+ All Categories
Home > Documents > 05 Global Logistics

05 Global Logistics

Date post: 10-Apr-2018
Category:
Upload: sosa-hasso
View: 223 times
Download: 0 times
Share this document with a friend

of 55

Transcript
  • 8/8/2019 05 Global Logistics

    1/55

    Chapter 5 1

    Chapter 5

    Global Logistics

  • 8/8/2019 05 Global Logistics

    2/55

    Chapter 5 Management of Business Logistics, 7th Ed. 2

    Learning Objectives Describe the major similarities and

    differences between domestic and global

    logistics. Discuss the reasons for the increase in global

    business activity.

    Define a global company. Explain Porters dynamic diamond theory of

    global competitive advantage.

  • 8/8/2019 05 Global Logistics

    3/55

    Chapter 5 Management of Business Logistics, 7th Ed. 3

    Learning Objectives Describe the critical changes affecting global

    logistics.

    Explain the effect of the changing legal andpolitical environment in Europe, Asia, North

    America, and South America.

    Discuss North American Free Trade

    Agreement and its effect on logistics. Define the nature and benefit of a

    Maquiladora.

  • 8/8/2019 05 Global Logistics

    4/55

    Chapter 5 Management of Business Logistics, 7th Ed. 4

    Learning Objectives Explain the major transportation systems

    available for global logistics.

    Distinguish among the global logisticsintermediaries, freight forwarders, customshouse brokers, non-vessel operating commoncarriers, and export management companies.

  • 8/8/2019 05 Global Logistics

    5/55

    Chapter 5 Management of Business Logistics, 7th Ed. 5

    Learning Objectives Explain the criteria used to select a port for

    global shipments.

    Discuss warehousing and packagingrequirements for global shipments.

    Define the role of customs duties and free

    trade zones.

  • 8/8/2019 05 Global Logistics

    6/55

    Chapter 5 Management of Business Logistics, 7th Ed. 6

    Global Business Logistics Important issues to consider:

    To gain a competitive advantage, global

    sourcing is a given for companies engagingin global marketing strategies.

    The longer the supply chain, the more

    cooperation and coordination is requiredbetween production, marketing, purchasingand the logistics management group.

  • 8/8/2019 05 Global Logistics

    7/55

    Chapter 5 Management of Business Logistics, 7th Ed. 7

    The Magnitude of

    Global Logistics Activity

    World trade is growing as fast logistics systemshave had the effect of shrinking the world,empowering competitive trade.

    Foreign trade has grown in tonnage and in valuefor the United States and other nations.

    Lower labor costs from international outsourcing isa critical component of the supply chain.

    Focused manufacturing fits well into aninternational logistics strategy.

  • 8/8/2019 05 Global Logistics

    8/55

    Chapter 5 Management of Business Logistics, 7th Ed. 8

    Table 5-1

    Top U.S. Trading Partners

  • 8/8/2019 05 Global Logistics

    9/55

    Chapter 5 Management of Business Logistics, 7th Ed. 9

    Global Markets

    and Global Corporations Trade barriers continue to fall, accelerating

    global business activity.

    Global markets result from the generalhomogenization of global needs and wants.

    Local needs suborned to lower-priced,higher-quality products.

    Preferences for international products canalso be related to attempts to copy othermore prosperous cultures.

  • 8/8/2019 05 Global Logistics

    10/55

    Chapter 5 Management of Business Logistics, 7th Ed. 10

    Global Competitive Strategy To effectively serve global markets, firms

    should consider adopting integrated

    worldwide strategies. These firms are more likely to search for

    global sourcing for materials andcomponents, depots, assembly, distribution

    centers, and logistics. Global firms typically design synchronous

    strategies around technology, marketing,manufacturing, and logistics.

  • 8/8/2019 05 Global Logistics

    11/55

    Chapter 5 Management of Business Logistics, 7th Ed. 11

    Customer Service Strategies for

    Global Markets: Four Characteristics

    1. Marketing becomes standardized yetcustomized.

    2. Product life cycles shorten, sometimes toless than one year.

    3. Outsourcing and offshore manufacturing arebecoming more prevalent.

    4. Marketing and manufacturing activities andstrategies tend to converge and be bettercoordinated in firms operating globally.4

  • 8/8/2019 05 Global Logistics

    12/55

    Chapter 5 Management of Business Logistics, 7th Ed. 12

    Customer Service

    Strategies for Global Markets Logistics networks tend to become more

    expansive and complex.

