimized with the necessary time, by lowest possible cost,
interlockable with the required service strategy. The system physical distribution deals
with what is related to product placement X starting with the producer to the end user,
passing through the stages corresponding to terminals and / or indirect channels used.

This concept originates from marketing and introduced by the United States in the late
1970s. This refers to a unification of five subsystems: transport, storage, packaging,
loading / unloading and distribution; and a support and information system.

Actors in foreign trade operations.

The actors involved in foreign trade in their operations can be made up of a variable
number of “intermediaries” (Berumen, 2002).

These actors include:

■ Status.

■ International organizations.

■ Banking institutions.

■ Surety companies.

■ Insurance companies.

■ Warehousing companies.

■ Packaging and container companies.

■ Customs agencies.

■ Direct carriers.

■ Freight forwarders.

■ Importer and exporter.

■ Destination ports.
OBJECTIVES OF THE DFI

One of the main objectives of the DFI chain is to maintain balance within the
contractual terms and in compliance with the distribution, its channels, prices, times
and operational management; taking into account that the medium-term projection
agrees with the policy of each company.

DFI encompasses a very inclusive field in transportation. First you have to verify the
different possibilities in terms of to the way of transport, the itinerary and the
technological part, since it forms an integral part of the DFI.

1. Preparation in terms of marking and packaging: optimizes the use of cubic

transport capacity. Packaging the goods or merchandise is to put it or place it "in-
glass", that there is a contact with the interior of the container that it is containing and
additionally that it can be dosed and presented according to current market demands,
therefore, it develops a great importance in marketing.

Packing it is placing it "in-bale", that is, in a package or a bundle that provides

protection during transport. Its purposes are:

• Protect the load during the journey as it is sometimes long.

• Ease of cargo handling and reception by normal means is sought.

• Balance costs and ensure quality protection for the merchandise.

• Identify the correct labels on the merchandise, for example, check ISO and
dangerous goods labels.

• Generate facilitation so that the customs can inspect the merchandise

2. Containers, palletization and unitization: types of materials for pallets (plastics,

wood, etc.) are transport elements that serve as auxiliaries, easy to handle, empty and
fill. Currently, they can be large packages with previously established dimensions from
different entities, either a basic means of transport, such as the different classes:

 Closed or “Box”.
 Open side or open side.
 Open top or open roof.
 Platforms or “Flat”.
 Bulk or “Bulk”.
 Cistern or “Tank”.
 Refrigerators or “Reefer”.
 Temperature control.
 Cage or “Cage” for animals.

There are different containers that can be presented in different ways, which are used
in multimodal transport, whether air, rail and sea. For example, with ISO standards,
those with a maritime base are more used
20 "and 40", and its most common external measurements are 20'x 8'x 8'6 "the
smallest and the other 40'x 8'x 8'6".

3. Handling and intermediate deposit points: this improves operations quantitatively

and qualitatively with regard to the merchandise in terms of its handling for transport
terminals, be it railways, airports, stations or ports, among others and warehouses. To
manipulate merchandise, a lot of manual work is needed, at times it is necessary to
use machines that speed up and facilitate the work in unloading, both in loading and in
internal movements and storage.

4. Storage that can be done in public and private warehouses and warehouses. At any
time during the transport of the merchandise, it may be necessary to store it for long or
short periods of time.

The aspects to have for storage are:

The cost is high when it is stored for a long time, therefore delivery should be
scheduled as soon as possible to minimize this time.

By letting time go by, they increase the possibility of a decrease in the product, as for
example, with theft, rodents, among others.

It should be studied whether the merchandise is stored outdoors or not, because it can
be damaged.

High-cost merchandise must be stored in special places with surveillance.

When storing the goods, the heavy load should not be placed on the light load and on
the one that has an irregular shape in separate places.

