Factors That Matter in Cross Border Supply ChainsS.L.Ganapathi

Physical FlowDocumentation FlowFinance FlowInternational BorderCountry Of ProductionMarkets

Propulsion of global logistics Factors facilitating propulsion a) economic growth b) supply chain perspectives c) Regionalisation d) Technology e) Deregulation

Economic GrowthIn saturated economics like western economies one has to look outwards for marketsIntegration of manufacturing with markets can happen only with streamlined cross border logistics

Supply Chain PerspectivesHistorically manufacturers sold goods on FOB or C&F basis without bothering about channel costs at destinationsHowever with world as one market, brands and market promotion at markets afar became necessary for the manufacturersIt has become necessary for them to look at total supply chain cost and efficiency together and hence global logistics became importantOut sourcing of end to end logistics with assets owned and provided by service specialist brought in a global dimension to logistics

RegionalisationBorderless world has become common with products of countries reaching the other with min or without restriction-regional grouping like EEU,NAFTA,ASEAN and Now SAARC-these groupings operate with common documentation etc and facilitate global logistics

Technology

Visual Media and internet has created visibility for products and services which result in cross border demand e.g book order or a shoe order on netThe IT revolution coupled with improved logistics systems has made the serviceability of such orders in reasonable time and efficiency Even global e-auctions are conducted on supplies of industrial materials on the inter/intra net-this has enabled industrial giants from sourcing from corners of the world as against domestic sourcing

Deregulation Financial Deregulation Free flow of currency and and availability of overseas credit has facilitated global trade and consequent logistics] e.g free convertibility of currency opened up the whole CIS markets for western and other nations as compared to restricted bilateral and barter trade

Transport deregulation Open seas in India and no reservation for general cargoes brought containerization and modern shipping to to Indian waters-only free skies for cargo has enabled unlimited freight capacity in India and holding of freight rates and improved off take

Shipping conferences and restrictive trade agreements have fallen by the wayside to support international trade economically

Factors Hindering Global LogisticsMarkets and competition

Financial Barriers

Difficult Distribution channels Reverse Globalization arising out of high crude prices

Marketing/CompetitionEntry BarriersLegal e.g MNCs cannot get into retail trade in India Physical For International companies to do stock&sales in India they may have to have an Indian entity and local stocksInformation Barriers lack of info regarding market size,demographics and competition lack of information regarding import documentation leading to hold up of goodsPricing and tariffsIn spite of WTO the governments still have right to protect against dumpingExchange rate fluctuations can affect stocking decisionsPrice preference for domestic manufacturers

Financial BarriersOperational Environment of facilitating intermediaries like banks,insurance,legal counselors and Transportation carriersMany countries especially in CIS even today banking and legal developments are so poor that trading and logistics is difficultCurrency Regulations & Foreign Exchange Restrictions still prevailE.g Carriers cannot get Original Bill of Ladings in CIS before delivery of goods and thus failing in International law

Difficult Distribution ChannelsLack of infrastructure standardization like different gauges of railways of different countriesAxle weight regulations often cause container to be destuffed and transloaded into domestics trucks causing delay and additional costsRequirement of bonding prior to sales-Quarantines which are not uniform and require warehousing while inspection etc

Critical issuesLogistics and transportation issues- higher safety stocksNeed for more than one sourceGovernmental PoliciesCurrency/exchange Issues Political environmentSocial issues

OptimizationLeverage IncotermsBuild long terms relationship and strategic alliances- lead time and cost to induct a source or build a marketReduce Transaction costsShare risks and reward alike