Basic worldwide infrastructure

2
Elements Issues
CHAPTER 3 1. Transportation ¨ Security
¨ Risks
2. Communication
¨Value
3. Utilities
¨ Legal considerations
GLOBAL SUPPLY CHAIN 4. Technology ¨ Contracts

¨ Insurance
INFRASTRUCTURE
¨ Customs

¨ Payment

Road for trucks

4

3 Transportation infrastructure

Roads for trucks

Railways for trains
Waterway for ships
 Railway for trains Railway for trains
5 6

Railway for trains Waterway for ships

7 8
 Waterway for ship Transportation infrastructure
9 10

¨ How many nodes are there in a specific supply chain that spans
some portion of the globe?
¨ What transportation do you expect to use between each pair of
nodes?
¨ Is that type of transportation supported by the appropriate
infrastructure?
¤ Roads for trucks

¤ Railways for trains

¤ Waterway for ships

¨ What type of packaging needs to be used to carry the goods from

one mode of transportation in the chain to another?
¨ Where in the chain can delays be expected?

Transportation infrastructure Cai Lan port

11 12

¨ Global supply chains depend on transportation infrastructure

in the form of roads, railways, airports and air space,
waterways, ports and warehousing.
¨ Roads are very important: Roads support ports, airports and
railroads
¨ Road issues:
¤ Road quality
¤ Congestion
¤ Networks and Connections
¤ Signage on the roads
13 14

Why do most of container ships load/unload at

Hai Phong port instead of Cai Lan port?
High logistics cost
15 16
 Long Beach, California port Long Beach cargo port
17 18

ShangHai port ShangHai port

19 20
 Rotterdam port Largest World Seaports: Cargo
21 22

Global transportation decisions related to logistics

23

High Low 24 Communication infrastructure

Water
(Ship)
Rail Telecommunication
(Train) Pipeline

Volume
Mail services
Cost
Highway
(Truck) Easier data transfer

Hand Air
delivery
Low High

Slow Speed of delivery Fast

 Communication infrastructure Email
25 26

¨ Telecommunication
¨ Mail services
¨ Easier data transfer
¤ More effective operations of global supply chains
¤ More transparency
¤ More control and involvement in where and how
shippments flow from node to node and to the end
customers

Online meeting Online management

27 28
 Technology infrastructure
30

¨ Software and hardware allow a firm to managesupply chain operations

29 Technology infrastructure effectively
¨ E-commerce helps:
¤ break down the barriers of geographic distance,

¤ supports information exchanges across all inbound/upstream and

outbound/downstream nodes,
¤ and support just-in-time information exchanges
¨ Consider:
¤ Electronic data interchange (EDI)
¤ Enterprise resource planning (ERP)
¤ Collaborative planning, forecasting, and replenishment (CPFR)
¤ Vendor-managed inventory (VMI)
¤ Warehouse management system (WMS)
¤ Radio frequency identification (RFID)

Technology infrastructure Utilities infrastructure

31 32

Electronic data interchange (EDI): the electronic interchange of data between two
1.
or more companies – purchase orders, invoices for payment, payment instructions,
¨ Utilities as electricity, Water, Sewer, Gas support
delivery schedules. global supply chain operations.
2. Enterprise resource planning (ERP): wide-ranging business planning and control
system that includes supply chain-related subsystems – materials requirements
planning.
3. Collaborative planning, forecasting, and replenishment (CPFR): mainly a
collaborative method for scheduling logistics between suppliers and customers
4. Vendor-managed inventory (VMI): involves a retailer outsourcing its inventory
management to a supplier.
5. Warehouse management system (WMS): often operate in concert with ERP – ERP
defines material requirements and these are transmitted to a distribution center for a
WMS
6. Radio frequency identification (RFID): identify and locate tangible products that
are in freight.
 Supply chain risks and security
34

33 Supply chain risks and security Multinational corporation International environment

Market place Cost factors Types of risks Infrastructure

Logistics Market Transportation

Domestic
Purchasing Cost Communication
Regional
Operations Government Utilities
Global
Market channels Competitive Technology

Documents base Other infrastructure

35 36

¨ ISO 28000 ¨ Legal considerations, international contract, and

¨ International maritime organization (IMO)
¨ International ship and port facility security code
(ISPS code)
¨ World customs organization (WCO)
¨ Container security initiative (CSI)
¨ Customs – trade partnership against terrorism
(C-TPAT)
insurance
¨ Commercial documents and customs clearance
¨ Terms of payment and currency of payment
¨ International commerce terms (Incoterms)
¨ World customs organization and the hamonized
system