International Logistics Mix

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Russian: Международный логистик-микс

Effectiveness and efficiency of international logistics management depends sine qua non on a set of well-arranged and well-performed logistics functions, such as[1]: customer service; demand forecasting; documentation flow; handling returns; inter-plant movements; inventory management (inbound, plant, and outbound); parts/service support; materials handling; order processing; plant and warehouse site selection; production scheduling; protective packaging; purchasing; salvage scrap disposal; traffic management; and warehouse and distribution center management. Not all of these functions are equally specific for the international logistics management and some of them (more specific in this sense) are highlighted in italics herein. The case of international logistics – due to such simple and the most important factor of international trade as crossing borders – demands to add to the list of italicized items above some other items defined by the sense and scope of the three-fold international logistics channel[2]:

  • the transaction channel, which handles the buying, selling and collection of payment;
  • the distribution channel, through which the good moves physically; and
  • the documentation/communications channel.

This number and complexity of factors influencing international logistics remind of the situation in marketing science/practices before the time the marketing mix concept was coined by Nail Borden [3]and then formatted in the frame of the well-known 4P paradigm by Jerome McCarthy [4]. Taking into account that the Target Function of International Logistics could be defined as matching the components of home logistics mix with logistically significant dimensions (variables) of neighboring national marketing environment to be crossed by a moving item of the global supply chain one could be referenced to the “prismatic model” in the article Subject of International Logistics to receive understanding the fields of possible mismatching/disruptions where international logistics functions are to be researched and adjusted . While defining this target function, the concept of international logistics mix occupies the central position just as the marketing mix concept in adapting product to market. In the present case, the marketing approach appeared the universal one as for many of other business disciplines. Genetically, such functional proximity between logistic mix and marketing mix (See the “Model of connection between concepts of marketing mix and logistics mix below) could be explained by the well-known fact that the main category of marketing is presented by an exchange[5] and the logistics serves the exchange too. Any convenient understanding of the logistics mix content is not revealed. However, one names four fields of this mix [6], namely: customer services, order processing, inventory management, and transportation. Defining the international marketing mix is in progress now [7].


Genetic Connection between Concepts of Marketing Mix and Logistics Mix[8]

L MIX E.jpeg

Critics on an Understanding 7R as a Logistics Mix

In many Russian textbooks and articles an incorrect, in our mind, understanding of the well-known 7R paradigm (See the pic below) is revealed where the latter is referenced to as the «logistics mix» . [9] is references as to «logistics mix» [10][11][12][13][14][15][16].

7R E.jpeg

Indeed, in the relevant Western literature, reflecting the spirit of Anglo-American culture where they have created and continue to repeat time and again: «be in the right place at the right time»[17]: «The logis-tics is a set of actions that guarantees an availability of right products in right quality for right consumers in the right time». More numerous 7R-paradigm of that «rightness»[18] makes an integration of these «rightness», displayed at the pic above symbolically. However, any «rightness» is a result of our a posteriori assessment; i.e., the assessment that could be received after an experiment or after an event that would take place. Sometimes, the said Western literature uses the quotation extracted from the same source[19] where the “logistics mix” as represented as the fol-lowing set of five components, providing the said 7R in favor of seller and buyer[20]:

  • Facility decisions: how many warehouses and plants should we have? Where it is located?
  • Inventory decisions: how much inventory to hold in a particular country or region? Where? What technology for picking inventory? Do our customers require just-in-time delivery?
  • Communications decisions: Flow of information just as important as physical flow of goods – invoicing, orders, demand forecasting, sales reporting issues
  • Utilization decisions: packaging or palletizing? Containerisation?
  • Transport decisions: Own transport fleet or leased vehicles? How often deliver? How schedule deliveries?.

Therefore, in our opinion, the «logistics mix» in many Russian textbooks and articles could be considered not as an analogue of “marketing mix” and a tool for matching different national sets of logistically significant dimensions of corresponding marketing environments but rather as a didactic tool. However, we have found in Russia a proselyte of other understanding of logistics mix that is much more close to our one[21].

