Introduction to International Logistics CHAPTER 1 Introduction to International Logistics
Logistics: What It Is Council of Logistics Management definition: “Logistics is that part of the supply chain process 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.” Source: clm1.org
The Goal of Logistics Rapid Response Minimum Variance Minimum Inventory Movement Consolidation Quality Life Cycle Support
The Overall Goal of Logistics to achieve a targeted level of customer service at the lowest possible cost.
Other Terms (1) Materials Management Physical Distribution Business Logistics inbound logistics operations logistics outbound logistics
Control Over the Flow of Inbound and Outbound Movements
Other Terms (2) Integrated Logistics International Logistics + Suppliers and Customers Figure: p.9 International Logistics Special for reasons of Business Environment Cultures
The Cost of the Business Logistics System In Relation to Gross Domestic Product (GDP) In $ Billion Year Inventory Carrying Costs Transportation Costs Administrative Costs Total U.S. Logistics Cost Logistics As a Percentage of GDP 1960 31 44 3 78 14.7 1965 38 64 4 106 1970 56 91 6 153 1975 97 116 9 222 13.5 1980 220 214 17 451 16.1 1985 227 274 20 521 12.4 1990 283 351 25 659 11.4 1995 302 441 30 773 10.4 2000 377 590 39 1,006 10.1 Source: R. Wilson and R. Delaney, Twelfth Annual State of Logistics Report, 2001
Three Factors for Spending on Logistics Level of Economic Activity Efficiency From goods and Toward Services
Regional Logistics Assessment Geography Physical Infrastructure Legal/Business Infrastructure Two Countries Compared -P.15
The Three Logistics Environments military Business civil
Three Channels for Performance Cycle Transaction Distribution Documentation / communication
Transportation The Role of Transportation Three Perspectives to Transportation Shippers Carriers consignees
Brief History of Logistics and Transportation Military term Why logistics is now a well-recognized Profession?
Regional Trading Agreements I The European Union (EU) A unified economic and trade entity Belgium, Denmark, France, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, the United Kingdom, Germany, Austria, Finland, and Sweden Economic and monetary union (Euro) North American Free Trade Agreement (NAFTA) Eliminated barriers to free trade (tariffs, import licensing requirements, and customs user fees) United States, Canada, and Mexico
European Union Countries
Regional Trading Agreements II Free Trade Area of the Americas Southern Cone Common Market (Mercosur) Association of Southeast Asian Nations (ASEAN) Trading alliance of 10 Southeast Asian nations African Union
ASEAN Members
The World Trade Organization (WTO) Evolved from the General Agreement on Tariffs and Trade (GATT) in 1995. Functions as the only global organization dealing with the rules of trade among nations. Has 145 member nations. Monitors and promotes world trade.
Incoterms 2000 –p31 E: F C EX-Works (EXW) FCA (Free Carrier) FAS (Free Alongside Ship) FOB (Free on Board) C CFR (Cost and Freight) CIF (Cost, Insurance, and Freight) CPT (Carriage Paid To) CIP (Carriage and Insurance Paid To)
Incoterms 2000 –p31 D DAF (Delivered at Frontier) DES (Delivered Ex Ship) DEQ (Delivered Ex Quay) DDU (Delivered Duty Unpaid) DDP (Delivered Duty Paid)