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MULTINATIONAL LOGISTICS MANAGEMENT

MULTINATIONAL LOGISTICS MANAGEMENT. HOW DO INTERNATIONAL LOGISTICS DIFFER FROM DOMESTIC LOGISTICS?. THE LOGISTICS SYSTEM (OR PIPELINE). The Procurement (or Supply) System. The Operating System. The Distribution System. Raw Material Supply Points. Raw Material Storage. Manufacturing.

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MULTINATIONAL LOGISTICS MANAGEMENT

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  1. MULTINATIONAL LOGISTICS MANAGEMENT HOW DO INTERNATIONAL LOGISTICS DIFFER FROM DOMESTIC LOGISTICS?

  2. THE LOGISTICS SYSTEM (OR PIPELINE) The Procurement (or Supply) System The Operating System The Distribution System Raw Material Supply Points Raw Material Storage Manufacturing Finished Goods Storage Markets Movement/Transportation Movement/Transportation Movement/Transportation Movement/Transportation STORAGE PLANT #1 WAREHOUSE A R A W M A T E R I A L S STORAGE PLANT #2 WAREHOUSE B WAREHOUSE C STORAGE PLANT #3 Physical Supply Materials Management Physical Distribution Marketing Logistics

  3. Flows Within the Logistics Pipeline Flow of Information Function Flow of Material • Forecasting • Order Processing • Finished product transport • warehouse to customer • Finished product inventory • control • Distribution center warehousing • Transportation from plant to • distribution center • Packaging • Product Planning • Plant Storage • Production material control • Raw material storage • Raw material transportation • Raw material inventory control • Procurement

  4. Major Components Issues/Decisions Key Decisions in Logistics System Design Procurement Degree of centralization Supplier characteristics Multiple vs. single sourcing Degree of backward integration Order Processing Order cycle design Information flows Degree of automation Inventory Policy Coverage level Form/Location of inventories Transport Policy Transport modes Utilization Degree of forward integration Customer Service Policy Frequency of delivery Order communication Inventory coverage levels Order selection methods Facilities Network Degree of centralization Number of echelons For each: Number of facilities Location Scale Layout Product/process specialization Links between facilities: Information flows Sourcing Patterns

  5. THE TWO FACES OF LOGISTICS TACTICAL BROAD SHORT TERM QUALITATIVE QUANTITATIVE LONG TERM DETAILED STRATEGIC

  6. BASIC STRATEGIC ALTERNATIVESFOR MULTINATIONAL FIRMS INLOGISTICS MANAGEMENT • PLAN BUSINESS AROUND GEOGRAPHIC AREAS OR COUNTRIES • (MULTIDOMESTIC COMPANIES) • PLAN BUSINESS AROUND PRODUCTS (GLOBAL COMPANIES)

  7. Basic Strategic Alternatives for Multinational Firms andtheir Implications for Logistics Management Multinational Firms Multinational Firms Tend to Plan Business Tend to Plan Business Around Geographic Areas Strategies Around or Countries When: Products When: • Variations in customer needs for products • or services from country to country are: Large Small • Import restrictions on raw materials are: Stringent Liberal • Economies of scale in production are: Small Large • Restrictions on monetary exchange are: Stringent Liberal • Differences in cost of labor from one • country to another: Small Large • Potential economies form coordinated • planning of logistics are: Small Large • The strength of management’s bias toward • decentralization is: Strong Weak • This will tend to produce a logistics management • effort that is: Decentralized by Centralized by • country product • Not globally Globally • coordinated coordinated • Less visible More visible

  8. INTERNATIONAL VS. DOMESTIC LOGISTICS • RISKIER & MORE COMPLEX • ATTENTION PAID TO CULTURAL, POLITICAL, AND ECONOMIC FACTORS • INTERPERSONAL MANAGEMENT TASK MORE DIFFICULT: • MULTIPLE PLAYERS • HOME OFFICE • INTERNATIONAL BUSINESS PARTNERS • OFFICIALS IN CENTRAL AND LOCAL GOVERNMENT • WORKERS IN THE VENTURE • INVENTORY COSTS HIGHER • WHY? • PIPELINES LONGER & SLOWER PIPELINE INVENTORY • UNCERTAINTY (POLITICAL AND PRODUCTION) SAFETY STOCK • PRODUCT PROLIFERATION MORE SKUs INV. OF F.G. • PILFERAGE AND RISK CARRYING COST

  9. INTERNATIONAL VS. DOMESTIC LOGISTICS • TRANSPORTATION MORE DIFFICULT AND COSTLIER • MULTIPLE TRANSPORTATION MODES • INTERNATIONAL TRANSPORTATION: OCEAN AND AIR CARRIAGE • DOMESTIC TRANSPORTATION: RAIL AND TRUCK • MANAGER HAS TO DEAL WITH: • NEW INSTITUTIONS, NEW TERMS, COMPLEX DOCUMENTATION AND INTERMEDIARIES • NEED OF CONSOLIDATION PLANNING EFFORT (LARGE ECONOMIC VESSELS) • SLOWER AND COSTLIER SERVICE, MORE FREQUENT STOCKOUTS • INTERNATIONAL FACILITIES NETWORK MORE DIFFICULT TO CONTROL: • MANY LANGUAGES, CUSTOMS, LABOR NORMS • LACK OF INFRASTRUCTURE DIFFICULT COMMUNICATION • (2 YEAR WAIT TO GET A TELEPHONE!) • ACCESS TO RAW MATERIALS AND LOCAL MARKETS

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