References

  1. Encyclopedia Britannica (1993), Chicago, Encyclopedia Britannica, Inc., Vol. 28
  2. Wood, D.F., Barone, A.P., Murphy,P.R., and Wardlow, D.L. (2002), International Logistics, AMACOM, a division of American Management Association, New York, etc. – p.7.
  3. Borden, Neil H. (1965). The Concept of the Marketing Mix. / In: Science in marketing / Schwartz, G. Wiley
  4. McCarthy, J. (1975) Basic Marketing: A Managerial Approach, Irwin, Inc.
  5. Cunningham M. H. Exchange and Marketing Theory // Proceedings of the Southern Marketing Association, 1988.
  6. Lai, K.-H. and Cheng, T.C.E. (2009) Just-in-Time Logistics, Gower, Farnham, UK –p.108.
  7. Cherenkov V.I. International Logistics Management: From Subject to Lean Syllabus and Effective Teaching – International Conference “GSOM Emerging Markets Conference: Business and Government Perspectives” (Graduate School of Management, SPSU, St. Petersburg, October, 16-17, 2014) - http://www.gsom.spbu.ru/images/a9/ebook_gsom_emerging_markets_conference_business_and_government_perspectives.pdf
  8. The basement for building this model is extracted from the following source - Barcik1, R., and Jakubiec, M. (2013) – Marketing Logistics -p.7., Fig.1. - http://www.slu.cz/opf/cz/informace/acta-academica-karviniensia/casopisy-aak/aak-rocnik-2013/docs-4-2013/Barcik_Jakubiec.pdf
  9. e.g., International Logistics Management - http://www.graduate.au.edu/download/content/file/school%20of%20business/MBA%20DD%20Comprehensive/Inter%20logistics.pdf
  10. Андреев С.Н., Рыкалина О.В. Общность содержания и функций логистической и маркетинговой деятельности (2013) // Маркетинг и маркетинговые исследования – 05(107)
  11. Введение в операционный менеджмент MBA Start - http://aniri.flatrate.ru/Reading/
  12. Скоробогатова Т.Н Логистические цепи и логистические системы - http://masters.donntu.edu.ua/2011/iem/lukianchikov/library/art_5.pdf
  13. Мешалкин В.П. Конспект лекций по дисциплине: Теоретические основы логистики. – М.: 2011 - http://moodle.milrti.ru/file.php/11/Teoreticheskie_osnovy_logistiki_Lekcii_.pdf - с.10
  14. Взаимосвязь маркетинга и логистики - http://www.rusnauka.com/12_KPSN_2012/Economics/6_108545.doc.htm
  15. Ухов В. О взаимосвязи маркетинга и логистики в инновационной экономике - http://logistic-forum.lv/menegment/marketing-logistika
  16. Григорак М. Сущность логистической деятельности предприятия - http://customsexpert.ru/articles/terminologiya-v-logistike.htm
  17. Kasilingam, R.G. (1998), Logistics and Transportation: Design and Planning, SHPRINGER-SCIENCE+BUSINESS MEDIA, B.V. Dordrecht, Nederland
  18. Shapiro, S. and Heskett, J.L., (1985) Logistics Strategy, West Publishing Co, Eagan, Minnesota.
  19. Fernie, J., & Sparks, L. 2004. Logistics and Retail Management. Insights into Current Practice and Trends from Leading Ex-perts - London: Kogan Page Ltd. – p.4
  20. Lynch, R. How do you develop the product or service offering? - http://www.global-strategy.net/how-do-you-develop-the-product-or-service-offering/
  21. Elena Efimova,professor of Dpt. of International Economics, St. Petersburg State University - Dry terminals in St. Petersburg and Leningrad re-gion: logistic solutions for Russian port industry - http://www.centrumbalticum.org/sites/default/files/user_uploads/Elena%20Efimova%20Dry%20termi-nals%20in%20St.%20Petersburg%20and%20Leningrad%20region%20logistic%20solutions%20for%20Russian%20port%20industry.pdf
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