In this first video, we will undertake a broad overview of international logistics. In subsequent videos, we'll dive into the details. International logistics managers plan, implement and control the flow of goods and services, and information from origin to destination of products. In other words, logistics is all about getting products and services from sellers to buyers. A common description of logistics are these six logistics for rights. Specifically, the goals of logistics are to get the right goods in the right quantities, in the right condition to the right place at the right time, for the right cost. International logistics managers are responsible for materials management, which includes sourcing, manufacturing, inventory, packaging, as well as recycling, and returns. Logistic managers are also responsible for physical distribution, which includes warehousing, customs clearance, and documentation. Finally, the logistics function is responsible for the transportation of goods from seller to buyer. Given the importance in scale of transportation, we will devote the next lesson of several videos to the logistics of transportation. There is often confusion about the differences between supply chain management, logistics, and transportation. Here's one explanation of the differences. Supply chain management is responsible for the make versus buy decision, strategic sourcing policy, interfacing with marketing and finance, and strategic distribution plans. Logistics management is a subset of supply chain management with responsibilities for the execution of strategic supply chain policies, sourcing, routing, and distribution, as well as manufacturing and inventory control. Finally, transportation management is a subset of logistics responsible for contracting transportation carriers and running and dispatching goods movement. Here are some of the decisions that are the responsibility of domestic logistics. Distribution networks including facilities, location, and transport routes. Warehousing, including their location, layout, vendors, and costs. Transportation modes, routes, costs, and control. Inventory management including locations, quantities, and replenishment policies. Order processing such as shipping, receiving, and handling. Materials handling which can include resizing, recombining, and labeling inventory and packaging to ensure, its suitability for its purpose into survive the rigors of transportation. As you might imagine, international logistics is responsible for the same decisions as domestic logistics. But in addition, must pay attention to tariffs and duties. Non-tariff trade barriers, exchange rate risk, customs and entry documents, insurances, foreign country taxes, access to intermodal nodes and facilities, and infrastructure, such as assessing the availability of ports, roads, and railroads. That chart to the right shows a typical breakdown of logistics costs. Administrative costs run about 8 percent and can include overhead staff and third-party intermediaries. Inventory carrying costs run about 11 percent, which includes working capital opportunity costs, plus damage theft and insurance expenses. Twenty-three percent for warehousing costs such as receiving, handling, and shipping costs plus security, insurance, and property expenses. Finally, the largest category of logistics expenses or transportation costs at 58 percent for expenses such as shipping, handling, insurance, import, export charges and brokerage fees. Note that these costs vary widely depending on circumstances, but this breakdown is typical. In a recent survey, logistics managers report that their largest challenges are uncertainty in volatile fuel costs. Staying on top of new advances and process technologies. Improving customer service to meet and exceed the competition by providing full transparency into orders and deliveries. Dealing with a volatility of global economies, ever-changing and expanding government regulations. Cost-effective compliance with environmental regulations and imperatives. Determining how to fund and implement new technologies and designing reverse logistics systems for product recycling, re-use, and returns. Speaking of reverse logistics, if you don't know, reverse logistics is the management of materials, parts, or products moving backward internally or returning externally through any part of a supply chain. Here are some examples of the need for a coordinated reverse logistics strategy. Return of goods by customers, return of unsold goods by distribution partners to contract terms, reuse of packaging, refurbishment of use cards, repairs and maintenance per warranty agreements, re-manufacturing of goods from a returned or defective items. Selling our return goods in secondary markets, and recycling of disposal of end-of-life goods. As you can see, there are lots of reasons for being proficient at reverse logistics. International businesses are increasingly being called upon to be responsible for products throughout their life cycles from cradle to grave. Effective and cost-effective reverse logistic systems are rapidly growing imperative. In summary, logistics is all about getting goods, services, and information from seller to buyer. Logistics is a subset of supply chain management. The six rights of logistics are getting the right goods in the right quantities, in the right condition to the right place at the right time for the right cost. Logistics decisions involve materials management, physical distribution, and transportation. Transportation is the greatest cost in logistics networks. In managing reverse logistics is a growing and needed opportunity. In the next video, we turn to the insurance of logistics operations and what are called Incoterms will see you there. [ MUSIC ].
