Target Function of International Logistics
From Supply Chain Management Encyclopedia
Avoiding any mathematical formalization the target (objective) function of a system could be defined as an action or a combined set of actions devoted to gain the for the sake of which the present system exists (was created) .
Taking into account the sense and scope of the Subject of International Logistics the target function of international logistics could be a priori defined as minimizing logistics risks and transaction costs of international trade (business) under some given conditions (restrictions) defined by logistically significant marketing dimensions (variables) of the marketing environments of such countries where the global supply chain is passing through. This definition displays the fact that the international logistics does not exist per se, but is the “hard and soft” of international business, universally getting into and cooperating with other fields (disciplines) of international business (See the pic below) and being its "framework".
The simplest and very lapidary definitions of logistics and logistics management say, respectively: “logistics is a term describing the many functions related to the movement of an item from the place where it was made or grown to the place where it is used or consumed” and “logistics management is the act of supervising the movement of goods [and also information and finance flows that support the said movement] to the right place at the right time”. From here it is logical to draw the following conclusion: the target function of international logistics should be defined on the basis of nature and content of the International Logistics Mix where the latter could be understood as a set of arguments of this target function. A version of the said set of arguments could be revealed referencing to the logistics mix above. Another one  presenting The World Bank’s Logistics Performance Index (LPI) is given below:
- Efficiency of the customs clearance process.
- Quality of trade and transport-related infrastructure.
- Ease of arranging competitively priced shipments.
- Competence and quality of logistics services.
- Ability to track and trace consignments.
- Frequency with which shipments reach the consignee within the scheduled or expected time
Therefore, skipping some intermediary suggestions and considerations, the target function of international logistics management (as a completed system) could be defined as adjusting the home country’s logistics mix to the logistically significant dissimilarities of the host country’s dimensions (variables) of marketing environment that are significant for transferring goods through the frontier between these home and host countries for the purpose of decreasing (minimizing) logistics transaction costs and risks of international trade (business).
- ↑ The function, expressing given conditions for a system, which one seeks to minimize subject to given constraints. - http://encyclopedia2.thefreedictionary.com/objective+function
- ↑ Теория менеджмента / под. ред. А.М.Лялина – СПб.: Питер, 2009 – с.342.
- ↑ Logistics Management - http://majors.osu.edu/pdfview.aspx?id=100
- ↑ Connecting to Compete 2010: Trade Logistics in the Global Economy: The Logistics Performance Index and Its Indicators (2010) / by Arvis, J-F., Mustra, M.A., Ojala, L., Shepherd, B., and Saslavsky, D. – The International Bank for Reconstruction and Development/The World Bank – http://siteresources.worldbank.org/INTLAC/Resources/ConnectingtoCompete.pdf