Quản trị kinh doanh - International logistics

INTERNATIONAL LOGISTICSLearning objectivesAt the end of this lecture, students should be able toUnderstand global logisticsUnderstand the benefits Global LogisticsUnderstand Challenges to Global LogisticsUnderstand the factors that influence a company’s decision to enter international marketsUnderstand ways by which a company can enter international market/International Market Entry StrategiesGlobal Logistics IntroductionNew market are opening up and existing market are expanding worldwideA global financial network has developed that allows multi-national enterprises to expand their operationManufacturers have increased new material and component acquisition from other countries (i.e., global sourcing)The world economy is becoming more interdependentGlobal Logistics plans, controls, and manages the movement and storage of goods, services, and related information as it moves across international boundaries from the raw material provider (supplier) to the consumer, also considering the handling of returned goods and containers.The design and management of a system that controls the flow of materials into, through and out of the international corporationCouncil of Logistics Management definitionThe design and management of a system that controls the flow of materials into, through and out of the international corporationThe International Supply ChainKey major decision areasIn International Logistics, the designing and managing of a system that controls the flow of materials into, through, and out of the international corporation requires some major decision areas:Locating plants and warehousesChoice of transportation modeManaging inventoryPackagingBenefits Achievable Through Global LogisticsLow cost sourcingIncreased markets (and market share)Increased economies of scaleImportant issue to consider before entering International marketWith international logistics, an organization's supply chain can become longer And the longer the supply chain, the more cooperation and coordination is required between production, marketing, purchasing, and the logistics management departmentTo support non-domestic markets a company must have a distribution system that satisfied the particular requirement of those markets Comparing the Distribution Systems of Developing and Developed CountriesDistribution Systems in Developing Countries (Africa, South America or Asia)Distribution Systems in Developed Countries (Japan, Canada, United States and most Western Europe)Inadequate transportation and storage facilitiesa large labor force of mainly unskilled workersAn absence of distribution support systemshave good transportation systemsHave high-technology warehousingSkilled labour forceWhat are the factors that would influence a company’s decision to enter international markets?Market potentialGeographic diversificationExcess production capacity Products near the end of their cycle in the domestic market could generate growth in the international marketSource of new product and ideasForeign competition in the domestic marketInternational Distribution Channel StrategiesInternational Market Entry Strategies/ways companies enter international markets1.Exporting2. Licensing3. Joint ventures4. Ownership6. Countertrade5. ImportingInternational Distribution Channel StrategiesExportingRefers to selling products in another countryRequires the least amount of knowledge about foreign markets because domestic firms allow an international freight forwarder, distributor, trading company or some other organization to carry out the logistics and marketing functionAdvantagesDisadvantages greater flexibility & less riskNo additional production facilities or logistics distribution asset investment Firms produce the product domestically and allow the exporting intermediary to handle distribution of the product abroad Difficult to compete in foreign market tariffs (taxes assessed on goods entering a market)import quotas (limitation on the amount of goods to enter market)unfavorable currency exchange rateLess control over pricing, promotion or product distribution International Distribution Channel StrategiesLicensingInvolves agreements that allow a firm in one country (the licenser) to use the manufacturing, processing, trademark, know how, technical assistance, merchandising knowledge or some other skill provided by the licenser located in another countryAdvantagesDisadvantagesmore control to distribute product because distribution strategy is usually part of the preliminary discussionsless risk and increasing flexibilitydoes not require large capital outlaysLicensing agreement cannot be terminated in short periodthere is a time lag between the decision to terminate and the actual date of terminationLicensees can become future competitorsAs licensees develop their own know-how and capabilities, they may end the licensing agreement and begin to compete with licensers. International Distribution Channel StrategiesJoint VenturesRefers to have more control over the foreign firm than is available in a licensing agreement, but at the same time don’t want to establish a freestanding