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7/25/2019 SCM - International Issues in SCM
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International
Issues in SCM
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International Supply Chain
Management
Dispersed over a larger geographical area
Offers many more opportunities than justthe domestic supply chain
Risk factors are also present
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International Supply Chains International distribution systems
Manufacturing still occurs domestically, but distribution andtypically some marketing take place overseas. International suppliers
Raw materials and components are furnished by foreignsuppliers
Final assembly is performed domestically. In some cases, the final product is then shipped to foreignmarkets.
Offshore manufacturing
Product is typically sourced and manufactured in a singleforeign location
hipped back to domestic warehouses for sale anddistribution
Fully integrated global supply chain
Products are supplied, manufactured, and distributed fromvarious facilities located throughout the world.
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International Logistics
Logistics Costs comprise between 10% & 30% of thetotal landed costs of an International Order. Thus
International Logistics is a competiti!e tool
"ffecti!e International Logistics and #uppl$ Chainanagement can produce higher earnings and greaterCorporate "fficienc$
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International Logistics - Definition
International Logistics is design and management of a s$stem that controls the flow of materials into through
and out of the International Corporation
$ ta'ing a s$stems approach the Compan$ e(plicitl$recognises the lin'ages among the traditionall$ separate
logistics components within and outside the Corporation
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Difference between Domestic and
International Logistics
)istance
Currenc$ *luctuations
order + crossing ,rocess
Transportation odes
,ac'aging and Labelling re-uirements
Infrastructure
The Sixth Driver : Le!erage
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Availability of Modes
Ocean #hipping+ Liner #er!ice regularl$scheduled passage/ Tramp #er!ice a!ailable
for irregular routes and scheduled on demand/
Container #hips oll2on2oll2off OO/
ir #hipping
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!
Types of essels
Container #hips
oll + on +oll + off #hips
rea'bul' #hips
Combination #hips
Crude Carriers
)r$ bul' Carriers
4as Carriers
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"#
!ontainers
4eneral ,urpose Containers
eefer Containers
Tan' Containers
)r$ bul' Containers
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Pre-cooling
ContainersUsed at the farm level to
maintain Humidity and bring
down the temperature of the
product.
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Portable Storage on4!"eefer Containers
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"3
International Air Transportation
T$pes of ircrafts 5
,assenger ir ,lanes
ir freiters Cargo ,lanes
Combis
Charter ,lanes
"4
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M"lti # modal Transportation
In!ol!es at least two different modes of transportation
6suall$ Ocean and Land ail oad/
6ses onl$ one #hipping )ocument ill of Lading + issued at the point of origin /
"5
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!"stom $o"se Agents %!$A&
The ole of gents bro'ers/ is the same worldwide
Clearing of 4oods through Customs
oo'ing of space for Ocean ir and Land freight
,ro!iding information to the clients
,reparation of Import "(port documents
endering *reight forwarding ser!ice
"6
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'ac(aging for )xports
,rotecting the 4oods in transit from brea'ages
,rotecting the 4oods from water seapage
,rotecting 4oods from theft pilferage
"
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Transportation Doc"ments ill of Lading + fundamental #hipping document is a contract of carriage is a receipt for the goods is a certificate for title of 4oods
irwa$ ill + is a document that fulfils the same function
as an ocean ill of Lading howe!er it is non2 negotiable
,ac'ing List
Certificate from #hipping Compan$
Certificate of Origin
"!
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"!
'ayment Systems 7ormal mode of pa$ment in International Trade
is through Letter of Credit 5
Letter of Credit + n arrangement whereb$ obligation to pa$ the "(porter is underta'en b$ a an'
The u$er8s an' issues a LC in fa!our of the #eller
T$pes of LC8s 5 e!o'able LC Irre!o'able LC
e!ol!ing LC
7/25/2019 SCM - International Issues in SCM
19/27McGraw-Hill/Irwin 2003 Simchi-Levi, Kaminsky, Simchi-Levi
Forces Driving
Globalization $lo%al &arket 'orces
(echnological 'orces
$lo%al )ost 'orces
*olitical and +conomic 'orces
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McGraw-Hill/Irwin 2003 Simchi-Levi, Kaminsky, Simchi-Levi
Global Market Forces
'oreign competition in local markets $ro,th in foreign demand
Domestic consumption from 4#- to .3#- of ,orldconsumption since "/#
'oreign sales fuel gro,th $lo%al presence as a defensive tool
0estle1s and ellogg1s *resence in stateoftheart markets
apan consumer electronics $ermany machine tools 7 81s
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McGraw-Hill/Irwin 2003 Simchi-Levi, Kaminsky, Simchi-Levi
Technological Forces
Diffusion of kno,ledge
&any high tech components developed overseas
0eed close relationships ,ith foreign suppliers 'or e9ample: )anon has !#- of laser engines
(echnology sharing;colla%orations
as cycles get shorter?
)lose to e9pertise >@ndian programmersA?
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McGraw-Hill/Irwin 2003 Simchi-Levi, Kaminsky, Simchi-Levi
Global Cost Forces
Bo, la%or cost Diminishing importance >)osts underestimated: %enefits
overestimated?
Other cost priorities @ntegrated supplier infrastructure >as suppliers %ecome
more involved in design? killed la%or
)apital intensive facilities ta9 %reaks joint ventures price %reaks cost sharing
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McGraw-Hill/Irwin 2003 Simchi-Levi, Kaminsky, Simchi-Levi
Political and conomic
Forces+9change rate fluctuations and operating
fle9i%ility
Regional trade agreements >+urope: 0orth*roductionprocesses designed to avoid tariffs?
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McGraw-Hill/Irwin 2003 Simchi-Levi, Kaminsky, Simchi-Levi
Political and conomic
Forces !rade protection mechanisms
(ariffs Cuotas
8oluntary e9port restrictions apanese automakers in
Bocal content reuirements (@;@ntel factories in +urope apanese automakers in the +
Eealth;environmental regulations apanese refused to import skis for many years >different sno,? $overnment procurement policies
p to 5#- advantage for
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McGraw-Hill/Irwin 2003 Simchi-Levi, Kaminsky, Simchi-Levi
!dded Comple"ities
u%stantial geographic distances
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McGraw-Hill/Irwin 2003 Simchi-Levi, Kaminsky, Simchi-Levi
!dded Comple"ities
+9change rate uncertainties
)ultural differences
accepted partnerships: styles value of punctuality
*olitical insta%ility ta9 rates government control
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#perational StrategiesTo !ddress These $isks
peculative trategy Iet on a single scenario
apanese auto manufacturing in apan Eedged trategy
Bosses in one area offset %y gains in another
8F in : IraJil: &e9ico: $ermany 'le9i%le trategy