    Thus, lead times and inventory may rise. Logistics activities must be operated as a

    system to provide a countervailing force.

    Most importantly, the service needs of

    internationally-dispersed customers mustdrive the design and implementation of thelogistics system.

  • 8/8/2019 05 Global Logistics

    13/55

    Chapter 5 Management of Business Logistics, 7th Ed. 13

    Critical Factors and Key Trends:

    Importance of Competitive Environment

    Michael Porters study concludes that anations ability to upgrade its existing

    advantages to the next level of technologyand productivity is the key to international(global) success.5

    Porter feels that the US loss of global marketshare in advanced fields of transportation andtechnology shows the US slipping recently ininternational trade.

  • 8/8/2019 05 Global Logistics

    14/55

    Chapter 5 Management of Business Logistics, 7th Ed. 14

    Critical Factors and Key Trends:

    Porters Model

    Factor conditions

    Ability to transform basic factors into

    competitive advantage Demand conditions

    Market size, buyer sophistication, exposure

    Related and supporting industries

    Partners in supply chain, manufacturers

    Company strategy, structure, and rivalry

    Market structure and nature of competition

  • 8/8/2019 05 Global Logistics

    15/55

    Chapter 5 Management of Business Logistics, 7th Ed. 15

    Critical Factors and KeyTrends: Changes in

    Logistics and Transportation

    Deregulation of the U.S. Ocean LinerIndustry

    Shipping Act of 1984 and Ocean ShippingReform Act of 1998 gave freedom to setrates, establish service and capacity onshipping lanes.

    Ocean rates now more flexible to move inresponse to the laws of supply anddemand.

  • 8/8/2019 05 Global Logistics

    16/55

    Chapter 5 Management of Business Logistics, 7th Ed. 16

    Critical Factors and Key Trends:

    Changes in Logistics and Transportation

    Intermodalism

    Joint use of two or more

    transportation modes.

    Microbridge moves logistics capabilitiesfrom port-to-port through port-to-pointdirectly to point-to-point.

    Shipment Control

    High tech permits tracking & diversion ofshipments.

  • 8/8/2019 05 Global Logistics

    17/55

    Chapter 5 Management of Business Logistics, 7th Ed. 17

    Figure 5-1Types of International Intermodalism

  • 8/8/2019 05 Global Logistics

    18/55

    Chapter 5 Management of Business Logistics, 7th Ed. 18

    Critical Factors and Key Trends:

    Changes in Logistics and Transportation

    Free Trade Agreements

    NAFTA is the most current.

    EU is the 15 country European equivalent.

    APEC is the Pacific equivalent.

    Remaining customs barriers can impair

    logistics activities where they remain. Cultural differences can result in shipment

    delays where they are not understood.

  • 8/8/2019 05 Global Logistics

    19/55

    Chapter 5 Management of Business Logistics, 7th Ed. 19

    Critical Factors and Key Trends:

    Changes in Logistics and Transportation

    Currency Fluctuations

    The exchange rate of dollars to other

    international currencies affects both thevolume and direction of global trade.

    The effects of weak or strong dollarpositions carry through to marketing andlogistics.

  • 8/8/2019 05 Global Logistics

    20/55

    Chapter 5 Management of Business Logistics, 7th Ed. 20

    Table 5-2 Effect of Currency

    Fluctuations on Exports and Imports

    Scenario

    U.S. $ Value

    In Japanese

    Yen

    U.S. $ Cost of5000-Yen

    Item

    Yen Cost ofU.S. $1,000

    Item

    A 100 $ 50.00 100,000 yen

    B 120 $ 41.67 120,000 yen

    C 130 $ 38.46 130,000 yen

  • 8/8/2019 05 Global Logistics

    21/55

    Chapter 5 Management of Business Logistics, 7th Ed. 21

    Changing Political and Legal

    Environments A Single European Market

    Eastern Europe

    North American Free Trade Agreement

    Maquiladora Operations

    Asian Emergence

    New Directions

  • 8/8/2019 05 Global Logistics

    22/55

    Chapter 5 Management of Business Logistics, 7th Ed. 22

    Changing Political and Legal

    Environments: European Market 230 million consumers

    were established as onemarket thru the 1987

    Single European Act EU has eliminated:

    Physical barriers likecustoms.

    Technical barriers likehealth & safety issues.

