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Summary of the book: Contemporary logistics

by: Paul R. Murphy, Jr. Donald F. Wood

Tenth edition. Pearson

Summary of Chapters:1, 5, 7, 8, 10 & 14

20 Pages in total

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Chapter 1 An overview of logistics

Economic impacts of logistics Economic utility (the value or usefulness of a product in fulfilling customer needs or wants)

4 general types:

Possession utility : the value or usefulness that comes from a customer being able to take

possession of a product

Form utility : a product’s being in a form that can be used by the customer and is of

value to the customer(allocation; smaller quantities that are desired by customers)

Place utility :having products available where they are needed by customers

Time utility : having products available when they are needed by customers

What is logistics? ‘logistics management is that part of Supply Chain Management 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.’

Mass logistics: every customer gets the same type and levels of logistics service(then some will be

overserved/underserved)

Tailored logistics: groups of customers with similar logistical needs and wants are provided with logistics

service appropriate to these needs and wants

Increased importance of logistics by: A reduction in economic regulation

Changes in consumer behavior

Technological advances

The growing power of retailers

Globalization of trade

The systems and total cost approaches to logistics Systems approach: indicates that a company’s objectives can be realized by recognizing the mutual

interdependence of the major functional areas(marketing, production, finance and logistics) of the firm.

Stock-keeping units(SKUs): each different type or package size of a good is a different SKU.

Materials management: movement and storage of materials into a firm.


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Physical distribution: storage of finished product and movement to the customer.

Total cost approach: all relevant activities in moving and storing products should be considered as a

whole, not individually.

Logistical relationships within the firm

Finance

Production Postponement: the delay of value-added activities such as assembly, production, and packaging until the

latest possible time.

Marketing

Place decisions

Price decisions

- Landed costs: which refers to the price of a product at the source plus transportation costs

to its destination.

- Phantom freight

- Freight absorption

Product decisions

Stockouts: being out of an item at the same time there is demand for it

Promotion decisions

Marketing channels ‘a set of institutions necessary to transfer the title to goods and to move goods from the point of

production to the point of consumption and, as such, which consists of all the institutions and all the

marketing activities in the marketing process.’

Ownership channel: covers movement of the title to the goods;

Negotiations channel: the one in which buy and sell agreements are reached;

Financing channel: payments for goods/ company’s credit

Promotions channel: promoting a new or an existing product

Sorting function

‘the discrepancy between the assortment of goods and services generated by the producer and the

assortment demanded by the consumer.’

Sorting out; A-eggs from different suppliers into a company’s storage-> Storage only A-eggs

(is sorting a heterogeneous supply of products into stocks that are homogeneous)

Accumulating; bring together similar stocks from different sources


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Allocating; breaking a homogeneous supply into smaller lots.

Assorting; building up assortments of goods for resale(to retail customers)

Activities in the logistical channel Customer service: keeping existing customers happy

Demand forecasting: estimate product demand in a future time period.

Facility location decisions: location of the relevant warehousing and production facilities.

International logistics: the logistics activities associated with goods that are sold across national

boundaries.

Inventory management: stocks of goods that are maintained for a variety of purposes

Materials handling: the short- distance movement of products within the confines of a

facility(warehouse)

Order management: management of the activities that take place between the time a customer places

an order and the time it is received by the customer

Packaging: industrial(protective) packaging refers to packaging that prepares a product for storage and

transit.

Procurement: raw materials, component parts, and supplies brought from outside organizations to

support a company’s operations.

Reverse logistics: products can be returned for various reasons, such as product recalls, product damage,

lack of demand, and customer dissatisfaction.

Transportation management: actual physical movement of goods or people from one place to another,

whereas transportation management refers to the management of transportation activities by a

particular organization.

Warehouse management: places where inventory can be stored for a particular period of time.


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Chapter 5 The supply chain management concept

Supply chain management ‘SCM 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, 3rd party service providers

and customers. In essence, SCM integrates supply and demand management within and across

companies.’

Evolution of supply chain management Supply chain: all activities associated with the flow and transformation of goods from the raw material

stage(extraction), through to the end user, as well as the associated information flows.