5 Transport: It is carried out throughout the chain in the international physical

distribution, as the responsibility of the carriers is to take into account that they
generate "results", that is, they move things, goods or people to their corresponding
place or destination and without inconvenience ”, but, this responsibility is restricted by
the

Laws and international conventions, transport regulations, financially compensated if

there are inconveniences.

On some occasions the legal protection or the limits of liability are exceeded by the
damage at an economic level and It is at that moment when the solution is to obtain an
economic protection that is added through the acquisition of an insurance or a policy.

Transport classification

Depending on the environment in which it takes place:

Air, maritime or land either by rail or highway.

Depending on its nature:

Public: It is carried out by means of an economic consideration.

Private: Without economic consideration, this can be personal, carried out by
individuals who own their own means or vehicles, and complementary that are carried
out by companies where their main activity is not necessarily transportation.

Due to its purpose: it can be merchandise, or travelers, or mixed.

Depending on its geographical appearance:

It can be urban south, where it is carried out internally in the cities or in their urban
levels, National, which is within the country, International that makes the relationship
between two or more countries.

Depending on its administrative standardization: It can be liberalized, which means that

it is not subject to any

authorization or quota that if it is.

Depending on the way the vehicles are used:

It can be successive, used sequentially only on airplanes, trucks or blocks.

6. Cargo insurance, such as policies and risks.

There is an insurance that goes around the concept of compensation, where the
insured who has suffered a loss, remains or returns to the same economic and
personal circumstances that he had before the incident occurred.

This insurance is divided into:

Personal insurance: It focuses on partial compensation at an economic level, because

in many cases its full restitution is impossible, such as disability or life.

Property damage insurance: The idea is that the insured is subsequently in the same
financial situation in which he was before, in this position is transport insurance.

7. Documentation: payment documents, certificates, invoices among others.

8. The operation and management of customs, customs duties and fees that must be
paid based on the ICONTERMS.

9. Banking operations and procedures, as correspondent agents.

10. Distribution management where administrative and operational personnel are

included in the company.

What are the advantages of reducing logistics and transportation costs in international
physical distribution.
Advantage:

Lower rates, mass transport of large volumes, diversity and specialization of vessels, it
has no restrictions for dangerous products.

Increase competitiveness. The efforts of companies are aimed at being better than the
competition. And better means being more efficient in a timely manner, that is,
delivering the product in excellent condition in the shortest possible time.

Management improvement with a global vision of the company. Covering so much

space implies that all business processes must be one, all areas intercommunicate and
interact. The system begins with the suppliers of the suppliers and ends with the
customers of the customers.

Cost reduction. Being able to choose a headquarters and premises anywhere in the
world helps reduce costs. Each country has working conditions, which can increase or
increase, for example, the price of labor. Of course, it must be combined with the prices
of transport.

Disadvantages:

Low speed, insurance and more expensive packaging, port costs, high risks of looting
and deterioration, more widely spaced frequencies.

Coordination risks. If you operate in different countries, you have to deal with language
problems, differences in working conditions and even cultural norms.

Distance. It can be a problem as the unit transportation cost per product rises and the
distributor storage cost decreases. It requires the search for a balance so that both
supplier and company are willing to support.

Reduced inventories. Wanting to be efficient means that you have to operate with
reduced inventories, which is why it is a challenge to multiply the quality and reliability
of the logistics process.
 CONCLUSIONS

To conclude in companies there are basic systems that facilitate their smooth
operation, one of them is the logistics system related to the flow of materials from
suppliers to end users and whose establishment requires an analysis and study to
ensure that the company has a fully integrated logistics element.

Each of the advantages and disadvantages that can be obtained through international
physical distribution must be studied, which can attribute benefits or difficulties to
companies.
 BIBLIOGRAPHY

https://digitk.areandina.edu.co/bitstream/handle/areandina/1499/Distribuci%C3%B3n
%20F%C3%ADsica%20Internacional.pdf?sequence=1&isAllowed=y

https://retos-operaciones-logistica.eae.es/globalizacion-ventajas-y-desventajas-para-el-
sector-logistico/