Logistics Operations Assignment Help

International Logistics

Logistics Operations Assignment Help is the logistics system which fulfills the need of logistics for the company which has a worldwide presence. So these companies have to fulfill their need for logistics in various countries. So for meeting these needs company needs to establish an international logistics supply chain in order to   expand in various countries. The domestic logistics function which company is having right now is quite different in its operations from the international logistics system.

International Vs Domestic Logistics

There are several differences in operations of international and domestic logistics system which are as follows:

  1. Inventory Holding: Inventory holding in the case of international logistics system increase significantly since it is not easy to replenish the inventory immediately across variation since the warehouses are located at a long distance in case of the international logistics management system. Due to excess inventory holding in the case of international logistics capital investments also increases significantly. Since warehouse is away and is only able to replenish in a long time so a particular store has to carry more amount of inventory in order to safeguard itself from the stock out condition so the retail location increases the inventory holding cost.
  2. Operation environment: In international accounting and marketing  companies operate under different operation environment in terms of technology used in international logistics, geographical features involved, the culture of the various countries and the climate of the various regions (Mathias, P. F., 2006). Since various countries involve different cultural environment hence company have to deal with this diverse environment.
  3. Different aims and objectives: In international logistics system companies operate under different aims and objectives as the personnel working have different aims and working hours too.
  4. Replenishment policy: Replenishment in the case of domestic logistics is easy as compared to the international logistics system since in the case of the international logistics system warehouses are very far away from the location and due to these it takes the time to replenish the inventory.
  5. Facility and locations: International logistics system also involves different organizational performance, production locations, storage and warehousing facilities as well since the requirement of various countries varies very much for the inventory and various facilities.
  6. Channel structure: The channel structure in case of the international logistics system is of the different structure; generally channel structure is long in case of the international logistics system.
  7. Capital Investment: There is the very high volume of capital investment has to be poured in by the companies in order to maintain the global supply chain.
  8. Sourcing: In international logistics system companies have to look for the sourcing of the raw material and another requirement worldwide which is just locally in case of the domestic logistics system.
  9. Trade Barriers: In the case of international logistics system companies have to face the international trade barriers, tariffs and quota.
  10. Choice of marketing channel: In the case of international logistics system companies have a choice in terms of different marketing channels available to them.
  11. Alternative transport modes: There is various kind of transport available with the companies in case of the international logistics system available with the companies.
  12. Complex management and control system: International logistics system involve complex management information and control system since the company is operating worldwide and have to deal with so many buyers and suppliers for various requirements of the company.

International logistics system

The following figure provides the flow of a typical international logistics system:

international logistics system , Plant and warehouse location

Some of the major decision areas involved into the international logistics system includes following:

  • Plant and warehouse location
  • Transportation mode
  • Inventory holding and replenishment
  • Packaging of the material

In order to compare the domestic and international logistics system following table provides the significant differences:

InventoryInventory

Domestic International
Cost It only accounted for small portion of the world’s GDP It accounted for 16% of the world GDP hence large investments are involved in it
Transportation mode Mainly it involves transportation through rail lines and trucks It involves transportation through ocean and air
Inventory short order is generally given, lead time requirements It requires higher level of inventory and longer lead time for the replenishment
Agent It has very modest usage, rail are the main source It has many agents like forwarders, consolidators and custom brokers as well
Financial risk Very low risk involved here It involves high risk due to inflation, currency rates and interest rates as well
Cargo risk There is very low cargo risk in case of the domestic logistics Due to high volume and different infrastructure for cargo transportation risk is very high
Government regulations In domestic logistics government regulations involves hazardous product, safety and tariff laws etc Many government regulations exist about custom, trade and transport as well
Administration It involves minimum paper work in order to make logistics facilities In international logistics system there are lot of formalities involved

Strategies to develop International logistics

  • The alternative strategies in order to develop the international logistics system are as follows:
  • Manufacturer domestically but marketing channel agency owned
  • Both manufacturing and marketing mix company owned
  • Both domestic as well as off-shore manufacturing
  • Manufacturing at multiple locations
  • License agreement

Problems in developing international logistics

The problems faced in order to develop the international logistics system over the domestic logistic system can be summed up as under:

Mode of transportation

The selection of appropriate transport mode depends upon a two factors which are carrier characteristics and cargo characteristics. Both factors in totality decide about the transport mode to be used by the logistics system (Skinner, W., 2005).

Factors affecting modes of transportation

Cargo characteristics

A cargo characteristic which affects the carrier choice in logistics system is as follows:

  1. Size: The size of the cargo matters in deciding about the transport policy. The dimension and volume of the cargo has to be taken into account.
  2. Weight: The total weight of the cargo also has impact on the transport mode to be selected for the transport.
  3. Density: Size and weight in combination also decides the transport medium.
  4. Stowability: Stowability is another component as the single large piece is difficult to handle while many moderate pieces are easy to handle.
  5. Handling: Cargo with handles is easy to handle in comparison to cargo without handles. Since some cargo have handle while other do not so cargo with handles are generally transported through the see medium since movement becomes easy in such cases.
  6. Liability: Some cargo requires extensive care while others do not have any liability in terms of theft or any other kind of care for them. The value of the cargo also forms a significant part of the liability (Valtz, C., 2001). If the cargo is highly valuable then it takes special medium to transport it while in case of a low value the cargo transport medium used is different from other medium.
  7. Special service requirements: Sometimes company have to cater to some special needs of the customer for that purpose company have to choose a transport medium which can provide it special services hence in such cases a special transport medium is adopted.
  8. Dangerous goods: Some goods are categorised under dangerous goods, so for transporting these goods through any transport medium need special care to be taken by the transporter and hence special transport medium is to be adopted 