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3 SCM models

Supply Chain Operations Reference(SCOR) model: Plan

Source

Make

Deliver

Return

Global Supply Chain Forum(GSCF) model: Customer relationship management

Customer service management

Demand management

Order fulfillment

Manufacturing flow management

Supplier relationship management

Product development and commercialization

Returns management

Process Classification Framework(PCF) Develop vision and strategy

Develop and manage products and services

Market and sell products and services

Deliver products and services

Manage customer service

Develop and manage human capital

Manage information technology

Manage financial resources

Acquire, construct and manage property

Manage environmental health and safety (EHS)

Manage external relationships

Manage knowledge, improvement and change

The PCF and SCOR model provide open-source benchmarking data for the logistics activities that are part

of their established processes, while the GSCF model has an assessment tool that includes logistics-

related items.


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Attributes affecting SCM implementation

Customer power Consumer has a greater access to information(internet)-> become highly knowledgeable about an

organization and about competing organizations and its products.

Goals:

Fast supply chain: emphasizes a speed and time component

Agile supply chain: focuses on an organization’s ability to respond to changes in demand with

respect to volume and variety.

Lean supply chain/leagility: A lean supply chain defines how a well-designed supply chain should

operate, delivering products quickly to the end customer, with minimum waste.

Long-term orientation Long-term orientation-> relational exchanges

Short-term orientation-> transactional exchanges

Partnerships: long-term relationships between SC participants, are part and parcel of a relational

exchange.

Leveraging technology

Enhanced communication across organizations The enhanced communication across organizations is dependent on both technological capabilities and a

willingness to share information(part of a long-term orientation)

Inventory control 1st aspect: move from a pattern of stops and starts to a continuous flow. 2nd aspect: a reduction in the amount of inventory in the supply chain. Reduced by:

Smaller, more frequent orders

Use of premium transportation

Demand-pull, as opposed to supply-push

Replenishment; aanvulling

Elimination or consolidation of slower-moving product.

Bullwhip effect: variability in demand orders among supply chain participants

Interorganizational collaboration Supply chain collaboration: cooperative, supply chain relationships-formal or informal- between

manufacturing companies and their suppliers, business partners or customers, developed to enhance the

overall business performance of both sides.


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Supply chain facilitators 3rd party logistics(3PL) also called: logistics outsourcing or contract logistics: one company allows a

specialist company to provide it with one or more logistics functions. 3PL providers: FedEx SC services,

Schenker logistics, UPS SC solutions.

Barriers to SCM implementation

Regulatory and political considerations Several decades ago, many of the SC arrangements in use today would have been considered illegal

under certain regulatory statutes. Because it will make it more difficult for others to enter particular

markets. It would be wise to seek sound legal advice before entering into future supply chain

arrangements.

Lack of top management commitment Top management commitment is absolutely essential if supply chain efforts are to have any chance of

success. Top management has the ability to allocate the necessary resources for supply chain endeavors

and the power to structure, or restructure, corporate incentive policies to focus on achieving

organizational and inter-organizational objectives.

Reluctance to share, or use, relevant information Some organizations are reluctant to share information, particularly information that might be considered

proprietary in nature.

Supply chain analytics: combines technology with manual employee effort to identify trends, perform

comparisons, and highlight opportunities in supply chain processes, even when large amounts of data

are involved.

Incompatible information systems One advantage to the single integrator approach is that there should be coordination across the various

applications. (with transportation management software)

Incompatible corporate cultures Important that the participants be comfortable with the companies they will be working with. Corporate

cultures refers to: ‘how we do things around here’.

Globalization Global supply chains translate into both longer and more unpredictable lead times(time from when an

order is placed until it is received) for shipments, which increases the chance that customer demand

might not be fulfilled, due to a potential out-of-stock situation.


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Supply chain integration Fe. Food manufacturers may sell to grocery chains, institutional buyers, specialty firms and industrial

users. -> The packaging expectations of specialty firms might be more demanding than those of

industrial users.

3 primary methods of supply chain coordination:

Vertical integration: where one organization owns multiple participants in the supply chain.

Formal contracts: franchising

Informal agreements: offers supply chain participants flexibility in the sense that organizations

can exit unprofitable or unproductive arrangements quickly and with relative ease, organizations

should be aware of potential shortcomings.

Chapter 8 Inventory Management

Inventory: stocks of goods and materials that are maintained for many purposes(most common purpose:

to satisfy normal demand)

Inventory management:(Key component) inventory decisions are often a starting point, or driver, for

other business activities, such as a warehousing, transportation and materials handling.

Inventory classifications: Cycle, or base stock: inventory that is needed to satisfy normal demand during the course of

an order cycle.

Safety, or buffer stock: inventory that is held in addition to cycle stock to guard against

uncertainty in demand or lead time.

Pipeline, or in-transit stock: inventory that is en route between various fixed facilities in a

logistics systems such as a plant, warehouse or store.

