Global logistics is essentially the management of the supply chain system through which the flow of material and resources is into the company and moving out of the company is controlled. It is the management of the transportation of the resources and the materials to and from the locations of the business operations as well as amongst the business suppliers and customers. The management of the logistics in terms of global operations is the managing the transportations of resources and material in production at the company across borders at the lowest possible costs while achieving efficiency in operations.
The definition of global logistics is that it is “comprised of courses and/or programs related to planning, management, and movement of people, materials, and goods by road, pipeline, air, rail and water and related professional and technical support services such as transportation infrastructure planning and management, logistics services, mobile equipment and facility maintenance. “ (‘Instructions and Definitions for the Annual Report on Perkins Indicators for Post-secondary’) over a wide spread geographic region.
Global logistics is significantly different from local operations as when it comes to managing global logistics, the company has to take into accounts issues pertaining to port issues, the cross border customs and transportation issues as well as management of different forms of sea, land and air transport for the materials and resources which have to be managed across different countries and geographic regions.
The domestic operations in comparison are limited in terms of their scope and doe not involve dealing with customs or cross border transportation or logistics management. These makes them less expensive, as well as less complex than global logistic operations and therefore even those management personnel who are not highly skilled in logistics, and diverse cultures can undertake management of the domestic logistic operations for the company.
There has been a dramatic surge in the activity pertaining to the function of global logistics (Parker, 1999). The complexity of the business operations and the increasingly number of companies with expanding nature of business operations in the international markets have created a dramatic increase in the requirement of the global logistics management function. These companies need to coordinate with their suppliers, distributors and customers and transport resources ad materials amongst the operation location over widespread geographic areas and the function of global logistics management aids the companies in managing these operations.
The characteristic of the global logistics is that it has controllable and uncontrollable elements. The controllable elements pertain to services provided to the customers, the warehouse facilities available, inventory management, transportation and distribution function, packaging, and the management of information and information systems. These elements are controllable as they are internal to the company and are managed by the company and the management itself. The non controllable elements that affect the global logistics function at any company pertain to the political situation, government status and government regulations in the countries where the company is operating as well as the economic condition of the countries.
Aside from this the natural resources available, competition in the local markets in the regions of operation, the social culture dominant in the regions of operation as well as the climate and the geographical environment also form the uncontrollable elements which affect the global logistics function at any company. The existence of the constantly changing, dynamic and volatile elements which are not controllable by the company require special skills on part of the management personnel to manage and plan for logistic operations on a global scale.
Furthermore the changing external environments of the multinational companies and the characteristics of their diverse operating regions increase complexity of management in the global logistics functions. As a result specialized, skilled personnel in the management are required to run and manage the global logistics division in a company. “The complexity of the logistics task appears to be increasing exponentially, influenced by such factors as the increasing range of products, shorter product life-cycles, marketplace growth and the number of supply or market channels. The trend towards globalization in logistics has been predominantly driven by trends in markets and the technology of both product development and manufacturing.” (Braithwaite & Christopher, 1991)
In a logistics based conference in Singapore, the “Maersk Co. Director of Business Development Peter Winther highlighted some of the key issues associated with the development of global supply-chains. He emphasizes the need for companies to be in a position to manage the risks that might arise in situations like the European Union-China trade wrangle over textile quotas.” (‘Global supply-chains: Managing the risks and opportunities’, 2005)
The three areas where global logistic managers need to pay attention and focus their efforts and emphasize their strategies upon pertain to “importance of team building on global management; Consideration of cultural issues when promoting change; Human information flow and communication.” (‘Managing Global Logistics Operations’, 2001)
The specific factors which create complexities for the management of the global logistics function in any company pertain to security, issues at port, tax & tariff issues, alliances with local bodies, cultural differences, availability and compatibility of technology, as well as the risk management and mitigation. The security issues are raised when the shipments are transported across the borders of the nations, and if the shipments are being made through the seas, then capacity and route issues have to be considers. The tax and tariff issues also play an important part in terms of complying with the regulations of the company while still operating in a profitable manner.
“Extending the supply chain into another country requires in-depth knowledge of how that country operates. Partners, either through 3PLs or directly, are often critical to success.” (MacDonald, 2006) Moreover it is also important for the company and the function to understand the culture of the countries and regions where the company is operating in along with investment in technology in the international market to integrate operations and support business activities. Additionally “with a global supply chain, the possibility of things going wrong is greater and often more costly to fix. Knowing what the risks are and planning for them in advance is critical.” (MacDonald, 2006)
Therefore, in order to manage the business operations fo the function of global logistics in a multinational corporation which has operations spread across multiple regions and markets it is necessary to have highly skilled management which understands the international markets and can operate in a dynamic manner while mitigating risks for the company.
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