manufacturing plant or facility in a foreign marketThe risk is higher and the flexibility is lower for a company because an equity position is establish in a foreign firmRequires a greater knowledge of the international markets the firm is trying to serveInternational Distribution Channel StrategiesDirect OwnershipComplete ownership of a foreign offers the domestic firm the highest degree of control over its international marketing and logistics strategiesDirect ownership takes place through acquisition or expansionAdvantagesDisadvantagesMinimizes the start-up costs; locating and building facilities, hiring employees and establishing distribution channel relationshipsTotally responsible for marketing and distributing the productCompete more effectively on a price basis – transportation cost, custom duties and import taxesLess flexibility  long term commitmentFixed facilities and equipment cannot be disposed quickly if sales declineExchange rate fluctuations change the relative value of foreign investments because they are valued in local currencyAdvantages VS Disadvantages of Direct OwnershipMarket-Entry StrategiesIn general, firms follow more than one market-entry strategyMarkets, product lines, economic conditions and political environments change over time, so the optimal market-entry strategy may changeA firm considering exporting, licensing, joint venture or ownership should establish a formal procedure for evaluating each alternative.A firm should decide on a method of international involvement only after it has made a complete analysis of each market-entry strategy International Distribution Channel StrategiesImportingInvolves the purchase and shipment of goods from an overseas sourceImported items can be used immediately in the production process or sold directly to customersItems can be transported to other ports of entry, stored in bonded warehouses (where goods are stored until import duties are paid) or places in a free trade zone (where goods are exempted from customs duties until they are removed for use or sale)International Distribution Channel StrategiesCountertradeApplies to the requirement that a firm import something from a country in which it has sold something elseAny transaction in which part of the payment is made in goods instead of moneyThe need for countertrade is driven by the balance of payment problems of a country and by weak demand for the country’s product5 Forms of CountertradeBarterOccurs when goods of equal value are exchanged and no money involvedSwitchTransaction uses at least one third party outside the host country to facilitate the tradeCounterpurchaseInvolves transactions with more cash, smaller volumes of goods flowing to the multinational corporation over a shorter period of time and goods unrelated to the original dealCompensationTakes place when barter is specified as a percentage of the value of goods being traded to the value of the product being soldBuybackThe selling firm provides equipment/ entire plant and agrees to buy back a certain part of the productionManaging Global LogisticsKey Questions for Analysis, Planning and Control Environmental analysisWhat are the unique characteristics of each national market?What characteristics does each market have in common with other national markets?PlanningWho should make logistics decisions?What are the customer service needs of the target market?StructureHow do we structure our logistics organization to optimally achieve our objectives?Plan implementationHow do we develop effective operational logistics plans?Control of the logistics programHow do we measure and monitor plan performance?Managing Global LogisticsKey Issues in Global Logistics Decision MakingCost-Service Trade Off AnalysisThe ability to proper identify, evaluate and implement the optimal cost-service mix is always important to the firm and its customerSome particularly important cost and service considerations concern the use of integrated logistics systems to effectively and rapidly manage order completeness, shipping accuracy and shipment condition Managing Global LogisticsGuidelines in Developing a Global Logistics StrategyIn developing a global logistics strategy, some general guidelines applyLogistics planning should be integrated into the company’s strategic planning processLogistics department need to be guided by a clear vision and must measure output regularlyImport-export management should try to ensure integrated management of all elements of the logistics supply chain from origin to destinationOpportunities to integrate domestic and international operations should be pursued to leverage total company volumes with globally oriented carriersManaging Global LogisticsOrganizing for Global LogisticsShould you centralize or decentralize Logistics Globally?Many companies operating in the global marketplace centralize a large number of logistics activities while decentralizing othersExample: management of customer service tends to work best when it is under local control in the foreign marketOn the other hand, material flows into the organization are often centralized, because technology can quickly overcome spatial