INTERNATIONAL LOGISTICS & GSM

CHAPTER 2: FACTORS AND CHALLENGES

DRIVING LOGISTICS & SCM
Factors Driving Global Supply Chain
Management :
• Factors driving logistics in the twenty-first century are focused on companies
striving to become more competitive and providing customers with added
value in the supply chain. It is more complex and more demanding in a
global market environment in comparison with a local domestic market
whereby the logistic operator is usually very familiar with the marketplace
and its constraints and opportunities.
• The key for any global logistics operator is the differential from other players
in the marketplace and to have a separate identity. Basically to demonstrate
to customers they have a certain added value in the marketplace.
• . This embraces competitiveness and cost featuring efficiency. It may be
supply chain cycle time management reduction.
Factors Driving Global Supply Chain
Management :
There are five factors on which to focus, to manage the global network of
materials and information flows that transcend many borders and management
cultures:
• The centralization of a one-production center
• Managers are often reluctant to eliminate long-established suppliers
• A continuous audit review gathering market intelligence must be conducted of
both inbound and outbound supply chain embracing all its elements
• Carriers are driven by the needs of shippers to add value to the service
• The procurement officer in product sourcing must have full cognizance to
minimize payment exposure to payment of customs duties and taxation
Customs and GSM
As materials and goods are moved from one country to another, borders are crossed and any
goods or materials shipped/air freighted become subject to customs authorities control
Customs authorities, by administering and supervising the movement of goods and materials
across national frontiers, play a key role. Costs for business can be identified in three areas as
follows:
• Direct cost associated with paying duties embracing: customs duty, excise duty, anti-dumping
duty, countervailing duties, import VAT and compensatory interest.
• Costs for business associated with the compliance of import restrictions and in meeting
obligatory customs requirements such as prescribed accounting procedures and information
requirements – including statistics – and compulsory document requirements.
• Costs, which may include opportunity costs, by failing to take advantage of any customs
regime or trade concessions. Likewise, the inappropriate use of any customs regime, or
procedures, which may give rise to future liabilities.
Customs and GSM
Customs facilities available to the buyer include the following:
• Import into free circulation
• Customs warehousing
• Free zones
• Inward processing relief suspension
• Processing under customs control
• Temporary importation
• Returned goods relief
• End use
• Other
Customs facilities available to exporters include the following:
• Export
• Outward processing relief
• Community Transit
• ATA carnet
• TIR carnet
Management of the
Inventory in the
Supply Chain
Analysis Including
Vendor
Management
Management of the Inventory in the Supply Chain Analysis
Including Vendor Management:
• The management of the inventory in the supply chain is a critical area in the cycle time analysis. This
embraces from the time when inventory is needed until it is received, sold and sales payment is received,
and is particularly important to company success and longevity.
• The longer the cycle time the larger the amount of inventory that will be carried to balance against
uncertainty. From an accounting and financial evaluation, inventory is an asset and a positive for businesses.
• A contract manufacturer turns inventory 3.6 times, a retailer turns inventory 4.1 times, and a wholesaler
turns inventory 4.4 times; each have a differing inventory strategy. It embraces raw, work in progress (WIP)
or finished product; each have too much money tied up in the inventory.
• Development of a strategic focus on inventory is best expressed in companies operating a payment cycle
every 90 days resulting in four payments per year. Hence a lot of capital is tied up, which earns nothing while
goods remain unsold.
• Moreover, the working capital to run the company is much increased and thereby is detrimental to the
company efficiency and competitive pricing strategy. Inventory has a limited shelf life. There is a window of
opportunity to sell the product. Once that window closes, the sales value falls, and the level of profitability
and inventory yield are not maximized
Management of the Inventory in the Supply Chain Analysis
Including Vendor Management:
A key factor is the degree to which the logistic supply chain network has been developed. We will
now focus on some of the reasons for excess inventories to be followed by a strategic development
• Loss of sales
• Price strategy
• Obsolescence is a great risk in overstocking
• Absence of a range of effective inventory management measures
• Planning
• Supplier performance and analysis is a key area
• Absence of any process embracing buying and ordering transactions
• A unified approach embracing one-approach-fits-all
Factors Contributing to the Development of Logistics:
The factors influencing the development of global logistics are numerous. The most salient are detailed below.
