INTERNATIONAL LOGISTICS AND DISTRIBUTION

INTRODUCTION

International business is a term used to collectively describe all commercial transactions that take place between two or more nations. Usually, private companies undertake such transactions for profit , governments undertake them for profit and for political reasons. It refers to all those business activities which involves cross border transactions of goods, services, resources between two or more nations. Transaction of economic resources include capital, skills, people etc. for international production of physical goods and services such as finance, banking, insurance, construction etc. International Business in India looks really lucrative and every passing day, it is coming up with only more possibilities. The growth in the international business sector in India is more than 7% annually. There is scope for more improvement if only the relations with the neighboring countries are stabilized. GLOBAL SUPPLY CHAIN MANAGEMENT

With increased globalization and offshore sourcing, global supply chain management is becoming an important issue for many businesses. Like traditional, supply chain management, the underlying factors behind the trend are reducing the costs of procurement and decreasing the risks related to purchasing activities. The big difference is that global supply chain management involves a company's worldwide interests and suppliers rather than simply a local or national orientation. Global supply chain management usually involves a plethora of countries, it also usually comes with a plethora of new difficulties that need to be dealt with appropriately. The companies need to consider is the overall costs. While local labor costs may be significantly lower, companies must also focus on the costs of space, tariffs, and other expenses related to doing business overseas. Additionally, companies need to factor in the exchange rate.

Global supply chains pose challenges regarding both quantity and value:

Supply and Value Chain Trends

Globalization Increased cross border sourcing Collaboration for parts of value chain with low-cost providers Shared service centers for logistical and administrative functions Increasingly global operations, which require increasingly global coordination

and planning to achieve global optimums Complex problems involve also midsized companies to an increasing degree.

These trends have many benefits for manufacturers because they make possible larger lot sizes, lower taxes, and better environments (culture, infrastructure, special tax zones, sophisticated OEM) for their products. Meanwhile, on top of the problems recognized in supply chain management, there will be many more challenges when the scope of supply chains is global. This is because with a supply chain of a larger scope, the lead time is much longer.

EXAMPLE

OHL , flexible and scalable global supply chain solutions offers a comprehensive set of logistics solutions to support customer needs throughout the world. Their services include transportation, warehousing and distribution, customs brokerage, freight forwarding and trade consulting services.  These services are flexible and they meet the needs of companies of varying sizes and complexities.  Their services can be integrated together to deliver powerful, end-to-end supply chain solutions that will help you achieve your strategic business objectives while driving costs out of the supply chain .

With experience in a wide range of industries including automotive, apparel, healthcare, retail, chemical, electronics, food and beverage, industrial products, high value commodities, pharmaceutical, steel and forestry, OHL can handle any size, weight, or value of shipment.

INTERNATIONAL LOGISTICS

The negotiating, planning, and implementation of supporting logistic arrangements between nations, their forces, and agencies. It includes furnishing logistic support to, or receiving logistic support from, one or more friendly foreign governments, international organizations, or military forces, with or without reimbursement. For the international firm, customer locations and sourcing opportunities are widely dispersed. The firm can attain a strategically advantageous position only if it is able to successfully manage complex networks, consisting of its vendors, suppliers, other third parties, and its customers. Logistics costs comprise between 10% and 30% of the total landed costs of an international order. Thus, international logistics is a competitive tool. Effective international logistics and supply-chain management can produce higher earnings and greater corporate efficiency.International freight logistics , International cargo logistics, International customs logistics and sea cargo logistics are some of the types of international logistics.

EXAMPLE Japan, as an island country, is naturally dependent on foreign trade. Imports and exports for 2003 totaled 984 million tons; of that amount, ships transported 99.7% by volume, or 68% by value. The MOL Group, centered on ocean shipping transport, plays a key role in transporting a range of cargoes that are essential to consumers and businesses around the world. As an indispensable industry for sustainable worldwide economic growth, the MOL Group is expanding its business while focusing on environmental protection and social needs.

INTERNATIONAL CUSTOMS LOGISTICS

CUSTOMS BROKERS

In recent years, large multinational and other larger freight companies have leaned towards selling short the importance of the customs broker, preferring to market freight as the key to successful import program.

Increased pressures on forwarders to provide quicker delivery times has led to many forwarders cutting costs in their customs departments through reducing the number of tariff experienced staff and reducing clearance cycle times. The result has been a decline over time in the ability of brokers to identify all opportunities to reduce their customer’s duty payable.

EXAMPLES

(1)Toyota Motor Sales, U.S.A., Inc., the car maker's marketing arm in the United States, selected Expeditors International of Washington Inc. (NASDAQ:EXPD) as customs broker for the automobiles and parts it brings into the United States .Toyota Motor Sales, U.S.A. Inc. selected Expeditors from a field of four contenders. Toyota preferred Expeditors'. automated reporting systems

(2) Joseph Smith Company has been providing Customs clearance, International Freight Forwarding, and Logistics consulting services to the international community for over 20 years.