    Fiscal barriers likevalue-added tax andexcise taxes.

  • 8/8/2019 05 Global Logistics

    23/55

    Chapter 5 Management of Business Logistics, 7th Ed. 23

    Changing Political and Legal

    Environments Eastern Europe Currently restructuring but generally working to improve

    from former communist-style governmental restrictions.

    Older infrastructure is holding these nations back fromfull participation in global markets.

    Governments have been selling assets to use for capitalinvestment.

    Future is uncertain, but markets are large enough toattract foreign capital if political environment is seen asstable.

  • 8/8/2019 05 Global Logistics

    24/55

    Chapter 5 Management of Business Logistics, 7th Ed. 24

    Changing Political and LegalEnvironments: The North American

    Free Trade Agreement (NAFTA) of 1994

    360 million people market

    $6.6 trillion market

    Phasing out tariffs on more than 10,000commodities over the next 10 to 15 years

    Poor transportation infrastructure remains in

    Mexico. Labeling inconsistencies are problematic.

    NAFTA will mature eventually.

  • 8/8/2019 05 Global Logistics

    25/55

    Chapter 5 Management of Business Logistics, 7th Ed. 25

    Figure 5-3A A Typical Truck

    Shipment Crossing into Mexico

  • 8/8/2019 05 Global Logistics

    26/55

    Chapter 5 Management of Business Logistics, 7th Ed. 26

    Changing Political and Legal

    Environments: Maquiladora Operations

    Maquiladora Operations takes its name fromthe region of Mexico in which the business

    facilities are located. Companies such as General Motors have built

    campus-style collections of assembly plants,supplier facilities and housing in Maquiladora.

    Currently more than 2,000 U.S./Mexicofacilities use the low wages, taxes, and lowduties of the Maquiladora.

  • 8/8/2019 05 Global Logistics

    27/55

    Chapter 5 Management of Business Logistics, 7th Ed. 27

    Changing Political and Legal

    Environments: Asian Emergence The Pacific Rim nations have emerged as key players

    in the global business environment.

    In the first three months of 2000, imports fromPacific Rim countries accounted for 32.9 percent oftotal U.S. imports.

    Japan, Korea, Taiwan, and Singapore purchased 24.7percent of U.S. exports in this same period.

    Japan is the leading regional supplier, followed byChina, Taiwan, and Korea.

    Low labor and high quality characterizes these Asiannations raw materials and finished goods.

  • 8/8/2019 05 Global Logistics

    28/55

    Chapter 5 Management of Business Logistics, 7th Ed. 28

    Changing Political and Legal

    Environments: New Directions Offshore plants and logistics facilities

    Focus production plants often require

    complex logistics facilities.

    General expansion of worldwide markets

    Worldwide growth of affluence

    Growth of Caribbean, Australian, African,Russian, and Eastern European markets

  • 8/8/2019 05 Global Logistics

    29/55

    Chapter 5 Management of Business Logistics, 7th Ed. 29

    On the Line: Holiday May BeHazardous to International

    Logistics Systems Workers not on the joblogistics activities

    come to a halt.

    Holidays vary by country and must beknown to international logistics managers.

    By scheduling pickup and delivery around acountrys holidays, the logistics managercan:

    Prevent disruptions in the internationalsupply chain;

    Maintain desired logistics service levels.

  • 8/8/2019 05 Global Logistics

    30/55

    Chapter 5 Management of Business Logistics, 7th Ed. 30

    On the Line: 2001 Holidays for theUnited States and Its Top Six Trading

    Partners

  • 8/8/2019 05 Global Logistics

    31/55

    Chapter 5 Management of Business Logistics, 7th Ed. 31

    Global Transportation Options More complex than domestic due to distance

    and number of parties involved

    Major international transportation modes

    Ocean

    Air

    Motor Rail

  • 8/8/2019 05 Global Logistics

    32/55

    Chapter 5 Management of Business Logistics, 7th Ed. 32

    Global Transportation

    Options: Ocean Ocean structure

    Liner scheduled service; regular routes

    Charter contract service; no set routes

    Private service firms own logistics needs

    Include bulk, container, RO-RO

    Most pervasive and important global mode Revenues are substantial see Table 5-3.

  • 8/8/2019 05 Global Logistics

    33/55

    Chapter 5 Management of Business Logistics, 7th Ed. 33

    Table 5-3

    Top Ten Ocean Carriers

  • 8/8/2019 05 Global Logistics

    34/55

    Chapter 5 Management of Business Logistics, 7th Ed. 34

    Global Transportation

    Options: Air Speed allows large compression of transit times.

