Ten years ago, most people also believed that manufacturers and retailers should obtain products and raw materials from domestic and local suppliers as much as possible, because it helps suppliers control the delivery time of products and ensure that factories have Order production to ensure full monitoring of the quality of the goods. However, with the development of global economic integration, more and more multinational companies have begun to change the traditional logistics procurement approach, and instead seek new "global resource allocation" business opportunities. Cross-regional and cross-border global logistics procurement has become a new source of world trade growth. Although this approach puts higher demands on maintaining the company's complete resource supply chain, many logistics and transportation managers are still willing to work in this direction.
The greater benefit of global resource allocation is the use of the “International Division of Labor Theory†to significantly reduce operating costs while ensuring improved product quality. The logistics industry generally believes that the effective use of global resources and reasonable supply chain management can reduce the total cost by more than 15%. This result mainly comes from compressing transportation and inventory costs in the entire logistics chain. It can be seen that modern logistics cost management plays a decisive role in maintaining successful operations. This article will focus on the logistics process of global resources and discuss some of the key issues in global logistics.
First, global resource allocation
Global resource allocation is a re-examination of a company's cost of purchasing materials. It can establish dynamic high-speed supply channels based on changes in the global economy and global supply bases, and the company can find major suppliers on a global scale based on factors such as price, quality, technology and delivery reliability.
Global resource allocation has gradually become a viable option for many industry operators. The practice of global resource allocation shows that more and more industry operators apply the global resource allocation strategy to all aspects of the company's internal material procurement. This is mainly because:
First, developing countries are increasing the production capacity of many supply industries. Because of the cheap labor costs, these emerging markets provide purchasers with a supply channel that is much cheaper than their own production costs. Secondly, the excess capacity of the global air and maritime industry is still relatively serious. The fierce competition makes it difficult for the low freight rate to achieve a major change in the short term. Lower capacity costs have prompted more companies to lean toward global resource allocation. In addition, many developing countries are working to improve transport and port infrastructure to improve service quality, which facilitates global resource allocation for multinational companies.
Second, the new requirements of logistics management
For any enterprise, the implementation of global resource allocation is a time-consuming and laborious task. Accidents may occur in every aspect of logistics, which puts higher requirements on logistics management. The internal logistics team must carefully consider every potential obstacle, such as price, quality, transit disconnection and other logistics related issues, and fully grasp the supplier's background information. However, in most cases, changes in logistics cost consumption may cause the purchaser to change from one supplier to another. Because of this, many companies will be engaged in global procurement work for those with experience in logistics management.
In order to improve the efficiency of the company's operation, logistics professionals must start the global resource allocation work as soon as possible. They should, as far as possible, meet the service and production needs, and realize the connection and operation of the new global supply chain at a lower cost. Logistics personnel must have a step-by-step understanding of logistics costs and service needs, and carefully and thoroughly develop procurement plans. In the process, logistics personnel also need to reasonably control the following logistics costs, from in-stock transportation (road and rail transportation) costs, storage costs, port operations and export documentation costs, marine and aviation from raw material production sites to ports. Transportation costs, domestic warehousing and handling costs, inland transportation costs from import ports to domestic production bases and distribution centers.
Logistics managers should not only monitor the above-mentioned logistics costs, but also make a comparative comparison and in-depth analysis of these costs, because the hidden costs contained in them need to be accurately analyzed before they can be accurately calculated.
These hidden costs include additional inventory costs due to the long supply chain, additional packaging costs and damage index caused by poor packaging, risk of damage caused by improper storage, extra time caused by unqualified return of the goods to the supplier and Expenditure, increasing information, transportation and personnel expenses, inflation and exchange rate risk costs.
For companies with many overseas procurement businesses, it is vital to cultivate a professional logistics management team within the company. In practice, in order to achieve good logistics results, a global resource management team including logistics managers should be established to develop the internal logistics management functions, including system maintenance costs, which should be included in the total cost of global resource procurement.
In addition, seeking a professional third-party logistics provider is a wise choice for companies that have spent a lot of energy in global resource allocation and want to further improve their logistics management. Many third-party logistics companies, ocean carriers, and freight forwarders are trying to establish their own international institutions to seize the global logistics opportunities, and then outsource the company's logistics business to logistics professional suppliers to obtain professional benefits and enjoy better. Logistics services and save on more logistics costs.
Third, the key logistics issues
A thorough understanding of the issues helps the company gain a dominant position in negotiations with suppliers, which cover a wide range of issues, including almost every aspect of the logistics supply chain. The key logistics issues that should be noted in global logistics include:
1. The choice of sea and air transport in logistics and transportation. Since the unit price of air transportation is about 10 times that of shipping, most logistics experts prefer shipping. However, air transport has its own unique advantages. For those fresh goods with short shelf life such as seafood, flowers, and fruits, valuable goods such as rare metals, valuable securities, and some special high-tech goods such as computer chips and medical devices, etc. Air transport is a better choice.
2. Trade-offs and service trade-offs in logistics decisions. It is generally believed that lowering freight rates and improving service quality are a contradiction. In fact, this is not the case. Under the trend of global transportation industry restrictions and privatization, international professional logistics companies are often able to provide quality services and preferential tariffs. Of course, in one respect, freight rates are the ultimate standard for logistics decisions.
3. Control of goods during the logistics process. A key issue in logistics is who controls the flow of goods. Some importers believe that the flow of goods controlled by the supplier before the domestic import or importing country can save the relevant logistics and insurance costs, but at the end of the day they will find that these costs are included in the delivery price. The earlier the importer knows the flow of goods, the greater their control over logistics costs and service management, but at the same time they will bear higher transportation inventory and exchange risk. Importing companies should decide when to intervene in logistics control in the global resource allocation process based on the composition of their overall logistics costs.
4. The construction of the supply chain in the logistics process. If a batch of products or raw materials are sourced from different places in the same geographical area, it is wise to first assemble the goods and then concentrate the transportation. However, when and where the collection of goods in a certain way will have a great impact on the determination of logistics costs, this process is actually the design and construction of the logistics supply chain. When establishing a supply chain, enterprises should pay attention to the convergence work and seize the opportunity of merger to ensure that the key logistics costs are not wasted.
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