iims global distribution

8/14/2019 Iims Global Distribution

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Global DistributionGlobal Distribution


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Global Logistics and DistributionGlobal Logistics and Distribution


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IntroductionIntroduction

Global logistics and distribution haveGlobal logistics and distribution have

played a critical role in the growth andplayed a critical role in the growth and

development of world trade and in thedevelopment of world trade and in the

integration of manufacturing on aintegration of manufacturing on a

worldwide scale.worldwide scale.

The use of appropriate distribution channelsThe use of appropriate distribution channels

in international markets increases thein international markets increases the

chances of success dramatically.chances of success dramatically.


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IntroductionIntroduction

As firms start operating on a global basis, logisticsAs firms start operating on a global basis, logistics

managers need to manage shipping of rawmanagers need to manage shipping of raw

materials, components, and supplies amongmaterials, components, and supplies among

various manufacturing sites at the mostvarious manufacturing sites at the mosteconomical and reliable rates.economical and reliable rates.

The development of intermodal transportation andThe development of intermodal transportation and

electronic tracking technology has resulted in aelectronic tracking technology has resulted in a

quantum jump in the efficiency of the logisticquantum jump in the efficiency of the logistic

methods employed by firms worldwide.methods employed by firms worldwide.


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1. Definition of Global Logistics1. Definition of Global Logistics

Global logisticsGlobal log

istics is defined as the design andis defined as the design andmanagement of a system that directs and controlsmanagement of a system that directs and controlsthe flows of materials into, through and out of thethe flows of materials into, through and out of thefirm across national boundaries to achieve itsfirm across national boundaries to achieve its

corporate objectives at a minimum total cost.corporate objectives at a minimum total cost. Materials managementMaterials managem

ent refers to to the inflow ofrefers to to the inflow ofraw material, parts, and supplies through the firm.raw material, parts, and supplies through the firm.

Physical distributionPhysi

cal distribution refers to the movement of therefers to the movement of the

firms finished products to its customers,firms finished products to its customers,consisting of transportation, warehousing,consisting of transportation, warehousing,inventory, customer service/order entry, andinventory, customer service/order entry, andadministrationadministration


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Managing Global LogisticsManaging Global Logistics

The following factors contribute to the increasedThe following factors contribute to the increased

complexity and cost of global logistics:complexity and cost of global logistics:

DistanceDistance

Exchange rate fluctuationsExchange rate fluctuations

Foreign intermediariesForeign intermediaries

RegulationRegulation

SecuritySecurity


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Modes of TransportationModes of Transportation

Value-to-Volume RatioValue-to-Volume Ratio

PerishabilityPerishability

Cost of TransportationCost of Transportation

Ocean ShippingOcean Shipping

Liner ServiceLiner Service

Bulk ShippingBulk ShippingAir FreightAir Freight

Intermodal TransportationIntermodal Transportation


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Warehousing and Inventory ManagementWarehousing and Inventory Management

Hedging Against Inflation and Exchange RateHedging Against Inflation and Exchange Rate

FluctuationsFluctuations

Benefiting from Tax DifferencesBenefiting from Tax Differences

Logistic Integration and RationalizationLogistic Integration and Rationalization

E-Commerce and LogisticsE-Commerce and Logistics

Third-Party Logistic (3PL) ManagementThird-Party Logistic (3PL) Management

The largest 3PL sector is the value-addedThe largest 3PL sector is the value-added

warehousing and distribution industry.warehousing and distribution industry.


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3. Free Trade Zones3. Free Trade Zones

Logistical Revolution with the InternetLogistical Revolution with the Internet

The trend toward third-party logistics is aThe trend toward third-party logistics is a

result of the Internet and the intranet as wellresult of the Internet and the intranet as well

as concentrating on core competencies.as concentrating on core competencies. A free trade zone (FTZ)A free trade zone (FTZ) is an area that is locatedis an area that is located

within a nation (say, the United States), but iswithin a nation (say, the United States), but is

considered outside of the customs territory of theconsidered outside of the customs territory of thenation.nation.


