International Logistics &

Supply Chain Management

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1 Chapter 1 Introduction to Logistics and Supply Chain Management

2 Chapter 2 Globalisation and International Trade

3 Chapter 3 Factors and Challenges Driving Logistics and Supply

Chain Management

4 Chapter 4 Supply Chain Strategies

5 Chapter 5 International Procurement and Sale

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6 Chapter 6 International Shipping – I

7 Chapter 7 International Shipping – II

8 Chapter 8 Information Technology and Information System in

Logistics Management

9 Chapter 9 International Insurance

10 Chapter 10 Prospective Growth in International Logistics and Supply Chain

Management
 Course Introduction

Logistics and supply Logistics involves planning SCM is a broad concept that In a nutshell, it can be said
chain management and controlling the flow of encompasses all activities that SCM integrates and
(SCM) are two goods till they reach the involved in the movement of coordinates the flow of
desired destination. a product from its raw stage products from a number of
important inter-related to the final delivery to suppliers and distributes
functions of an customers. these products through
organisation that focus different intermediaries.
on timely delivery of
products to customers.
S. No Reference No Particulars

1 Chapter 1 Introduction to Logistics and Supply Chain

Management

2 Chapter 2 Globalisation and International Trade

Chapter 1: Introduction to
Logistics and Supply Chain
Management
 Chapter Index

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1 Learning Objectives

2 Topic 1 Concept of Logistics

Defining Supply Chain Management

3 Topic 2

Evolution of Logistics and Supply Chain

4 Topic 3
Management
 Chapter Index

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5 Topic 4 Distinguishing between Logistics and

Supply Chain Management

International Logistics and Supply Chain

6 Topic 5
Management

7 Let’s Sum Up
• Explain the concept of logistics
• Define supply chain management
• Discuss the evolution of logistics and supply chain management
• Differentiate between logistics and supply chain management
• Explain international logistics and supply chain management
 1. Concept of Logistics

• The term logistics has been derived from the Greek word logisticos, which means science of
computation.
• Now, logistics refers to the integration of handling, warehousing, transporting and controlling
of inventory.
• According to Philip Kotler, Logistics is the planning, implementing and controlling the
physical flow of materials and finished goods from the point of origin to the point of use to
meet customers’ need at a profit.
 3. Concept of Logistics

Types of Logistics
• The common types of logistics are:
− Procurement logistics: This type of logistics aims at obtaining materials, goods or
services at the minimum cost and within the time constraints of the organisation.
− Distribution logistics: It is concerned with delivering finished goods to customers.
− Production logistics: It is concerned with maintaining the flow of value-adding
processes and eliminating non-value-adding processes from the overall production
process.
 4. Concept of Logistics

Types of Logistics
− After-sales logistics: This type of logistics deals with the supply of services and spare
parts required after the product is sold to customers.
− Disposal logistics: This type of logistics relates to the disposal of waste produced during
the operational processes of a business.
− Reverse logistics: It is concerned with activities related to the logistics of a
product/service after its sale.
− Global logistics: It governs the flow of products across international borders.
− Domestic logistics: This type of logistics deals primarily with the flow of goods within a
country (across multiple states).
 2. Concept of Logistics

Logistics Management
• Logistics management involves planning and controlling the forward and reverse flow of
goods and their storage and maintaining related information between two points, namely the
point of origin and the point of consumption.
• The key components of logistics management activities can be divided into two categories,
which are:
– Core activities: These activities take place in all supply channels and contribute mainly
to the total cost of logistics.
– Supporting activities: These activities may vary depending on the nature and type of
products/services of an organisation.
 Defining Supply Chain
Management

• Logistics is concerned primarily with warehousing, packaging, transportation and inventory of

goods.
• SCM relies on the network of transportation and warehousing to ensure procurement,
distribution and movement of materials up to the point of sale for reaching customers.
• The main objective of SCM includes creating a net value and synchronising demand and
supply.
• According to Stock and Lambert (2001), SCM integrates the key business processes of an
organisation from the original suppliers that provide products, services and information that
add value for customers and other stakeholders to the end users.
 Evolution of Logistics and Supply
Chain Management

• With the advent of globalisation and technological advancement, the level of competition
rapidly increased and customers’ expectations frequently changed. Thus, the concept of SCM
came into the picture.
• The SCM function of an organisation is integrated with various other functions such as:

Customer Relationship Management (CRM)

Online Marketing

Strategic Relationship Management (SRM)

 Distinguishing between Logistics
and Supply Chain Management

• Logistics focuses on the actual transportation and storage of goods and deals with inbound and
outbound freight, warehousing, delivery, coordination, transport scheduling and management
of other processes.
• SCM focuses on generating value for different entities by maintaining effective coordination
between different parties involved in a supply chain network of an organisation.
• An important point of distinction between logistics and supply chain management is that
logistics is mostly involved in developing strategies and SCM is more focused on
procurement.
 International Logistics and
Supply Chain Management

• International logistics and SCM practices aim at helping an organisation in:

− Making speedy decisions regarding logistics and supply chain
− ‰ Sourcing pre-defined global processes
− ‰ Controlling operations at a global level
− ‰ Ensuring the availability of key resources
− ‰ Sharing information with vendors globally
− ‰ Analysing global contracting systems
− ‰ Procuring international support for efficient logistics and SCM activities
 Let’s Sum Up

• Logistics can be defined as a set of activities that govern the flow of resources between its
point of origin and the destination as per customers’ requirements.
• Logistics management involves planning and controlling the forward and reverse flow of
goods and their storage and maintaining related information between two points, namely the
point of origin and the point of consumption.
• SCM refers to a function that governs the flow of goods and services from the point of origin
to the point of consumption including their storage.
• ‰The main objective of SCM is creating a net value and synchronising demand and supply.
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1 Chapter 1 Introduction to Logistics and Supply Chain Management

2 Chapter 2 Globalisation and International Trade

Chapter 2: Globalisation and
International Trade
 Chapter Index

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1 Learning Objectives

2 Topic 1 Effects of Globalisation on International

Trade

Outsourcing and Offshoring as an

3 Topic 2
Emerging Trend in International Trade

Directional Imbalances
4 Topic 3

5 Let’s Sum Up
• Discuss the effects of globalisation on international trade
• Explain the significance of outsourcing and offshoring
• Describe the concept of directional imbalance
 1. Effects of Globalisation on
International Trade

• International trade refers to selling and purchasing of goods and services by organisations
across national borders.
• It helps countries find profitable markets for their goods and services.
• International trade contributes largely towards a country’s development by increasing its
income, which ultimately leads to an increase in its Gross Domestic Product (GDP).
• International trade is a major factor contributor in the economic and social upliftment of many
countries
 2. Effects of Globalisation on
International Trade

• International trade has two different views regarding the degree of control on trade: free trade
and protectionism.
• Free trade is a laissez-faire approach, with no restrictions on trade.
• The main idea behind the laissez-faire approach that supply and demand factors, operating on
a global scale, will ensure efficient production.
• The protectionism approach holds that for international markets to function productively,
incorporation of regulation is necessary.
• Supporters of protectionism theory believe that the inefficiencies of the market may adversely
affect the benefits of international trade, and they aim to guide the market accordingly.
 3. Effects of Globalisation on
International Trade

• Tremendous economic growth and internationalisation of business would not have been
possible without globalisation. This is because of the following aspects of globalisation:
− International trade: Due to globalisation, trade restrictions imposed by several countries
were relaxed to a great extent. Tariffs and non-tariff barriers in the export-import of
goods, such as ad valorem tariffs, specific tariffs, revenue tariffs, voluntary export
restraints and subsidies, were reduced by different countries to allow the movement of
goods freely across international borders.
 4. Effects of Globalisation on
International Trade

− Financial integration: Financial integration can be defined as the process of closely

integrating the financial markets of different economies, because of which free flow of
capital and trade in financial assets becomes easy.
− Labour flow: Relaxation in cross-border regulations for the movement of human
resources increases labour flow at the global level.
− Exchange of technologies: Globalisation also facilitates the movement of new and
advanced technolo
− Employment opportunities: Due to globalisation, many companies have shown interest
in developing countries by investing large amounts of capital in them.
 1. Outsourcing and Offshoring as an
Emerging Trend in International
Trade

• Outsourcing refers to a process or an activity in which a company enters into an agreement

with a third party to produce goods or to provide services that the company previously used to
provide itself.
• Offshoring occurs when a company shifts the location of product manufacturing or service
delivery to another country in order to save costs related to labour as well as resources.
• Outsourcing and offshoring help emerging service market suppliers upgrade their own
capabilities.
 2. Outsourcing and Offshoring as an
Emerging Trend in International
Trade

• The following points would help in understanding the main differences between offshoring
and outsourcing:
− Subcontracting a process within the same country is outsourcing and not offshoring.
− A company moving an internal business unit from one country to another would be
offshoring or physical restructuring, but not outsourcing.
− A company subcontracting a business unit to a different company
in another country would be both outsourcing and offshoring.
 1. Directional Imbalances

• Directional movement of traffic involved in international trade and the economic geography of
the world both play a very significant role in the overall trade costs because of the
transportation costs.
• A significant imbalance is noticed in costs with respect to the direction of shipment between
two places.
• The optimum transport cost (shipment cost) in a particular direction is a function of the
relative volume of trade in the region.
• In short, the imbalance tends to throw the trade costs off balance.
 2. Directional Imbalances

• The data compiled from three different sets of international trade, which comprise bulk
volumes, show that there exists an integral relationship between trade flows, unit-specific
trade costs and aggregate income shifters.
• Hence, balances are estimated using a technique of panel co-integration.
• Results point towards a relatively inelastic demand and supply relations in the international
container shipping industry.
 Let’s Sum Up

• Outsourcing refers to a process by which a firm gives a part of its work to another firm.
• ‰Offshoring occurs when a company shifts the location of product manufacturing or service
delivery to another country in order to save costs related to labour as well as resources.
• ‰Offshoring more often than not refers primarily to the outsourcing of technical and
administrative support services.
• Directional movement of traffic involved in international trade and the economic geography
of the world both play a very significant role in the overall trade costs because of
transportation costs.
Q &A