Carrier Characteristics

carrier characteristics,logistics system

Second important factor in deciding the transport mode into a logistics system is the carrier characteristics to be used by the logistics system (Skinner, W., 1999). The following carrier characteristics are generally observed:

  1. Low value to weight ratio: In this approach of carrier selection the cargo which is having low monetary value and have high weight those cargos are transported through the water medium. Since there is more risk involved into the water medium since any time cargo can come in contact with the water. And also since cargo has high weight so in that case it is not cost effective to send the cargo through the other transport medium.
  2. High value to weight ratio: In second approach to the transport mode decision making system it involves the ratio between value and weight of the cargo to be transported through that mode (Walters, P. G. P., 2004). If the cargo to be transported is having high value like if the cargo involve jewellery and other such items and weight of the cargo is less then such items are transported through the air medium.
  3. Intermodal: In case of the opposite situation i.e. sometime cargo is not valuable and also do not have much wait but needs to be delivered fast in such situations it is advisable to use the land as the transport medium since by using the land as the transport medium cargo can be sent within time and cost effective as compared to the air medium.

Factors deciding choice of transportation mode

  1. Transportation cost-Transportation cost of the carrier includes the loading charges, unloading charge and rates of the carrier to be used for the transportation.
    Transit time– Transit time is the time taken by manufacturing of the goods to the delivery of goods to final destination. Hence if the transit time required is low then the cargo has to be transported through air medium or through land otherwise transportation has to be through water medium.
  2. Reliability-It is the accuracy with which transportation system delivers the goods to the final destination every time (Taniguchi, E., 2008). So sometimes companies need to have high reliability for the time in which goods have to reach the final location for that air medium has to be preferred since that takes less time but though that is little costlier than other medium of transport.
  3. Capability-for movement of the cargo some tools are required which has to be possessed by the particular transport medium.
  4. Accessibility-Transportation medium choice is also dependent upon the geographical area which a particular medium can access and hence more the geographical area covered by the media better it is.
  5. Security– A particular transport media which can transport the goods safely to destination is considered better. 

Mode of transportation to be used

NAF clothing which deals in fashion clothing is establishing international logistics. So for delivering the fashion clothing company need to use the air mode. Since the value of clothes is high and also there is very less weights in these fashionable clothes. One more factor supporting the air mode for transportation is that since it’s the fashion clothing so it needs to be delivered fast to the retail outlet and very less time is available between manufacturing of the cloth and delivering the cloth to final destination.

Monitoring and control system

In case of international logistics system companies need to monitor and control their inventory well in order to keep track of the inventory in real time (GAO Shan, 2002). And it avoids the stock out condition and at the same time companies have to minimize their Commercial Financing cost as well. In order to monitor and control the new international logistics system company needs to adopt the RFID based monitoring system which will allow the smooth inventory flow in company. This new RFID tag based system uses RFID e-tags, GPS, GPRS as well as the IC card which help the company to track and monitor the inventory status of the company.

The RFID tags are used in order to identify the cargo into the warehouses, while IC are used in order to do the relevant personal identification, GPS is used in order to locate the goods and inventory in real time while transportation of inventory is going on in order to manage inventory well. GPRS is used in order to send the automated SMS about the cargo information.

The tracking and tracing technologies can be used in order to capture the real time data about the logistics in an enterprise wide system. A RFID enabled system can be enabled at the outer side of the warehouse. And each inventory within the warehouse has to be entered with the RFID tag. Whenever a particular inventory comes inside the warehouse or whenever any inventory will leave the warehouse, RFID system attached with the inventory will identify that and the transferring inventory with help of the RFID system will be recorder in the computer system attached with the RFID system (Hauling, 2006). And Computer system will add or subtract the inventory as per the movement of the inventory within or out of the warehouse.

BY doing so real time data can be captures about the inventory status of the warehouse. Hence company can know exact inventory which is present in the warehouse at some particular instant of time. By using this real time data, company can save themselves from the stock out cost which generally happens due to the lack of sufficient data about the inventory present in the warehouse of the company.

Summary

For a company which is looking, for the worldwide expansion, it is necessary to have the global logistics system. Since by having global logistics system it can fulfil its requirements for running global Accounting operations. Domestic and international logistics systems are different in lot of parameters like cultural issues, trade barriers, capital investment, inventory holding and replenishment policy of the company. There are five alternatives of designing a international logistics system which are:

  • Manufacturer domestically but marketing channel agency owned
  • Both manufacturing and marketing channel company owned
  • Both domestic as well as off-shore manufacturing
  • Manufacturing at multiple locations
  • License agreement

The choice of transport medium used by the companies depends upon the two factors which are:

  • Characteristics of carrier
  • Characteristics of cargo

Hence both carrier and cargo decide which particular transport medium is to be used by the company. For choosing the transport medium companies took help of value/weight ratio of the cargo and if the value is high and weigh it less then companies use air method and if value is low and weight is more than transportation medium used is water.

For tracking the inventory in case of the international logistics system RFID system in combination of GPS and GPRS system can be used. These systems help the company to capture the real time data about the inventory of the company and help them to allocate them at real time.

References:

  • Heskett, J. L., and Mathias, P. F. (2006). The Management of Logistics in Multinational Corporations. Columbia Journal of World Business. 52.
  • Skinner, W. (2005). American Industry in Developing Economics. New York: J. Wiley and Son. 5-21.
  • Valtz, C. (2001). The Case of the Multi-Plant Manufacturer. Harvard Business Review. 13-30 and 177-81.
  • Skinner, W. (1999). Management of International Production. Harvard Business Review. 125-36