Subject of International Logistics

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Russian: Предмет международной логистики

Contents

Starting Points for Defining the Subject of International Logistics

According to the system engineering theory[1], international trade is a system with complicated and high great yardstick. Regarding the activity subject of international trade (business) as the whole collection, and the one of the international logistics as the subset, the effect of establishing one's own system exists in the subset, and the international logistics can be regarded as the subsystem of international trade (business), discussed independently. The activity subject in international trades mainly include importers, transnational logistics facilitators, exporters, customs, banks, government's functional departments, insurance companies, credit rating organizations, audit agencies, etc. Among them, the international logistics facilitators are a subject of international logistics activities

In the large geographical range, the main goal of international logistics is international trade and transnational operating service, making the logistics system of various countries joined each other. Compared with local logistics system the main characteristic is summed up as follows[2]:

  • Complexity of the hardware environment of international logistics. According to the principle of the wooden barrel, the disappearance/distortion of logistics technical application of some areas/functions (See the model below) will cause the service level of the whole international logistics system to drop. In addition, different logistics technical standards will cause the difficulty of integrating the global supply chain too.
  • Complexity of the soft environment of international logistics. Each country has different law, custom, language, social system, natural environment, management method, and production custom etc., the soft environment of logistics made up by these key elements (marketing dimensions or non-controllable variables) demonstrates the diversification will increase the complexity of integrating the global supply chain too.


Prismatic model of emerging a mismatching between the home country logistics mix and host country business/marketing environment while crossing the state border by a subject of international sale contract

S PRISMA E.jpeg

LEGEND:

  • White Light” displays a quasi-optimized logistics mix having its components matched with the home country business/marketing environment.
  • Glass Prism” displays impacts of cross-border disruptions or dissimilarities on the home country logistics mix in comparison with a host country logistics mix.
  • Angles of declining for different color components of the “White Light” (from “Red” till “Violet”) display degrees of mismatching between the home and host logistics mixes after crossing the state border.


Essay of Defining the Subject of International Logistics

The military genesis of international logistics is a locus communis for corresponding textbooks [3]. A “new logistics” or “business logistics” was initially (1970s) based on the military concept and encompassed mostly the physical movement of goods [4]. Today the “logistics” term is understood much broader and covers not only items of physical movement of goods in space and time[5] (i.e., transportation and storage functions, respectively), both upstream (procurement) activities and downstream (sales) activities, but also the management of the relationships of a focal company with its suppliers and customers (i.e., informational and financial flows included). Defining the subject of logistics in a general sense demands to include such tasks as designing, setting up, operating and optimizing systems, which generate physical goods and immaterial services. Therefore [6], “These tasks overlap with production planning, process technology, industrial engineering, operations research, informatics and other fields of technology and economics”. Besides, “considering logistics in this broadest sense one should to include also purchase and sales” [7]. The latter conforms to the disciplines known as Procurement Logistics [8] and Marketing Logistics[9], respectively.

There is the suggestion[10] that the contemporary differentiation of logistics systems (their globalization included), combined with the internal quantum of knowledge on logistics, now plays the dominant role in all processes and spheres of life, where the International Logistics has to have its own and well-defined subject.Defining the subject of international logistics one has to begin from the Target Function of International Logistics (Management). Understanding the latter mainly as minimizing transactions costs and risks of international logistics (trade, business), one could say that the most important goal that should be achieved with the help of international logistics functions is the integration of international supply chain where one could find “traffic” or even disruptions[11]. To simplify the task, one could begin from the subject of Logistics, keeping in mind “general” or domestic logistics only – without any tinge of international features. Any “wrong R” from the well-known “7R” mnemonic[12] could result in negative changes of transaction costs and risks of international logistics. Each “R” is associated with disruptions and/or distortions in global supply chains that are perceived as the biggest threat to companies’ revenue streams[13]. The main attention of international logistics managers is attracted to risk/cost problems arisen due to wrong logistics decisions or to “right” decisions that are becoming “wrong” ones in new marketing environments.

Therefore, one could say that the subject of international logistics deals with the concept of defining mismatching/disruptions between quasi optimized home logistics mix and logistically significant dimensions (variables) of a host country’s marketing environment and designing such actions that should provide decreasing international logistics transaction costs and risks.

References

  1. Systems Engineering Fundamentals - DAU/DSMC Press - http://ocw.mit.edu/courses/aeronautics-and-astronautics/16-885j-aircraft-systems-engineering-fall-2005/readings/sefguide_01_01.pdf
  2. Zhanghanjiang, X. The International Logistics E-Business System Analysis and Design based on Middle Ware Technology - http://www.seiofbluemountain.com/upload/product/201001/1263372659ccobn55q.pdf
  3. 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.1
  4. David, P.A., and Stewart, R.D. (2010), International Logistics: The Management of International Trade Operations, Cengage Learning, Maison, USA. – p.35
  5. Gudehus, T. and Kotzab, H. (2012), Comprehensive Logistics, Springer-Verlag, Berlin Hei-delberg, Germany. – p.4.
  6. ibid
  7. ibid
  8. Taderera, F. (2010), Principles of International Purchasing: International Procurement, Ship-ping, Logistics, Lambert Academic Publishing, Saarbrücken, Germany.
  9. Christopher, M. and Peck, H. (2010) Marketing Logistics (Chartered Institute of Marketing), Butterworth-Heinemann, Amsterdam, etc.
  10. Tepic, J., Tanackov, I., and Stojić, G. (2011) Ancient Logistics – Historical Timeline and Etymology. Technical Gazette, Vol. 18, No. 3
  11. Stading, G. and Kauffman, R.G. (2006), " A Framework for Management of Supply Chain Disruption", Proceedings of the 92nd Annual International Supply Management Conference, available at: https://www.ism.ws/files/Pubs/Proceedings/FDStadingKauffman.pdf
  12. Shapiro, S. and Heskett, J.L., (1985) Logistics Strategy, West Publishing Co, Eagan, Minnesota.
  13. Green, H. (2004), “Loss/Risk Management Notes: Survey: Executives Rank Fire, Disruptions Top Threats”, Best’s Review, September 1, A.M. Best Company, Oldwick, NJ.
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