Speculative stock: inventory that is held for: seasonal demand, projected price increases,

and potential shortages of product.

Psychic stock: inventory that s associated with retail stores, and the general idea is that customer

purchases are stimulated by inventory that they can see.

Inventory costs ‘Stockholders’ equity ‘inventory costs money: inventory appear as an asset on company balance sheets,

tends to be one of the largest assets on the balance sheet.

Inventory carrying costs Inventory carrying costs: Costs associated with holding inventory. Expressed in a percentage multiplied

by the inventory’s value


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Inventory carrying costs % x inventory’s value = relevant carrying costs

Inventory carrying costs:

Inventory shrinkage: more items are recorded entering than leaving warehousing facilities.

Shrinkage is generally caused by damage, loss, or theft. Although shrinkage costs can be

reduced.

Storage costs: costs who are associated with occupying space in a plant, storeroom, or

warehousing facility.

Handling costs: costs of employing staff to receive, store, retrieve and move inventory.

Insurance costs: insure inventory against fire, flood or theft

Taxes

Interest costs: the money that is required to maintain the investment in inventory.

NOTE: Some inventory items have other types of carrying costs because of their specialized nature:

plants, pets and livestock.

Ordering costs ‘costs associated with ordering inventory, such as order costs and setup costs’(administration etc.)

Trade-off between carrying and ordering costs ‘respond in opposite ways to the number of orders or size of orders. That is an increase in the number of

orders leads to higher order costs and lower carrying costs.

Stockout costs The costs or penalties for a stockout involve an understanding of a customer’s reaction to a company

being out of stock when a customer wants to buy an item.

Trade-off between carrying and stockout costs Both move in opposite directions – higher inventory levels result in lower chances of a stockout.

When to order Fixed order quantity system:a key issue with respect to inventory management involves when product

should be ordered; one could order a fixed amount of inventory

Fixed order interval system: or orders can be placed at fixed time intervals

Reorder(trigger)point(ROPs): the level of inventory at which a replenishment order is placed

ROP = DD(daily demand) x RC(replenishment cycle) +SS(safety stock)


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How much to order

Economic order quantity(EOQ) EOQ: calculating the proper order size with respect to two costs:

Costs of carrying the inventory

Costs of ordering the inventory

EOQ = √2AB/C

= √2x (A)nnual usage€ x administrative costs per order of placing(B)/%(C)arrying costs of the

inventory=€… order size

EOQ =√2DB/CI

=√2xannual (D)emand in units x (B) / (C) x €(I)nventory per unit = … units

Page 159

Inventory management: special concerns

ABC analysis of inventory Inventories are not of equal value to a firm and that , as a result, all inventory should not be managed in

the same way. Value to a firm because of: criticality, item profitability, sales volume.

A=highest criticality

B=Moderate criticality

C= Low criticality

Dead inventory We know ABC, but D stands for ‘dogs’ or dead inventory(no sales during a 12 month period)

Dead inventory increases inventory carrying costs and takes up space in warehousing facilities

Dead inventory because of: overproduction or customers don’t want/need it.

Inventory turnover Refers to the number of times that inventory is sold in a one-year period.

Inventory turnover= cost of goods sold / Average inventory

Complementary and substitute products Complementary products: inventories that can be used or distributed together(such as razor blades and

razors).

Substitute products:products that can fill the same need or want as another product(Coca Cola, Cola AH)


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Contemporary approaches to managing inventory

Lean manufacturing(lean) Focuses on the elimination of waste and the increase of speed and flow.

JIT approach: seeks to minimize inventory by reducing Safety Stock, as well as by having the required

amount of materials arrive at the production location at the exact time that they are needed.

Service parts logistics Involves designing a network of facilities to stock service parts, deciding upon inventory ordering

policies, stocking the required parts, and transporting parts form stocking facilities to customers.

Vendor-Managed inventory (VMI) The size and timing of replenishment orders are the responsibility of the manufacturer.

Chapter 7

Demand management

Demand management is ‘the creation across the supply chain and its markets of a coordinated flow of

demand.’

Make-to-stock situations= when finishing goods are produced prior to receiving a customer order.

Make-to-order situations= when finished goods are produced after receiving a customer order.

Demand forecasting models

Manieren om de verwachte vraag te berekenen

The 3 basic types of forecasting models are:

1. Judgemental forecasting= involves using judgment or intuition and is preferred in situations where

there are limited or no historical data, such as with a new product introduction. (surveys)

2. Time series forecasting= is that future demand is solely dependent on past demand.

3. Cause and effect forecasting= assumes that one or more factors are related to demand and that the

relationship between cause and effect can be used to estimate future demand.

