International Logistics and Global Supply Chain

8/4/2019 International Logistics and Global Supply Chain

1/19

International logistics &

Global Supply Chain


2/19

Global Expansion Benefits

Earn greater return from distinctive skills,

core competencies

Inimitable or difficult to imitate skills in valuechain

Realize location economies (choice of FDI

location)

Create multinational network of activities

(global web)


3/19

Pressures for Global Integration

& Local Responsiveness

Cost Reduction Pressures vs.

Local Responsiveness Pressures

Differences in consumer preferencesInfrastructure/practices

Distribution channels

Host government needs


4/19

Key Export Issue

Standardizationcost reduction

AND/OR

Adaptationresponding to markets.youmust do both!

Product Design, Pricing, Distribution and

Promotion- the marketing mix.


5/19

Making Alliances Work

Selecting a suitable partner

Helps achieve strategic goals & may bring

valuable expertise. Learn from partners.But the partner must be bona fide. Lots of face

to face time must be spent with likely partner.

Technology protection.

Safeguards against opportunism. Build trust.

Core competencies must be in line.


6/19

Scale of Entry

What level of resources to commit?

What can you afford to commit?

Strategic commitment is difficult to reverse.Has a long term impact

Means that resources cannot be used elsewhere.

Small scale entry allows learning at lowrisk. But small/large markets may requiresame level of initial resources.


7/19

Where to Locate?

Concentrate manufacturing if

Costs are best contained in one location

Trade barriers are low

Stable exchange rates

Production technology has high fixed costs,high minimum efficient scale, flexible

manufacturing format.Universal needs of product: minor consumerdifferences.


8/19

Where to locate?

Decentralize manufacturing if

Country environment does not affect costs.

Trade barriers are highProduction technology has low fixed costs, low

minimum efficient scale, & does not exist in

flexible manufacturing format.

Product does not serve universal needs.


9/19

Make or Buy?

Make advantage

Lower costs in-house?

Are specialized assets needed?

Is proprietary technology needed?

Buy advantage

Strategic flexibility needed?

Lower costs by buying?

In either case improved scheduling just asimportant.


10/19

Supply Chain Definition

Supervision of all the steps involved in

moving a product, regardless of corporate,

political or geographic boundaries, fromraw material supply through final delivery

to the ultimate user to satisfy a particular

customer group is called supply chain

management.


11/19

What the Supply Chain Enables

Firms can hold less inventory.

Can move inventory faster through distribution

channels.

Firms can track products through a glass pipelinethat enables suppliers and customers access to data.

Greater emphasis by the firm on global outsourcing of

product and distribution functions that cannot be done

efficiently in-house. Greater focus on core competencies primarily

around brand management.Movement towards thevirtual corporation.


12/19

Innovations within the Global

Supply ChainSeamless integration of software, systems managementand visibility of all parts from initial producer to finalpurchaser through on-line procurement.

Inventory cost is a fraction of the total cost. A make-one/sell-one model

Global supplier relationships are close and specific.

Suppliers locate based on the needs of keycustomers.

Replication of IT systems to allow all members towork in parallel to achieve performance standards.

Flow of goods is controlled by just-in-time shipment.


13/19

Planning in the Supply Chain

Connection of business partners in ways that allowfor a new degree of communication andcollaboration as part of a worldwide enterprise.

The ability to tightly schedule operations withlittle or no need for inventory.

Final product development can be delayed untilthe last minute to respond to changes in customer

orders.Web-based exchanges to link customers withsuppliers for individual transactions.


14/19

Supply Chain Issues

Companies are under intense pressure from theirworld-wide supply chains.

Millions invested in information technologies,

supply chain consultants, and new partnerships.Often there is incompatibility, security, andreliability problems between different operatingsystems.

Being able to deliver at increased speed means that

this becomes another requirement of retainingbusiness. The speed of inventory movementsmagnifies mistakes.

Retailers no longer keep large inventories with thepromise of instant service from suppliers.


15/19

Infrastructure Issues

Efficient and exact delivery of productsacross countries, oceans and time zones isdifficult under the best conditions.

State of the art air and ocean ports haveenormous costs for locales and compete withother obvious civic needs.

Much of the world infrastructure (roads,utilities, communication) is in need ofsubstantial upgrading.


16/19

Supplier Relationships

Unreasonable pressure put on suppliers or

manufacturers can upset delicate

relationships.Mutual trust, shared thinking and

commitment must replace fear, distrust, and

arrogance if a company expects to create

and maintain an efficient supply chain that

dominates its markets.


17/19

Why a Supply Chain?

A Global Supply chain also provides:

Information from the retailer on daily sales of

particular products to be transmitted back to the

manufacturer. Influences decisions on design, sourcing, and

production volumes.

Offers control over processes in manufacturing,

distribution, planning, financials, customer serviceand support.

Goal is to arrive at a point where the product is

made only after it is sold.


18/19

Current Supply Chain Solutions

ERP (Enterprise Resource Planning) software.(SAP, Oracle)

ASP (Application Service Provider) model (Ariba,

i2 Technologies, Commerce One) Beyond ASPs - E-Commerce Exchanges & B2B

models. (GoCargo, Worldbid, Freightwise)

Most solutions will require time, training and

perhaps process reengineering to work in anoptimal fashion.


19/19

International Logistics and Global Supply Chain

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