distancesManaging Global LogisticsThe Global MarketplaceUncontrollable ElementsPolitical and legal systems of the foreign marketsEconomic conditionDegree of competition in each marketLevel of distribution technology available or accessibleGeographic structure of the foreign marketSocial and cultural norms of the various target marketsManaging Global LogisticsKey Issues in Global Logistics Decision MakingThe Global MarketplaceControllable ElementsCustomer serviceInventoryPackagingTransportationWarehousing and storageManaging Global LogisticsCustomer Service StrategiesCS levels may be higher in international marketsExample: the order cycle time in Japan is generally shorter than in the US (geographical differences, the physical facilities of many retailers and financial consideration permit in Japan to be delivered in 24 hours or less)For that reason, many international firms operate owned facilities in foreign markets in order to compete effectively on a customer service basisThe cost of providing a specified level of customer service often varies between countriesA company must examine the service requirements of customers in each foreign market and develop a logistics package that best serves each area Managing Global LogisticsInventory StrategiesInventory control is particularly important to an international company and requires awareness of the many differences between international and domesticDepending on the length of transit and delays that can occur in international product movements, a firm may have to supply its distributor with higher than normal levels of inventory Managing Global LogisticsPackaging and ContainerizationInternational shipments require greater protection than domestic shipment, especially when they are not containerizedOther issues to consider include the handling of products, climate, potential for pilferage, communication and language differences, freight rates and customs dutiesThe greater number of handlings of international goods increases the possibility of damageLogistics executives can help to ensure that goods arrive safely at their international destinations through the proper planning, implementation and control of packaging decisionsManaging Global LogisticsThe Usage of Containers AdvantagesDisadvantages Costs due to loss or damage ↓ Labor costs in freight handling ↓ Easily stored and transported Available in a variety of sizesports/ terminals with container facilities may not be available in certain parts of the worldLarge capital expenditureThe Impact of International LogisticsLogistical costs are 10% to 30% of the total landed cost of an international orderUsing logistics as a competitive tool (Factors):Close collaboration with suppliers and customers.Technologically advanced information processing and communication exchange capabilities.Therefore, An integrated business infrastructure!!Challenges to Global Logistics“The 4 D’s”DemandDistanceDocumentationDiversityThe 4 D’sDemand is greater!!Distances are longer!!Documentation is more extensive!!Diversity is substantial in requirements and cultures!!Challenges in International Logistics Multiple and divergent challenges:Legal systems CurrenciesLanguagesMultiple and divergent challenges:EconomiesCulturesMovement-specific challenges Longer distances (and lead-time) Higher cost Additional documentation Involves both domestic & international transportationInternational Logistics (continued)International facilities network more difficult to control:Many languages, customs, labor normsLack of infrastructureDifficult communication Access to raw materials and local marketsTransportation more difficult and costlierMultiple transportation modesInternational transportation: ocean and air carriageDomestic transportation: rail and truckInternational Logistics (continuedNeed consolidation planning effort (large economic vessels)Slower and costlier service, more frequent stockoutsInventory costs higherPipelines longer and slower therefore pipeline inventory increasesUncertainty (political and production) therefore safety stock increasesProduct proliferation means with more SKUs, more inventory of finished goodsChallenges Global Logistics Managers Must ConsiderThe 5 V’sValueVelocityVariability VisibilityVulnerabilitySupply Chain Managers must consider the 5 V’sTo provide the consumer with better value in return for their dollarMaintaining supply chain velocityIncreased supply chain variabilityMaintain adequate supply chain visibilityManage supply chain vulnerabilityDomestic vs. International LogisticsDomestic vs. International Logistics (continued)Domestic vs. International Logistics (continued)Guidelines for Developing a Global Logistics StrategyLogistics planning should be integrated into the company’s strategyLogistics departments need to be guided by a clear vision and must measure output regularlyImport/export management should try to ensure integrated management of all elements of the logistics supply chain, from origin to destinationOpportunities to integrate domestic and international operations should be pursued to leverage total company volumes with globally oriented carriers48Akpe na mi!ANY QUESTION?????