    Linkages with package delivery and courier

    services provide true point-to-point service. Rates have traditionally restricted cargo to low

    density, high value goods.

    Volume is approximately 1% of movements, but

    nearly 20% of the value. New airfreighters can carry up to 13 TEUs (20

    foot containers).

  • 8/8/2019 05 Global Logistics

    35/55

    Chapter 5 Management of Business Logistics, 7th Ed. 35

    Table 5-4

    Major International Cargo Air Carriers

  • 8/8/2019 05 Global Logistics

    36/55

    Chapter 5 Management of Business Logistics, 7th Ed. 36

    Global Transportation

    Options: Motor Global motor characteristics of speed, safety,

    reliability, and accessibility basically the same

    as for domestic transportation. Container sizes are largely standardized into

    20, 40, 45, 48, and 53 foot boxes.

    Paperwork can be streamlined by having abonded warehouse seal the container at pointof shipment and not opened until it reachesits destination country.

  • 8/8/2019 05 Global Logistics

    37/55

    Chapter 5 Management of Business Logistics, 7th Ed. 37

    Global Transportation

    Options: Rail International rail movements are problematic.

    Rail gauges often vary.

    Containers maybe transloaded from rail toocean to rail and/or motor if standardinternational sizes are used.

    Maritime bridge movements gain speed byusing an intermodal strategy.

  • 8/8/2019 05 Global Logistics

    38/55

    Chapter 5 Management of Business Logistics, 7th Ed. 38

    Strategic Channel Intermediaries Foreign Freight

    Forwarders

    Non-Vessel-Operating CommonCarriers

    Export Management

    Companies Export Trading

    Companies

    Customs House

    Brokers Ship Brokers

    Ship Agents

    Export Packers

    Ports

  • 8/8/2019 05 Global Logistics

    39/55

    Chapter 5 Management of Business Logistics, 7th Ed. 39

    Strategic Channel Intermediaries:

    Foreign Freight Forwarders Consolidate small shipments into

    economical container or larger-sized lots.

    Used by small or inexperienced shippers. Consolidators and agents regulated by the

    Federal Maritime Commission.

    Fee for service and/or commissionfrom shipping companies.

    Use ocean and air modes.

  • 8/8/2019 05 Global Logistics

    40/55

    Chapter 5 Management of Business Logistics, 7th Ed. 40

    Strategic Channel Intermediaries:Non-Vessel Operating Common Carriers

    These carriers are used to disperse traffic movingto and from an inland port.

    These NVOCCs then collect traffic from inlandports back to the ocean port cities.

    This service saves the shippers from having to payto return empty containers to the ocean carriers.

    NVOCC service widens markets of the oceancarriers and provides expertise to the smallerinland shippers.

  • 8/8/2019 05 Global Logistics

    41/55

    Chapter 5 Management of Business Logistics, 7th Ed. 41

    Strategic Channel Intermediaries:

    Export Management Companies Export Management Companies (EMCs) act

    as a knowledgeable shippers agent in a

    foreign country. Act as the sellers agent in getting orders, and

    arranging for distribution, promotion, anddealing with the foreign government.

    Exclusive arrangements are possible and theEMC may sell with or without taking title tothe goods.

  • 8/8/2019 05 Global Logistics

    42/55

    Chapter 5 Management of Business Logistics, 7th Ed. 42

    Strategic Channel Intermediaries:

    Export Trading Companies Similar to the EMCs, the Export Trading

    Companies (ETCs) export goods and services.

    The ETC locates buyers, arranges for inlandand international transportation, and meetingforeign government requirements.

    Allows small and medium-sized firms theability to compete globally.

  • 8/8/2019 05 Global Logistics

    43/55

    Chapter 5 Management of Business Logistics, 7th Ed. 43

    Strategic Channel Intermediaries:

    Customs House Brokers Oversee the movement of goods through

    customs and ensures that paperwork

    accompanying a shipment is in order. Operate under power of attorney from the

    shipper and can pay any duty on freight.

    Much of the paperwork is done ahead of theshipment using integrated computer systems,greatly reducing the time it takes to clearcustoms, thereby reducing transit times.

