dissection about markting
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chapter_2.pptx1
Chapter 2
Marketing 4220
International Sourcing, Logistics
& Transportation
International Supply Chain Management
5/22/2015
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International Logistics
Historical Development
Logistics & Supply Chain Management
Elements of International Logistics
Economic Importance of Logistics
International Reverse Logistics
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Historical Development
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The early “slow” days
The move toward speed
Customer satisfaction
A strategic advantage
The Early “Slow” Days
The first international logisticians were traders on the Silk Road, a well-traveled trade route for over 3,000 years. It stretched from Europe to Asia, passing through the Middle East.
The primary concern of early modern logisticians was to ensure that goods arrived at their destination in good condition and at the lowest possible cost.
Following World War II, logistics began to incorporate the techniques used by the military.
The logistics definition of expanded to include the movement of goods, procurement of supplies, sales and the management of supplier and customer relationships.
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The Move Toward Speed
The introduction of containers (“boxes”) in the late ‘50s, and their eventual widespread adoption, made shipping much more efficient, cheaper and faster.
In the ‘70s, new companies, such as FedEx and DHL, introduced time-defined air shipping services, gaining a large market share in domestic shipments.
In the ‘80s, international air shipments increased as costs declined and the number of destinations escalated. Air transport became cost-competitive with ocean transport for many products.
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Customer Satisfaction Emphasis
The very high interest rates of the 1980s led companies to reduce inventory levels.
New inventory management techniques were created to reduce inventory costs. Those techniques included:
Just-in-time (JIT)
Materials Requirement Planning (MRP)
Manufacturing Resources Planning (MRP II)
Distribution Resources Planning (DRP)
Since these techniques relied on rapid and reliable deliveries, logistics firms provided reduced shipping times and time-defined deliveries.
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Just-In-Time Techniques
Just-in-time manufacturing is a process whereby parts are planned to arrive on the assembly line just before needed. The goal of this technique is to reduce or eliminate the need for inventory.
It now includes the delivery of parts to the assembly plant just before they are needed and the delivery of finished goods just as the retail store is running out.
JIT has become part of standard operations management practices in most manufacturing facilities.
JIT involves a risk if the supply chain is disrupted and production may have to shut down due to lack of materials.
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Computer-Based Tools
Materials Requirement Planning (MRP) and Manufacturing Resources Planning (MRP II) are tools manufacturers use to determine what to produce (or order from suppliers), how much and when, to facilitate sales forecasts and pending customer orders.
Distribution Resources Planning (DRP) is a tool retail firms use to determine what to order from its suppliers, how much and when, to facilitate sales to retail customers.
These tools are dependent on the reliable and efficient delivery of relatively small shipments.
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Transformation into a Strategic Advantage
International Logistics management has become a strategic advantage for the firms capable of:
Containing the costs of shipping, in view of increased fuel costs
Providing “visibility” in the supply chain, or the ability to determine the location of a particular shipment at any time
Maintaining reliable, dependable deliveries
Ensuring the security of the goods while they are in transit
Engaging in sustainable practices
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Sustainable Practices
Implementation of green practices by region of the world.
Source: IBM
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Definitions
Logistics
Supply Chain Management
Evolution of Logistics
Relationship between Logistics and SCM
International Logistics
Logistics, International Logistics and SCM
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Logistics
“Logistics is the part of the supply chain process that plans, implements and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers’ requirements.”
Source: Council of Supply Chain Management Professionals
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Supply Chain Management
“Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all Logistics Management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies.”
Source: Council of Supply Chain Management Professionals
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Evolution of Logistics
Source: Alfred Battaglia
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Logistics / SCM Perspectives
Inclusionist Evolutionist Intersectionist
Logistics
SCM
Logistics
SCM
Logistics
SCM
Source: Larson and Halldorsson
Three different perspectives on the relationship between Logistics and Supply Chain Management. The “inclusionist” perception prevails today.
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International Logistics, Logistics and SCM
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Elements of International Logistics ( 1of 2)
The environment in which international logisticians operate is quite different from the domestic environment.
The decisions regarding international transportation are much more complicated than those regarding domestic transportation.
The number of intermediaries involved in an international transaction is greater than in a domestic transaction.
The inherent risks and hazards of international transportation are much greater.
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Elements of International Logistics ( 2 of 2 )
International insurance is much more complex
International means of payment remain complicated
Terms of trade can be convoluted
Border crossings involve specific challenges
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Economic Importance of Logistics in the U.S.
Source: State of Logistics Annual Reports 2000-2012
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Economic Importance of World Logistics
Source: Supply Chain Brain
(U.S.$ billions)
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Reverse Logistics
Source: Lora Skarman
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Reverse Logistics
The German approach: require companies
recycle all packaging and create a post-
consumer recycling program.
The Curitiba approach:
Use recycling as an anti-
Poverty program.
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Fragmentation 1960 Evolving Integration 1980 Total Integration 1990 2000
Demand Forecasting
Purchasing
Requirements Planning
Physical
Distribution
Materials
Management
Logistics
Supply Chain Mgmt.
Production Planning
Manufacturing Inventory
Warehousing
Materials Handling
Industrial Packaging
Finished Goods Inventory
Distribution Planning
Strategic Planning
Customer Service
Transportation
Order Processing
Sales
Marketing
Information Technology
( Fragmentation 1960 Evolving Integration 1980 Total Integration 1990 2000 Demand Forecasting Purchasing Requirements Planning Physical Distribution Materials Management Logistics Supply Chain Mgmt. Production Planning Manufacturing Inventory Warehousing Materials Handling Industrial Packaging Finished Goods Inventory Distribution Planning Strategic Planning Customer Service Transportation Order Processing Sales Marketing Information Technology )
Domestic
Suppliers
Domestic
Customers
Foreign
Customers
Foreign
Suppliers
Company
International Logistics
Logistics
Supply Chain Management
( Domestic Supplier s Domestic Customer s Foreign Customer s Foreign Supplier s Company International Logistics Logistics Supply Chain Management )
