Page 276 - DMGT545_INTERNATIONAL_BUSINESS

Unit 14: International Production and Logistics Management

14.4.1 components of international logistics notes

Logistics encompasses the total movement concept, covering the entire range of operations
concerned with the movement of materials and products to, through, and out of the firm to
the consumer. It includes a variety of activities such as inventory management, warehousing
and storage, transportation, materials handling, order processing, distribution, communications,
packaging, salvage and scrap disposal, returned goods handling, customer service, etc.
The various components of logistics are as under:
1. Fixed Facilities Location: The major consideration is the location of fixed facilities like
production and warehousing in such a way as to maximize the total efficiency of the
logistics system. Factors like future potential of the markets, future plans of the company,
competitive factors and political stability are also important considerations.
2. Inventory Management: The main objective of inventory management is to minimize
the cost of the inventory while ensuring smooth supplies. Developments in inventory
management by the customers’ order processing and in the total logistics system have
made inventory management both challenging and efficient.
3. Order Processing: The efficiency of order processing by the client as well as the company
has important implications for inventory levels and other aspects of the logistics. Rapid
order processing shortens the order cycle and allows for lower safety stocks on the part of
the client. Exporters from developing countries like India face the challenge of coping up
with such situations.
4. Material Handling and Transportation: Material handling and transportation are also an
important part of the logistics management. The technologies in use in material handling
and transportation affect the efficiency of logistics.

Task Enumerate various components of international logistics.

self assessment

Fill in the blanks:
10. ................. encompasses the total movement concept, covering the entire range of operations
concerned with the movement of materials and products to, through, and out of the firm to
the consumer.
11. The difference between supply chain management and materials management is only of
................. .
12. ................. technology is a technology unique to a firm.
13. The drawback of a ................. system is that it leaves a firm without a buffer stock of
inventory.

14. Firms increasingly use ................. to co-ordinate the flow of materials into manufacturing,
through manufacturing and out to customers.
15. Where there are ................. economies in production, production tends to concentrate in
one or very limited number of locations.

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