Fundamentals of International Business - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -  CHAPTER 8: Logistics Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Key Terms logistics production logistics business logistics supply chain vertical integration horizontal integration point-of-sale terminal just-in-time (JIT) inventory systems letter of credit supplier management outsourcing nearsourcing insourcing offshoring inshoring inbound distribution outbound distribution receiving process Ex Works (EXW) carrier bill of lading freight consolidation containerization Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Chapter Objectives By the time you finish this chapter, you should be able to: Compare the logistics of delivering a product to a local, national, or international market Describe the key factors that influence the ways in which a company may deliver its product to an international market Compare the advantages and disadvantages of different modes of transportation for distributing a product to different world markets Identify, drawing on a variety of sources information to facilitate the import/export process Explain the role of the Canada Border Services Agency Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Consider our Food Supply-Chain Grocery Stores: How did all the food items get onto the shelves? Where did it all come from? How do they keep it all fresh and ready to eat? How many items are available for sale in a typical grocery store?

Manufactured Items How many parts are in a Boeing 787 Airplane?

Even a skateboard needs a supply chain Wood for the main body Metal and Fasteners for the skateboard truck Polyurethane for the wheels Grip Tape for traction Lacquer and Graphics Cardboard box for shipping Packaging Labels

SUPPLY CHAIN MANAGEMENT -A Career in Motion Click on the yellow highlight to get the CSCSC video-good to test in advance of presentation or right before presentation that the sound works. -I like the “join us” video. - Take out a piece of paper and write down as many job titles as you can. After the video ask them to call them back to you. BUY MAKE MOVE

What is Supply Chain Management? As you are watching the video write down the careers available in supply chain management. Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Logistics Defined Logistics The management of the flow of goods and services both into and out of an organization, from the point of origin to the point of consumption. It consists of transportation, inventory management, warehousing and storage, and packaging. Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Logistics Defined Production logistics Logistic processes within a company, usually a manufacturing business, that ensure that each machine and workstation in a plant has the right material in the right quantity and quality at the right point in time. Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Logistics Defined Business logistics A process that ensures a steady flow of needed materials and information to all parts of a business through a network of computer terminals, transportation links, and storage facilities. Used under license from Shutterstock, Inc. Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Logistics Defined Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Importance of Logistics What is logistics Warehouse systems from design to service – video As you are watching the video write down the different teams responsible for the logistic design and how each ones contributes to the process. Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Supply Chain Supply chain The sum total of all activities involved in moving raw materials, processed goods, and finished products into an organization, and moving the semi-processed or finished goods out of the organization toward the end-consumer. Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Failure and success stories Target expending into Canada a supply chain disaster (170 million dollars lose) http://www.bnn.ca/News/2014/5/21/Target-Canadas-supply-chain-gridlock-how-Barbie-SUVs-snarled-traffic.aspx Target failure story-video Outline the 3 mains reasons why Target failed in Canada Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Wal-Mart Success Story of Supply Chain Read the article and summary Wal-Mart’s 5 key factors to a successful supply chain management Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Supply Chain Vertical integration A form of business organization in which a company owns the whole supply chain, or significant portions of it, from acquisition of raw materials to retailing. Example of vertical integration in a company that sells canned fish. Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

McDonald’s Example of Vertical Intergration From farm to fries: a potato story McDonald’s owns their own potato farms in each country where they operate http://www.mcdonalds.ca/ca/en/food/all-access_moms/from_farm_to_fries.html From beef to burger McDonald’s owner their own cattle farms http://www.mcdonalds.ca/ca/en/food/all-access_moms/heres_the_beef.html Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Supply Chain Horizontal integration A method of expanding a company by acquiring its competitors. Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Examples of Horizontal Integration Microsoft purchased Yahoo PepsiCo purchased Quaker Oats Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Supply Chain Advantages Disadvantages Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Supply Chain The main links in the supply chain are: Inventory management Storage Cash flow Supplier co-ordination Information processing Physical distribution Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Supply Chain Inventory management For retailers, this requires a system that records sales Usually a point-of-sale terminal, a system that tracks retail sales by recording the code or stock number of each stock-keeping unit (SKU) In larger companies, this becomes more complex, particularly if they design and manufacture the products they sell Used under license from Shutterstock, Inc Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Supply Chain Storage Four possible locations for the storage of goods: Place where the goods are made Warehouse Distribution centre Place that receives the goods Used under license from Shutterstock, Inc Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Supply Chain Companies are reluctant to be responsible for storage of goods because it takes up valuable space and increases the possibility that they will have to deal with damage or theft. Each link in the supply chain tries to pass goods on as quickly as possible. Just-in-time (JIT) inventory systems are used to eliminate storage altogether. JIT requires suppliers to make and ship the materials that factory or retailer needs quickly enough that the goods and materials arrive at the workstation, factory floor, or retail store just as they are needed. Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Supply Chain Cash-flow management Involves negotiating payment terms, setting up the method of payment, and arranging exchange of funds across the supply chain. Letter of credit A financial guarantee, issued by a buyer’s bank, that they have sufficient collateral on deposit to pay for a shipment. Letters of credit are often used for international transactions. Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Supply Chain Supplier management Often referred to as sourcing or procurement, the practice of finding reliable sources for the products and services that a business needs. Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Supply Chain Outsourcing The strategic use of outside resources to perform activities that were previously handled internally by the company itself. Nearsourcing Sourcing particular business functions or services, such as telemarketing, to a company in a foreign country that is relatively close in distance. Insourcing A company’s establishment of a specific division within the business, such as an advertising department or customer call center, to handle a function that is normally outsourced. Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Supply Chain Offshoring The transfer of certain business functions by a company to a branch of the company that is located in another country, usually to save on labour costs. Inshoring A company’s contracting out of a function to other businesses within its own country, for example to another state or province where labour is cheaper or facilities are better. Used under license from Shutterstock, Inc Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Examples Apple Inc  outsources their manufacturing to Foxconn Bell outsources their call centre to India Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Supply Chain Information management As the complexity and speed of business around the world increases, information technology is necessary for effective supply chain management. Each member of the supply chain requires instant access information, and all members need to be networked to the same information source. Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Supply Chain – Physical Distribution In groups of 4 each person summarize one of the 4 physical distribution and share with your team members We will take up the answers as a class. Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Methods of Physical Distribution in the Supply Chain The selection of a carrier depends on several different factors: What is being shipped Weight of the shipment Speed of delivery required Cost of the carrier Destination of the shipment Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Methods of Physical Distribution in the Supply Chain On your own read the methods of Physical Distribution and summarize it. Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Methods of Physical Distribution in the Supply Chain Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Issues in the Supply Chain Issues in the supply chain include: Reliability of sources Oil prices Unstable political climate Piracy Optimization Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Getting Help with the Supply Chain Sources of help for Canadian businesses: Department of Foreign Affairs and International Trade The Canadian Trade Index Frasers Customs brokers Industry Canada Canada Border Services Agency Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Foreign Marketing and Canadian Shopping Habits Canadian businesses must stock goods from around the world to compete with online retailers. Retailers must guarantee a unique selection of products by visiting international trade shows or accessing online distributors. Increase in foreign ownership of Canadian manufacturers means it is more difficult to buy Canadian-made goods. Canadian businesses must remind shoppers that they sell and produce Canadian goods. Chapter 8: LOGISTICS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.