Demand forecasting Issues

Forecasting accuracy refers to the relationship between actual and forecasted demand.


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Order management

Order management refers to management of the various activities associated with the order cycle.

Order cycle refers to the time from when a customer places an order to when the goods are received.

Order to cash cycle= the time from when a customers places an order to when the payment is received.

The order cycle has 4 stages:

1. Order transmittal: refers to the time from when the customer places an order until the seller receives

the order. Ways to transmit orders: in person, by telephone, fax and electronically.

2. Order processing: refers to the time from when the seller receives an order until an appropriate

location(F.E. a warehouse) is authorized to fill the order. Differences in companies approaches to

manage order processing and its activities:

- order receipt, the order has to be checked for completeness and accuracy, but that costs time and

money. So companies structure the order receipt function to reflect historical trends on order

completeness and accuracy.

-order triage: decide which order is more important and prioritize orders and make the most important

order first.

- location. For example, the location with the most order has priority.

3. Order picking and assembly: It includes all activities from when an appropriate location( warehouse)

is authorized to fill the order until goods are loaded aboard an outbound carrier.

Voice-based order picking refers to the use of speech to guide order-picking activities.

Pick-to-light technology, in which order to be picked are identified by lights placed on shelves or racks.

An advantage of this is that the worker simply follows the lights placed from pick to pick, as opposed to

the working having to figure out an optimal picking path.

4. Order delivery: refers to the time from when a transportation carrier picks up the shipment until it is

received by the customer.

CUSTOMER SERVICE

Customer service ‘the ability of logistics management to satisfy users in terms of time, dependability,

communication and convenience.

Time: refers to the period between successive events.

Dependability: refers to the reliability of the service encounter and consist of 3 elements, namely,

consistent order cycles, safe delivery and complete delivery.

Order fill rate= the percentage of orders that can be completely and immediately filled from existing

stock, is one way of measuring the completeness of delivery.

Communication: effective communication should be a two-way exchange between seller and customer,

with the goal of keeping both parties informed.

Convenience: (gemak) The convenience component of customer service focuses on the ease of doing


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business with a seller. Multichannel marketing systems= separate marketing channels to serve

customers, because customers like to have multiple purchasing options.

MANAGING CUSTOMER SERVICE

Customer profitability

Customer profitability (CPA) refers to the allocation of revenues and costs to customer segments or

individual customers to calculate the profitability of the segments or customers. CPA recognizes that not

all the customers are the same and divide them in groups. One group is profitable and another group

not.

Establishing customer service objectives.

Because customer service standards can significantly affect a firm’s overall sales success, establishing

goals and objectives is an important management decision.

Benchmarking, refers to a process that continuously identifies understand and adapts outstanding

processes found inside and outside an organisation.

Performance benchmarking = which compares quantitative performance.

Process benchmarking= which is qualitative in nature and compares specific processes.

Service failure and service recovery

Service recovery will refer to a process for returning a customer to a state of satisfaction after a service

of product has failed to live up to expectations.

Chapter 10. Warehousing management.

Warehousing refers to that part of a firm’s logistics system that stores products at and between points of

origin and point of consumption.

Short-haul transportation:

producer >Transportation Retailer A,B or C

Long-haul transportation:


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producer <transportation Warehousing

facility

<transportation Retailer A,B or C

A key reason for warehousing is because patterns of production and consumption do not

coincide(samenvallen)

Regrouping function involves rearranging the quantities and assortment of products as they move

through the supply chain and can take 4 forms:

1. Accumulating (Bulk making) involves bringing together similar stocks from different sources, as might

be done by a department store that buys large quantities of men’s suits from several different

producers.

2. Allocating (Bulk breaking) involves breaking larget quantities into smaller quantities. Example:

department store buys 5000 suits in size 42 and an individual store want only 15 suits.

3. Assorting, refers to building up a variety of different products for resale to particular customers

Example: our department store want to supply individual stores with a number of different suit sizes.

4. Sorting out, refers to separating products into grades and qualities desired by different target markets.

Example: a department store chain only sell $1000 men’s suit only in sotres located in high-income

areas.

Accumulating and allocating refer to adjustments associated with the quantity of products.

Assorting and sorting out refer to adjustments associated with product assortment.

Warehouses emphasize the storage of products, and their primary purpose is to maximize the usage of

available storage space.