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Free Trade ZonesFree Trade Zones

FTZs provide many cash flow and operatingFTZs provide many cash flow and operating

benefits to zone users and includebenefits to zone users and include

Duty deferral and eliminationDuty deferral and elimination

2. Lower tariff rates2. Lower tariff rates

3. Lower tariff incidence3. Lower tariff incidence

4. Exchange rate hedging4. Exchange rate hedging

5. Import quota not applicable5. Import quota not applicable

6. Made in U.S.A. designation6. Made in U.S.A. designation


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4. Maquiladora Operation4. Maquiladora Operation

The maquiladora industryThe maquiladora industry, also known as the, also known as the in-in-

bond or twin-plant programbond or twin-plant program, is essentially a, is essentially a

special Mexican version of a free trade zone andspecial Mexican version of a free trade zone and

was started in 1965.was started in 1965. Mexico allows duty-free imports of machineryMexico allows duty-free imports of machinery

and equipment for manufacturing as well asand equipment for manufacturing as well as

components for further processing and assembly,components for further processing and assembly,

as long as 80 percent of the plants output isas long as 80 percent of the plants output is

exported.exported.


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Home-Country Middlemen

1.1. Manufacturers Retail StoresManufacturers Retail Stores

2.2. Global RetailersGlobal Retailers

3.3. Export Management CompaniesExport Management Companies

4.4. Trading CompaniesTrading Companies

5.5. Export Trading CompaniesExport Trading Companies6.6. Complementary MarketersComplementary Marketers

7.7. Manufacturers Export AgentManufacturers Export Agent

Home-country middlemen, or domestic middlemen, providemarketing services from a domestic base and find foreignmarkets for products for local manufacturers

Home-country middlemen, or domestic middlemen, providemarketing services from a domestic base and find foreignmarkets for products for local manufacturers

Frequently used types of domestic intermediaries include:Frequently used types of domestic intermediaries include:

8. Home-Country Brokers9. Buying Offices

10. Selling Groups

11. Webb-Pomerene Export Associations

12. Foreign Sales Corporation

13. Export Merchants

14. Export Jobbers


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Foreign-Country Middlemen

1.1. Manufacturers RepresentativesManufacturers Representatives

2.2. DistributorsDistributors

3.3. Foreign-Country BrokersForeign-Country Brokers

4.4. Managing Agents and CompradorsManaging Agents and Compradors

5.5. DealersDealers

6.6. Import Jobbers, Wholesalers, andImport Jobbers, Wholesalers, andRetailersRetailers

Some of the more important foreign-country middlemen, who

find markets for foreign manufacturers include:

Some of the more important foreign-country middlemen, who

find markets for foreign manufacturers include:


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Six Cs of Channel Strategy

1.1. CostCost

2.2. Capital RequirementsCapital Requirements

3.3. ControlControl

4.4. CoverageCoverage

5.5. CharacterCharacter

6.6. ContinuityContinuity

Factors Affecting Choice of Channels


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Locating Middlemen

1.1. Commercially published directoriesCommercially published directories

2.2. Foreign consulatesForeign consulates

3.3. Chamber-of-commerce groups located abroadChamber-of-commerce groups located abroad4.4. Other manufacturers producing similar butOther manufacturers producing similar but

noncompetitive goodsnoncompetitive goods

5.5. Middlemen associationsMiddlemen associations

6.6. Business publicationsBusiness publications7.7. Management consultantsManagement consultants

8.8. U.S. Department of CommerceU.S. Department of Commerce

Firms seeking overseas representation should compile a list of middlemenfrom such sources as the following:

Firms seeking overseas representation should compile a list of middlemenfrom such sources as the following:


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Selecting Middlemen

1.1. Screening based onScreening based on

the following criteria:the following criteria:

(a) reputation(a) reputation

(b) creditworthiness(b) creditworthiness

(c) markets served(c) markets served

(d) products carried(d) products carried

(e) number of stores(e) number of stores(f) store size(f) store size

In selecting middlemen, the following steps should be used.In selecting middlemen, the following steps should be used.

2. The Agreement that

details terms of the

contract and the

functions to beperformed on behalf of

the foreign

manufacturer


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Motivating Middlemen

Motivational techniques may be groupedMotivational techniques may be groupedintointo

five categories:five categories:

(1) financial rewards(1) financial rewards

(2) psychological rewards(2) psychological rewards

(3) communications(3) communications

(4) company support, and(4) company support, and(5) corporate rapport(5) corporate rapport

There is a clear correlation between the middlemans motivation and sales

volume

There is a clear correlation between the middlemans motivation and sales

volume

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