Supply Chain Management And International Logistics

Supply chain management has a significant role in international logistics and has changed the way manufacturing companies operate and do business. The purpose of this paper is to demonstrate that international logistics affects the operations of manufacturing companies. In particular, the factors contributing to the rise of international logistics will be discussed, and also the changes in manufacturing operations that utilize the benefits that supply chain management provide.

Finally, some limitations of supply chain management and the challenges it faces to meet the demanding needs of business will be presented. Supply chain management is defined as an integrated system for transporting goods efficiently and inexpensively using at least two different modes of transport, such as air and truck, under a single bill of lading. The means of transportation are “transparent” to the shipper meaning that the shipper does not have to worry about organizing each mode, rather that he needs to be aware that different modes may be used so cargo should be packed accordingly.

Overall transportation and logistics costs are lowered by selecting the mode of transport that is most suited entermodal transportation systems into a seamless and integrated transportation network that utilizes the for a particular segment of the trip. Economic benefits are realized through consolidating that differ comparative advantages of different modes of transport. Significance of International Logistics in Business Setting

International logistics is loosely associated with Supply chain management and it is a relatively new concept, with the first forays into this system beginning in the 1950’s with experiments using standard sized containers to hold cargo. Before the 1960’s, when container use was less common, ocean cargo transportation cost approximately 10 to 15 percent of the retail value of the goods carried. Cargo arrived at the ports in boxes, barrels and bags and was manually lifted piece by piece onto cargo ships.

This caused a long delay of ships in ports as cargo stowage was time consuming and labor intensive and as a result, port costs accounted for approximately half the total operating cost of a voyage. The growth of international logistics as a means of freight transportation can be contributed to increasing deregulation of the transport industry, and the integration of various modal logistics companies utilizing containers for general cargo transport. Containers are a revolutionary technology that has led to the significant rise of international logistics management in the last five decades.

As David (p. 209) discusses, supply chain management and containerization are not tied, as it is possible to use supply chain management strategy for goods that are not packaged in a container and a container can be shipped using only one mode of transport. However, the two concepts are closely related. The impact of containerization in international freight transportation has been significant. Typically, a standard seagoing container is 20, 30 or 40 foot long, and fully enclosed in steel.

They are 8 feet tall by 8 feet wide and have a double door at one end (David p. 214). They can be stacked on ships and rail cars and transported on trucks. Container cargo has high accessibility characteristics because the containers can be delivered anywhere they can be trucked. Containerization has cut port costs significantly, as loading and unloading the containers are fully mechanized, which dramatically reduces labor costs, time in port, total transit time and losses due to breakages and theft.

In addition, containers are being increasingly adapted to hold special types of cargo such as oil, grains, perishable goods and oversized machinery components. Container use has changed the way goods are produced, distributed and sold worldwide and has gained recognition as a cost and service efficient means of transportation. “Today the cost of shipping goods in containers is between one and two percent of retail value, 90 percent less than before containerization. “