Distribution centers emphasize the rapid movement of products through facility and thus they attempt

to maximize throughput(= the amount of product entering and leaving a facility in a given time period)

Cross-docking= the process of receiving product and shipping it out the same say or overnight without

puttering it into storage.

Public warehousing

Public warehousing serves all legitimate users and has certain responsibilities to those users. The user

rent the space he needs. Public warehousing offers more locational flexibility than do company-owned

facilities, and this can be important when a company is entering new markets. The disadvantage of

public warehousing is the potential lack of control by the users. Services are purchased on a month-to-

month basis


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Private warehousing

Private warehousing, which is owned by the firm storing goods in the facility, generates high fixed costs

and thus should only be considered by companies with large volumes of inventories. The high fixed costs

can be spread out over more units. Users have a lot of control over their products.

Contract warehousing

‘A long term mutually beneficial arrangement which provides unique and specially tailored warehousing

and logistics services exclusively to 1 client. Where the vendor and client share the risks associated with

the operation. Contract warehousing allows a company to forcus on its core competencies (what it does

best) , with warehousing management provided by experts. Same control as by private warehousing.

Contract warehousing is more flexible than private warehousing but less so than public warehousing, this

flexibility depends on the length of the contract.

Multiclient warehousing

Multiclient warehousing mixes attributes of contract and public warehousing. It has a limited number of

customers. Services are purchased through contracts that cover at least one year. They are particularly

attractive to smaller organisations that don’t have sufficient volumes to (1) build up their own storages

facilities or (2) use traditional one client contract warehousing services.

DESIGN CONSIDERATIONS IN WAREHOUSING

General considerations

One of the best pieces of advice with respect to the design of warehousing facilities is to use common

sense. Also it is important for an organization to know the purpose to be served by a particular facility

because relative emphases placed on storage and distribution functions affects space layout.

Trade-offs

Trade-offs must be made among space, labor and mechanization with respect to warehousing design.

Fixed VS variable slot locations for merchandise

Fixed slot location: each stock-keeping unit(SKU) has one or more permanent slots assigned to it(a

parking garage with parking spaces to certain individuals.)

Variable slot location: involves empty storage slots being assigned to incoming products based on space

availability. (the closest available storage position)

Build out(horizontal) VS Build up (vertical)

It is cheaper to build up then to build out, because than you need more land etc.


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Although building costs decline on a cubic-foot basis as one builds higher, warehousing equipment tends

to increase.

Order-picking VS Stock-replenishing functions

Organizations must decide whether workers who pick outgoing orders and those who are restocking

storage facilities should work at the same time or in the same area.

Two dock VS Single-dock layout

A two-dock layout has receiving docks on one side of a facility and shipping docks on the other side, with

goods moving between them.

IN a one-dock system, each and every dock can be used for both shipping and receiving, typically

receiving product at one time on the day and shipping it at another time.

Conventional, narrow, or very narrow aisles(gangpad)

How bigger your aisles is, how smaller jour storage place.

Paperless warehousing VS traditional paper-oriented warehousing operations.

A paperless warehousing facility generates and uses few or no paper document and instead relies on

some type of technology, such as barcodes.

Other space needs

WAREHOUSING OPERATIONS

Warehousing Productivitity analysis.

Productivity is a measure of output divided by input and although a number of different productivity

metrics can be used to assess warehousing productivity, not all are relevant to all kinds of facilities. It is

important to recognize that increases in warehousing productivity do not always require significant

investment in technology or mechanized or automated equipment.

Safety considerations

Warehouse safety consideration fall into 3 categories

-Employee safety: It costs more to train and replace a worker than to provide a safe enviroment.

- Property safety: Dunnage= material that is used to block and brace products inside carrier equipment to

prevent the shipment from shifting in transit and becoming damaged.

- Motor vehiciles

Hazardous materials

‘ Is any item or agent which has the potential to cause harm to humans, animals or the enviroment,

either by itself or through interaction with other factors.

Warehousing security

Warehousing security focuses on 2 primary issues, namely, protecting produts and preventing their

theft.

Cleaniness and sanitation issues


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Cleaniness have a positive impact on employee safety, morale and productivity while als reducing

employee turnover.

14. International Logistics

Logistics activities associated with goods that are sold across national boundaries.

Macroenvironmental influences on international logistics Macroenvironmental influences: uncrollable forces and conditions facing an organization and include

demographic, economic, natural, technological and political factors.

