Chapter 4: Logistical Processes In International Environments PDF

CHAPTER 4: LOGISTICAL PROCESSES IN INTERNATIONAL ENVIRONMENTS ============================================================= *"Why is it a bad idea to invite a logistics manager to dinner?* *They\'ll spend too much time deciding which person will pass the salt fastest."* Logistics means so much mo...

CHAPTER 4: LOGISTICAL PROCESSES IN INTERNATIONAL ENVIRONMENTS ============================================================= *"Why is it a bad idea to invite a logistics manager to dinner?* *They\'ll spend too much time deciding which person will pass the salt fastest."* Logistics means so much more than just moving goods from point A to B. It's about integrating and managing the flow of materials, information, and finances to achieve business goals efficiently. Also, it has a tremendous financial impact: depending on the nature of the business and the activity, logistics costs may make up for upwards of 20% of product prices and 25% to 45% of total costs (Andrejic and Pajic, 2018). It is "*the business process in the economic activity of any company, are interrelated actions that implement one or more of the business goals of the company, consisting of many internal steps or movements, starting with one or more inputs and ending with the creation of products or services necessary for customers and satisfying them in terms of cost, quality and timing.*" (Prokpenko et al., 2021) **ROLE OF LOGISTICS WITHIN THE SUPPLY CHAIN** "*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.*" (CSCM, 2007) Logistics management involves multiple interconnected activities that ensure the efficient flow of goods from production to the customer. Inbound and outbound transportation manage the movement of goods, supported by optimized fleet management and warehousing systems. Effective materials handling and order fulfillment processes ensure products are processed and delivered accurately. Logistics network design and inventory management balance costs and availability, while supply/demand planning aligns operations with market needs. Managing third-party logistics, strategic sourcing, and production scheduling ensures supply chain resilience. Customer service, strategic planning, and tactical adjustments maintain responsiveness and long-term success. **LOGISTICS ACTIVITIES** -------------------------------------- -------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------- **Activity** **Description** **Example** **Inbound/Outbound Transportation** Managing the movement of goods to/from manufacturing sites and distribution centers. Amazon\'s efficient transport from suppliers to customers. **Fleet Management** Optimizing transportation vehicles for efficiency. UPS\'s advanced fleet management to ensure timely deliveries. **Warehousing** Storing goods safely and ensuring easy access. Walmart\'s automated warehouse systems for managing large inventories. **Materials Handling** Managing product movement within warehouses. Amazon\'s use of robotics for materials handling in their fulfillment centers. **Order Fulfillment** Processing and delivering customer orders accurately and on time. Zappos\' emphasis on fast and precise order processing. **Logistics Network Design** Planning efficient routes and locations for distribution centers. FedEx\'s strategic logistics network planning to minimize delivery times. **Inventory Management** Balancing stock levels to meet demand without overproduction. Apple\'s sophisticated inventory management to match supply with demand. **Supply/Demand Planning** Forecasting needs and adjusting operations accordingly. Nike\'s use of data analytics to forecast demand and plan supply chain activities. **Third-Party Logistics Management** Overseeing external logistics partners to ensure they meet performance standards. Coca-Cola\'s management of third-party logistics providers for global distribution. -------------------------------------- -------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------- ---------------------------------------- ----------------------------------------------------------------------------------- -------------------------------------------------------------------------------- **Sourcing and Procurement** Acquiring materials cost-effectively. Boeing\'s strategic sourcing to ensure reliable supply of aircraft components. **Production Planning and Scheduling** Aligning manufacturing processes with supply chain capabilities. Ford\'s production scheduling to align with supply chain logistics and demand. **Packaging and Assembly** Preparing products for shipment securely. IKEA\'s flat-pack design for efficient shipping and assembly. **Customer Service** Addressing customer needs and resolving issues. Apple\'s renowned customer service for handling inquiries and support. **Strategic Planning** Setting long-term goals for logistics and supply chain operations. Toyota\'s long-term logistics strategy for global market penetration. **Operational Planning** Managing day-to-day logistics activities. Walmart\'s daily logistics operations to ensure store shelves are stocked. **Tactical Planning** Implementing short-term actions to respond to immediate needs and market changes. Target\'s agile logistics adjustments during peak shopping seasons. ---------------------------------------- ----------------------------------------------------------------------------------- -------------------------------------------------------------------------------- A diagram of a company strategy Description automatically generated **THE 7 GOLDEN RULES OF LOGISTICS** All 7 rules are deeply interconnected. Ensuring the Right Product at the Right Quality directly impacts whether it's delivered on time (Right Time) and to the correct location (Right Place). Accurate demand planning (Right Quantity) depends on understanding customer needs (Right Customer), which, in turn, affects cost management (Right Cost). Integrating these rules means looking at the procurement process as a whole. Each aspect influences the others, and success depends on managing these dynamics. 