• The development of information technology
• The globalization of markets
• The accelerating development
• The continuous expansion
• The decline of the end-to-end/port-to-port
Factors Contributing to the Development of Logistics:
• The emergence of the mega-container operator
• The decline of the freight forwarder
• The development of the free port
• The ongoing technological developments
• The global logistic facility
• Continuing improvements
• The development of time-sharing
• Economic and trading blocs as found in Europe
To conclude our analysis the specific reasons for the increasing interest in supply chain management
and global logistics can be summarized as follows:
• Concept
• Value
Asset
Management in
the Supply Chain
 Asset Management in the Supply Chain
❖ Asset management is a key area in the global supply chain and warehouse
management. It is very much aligned to radio frequency identification (RFID)
❖ it provides a range of benefits in inventory control, asset utilization, manufacturing
work-in-process, loss prevention and security.
❖ Equally challenging is the equipment and asset monitoring to prevent theft or
misplacement
❖ The asset management problem – it emerges with many industries conducting and
keeping up with existing inventory
❖ The mechanism procedure of RFID embraces tags placed on assets to be monitored.
Depending on the asset type and application requirements
Lean Supply
Chain
Management
 Lean Supply Chain Management
❖ Lean supply chain management is the strategic process of developing and managing a
cost-effective and efficient supply chain that is competitive in the global marketplace
and has a strong empathy with the end user.
❖ It involves the ability to identify waste in the supply chain
❖ the lean principles that must be the basis of the lean supply chain: determine value
from the view of the customer, not the view of the company, make the product and
information flow, a pull product
❖ Lean supply chain management is a challenge that must be acknowledged
Areas that need to be addressed include the following:
• International sourcing
• Accounting
• Organization
• Number of firms
 Lean Supply Chain Management
The value stream mapping (VSM), which defines the current state of a company’s support chain, to
identify waste and to lay the foundation in determining its future state flow.
Initial VSM efforts include defining the present value stream for product families, those that share
common operations or have large volume impact, either in units or currency value. Formulating the
supply chain embraces featuring the various lean tools in the future supply chain flow. This features
the infrastructure to support it, training, culture, quality methods, accounting systems and
investment policies. Lean tools have differences as to ease of use, time to implement, benefits and
risk. It embraces six stages.
5 Ss
Rapid set-up
Standardize
Kanban
Work cell
Sigma
 Lean Supply Workforce
Lean supply workforce traces its history/conception to the Japanese car producer Toyota, which extolled a
highly efficient manufacturing workflow process. Its objective is to remove waste from the workflow
processes. Today it has become translated into the logistic framework and is found in the global supply chain.
It adds value to the supply chain and eliminates waste from the time the order is placed, to the delivery
process/end user.
Areas on which to focus include unproductive work methods, non-productive or indirect time, and a range of
other work habits and conditions – many of which are historical – that don’t add value.
Taiichi Ohno – the Toyota production engineer – who developed the idea, identified seven areas on which to
focus, which we will now examine briefly:
• Adopt the ‘best practice’
• Set goals, standards and adaptable precision
• Planning, scheduling and simulation
• Quality and safety
• Educating the workforce
• Measure the workforce productivity and reliability
• An area where waste can be identified.
 Lean Supply Workforce
lean supply workforce analysis, companies frequently experience a reluctance to change,
but in most situations the option does not exist if the company and its products are to
remain competitive. The driving force is often technology. The following points can be
deployed to persuade the workforce/management of the benefits emerging.
❑ Modelling and simulation tools
❑ Proper workforce planning
❑ logistic culture focused on efficiency
❑ Transformation to a self-accountability
❑ Elimination of wasted time
❑ Employment of best practices
❑ Self-motivated and accountable workers
❑ The collaborative partnership
❑ use of granular standards