Importance Of International Logistics In Global Procurement

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This book is dedicated to supply chain management and international logistics. The authors offer a practical approach to the topic, utilizing case studies by logistic operators. This book is an essential resource for management students, academics, and practitioners alike, as it illustrates key concepts and ideas in practice. It is a must-have for all practitioners in supply chain management. Read on to learn how to leverage the power of international logistics and supply chain management.

International Logistics In Global Procurement

The study highlights the importance of international logistics in global procurement, indicating that improved logistic capabilities will facilitate more trade facilitation. Increasing logistics investments will increase the amount of trade facilitation by improving the efficiency of transport and warehousing. Improving logistics will increase the productivity of exporters and importers. Therefore, the importance of logistics cannot be underestimated. It will be crucial for any company to invest in the logistics of their products and services.

Despite its importance, there is little empirical research on the impact of logistics on global trade. Most studies focus on the effect of logistics on economic growth. Moreover, there is limited research on specific dimensions of logistics. Most studies have industry-based data that have a limited connection with the conceptual framework. Nevertheless, there is growing interest in studying logistics in global procurement. The study of international logistics will help companies to understand the impacts and strategies of global supply chains.

The Efficiency of International Logistics

In the past, logistics was viewed as a commodity service and often outsourced to freight forwarders. These companies provided varying levels of visibility into their logistics management operations, and their logistics function was often siloed from other aspects of the business. While logistics is crucial for the overall success of a company, it is often treated as a commodity service, routinized, and isolated from other aspects of the business. This can result in stagnant supply topography and missed opportunities.

The latest OECD and European Union countries ranked highest in the latest Logistics Performance Index. China jumped from number 28 to number 27 in 2016, while India rose 19 places to rank 38. The logistics performance of a nation can determine the strength of that nation’s economy and how it can compete globally. When a nation is more efficient and competitive, it can realize its full potential. With a globalized economy, an efficient global supply chain infrastructure is vital to competitiveness.

international logistics in global procurement
Photo by Barrett Ward on Unsplash

Alternative Sourcing of Global Procurement

In the early days of sourcing optimization, its applications involved the buying of transportation services along national and international shipping lanes. Often, there were many suppliers and multiple shipping lanes, with the exact characteristics of a given route changing year to year. Bids varied greatly, and there were millions of possible combinations. In many cases, the bids were for the same product, but from different suppliers. As a result, these early examples of sourcing optimization did not meet the company’s specifications.

As global demand for goods and services grows worldwide, companies that can leverage global sourcing are better equipped to compete. The challenges in this field are vast and constantly evolving, including the need to reduce costs while improving quality and customer service. The following are three primary benefits of using global sourcing to help companies meet their goals. Here are some examples:

Costs of International Logistics

Growing concerns about rising global freight rates have put the practice of shipping bulky and low-value goods overseas under the spotlight. These items can include metals ore and rare earth minerals, which are shipped to China for processing before being transported to markets worldwide. Other examples include Alaskan-caught fish, which may be processed in China before being shipped back to the United States. Some of these processes are driven by labor arbitrage or supply security issues.

Many companies use a very narrow view of cost, focusing on actual purchase costs, manufacturing costs, transport costs, and customs duties. However, this approach masks other costs, such as the additional costs for inventory financing, lost sales, or supply chain disruption. Using unit total cost is an efficient way to estimate costs, and is most useful when selecting suppliers. But there are several issues to consider when analyzing international logistics.

Importance of Correct Tariff Codes

It is important to assign the correct tariff codes to products during the import and export process. These codes are also used by national Customs administrations for a variety of purposes, including data collection and statistical analysis, trade policies, monitoring of controlled goods, and compilation of national accounts. Incorrect classification of goods can be costly for both exporters and importers, resulting in additional taxes, duties, and lost profits.

To avoid paying unnecessary duties, it is imperative to classify products according to their classification codes. There are over 12,000 individual tariff classifications in the United States and Canada. Each classification has a specific hierarchy and explanatory notes. An expert in the field of tariff classification is essential for determining the correct classification of a product. Correct tariff codes are critical for successful international trade transactions.