Logistics has always been a critical part as one of the 4 P?s in Marketing: Product, Place, Price and Promotion. The ?Place? component ensures the product is at the right place, at the right time, in the right quantity and the right quality.
International logistics can be defined as ?the process of planning, implementing and controlling the efficient, effective flow and storage of goods, services and related information from point of origin to point of consumption through international channels for the purpose of conforming to customer requirements?
The Role of International Logistics
International logistics call for an understanding of the total supply chain, the elements of which include inventories, packing, forwarding, freight, storage and handling. Logistics is responsible for all the movement that takes place within and outside the organization whether it is inbound logistics of incoming, raw materials or movement within the company or the physical distribution of finished goods. It provides the time and place utility at a competitive cost, to gain a significant competitive advantage in the marketplace.
Typical international logistics framework mainly consists of Physical Supply, Internal /external Operations and Physical Distribution of Goods and Services. To put it more simply, the material supply logistics starts from the base level of ?generation of the demand?, through the ?process of purchase? and ?supply of material from the vendor? right through to ?final acceptance? and ?payments to the supplier? and ?issue to the indenter? and has to be considered as a ?one whole activity? with each stage having an impact on price/cost of material supply.
Logistics is, in itself, a system; it is a network of related activities with the purpose of managing the orderly flow of material and personnel within the logistics channel.
Essential factors or elements of Logistics development
The challenge can be seen with the five key logistics issues of supply chain management?movement of product, movement of information, time/service, cost and integration.
? Globalization of sourcing, manufacturing and distribution leading to an increase in the complexity of material movement.
? Competition that has forced companies towards more responsiveness and a reduction in inventories. An increased need for small but frequent shipments with 100 percent reliability, requiring core competence in logistics management.
? Resource constraints that require companies to concentrate only on their core manufacturing or new product development activities.
Formulating International logistics strategy
Internal and External considerations
ORIGIN OF ORGANIZATIONS.
HORIZONTAL VERSUS VERTICAL
IDENTIFYING LOGISTICS COSTS.
SUPPLY CHAIN COMPLEXITY.
? Growth. This may involve sales growth with existing customers, new customers, new products and/or new markets.
? Profitability. This may involve cost reductions and being able to raise prices.
? Shareholder/Investor Value. Has to answer to the owners of the company. Put these in the context of today's business environment that customers, competitors and suppliers are now global. To support the goals, he will look at programs and issues, such as:
? Agility. How fast can the company respond and develop new processes, products and markets?
? Inventory levels. Is too much capital tied up in inventories? Why are there out-of-stock occurrences?
? Cycles times. How can we reduce the time and inefficiencies it takes to do our basic business with customer orders and with manufacturing? Can we do it faster and better?
? Product cost and Sourcing. Are there sourcing opportunities in other countries to bring in lower cost components or finished products?
? Sales. Are export markets fully developed?
? Plus. Are there other opportunities that we are missing? None of these programs specifically mention logistics. Yet logistics is important to each program, and hence, to the corporate goals. Logistics executives have to present their strategic participation and role for the corporation and how they can positively impact each program.
WHAT TO DO. After recognizing the internal issues, you must then work on dealing with them. Consider these actions to improve the logistics position within the company and develop positive support:
*Pitch what you do.
*Break the organization mind-set.
*Have both the strategic and tactical views.
*Get buy-in from the top management.
Importance of effective logistics management
Logistics is not confined to manufacturing operation alone. It is relevant to all enterprises, including Govt. institutions such as Hospitals and schools and service organization such as retailers, banks and financial service organizations. Effective Logistics management is especially important for bulk raw materials, where substantial outflow of freight is involved. Logistics management establishes a lean supply chain, which would give an advantage of quick product change over, capability, excellent short and long term forecast visibility and JIT capability.
An essential requirement is helps gain supply chain visibility through Adaptive, move-quickly and lean processes in satisfying the organisation and customers demand.
Provides appropriate Knowledge about: what is going on throughout the supply chain, within your company, at suppliers, at outside warehouses, at carriers and at 3PLs or 4PLs that may be used? What inventory is where? What inventory is needed where? What customer orders must be filled? What is happening with purchase orders? Do purchase order deliveries match up with sales and inventory replenishment requirements and dates?
MODES OF TRANSPORTATION IN LOGISTICS :
In order to transport material from one place to another Logistics Managers are using Rail, Road, Air, Water & Pipe Line as the modes of Transportation. A logistics expert needs to understand these modes based on priorities, product type. lead time etc. to decide the appropriate mode of Transportation.
Rail: Used for delivery of a wide range of goods including coal, iron ore, cement, food grains, fertilizers, steel, petroleum products and other heavy goods.
Road : Used by suppliers to deliver goods in a cost effective manner and best suited for short distances. Many transport companies have expertise for fast delivery, packaging etc. for making scheduled delivery.
Air: Used mostly for delivery of high value and tow volume goods from distant suppliers, usually not connected by any other mode of Transportation. It is also suitable for emergent item to be imported for some specific requirement.
Water : Used by firms for delivery of goods from distant suppliers, mostly conducted in containers of varied size. This mode is ideal for transportation of heavy and bulky goods and suitable for products with long lead times.
Pipe Line : Used by oil sector companies for mass movement of Petroleum products including gases. Due to quite low operating cost it is one of the preferred mode of transportation.
Multi-mode transport strategies can, where the product permits, buffer the surge effect by creating a pipeline with product moving at all times. Multi-mode also has use as a quarter evolves. For example, if sourcing from Asia to supply a Europe distribution or manufacturing operation, then a quarter could begin using all ocean transport. Then a shift to sea-air as the quarter moves. Finally shifting to air freight as the end of the quarter ends, yet also starting to ship via ocean to load the supply chain for the next quarter.
THIRD PARTY LOGISTICS
To put simply, 3PL refers to the outsourcing of a logistics function. It could be the use of a transportation carrier, a warehouse, or a third party freight manager to perform all or part of a company?s production distribution functions.
The tracking and control of movement of goods drive freight optimization and asset utilization. The options are : increased trailer utilisation, combining full truckload shipments, consolidation, aggregation of smaller buyers. Purchase asset based transportation is becoming increasingly a commodity.
FOURTH PARTY LOGISTICS :
Fourth Party Logistics (4PL) provider is a supply chain integrator that assembles and manages the resources, capabilities and technology of its own organization with those of complementary service provider to deliver a comprehensive supply chain solution.
There are many variations of the 4PL model that are practiced.
Three different models are summarized as under;
A) Lead logistics provider: The 4PL provider acts as an in house freight management company, it might or might not have a role in the selection of 3 PL partners. It takes care of transport invoicing and the monitoring of the performance of the 3 PLs.
B) Solution Integrator: In this variant of the model, the 4PL acts as the integrator of various 3PLS and as a single window for freight negotiations, 3PI selection and freight management on behalf of its client.
C) Industry Innovator: Under this model the 4PL uses its expertise and resources to create a solution not for any single client, but for offering 4PL services to a number of clients in an industry.
The services provided by a 4PL provider are:
? Freight Negotiations with 3PLs
? Freight Contract Management
? Transport Billing
? Continuous Improvement Programs
? Management of Service Providers
? IT Solutions
? Risk Management and Insurance
? Cash-flow Management.
Logistics is one of the area of the supply chain i.e. growing at a tremendous case as the Internet and E-Commerce is drastically changing the range, delivery time and the speed of information as well as ordering and payment process. Due to the big boon of information technology, greatly influencing and enhancing the effectiveness of logistics