The Importance of International Logistics
Logistics management covers the physical movement of products as raw materials from their point of origin to receipt by end users as a finished product. Entrepreneurs need to understand international logistics because global production processes and delivery activities -- encompassing all transportation modes and storage and distribution systems -- are used more and more frequently to get a product to a customer.
The globalization of production means a company can procure or process resources from just about anywhere on the planet. This may be efficient when a resource either is not available locally or costs less when purchased from international markets. Before filing for bankruptcy in 2002, Nippon Kakoh Seishi was Japan's largest paper company; it owned forests and processing facilities in various countries around the world to produce wood pulp -- a key ingredient needed to create paper for its clients. For a small business, production inputs may include outsourcing production processes or importing finished products or raw materials from international manufacturers.
Packing, labeling, transportation and insurance are also part of international logistics. Sea, air, rail and interstate road systems are important aspects of transportation logistics. The cost of transporting materials and finished goods affects any decision about where to locate manufacturing facilities or which supplier to use to deliver a given production input. Keep in mind that some products cost very little to transport while others cost a great deal, and you'll need to look at transportation logistics relevant to your business.
Foreign goods imported into the United States must be processed by the U.S. Customs and Border Protection, a federal agency charged with the enforcement of trade and tariff laws. Customs procedures are generally highly technical; not properly following them can result in expensive and long delays. An importer may retain a customs broker to act as its agent in the entry process. A small business exporter may work with a freight forwarder or shippers' associations or use standard international mail delivery services, depending on specific transportation needs.
Knowledge of your product's global supply chain is vital for business planning related to fulfillment capacity. How many orders can your fulfillment center process in a given amount of time? How long does it take for products or raw materials to be delivered to a given point within the global supply chain? A business operator who does not know these answers risks making delivery promises he cannot keep.