Political factors Many nations ban certain types of shipments that might endanger their national security; fe. Military or

strategic equipment to certain nations->afraid for nuclear weapons.

Tariff: tariffs or taxes that governments place on the importation of certain items. Established to protect

local manufacturers, producers, or growers, and once tariff barriers are built, they are not easily torn

down.

Nontariff barriers: restrictions other than tariffs that are placed on imported products. One type:

Import quota: limits the amount or product that may be imported from any one country during

a period of time.

Embargoes: a political restriction on trade and generally result from political tensions(Fe. US trade with

Cuba has been banned since 1950s).

Balance of payments: system of accounts that records a country’s international financial transactions

Economic factors Currency fluctuations, market size, income, infrastructure and economic integration.

-> impact international trade/logistics

Cultural factors Religion, values, rituals, beliefs and languages.

INTERNATION DOCUMANTION

Some documents which are used for internation shipments:

Certificate of origin specifies the county in which a product in manufactured and can be required by

government for control purposes or by an exporter to verify the location of manufacture.


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Commercial invoice is similar in nature to a domestic bill of lading in the sense that a commercial invoice

summarizes the entire transaction and contains key information to include a description of the goods,

the terms of sale and methods of payment, the shipment quantity, the method of shipment, and so on.

Shipper’s export declaration(SED) contains relevant export transaction data such as the transportation

mode, transaction participants and decription of what is being exported.

Shipper’s letter of intstruction(SLI) often accompanies an SED and provides explicit shipment

instructions.

TERMS OF SALE (=incoterms)

1. The physical goods (logistics channel) 2. Payment for the goods, freight charges and insurance for the in-transit goods (financing channel) 3. Legal title to the goods (ownership channel) 4. Required documentation (documentational channel) 5. Responsibility for controlling or caring for the goods in transit, say, in the case of livestock

(logistics channel)

METHODS OF PAYMENT

Refers to the manner by which a seller will be paid by a buyer.

-cash in advance: is huge risk to the buyer

- letters of credit is issued by a bank and guarantees payment to a seller provided that the seller has

complied with the applicable terms and conditions of the transaction.

-bills of exchange

- open account: seller sends the goods and all document directly to the buyer ands trusts the buyer to

pay by a certain date, is a big risk for the seller.

INTERNATIONAL TRADE SPECIALISTS

International freight forwarders= specialize in handling either vessel shipment or air shipments.

- Advising on acceptance of letter of credit

-Booking space on carriers

-Preparing an export declaration

- Preparing an air waybill of bill of lading

-Obtaining consular documents

- Arranging for insuramce

-Preparing and sending shipping notices and documents

-Serving as general consultant on export matters.

Nonvessel-operating common varriers (VOCC)

Almost the same as the internation freight forwarders, differences:

-NVOCC can issue their own billgs of lading

-NVOCC can set their own rates for ocean and intermodal shipments

-NVOCC can enter into service contrats with ocean carriers to purchase transportation services.


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Export management companies(EMC)

A firm that acts as the export sales department for a manufacturer.

Export packers

Export packers custom pack shipments when the exporter lacks the equipment or the expertise to do so

itself. It is for 2 distinct purposes: move easily through customs and to protect the products.

TRANSPORTATION CONSIDERATION IN INTERNATIONAL LOGISTICS

Ocean shipping

Load centers are major ports where thousand of containers arrive and depart each week.

Shipping conferences and alliances

Shipping conferences are cartels of all ocean vessel operatiors operating between certain trade areas

such as Asia and Europe.

Ocean carrier alliances: carriers retain their induvidual identities but cooperate in the area of operations,

began froming in the containes trades.

International airfreight

3 types of internation airfreight operation exist:

-Chartered(gehuurd/bevracht)aircraft

- Intergrated air carriers that specialize in carrying parcels

- Scheduled air carriers.

Open skies agreements, which liberalize internation avaition opportunities and limit federal government

involvement

Surface transport considerations(road)

An alternative to surface transport in some nations is short-sea shipping(SSS), which refers to

waterborne transportation that utilizes inland and coastal waterways to move shipments from domestiv

ports to their destination.

LOGISTICS PERFORMANCE INDEX (LPI)

Is created in recognition of the importance of logistics in global trade and measures a county’s

performance across six logistical dimension

1. It can be analyzed for all countries according to the overall LPI socre

2. The LPI can be analyzed in terms of an induvidual county’s performance relative to its geographic

region and income group.

3. The overall and dimension-specific LPI scores among the BRIC(brazil, russia, india, china) nations.


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