  • 8/8/2019 05 Global Logistics

    44/55

    Chapter 5 Management of Business Logistics, 7th Ed. 44

    Strategic Channel Intermediaries: Ship

    Brokers/Ship Agents/Export Packers

    Ship brokers act as agents in securing thecharter of a ship.

    Ship agents are the local (port) agent of theship operator when the ship is in port.

    Export packers supply a shipper specializedexport packing services to help with customsand to protect the goods.

  • 8/8/2019 05 Global Logistics

    45/55

    Chapter 5 Management of Business Logistics, 7th Ed. 45

    Strategic Channel

    Intermediaries: Ports Port selection is a very important

    part of the international logistics strategy.

    Different ports often specialize in different typesof shipments.

    Selecting the wrong port can add miles, time,and therefore cost to a shipment not

    appropriately routed. Overall door-to-door transit time and variability

    most important factors.

  • 8/8/2019 05 Global Logistics

    46/55

    Chapter 5 Management of Business Logistics, 7th Ed. 46

    Figure 5-4

    Port Evaluation Factors

  • 8/8/2019 05 Global Logistics

    47/55

    Chapter 5 Management of Business Logistics, 7th Ed. 47

    Table 5-5: Ranking of U.S. Ports by

    Containers, Tons, and Cargo ValueBy Containers By Tons By Cargo Value

    Long Beach Houston Long Beach

    Los Angeles New Orleans Los Angeles

    NY & NJ South Louisiana NY & NJ

    San Juan NY & NJ Houston

    Oakland Corpus Christi Seattle

    Seattle Hampton Roads Charleston

    Charleston Beaumont Hampton Roads

    Hampton Roads Long Beach Oakland

    Tacoma Philadelphia New Orleans

    Houston Morgan City Baltimore

  • 8/8/2019 05 Global Logistics

    48/55

    Chapter 5 Management of Business Logistics, 7th Ed. 48

    Storage Facilities Storage may be necessary for containers,

    bulk, or finished goods.

    This may require different types of in transitfacilities depending upon the method ofshipment and cargo type.

    Longer term storage may require a public orbonded warehouse.

  • 8/8/2019 05 Global Logistics

    49/55

    Chapter 5 Management of Business Logistics, 7th Ed. 49

    Packaging Export shipments generally require a higher

    level of protection than domestic shipments

    because of extra handling and the motion ofthe ocean and its effect on cargo.

    Shippers expect to pay more for moreprotection, as settling liability claims can be

    very difficult due to the large number of firmsthat may be handling the goods.

  • 8/8/2019 05 Global Logistics

    50/55

    Chapter 5 Management of Business Logistics, 7th Ed. 50

    Figure 5-5 Some Symbols Used for

    Packing ExportShipments

  • 8/8/2019 05 Global Logistics

    51/55

    Chapter 5 Management of Business Logistics, 7th Ed. 51

    Governmental Influences Customs Regulation

    Other Customs Functions

    Foreign Trade Zones

  • 8/8/2019 05 Global Logistics

    52/55

    Chapter 5 Management of Business Logistics, 7th Ed. 52

    Figure 5-6

    Export-Import Flowchart

  • 8/8/2019 05 Global Logistics

    53/55

    Chapter 5 Management of Business Logistics, 7th Ed. 53

    Governmental Influences:

    Customs Regulation Customs regulations of the importing country

    have the greatest effect on the international

    movement of goods. In place to protect domestic industries from

    unfair or predatory competition, thesebarriers to trade are handled differently in

    various countries. Duties are expressed either as a percent of

    value, a fixed amount, or in combination.

  • 8/8/2019 05 Global Logistics

    54/55

    Chapter 5 Management of Business Logistics, 7th Ed. 54

    Governmental Influences:

    Other Customs Functions Determine that the goods value is as stated.

    Ensure that the goods are properly marked.

    Ensure that the items are permitted for entry.

    Ensure correct price and quantity.

    Control quota amounts.

  • 8/8/2019 05 Global Logistics

    55/55

    Chapter 5 Management of Business Logistics 7th Ed 55

    Governmental Influences:

    Foreign Trade Zones (FTZs) Goods enter without customs formalities, duty or

    bond.

    Shippers can break bulk before entry. Goods can be processed, repacked, or remarked

    to avoid fines before entry.

    FTZs can hold excess goods until the next quotawindow.

    Buyer can test or sample before entry.

    Goods can be stored indefinitely and/or re-exported without paying duty.


Recommended