They offer a full range of import and export services  They help companies manage their supply chains and solve their toughest logistics problems. Their clients range from Fortune 500 companies to sole proprietors. They also provide outsourcing solutions to air carriers and fellow freight forwarders.

(3) Primex Customs and Logistics Inc. was formed with one vision in mind, to provide their customers with a service that would add value to their firms through optimizing their supply and distribution chains. In today’s increasingly competitive environment logistics has become a fundamental differentiator in any company’s success. At the same time with the globalization of business, the logistics process is becoming increasingly complex. Primex has the expertise that can provide any company with a competitive advantage through their logistics processes . Today Primex is a full service international logistics provider and freight forwarder dedicated to being a seamless extension of their customer’s distribution and supply chains.

INTERNATIONAL FRIEGHT LOGISTICS

Freight logistics is the movement of goods from point A to point B by air, truck, rail, water, and pipeline. Nationally, the volume of freight and goods moved throughout the transportation system has grown significantly over the past few decades and is projected to increase nearly 70 percent by 2020. As the demand for goods and services grows, there is a greater concern about increasing congestion, safety and security, and the environment. Therefore, understanding and improving freight transportation is becoming a higher priority at all levels of government and in the private sector.

EXAMPLES

(1) A premium worldwide logistics network, project & supply chain management provider.

IFLN Group is dedicated to the provision of logistics services worldwide. The business philosophy on which the Group is founded delivers supply chain solutions in a unique way, benefiting end-users of both regular high volume shipments as well as those involved with large and small project moves .The Network of independent freight transport specialists in every part of the world has been knitted together to ensure that IFLN's service is presented as a united entity. Each Member of the Network is a well-established logistics company with country-based offices and facilities. The Network enables Members to cooperate with like-minded logistics companies in all corners of the world and in turn offer a truly global service to their customers.

The Group's established services, IFLN Network and VAL Management have been designed and developed in response to specific customer needs. The IFLN Group has discerned a significant demand for relationship-based service provision by logistics companies; service that delivers fast and innovative supply chain solutions with locally available expertise. IFLN Group achieves these goals through uniting such local resources in a centralized and professionally managed way.

(2) Challenge Logistics Pvt. Ltd., One of India's leading agencies engaged in the business of International Freight Forwarding by Air and Sea, to and from India. The Company offers its clients complete logistic solutions and tailormade packages with special focus on services. Founded in 1997, Challenge Logistics Pvt. Ltd., prides itself on its exceptional service, ability to meet tight time constraints, deadlines and service to a multitude of industries and is IATA approved.

(3) Navigator Shipping & Logistics is an international class organization engaged mainly into activities of Freight forwarding, (Air, Sea) Shipping & Clearing, Forwarding, Warehousing Agent and Consolidation. They offer a wide variety of services relating to freight forwarding, logistics, cargo clearance and consolidation through sea, air and road . Established in the year 2000, its one of India's leading freight forwarder. Over the last three years, they have developed a complete range of services to respond to all of their customers' logistics and transportation needs - air, ocean, and land transportation services; brokerage and customs consulting services;

warehousing and distribution.Their import services are efficient, cost effective and time definite. They specialize in imports from China, Taiwan, Hong Kong, Far East and South East Asian countries.

GLOBAL FREIGHT MANAGEMENT (GFM) SYSTEM

 The Global Freight Management (GFM) system is an automated DoD-wide freight traffic management system. The Surface Deployment and Distribution Command (SDDC) is the single manager of DoD surface freight movements and is responsible for acceptance and approval of tenders of service from the U.S. carrier industry. SDDC developed a standard tender in 1987 and requires all carriers to submit tenders using that standard. This allowed, for the first time, automation of the tenders, carrier rates, and costing equations used by the carriers. SDDC has developed the GFM system as a web-based DoD-wide freight traffic management system with a carrier tender database as an integral part

INTERNATIONAL DISTRIBUTION

The fourth P of the international marketing mix is place, more commonly referred to as distribution. Distribution involves moving products and services from the firm to its customers.

Distribution, though it looks routine , is important because the goods and services must be available where people want to buy them . In the absence of such an arrangement all the earlier efforts such as designing, developing , pricing and promoting a product or services will be a waste .

INTERNATIONAL CHANNEL SYSTEM

The international distribution system consists of two subsystems, namely the the domestic systems and foreign systems . The nature of the channel system is affected by ,among the other things, by the method of exporting .They are direct exporting and indirect exporting . The indirect export involves home based independent middlemen who constitute the domestic system. No such independent system is involved in direct export .When th export system is direct the producer makes direct sale to any one or more of the foreign customers.