1. **Right Product:** Ensure the correct product is delivered. 2. **Right Quantity:** Deliver the exact amount needed. 3. **Right Quality:** Maintain the quality of the product throughout the supply chain. 4. **Right Time:** Ensure timely delivery. 5. **Right Place:** Deliver to the correct location. 6. **Right Customer:** Meet the specific needs of the customer. 7. **Right Cost:** Minimize costs while maximizing efficiency. **FLOW OF INTERNATIONAL LOGISTICS**  **SUCCESSFUL EXAMPLE OF INTERNATIONAL LOGISTICS** A diagram of a delivery process Description automatically generated Think about an online retail giant like Amazon -- quite the prime example of efficient, well-functioning international logistics. Products are collected from various suppliers and brought to regional fulfillment centers. From there, items are shipped globally using planes and ships, arriving at local distribution hubs. Finally, delivery trucks ensure the products reach customers\' doorsteps swiftly. This multi-phase logistics process allows Amazon to maintain its promise of fast, reliable global delivery. **STATUS QUO OF BUSINESS LOGISTICS** Trade liberalisation will continue to push nations to participate in and profit from the globalising world\'s rising market prospects. The growth of local and international logistics services may help different countries trade freely and cheaply. Still, the quality and efficacy of logistics services are crticial for international trade, as a deficient logistics infrastructure and operational processes can pose a significant obstacle to global trade integration. The worldwide logistics industry was valued at USD 8.96 trillion in 2023. It is projected to reach over USD 21.91 trillion by 2033, with a compound annual growth rate (CAGR) of 9.35% from 2024 to 2033 (Precedence Research, 2024). **\ TRANSPORTATION TRENDS** - **Air Cargo Takes Flight**: Air cargo is booming on the rise of e-commerce\'s demand for fast delivery. High-value, time-sensitive items like pharmaceuticals and fresh produce are driving this surge. - **Ocean Freight Navigates New Currents**: Ocean freight faces challenges but remains crucial. Innovations like LNG fuel and digital tools for smart containers and tracking are making shipping greener and more efficient. - **Rail Freight Steams Ahead**: Rail freight offers a cost-effective, eco-friendly alternative to road transport. With investments in high-speed rail, it\'s becoming a key player in long-distance bulk cargo. - **Road Warriors Get Smarter**: Trucking is evolving with automation and AI for route optimization. Electric trucks are also emerging, especially for short-haul and urban deliveries, addressing issues like driver shortages and congestion. - **Last-Mile Delivery Takes a Twist**: The final delivery stage is changing with drones offering fast, contactless delivery. Micro-fulfillment centers near cities are speeding up deliveries and cutting costs, revolutionizing how goods reach consumers. **ADVANTAGES OF GLOBAL LOGISTICS** - **Competitive Pricing** - **Wider Product Ranges** - **Fulfill Larger Scale Orders** - **Reach New Marketplaces** **COMPARING PUSH AND PULL SYSTEMS** Effective operations depend on an awareness of the differences between push and pull supply chain strategies, particularly in an environment of changing client demand. The issue arises: which approach is best suitable for my business as the scope of these needs increases? **Definitions:** - - **Pros and Cons:** - **Push System:** - **Pros:** Stability, control over inventory. - **Cons:** Risk of overproduction, high storage costs. - **Pull System:** - **Pros:** Flexibility, reduced inventory costs. - **Cons:** High dependency on supplier reliability. **PUSH VS. PULL LOGISTICS**  Source: [Transport Geography, 2024](https://transportgeography.org/contents/chapter7/logistics-freight-distribution/push-pull-logistics/) **PUSH STRATEGY** - **Definition** - **Benefits** - **Limitations** **PULL STRATEGY** - **Definition** - **Benefits** - **Limitations** Ein Bild, das Text, Schuhwerk, Silhouette enthält. Automatisch generierte Beschreibung Source: [Kanbanzone, 2024](https://kanbanzone.com/resources/kanban/kanban-pull-system/) **SUSTAINABLE DISTRIBUTION PRACTICES** Sustainable distribution involves eco-friendly transportation, optimized warehousing, and reverse logistics. These practices reduce environmental impact and improve operational efficiency. - - Sustainable approaches in distribution and logistics can radically change processes, focusing on transportation, delivery, and warehouse activities. For instance, eco-design strategies for packaging and optimizing transportation processes can significantly impact environmental sustainability. Implementing eco-friendly distribution can reduce transportation costs by 15-20%. **Think About It:** What steps can your company take to make its distribution practices more sustainable? **ROLE OF TECHNOLOGY IN SUSTAINABLE DISTRIBUTION** Business digitalization is a worldwide shift that impacts production and organisational structure. Digitalizing a company\'s activities involves transforming all aspects of its operations and economic activity, not just one channel, production operation, or business process. Automating regular processes is how most industrial companies assess digitalization. Digitising a value chain process automates regular tasks. Digitalization connects and optimises material and commodity movements across the value chain. **What's Next?** Emerging technologies like AI, IoT, and blockchain enhance sustainable distribution by improving efficiency, transparency, and real-time monitoring. - **AI and Machine Learning:** For predictive analytics in logistics. - **IoT:** Real-time monitoring and efficient inventory management. - **Blockchain:** Transparency and traceability in the supply chain. Industry 4.0 technologies, such as AI, IoT, and blockchain, are pivotal for improving the efficiency and effectiveness of distribution processes. These technologies help reduce material, energy, and water waste and support real-time monitoring. **KEY TAKEAWAYS** - - - - -