Page 157 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

International Trade Procedures and Documentation

Notes Inventory Control Considerations
Some of the prime considerations are:

Who decides what quantities to distribute?
The lower level (pull) or the upper level (push)?
Decision should be based on training and human resource implications
Which type of max/min system to use?
How long should the pipeline be?
Longer pipeline reduces likelihood of stock-outs (more security stock) but increases
likelihood of wastage (short shelf lives, increased expiries)

How to include safety stock levels in a non-max/min system
Reliable and Consistent Delivery Performance

Customer Service is the key interface between Marketing and Logistics. It plays a significant
role in developing and maintaining customer loyalty and continuous satisfaction. Logistics also
supports the “place” element of marketing mix. However, in the areas of Product, Pricing and
Promotion, Competitors may equal! Hence, there is a need to excel consistently in Customer
Service through reliable & consistent delivery performance.

Freight Economy

The various Transportation Carrier Options available are: Truck, Rail, Water, Pipeline and Air.
Inter-modal transportation is becoming more common since it is really not possible to use only
one mode of transportation in most of the cases. Transportation by Road is perhaps the only
mode which can be used independently.

7.2.3 Transport Fundamentals

Freight/Transport is the most important component of logistics cost. Usually 1/3 – 2/3 of total
cost is the result of Transportation.
Transport involves

Equipment (trucks, planes, trains, boats, pipeline),
People (drivers, loaders & unloaders), and
Decisions (routing, timing, quantities, equipment size, transport mode).

!
Caution When deciding the transport mode for a given product, there are several things to
consider such as mode price, transit time &variability (reliability) and lastly potential for
loss or damage.

Note In developing countries we often find it necessary to locate production close to
both markets and resources, while in countries with developed distribution systems people
can live in places far from production and resources.

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