GLOBAL DISTRIBUTION SYSTEM (GDS)

Worldwide computerized reservation network used as a single point of access for reserving airline seats, hotel rooms, rental cars, and other travel related items by travel agents, online reservation sites, and large corporations. The premier GDS are Amadeus, Galileo, Sabre, and

Worldspan owned and operated as joint ventures by major airlines, car rental firms, and hotel groups. Also called automated reservation system (ARS) or computerized reservation system

Today’s era of globalization has seen the emergence of the ‘global’ corporation. Such a corporation has operations scattered over multiple locations across the globe. One of the most important aspects of the ‘global’ corporation is the international distribution system employed for the distribution of product to customers in different parts of the world.

EXAMPLES

(1) The four Global Distribution Systems (GDS) - Amadeus, Galileo, Sabre and Worldspan - have been referred to as the backbone of the modern travel distribution system. They have processed more than 1 billion air bookings each, and another 250 million for hotels, cruises and other non-air content, generating over US$6 billion in revenues. Sabre and Amadeus own the largest civilian data-processing centres in the US and Europe respectively. The volume of global transactions through the GDS has risen 4% year-on-year to 343 million.Worldwide , the GDS reaches some 230,000 points of sale. The four major systems have enjoyed traditionally what has been, in effect, an oligopoly sustained by the high entry costs required to build the IT booking systems to link airlines, hotels and car rental operators with travel agents and consumers. They are operating in a fast-changing market typified by evolving patterns of consumer behaviour , the emergence of new online sales channels, and a low-cost air model.

(2) A computer reservations system (CRS) is a computerized system used to store and retrieve information and conduct transactions related to air travel. Originally designed and operated by airlines, CRSes were later extended for the use of travel agencies; major CRS operations that book and sell tickets for multiple airlines are known as global distribution systems (GDS). Airlines have divested most of their direct holdings to dedicated GDS companies, who make their systems accessible to consumers through Internet gateways. Modern GDSes typically allow users to book hotel rooms and rental cars as well as airline tickets

(3) The FTSE Global Distribution Service may be obtained in a real-time or delayed data feed directly from FTSE. Vendors act as distributors of real-time and delayed market data from FTSE to both investors and to other data vendors. To support the growing use of its international indices and provide clients with the option to receive FTSE indices directly, FTSE Group provides and maintains a data distribution service from which clients can receive all of its real time equity and bond index data. To deliver the high quality service our clients expect, they selected BTRadianzNet , the leading global financial extranet from BTRadianz www.btradianz.com, to provide a robust and reliable delivery mechanism.

Users and distributors of market data have the capability to access their network from all major cities worldwide. The real time indices are accessible:

In all markets Throughout the global trading day

Every day of the year

GLOBAL SUPPLY CHAIN MANAGEMENT SYSTEM

Global supply chain management systems enable real-time exchange of data and information between concerned parties from different countries in the supply chain network. It is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers (Harland, 1996). It spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption (supply chain) between the countries. It has changed business operations through the flow of information ,control over operations remote in distance and across organizational boundaries, and by automation of processes. IT also shapes the future development of the supply chain with internet technology that currently offers fast and easy ways to transit complicated information and has considerable future potential. The most important contribution is to bring visibility to the entire supply chain.

EXAMPLE

GLOBAL SUPPLY CHAIN EVENT MANAGEMENT (SCEM)

As importers or exporters, we need information about the status of your orders and shipments, notifications about potential problems that may cause shipment delays, and real-time location of inventory across our global supply chain. TradeBeam’s SCEM solution gives real-time visibility into our order and shipment status across our global supply chain by leveraging electronic integration with trading partners. These partners include freight forwarding agents, carriers, customs brokers, and government agencies. The TradeBeam solution replaces cumbersome, time-consuming and error-prone tracking via phone, fax, e-mail and provider portals. Productivity tools such as automated Bar Code Label management enable importers to streamline their processes. TradeBeam’s intelligent alerts enable you to manage efficiently by exception .e.g., missed shipping milestones, or deviations in quantity or weight.

CONCLUSION

The development of international trade is driven by international logistics and management and the provision of the global supply chain. The ultimate objective of global supply chain management is to link the market place, distribution network,manufacturing/processing/assembly process, and procurement activity in such a way that customers are serviced at a higher level yet lower cost .Nowadays with globalization , global supply chain management is becoming very important issue for most of businesses. On the other hand , improved reliability can be obtained as a consequence of closer relationship with suppliers. Obviously, companies must do their research and give serious consideration to all of these different elements as part of their global supply management approach.

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