CHAPTER 1CHAPTER 1

Introduction to Introduction to

International Logistics International Logistics

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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

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The Goal of Logistics

Rapid Response Minimum Variance Minimum Inventory Movement Consolidation Quality Life Cycle Support

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The Overall Goal of Logistics

to achieve a targeted level of customer

service at the lowest possible cost.

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Other Terms (1)

Materials Management Physical Distribution Business Logistics

inbound logistics operations logistics outbound logistics

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Control Over the Flow of Inbound and Outbound Movements

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Other Terms (2)

Integrated Logistics + Suppliers and Customers Figure: p.9

International Logistics Special for reasons of

Business Environment Cultures

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The Cost of the Business Logistics System In Relation to Gross Domestic Product

(GDP) In $ BillionYear 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 14.7

1970 56 91 6 153 14.7

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

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Three Factors for Spending on Logistics

Level of Economic Activity Efficiency From goods and Toward Services

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Regional Logistics Assessment

Geography Physical Infrastructure Legal/Business Infrastructure

Two Countries Compared -P.15

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The Three Logistics Environments

military Business civil

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Three Channels for Performance Cycle

Transaction Distribution Documentation / communication

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Transportation

The Role of Transportation

Three Perspectives to Transportation Shippers Carriers consignees

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Brief History of Logistics and Transportation

Military term

Why logistics is now a well-recognized Profession?

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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

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European Union Countries

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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

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ASEAN Members

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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.

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Incoterms 2000 –p31 E:

EX-Works (EXW) F

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)

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Incoterms 2000 –p31 D

DAF (Delivered at Frontier) DES (Delivered Ex Ship) DEQ (Delivered Ex Quay) DDU (Delivered Duty Unpaid) DDP (Delivered Duty Paid)