THE IMPACT OF GLOBAL

LOGISTICS
3

The global logistics management process

1.
2.
3.
4.
5.

Environmental analysis
Planning
Structure
Plan implementation and
Controlling the logistics program

Cost-service trade off analysis

Order completeness
ii. Shipping accuracy and
iii. Shipment condition
i.

Guidelines for developing a global logistics

strategy
Logistics planning should be integrated into the

firms strategic planning process

Logistics departments must be guided by a clear
vision and must measure output regularly
Import-export management should try to ensure
integrated management of all elements of the
logistics supply chain from origin to destination
Opportunities to integrate domestic and
international operations should be pursued to
leverage total company volumes with globally
oriented carriers

The global logistics environment

Controllable elements
2. Uncontrollable elements
1.

Uncontrollable elements
i.
ii.
iii.
iv.
v.
vi.

Political and legal systems of foreign markets

Economic conditions
Degree of competition in each market
Level of distribution technology available or
accessible
Geographic structure of the foreign market
Social and cultural norms of various target markets

Controllable elements
i.
ii.
iii.
iv.
v.
vi.

Customer service
International Inventory issues
International Packaging issues
Transportation
Warehousing and storage
Other activities like global sourcing of materials

Issues related to global logistics

1.
2.
3.
4.
5.

International customer service issues

International inventory issues
International packaging issues
International transportation issues
International warehousing and storage issues

1. International customer service issues

Consumes longer time
Requires different types of transport carriers,
Multiple transfers and handling
Crossing of many international borders
Time in transit vary from shipment to shipment

2. International inventory issues

International business have 50% or more of their

assets in inventory
Inventory levels differ depending on the length of
the transit
Includes unique factors such as currency exchange
rates, greater distances and custom duties
In case of high inflation, large inventories provide
inflation hedge

3. International packaging issues

Handling of products
Climate
Potential for pilferage
Communication and language differences
Freight rates
Customs duties
Customers requirements

Containers - advantages
Reduced cost due to loss or damage
Increased use of automated or mechanized material

handling equipments
Lower warehousing and transportation costs
Available in variety of sizes
Serve as temporary storage facilities at ports and
terminals

Containers- disadvantages
Delay caused in in-bound and out-bound cargo
Large capital expenditures are required to initiate a

container

4. International transportation issues

Infrastructure
2. Availability of modes
3. Choice of modes among the given alternatives
1.

a. Ocean or Sea transport

Liner service-regular scheduled passage on established

routes
Bulk service-contractual services for individual voyages
Tramp service- irregular routes and scheduled only on
demand
Based on the type of cargo carried
1. Conventional cargo vessels-oversized and unusual
cargo
2. Container ships-standardised containers
3. Roll-on roll-off vessels-ocean going ferries

Shipping documents used in ocean shipping

The standard shipping note(SSN)- what is to happen

to the goods on arrival at the foreign port

The bill of lading-shipping companys receipt for the
goods loaded

b. Air transport or Air freight- advantages

Useful for transportation of perishable products,

high value, high density products

Less stock holding in loading terminals
Speedier settlement of invoices
Eliminates excess need of intermodal transportation
Facilitates JIT
Convenience and ease of administration

c. Rail and road transport

International consignment note

Choice of transport method

Transit time
2. Predictability
3. Cost of transportation
4. Non economic factors- govt pressure-UNCTADUnited Nations Conference for Trade and
Development
1.

5. International warehousing and storage issues

Storage facilities- bonded warehouse
Free ports- wider area at sea port and
free zones- near air ports

Queries?????