5 Global Logistics
5 Global Logistics
5 Global Logistics
Geographical Integration
Sectorial Integration
Functional Integration
Geographical Integration
Impact of Distribution and Transportation greater due to Globalilty Borders becoming more porous in terms of trade Production on global scale --- no longer country-specific International Sourcing Selling in Multiple Markets Data Processing and Communication technology help with the geographical integration.
Functional Integration
Logistics - cross-functional in nature. Cuts across activities and creates interfaces to optimize overall performance. Flow management in Global Logistics difficult Internationalized Markets Competitive products in the Market Adaptation of new technology Government Regulations
Sectorial Integration
Companies are handling logistics issues together beyond corporate boundaries. Efficient Consumer Response (ECR)
Collaborate
Manufacturer
Consumer
Freight Forwarders
Freight providers have the earliest instance of hub and spoke systems Tenders for freight services made worldwide Development of Intermodal freight provision Mergers between freight providers -- e.g. Airplane companies Globalization brings up several issues in order to satisfy proximity service
Use of manufacturers sales network
Setting up Proximity Distribution Centers (PDC) Developing central hub for express services and dispatch orders Setting up inventory of class A products with storage operator, distributor or agent
International Freight Forwarders Nonvessel-operating Common Carriers (NVOCC) Customs House Brokers Export Management companies Export Trading Companies Shippers Associations Export Packers
RESOURCES
Resource Oriented Logistics Emphasis towards optimal use of resources -- capital, materials and people Focuses on the relationship between the functional and the geographical
Optimize
Functional
Geographical Resources
Information Oriented Logistics Emphasis towards optimal use of information. Focuses on the relationship between the sectorial and the geographical dimensions
Geographical Sectorial
Optimal Performance
User Oriented Logistics Emphasis on the final customer. Using all the supply chain partners to bring their expertise in order to best service the customer User oriented focus brings about flexibility in the logistics channel
Customer
Global Markets
Competition from foreign firms in local markets. Incredible growth of demand in foreign markets. Global presence used as competitive threat. Change of priorities Global markets growing faster due to technological advances Products need to be introduced in all markets together. State of the Art markets driven by customer preferences Firms have to set up production in these areas to maintain their competitive profiles. E.g. Japan - M/c tools
Improvements in Technology
Communication faster, easier and cheaper. Markets characterized by fewer producers and greater diversity in products Shorter product life cycles Technology advancement become global phenomenon Firms have to start looking at international sources to tap technological services Global competition forcing companies to locate more R&D and production units closer to the suppliers. Joint ventures between firms to share technological info.
Exchange rate fluctuations Regional trade agreements --- NAFTA Trade protection mechanisms Tariff and non-tariff barriers Technical Standards Health regulations Procurement policies
The management has to consider the Global economy Service in the Industry becoming more important than Cost Saving Logistics operations perceived more as Service Provider for cost minimization
Logistics activities no longer limited to moving products through the Supply Chain but as an Information Provider for the SC. Companies moving away from Vertical Integration and towards Supply Chain Integration, with Logistics activities provided externally.
e.g: Labeling the products in the language of the countries that they have to be shipped to
Diversity of markets increasing giving rise to Standardization across international markets Product diversity Ability to access multiple sources of technology
Printers made in Vancouver in two stages Printed Circuit Assembly & Test (PCAT) Final Assembly & Testing (FAT) Components needed for PCAT & FAT taken from suppliers worldwide & from HP divisions Printer power supplies custom made for each country with manuals written in that language packed From Vancouver sent to Distribution Centers worldwide
IC MANUF.
DISTRIBUTION CENTRES
WORLDWIDE
WORLDWIDE
Logistics Flows
Direct Flow From companies to markets
Consolidation points
VIETNAM
IMPORT
USA/EUROPE
TAIWAN
MAKE-BULK OPERATION
USA/ EUROPE
MALAYSIA
EXPORT
TAIWAN
JAPAN CHINA
BREAK-BULK OPERATION
Postponement
Expand compliance guarantee to all supply chain requirements Guaranteed compliance with top 100 retailers Develop additional high value, informationintensive supply chain solutions
Integrated Logistics is the fusion of information, logistics and transportation technologies to provide rapid response to track and shift assets even while in reroute, and to deliver tailored logistics packages and sustainment directly at the strategic, operational and tactical level of operation Logistics functions will incorporate information technologies and will work jointly and integrate with other sectors to take advantage of advanced business practices, knowledge economy, and global networks Information technologies will enhance aircraft, sea liners, and pre-positioning capabilities to lighten deployment loads
Services provided are both physical and management. Service levels improve due to improvement in flexibility and inventory management
In global logistics, versatile markets and products need expert services which can be provided by several 3PL
Use of 3PL allows the firm to penetrate new markets . Access new technologies Reduce inherent financial investment risks Risks of using 3PL The same 3PL might be providing services for competing firms Manufacturer with a good image in the market might get tied down and their image linked with the 3PL
Globality and Supply Chain Integration are increasing the functions of Logistics providers. This has lead to the emergence of consulting firms as fourth party logistics providers
3PL have a larger, more efficient network of transportation & networking, but the 4PL have optimal combination of warehouse capabilities, transportation services and technology Consultants as 4PLs are used to review bids made by 3PLs, and to align the business processes with the supply chain -- especially critical in case of Global Logistics. 4PLs have the advantage of being in sync with the rapid, enormous changes in Information Technology.
4PL 1990s-2000
4PL
IT Service Providers
3PL
Outsourcing 1980s-1990s
Client
Insourcing 1970s-1980s
Client
Cost
Quality
Service Delivery Speed Delivery Reliability Flexibility New-Product Flexibility-- Ability to introduce a new product fast Customization --- highly segmented markets Product Mix Flexibility --- adjust production mix for demand fluctuations Product Ramp-up Flexibility -- expansion to mass production for uncertain markets
NOVCCs Perform most but not all of the functions of an international freight forwarder. Specific functionality is trade agreements with carriers NOVCCs affiliate with forwarders to offer the entire range of services
Customs House Brokers Take care of paperwork and movement of goods through customs
Export Management Companies Provides the US firm with information about the overseas buyer Advises the US supplier on requirements of the foreign market in issues like foreign labeling and other specialized functions
Export Trading Companies Attempt to combine all facets of international business Used extensively by the Japanese Shippers Associations Trade groups representing shippers of similar cargo that bargain with ocean steamship conferences as a single entity Export Packers Expertise is specifically in packaging for the exporter. To allow goods to move through customs easily. E.g taking into consideration weight restrictions etc To prevent the decay/damage of products.
Product processing Services Technical Support Inventory Management Financial Commodities vs. specialty items Delivery Speed Dependability Flexibility
Pricing
FOB
pricing
Pricing
Zoning
ZONE 1 ZONE 2
Quantity discounts
Legal implications - must prove price difference is justified by lowered logistical costs to deflect discrimination charges from small buyers