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TODAYS DISCUSSION LOGISTICS
Ingram Micro Tech Data Corp Merisel,
Inc Brightpoint CellStar
Circuit City
Intel
Solectron SCI Celestica Flextronics
Jabil Sanmina
Retailers
IBM HP Compaq Lucent Motorola Dell Alcatel
Nortel Cisco
Texas Instrument
Best Buy
Radio Shack
AMD
Arrow Avnet Pioneer Premier Bell
LSI Logic
End Consumer
National Semi
Enterprise Sales E-commerce purchase
Reverse Logistics
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LOGISTICS IN ACTION!
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DOING LOGISTICS IN A GLOBAL SETTING.. T
here are easier things to do!!!
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THE BASIC LOGISTICS PROCESS
Deliver
Make
Make
Deliver
Make
Source
Source
Deliver
Source
CustomersCustomer
Your Company
Supplier
Customer
SuppliersSupplier
Internal or External
Internal or External
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Key Elements in the Logistics
Process Transportation
Inventory Demand Planning/forecasting
Communications Distribution
Centers Customer service
Third-parties
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SOME SOBERING THOUGHTS ABOUT GLOBAL LOGISTICS
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Your typical grocery store in Bangkok
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Chinese Distributor Expands Warehouse via The
ultra-technological means of Tarps!!

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A special product display in a
Moscow supermarket
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Lets examine the key issues associated with the
source, make, deliver processes of logistics
MAKE
DELIVER
SOURCE
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Sourcing Issues

• Vendors competencies/cultures/mission
  alignment

• Full costs to move and store materials
  sourced
• from a given location

• Who will do the moving and storing?

• Other costs associated with sourcing

Transloading?
Taxes and duties?
Customs clearance?
Inventory costs?
Brokers?
Duties
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Making Issues

• Do we make or do we outsource?

• Where do we do the production?

• Relative importance of proximity to sources
• vs. proximity to markets

• Are Distribution Centers required in
  effectively
• reaching markets?

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Deliver- the major Logistics Issues

• Do ourselves or outsource?

• Shipment quantities?

• The need for Distribution Centers?

• The cost of transportation and DCs?

• Are middlemen needed, and what type?

• The costs of middlemen

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• Some of the key global challenges.
• Infrastructures
• Methods/Equipment
• Intermediaries
• Cultures and relationships

Chinese Distributors delivery bikes!
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Meaning of Logistics Infrastructure.. Modes of
transportation Warehousing networks 3PL
providers Communications capabilities Government
assets
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The Moral of Infrastructure..
It is different in almost every environment
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LOGISTICS INFRASTRUCTURE in OTHER PLACES
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MOVING DAY!!
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• Infrastructures, some examples..
• Russia/Ukraine Whoa, dont go there!
• India Trucks are able to run only 150 miles on
  average per day as compared to 360 miles in
  developed countries.
• Spain .. the trains in Spain are a big pain
• Mexico.. Those trucks are cheap, but you get
  what you pay for.

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RAIL FREIGHT TRANSPORTATION IN THE EU IS A
DIASTER!!!

• No two countries use the same signaling system
• No two countries use the same electric current
• Trains run on different sides of the track in
  some countries
• Track gauge varies
• Freight traffic yields to passenger traffic
• Lyon to MilanTrain48 hours Truck 8
• Cost of rail exceeds cost of truck!!

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• The significance of Third-parties in
• global logistics
• Minimize the asset base
• Obtain local knowledge of logistics
• practices
• Contract manufacturers
• Warehousing firms
• Carriers

3-PLs, as they are called, will be absolutely
essential in taking a frozen food product to
market in France and the UK.
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Some Unique Factors to Consider in the UK And
France From a Grocery Logistics Perspective

• Frances transportation infrastructure is one
  of
• the best in Europe and boasts the largest road
  network.
• The country has more than 589,000 miles of road
• network, including 6,820 miles of freeways, fully
  
• interconnected with Western Europe.

• The 35-hour workweek that is now part of
  Frances labor regulations affects all areas of
  logistics. These same regulations allow a system
  called modulation where employees can work
  fewer hours during off-seasons, and more hours
  during busy-seasons, all while paying workers a
  consistent salary year-round. Thus, the 35-hour
  workweek is actually flexible.

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Third-party logistics companies are important in
France. Geodis is the largest French logistics
company other leading French-based logistics
companies include Gefco, STEF, TFE, Giraud and FM
Logistic.
In France, genuine shared user facilities are
prevalent which allows a firm using a
third-party warehouse to share labor with other
firms using the same warehouse. This can
dramatically reduce warehouse labor cost.
The emergence of retail buying groups is an
effort by independent grocers to enhance their
buying power, and the leading chains of this
type are Leclerc and Intermarché in France.
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Mkt Share French Grocery Retailers Auchan
13 Casino 10 Carrefour
30 Intermarche 15 Leclerc 15
Intermarche and Leclerc are retailer coops and
are not integrated, and dont have coordinated
scanning
Auchan and Carrefore have big stores and do
a significant amount of direct store delivery
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Hypermarkets (defined by ACNielsen as stores over
2,500m2) in France account for 52 of total
grocery sales but just 2.7 of all grocery
outlets. Thus 1080 stores account for just over
half the total grocery market!
Importance of Hypermarkets in the UK and
France Country of Sales Value of
number of Stores France 52
2.7 U.K. 57 2.4
Keep in mind that France and the UK have much
older city centers built in a time when there
were no large trucks. Now all the major cities
have limited hours for distribution. So
distribution to stores is limited as to time and
size of trucks usually quite small.
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A key tactic to create differentiation is the use
of own brand products. UK grocery retailers have
used this approach extensively.
Percentage Penetration of Private Label
Products UK France Safeway
47 Carrefour 20 Tesco 51
Auchan 16 Sainsbury 54 Intermarche
29 ASDA 54 Leclerc 18 Somerfield
36 Casino 23 National Average 45
NationalAverage 22
In the UK, the big trend is the use of 3rd party
managed distribution centers, even for the big
manufacturers like Nestle
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French retailers are embarked on a
differentiation strategy based mainly on store
size and location. They are less advanced than
the British in terms of retail branding (as noted
earlier) and this is reflected in lower levels of
own label penetration and greater discounting.
Both countries share uniquely low levels of
switchability with relatively few large surface
stores accounting for over half the total market.
It is a matter of some debate in which country
retail power is the greatest and which consumers
are the greatest beneficiaries, both today and
tomorrow.
In the UK, key logistics issues also include huge
problems with road congestion, retailers pushing
back inventory to the product manufacturers, and
increasing use of cross-docking
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Congestion is so bad in the UK, there is a trend
towards congestion charges. London has put a
toll on vehicles that enter central London during
the daytime. Each vehicle must pay 5 (9) per
day even if they just are inside the boundary for
only 5 minutes. The zone is covered with CC-TV
in order to monitor the license plates, and then
match them to the database of paid customers.
Roads, in general, are becoming more congested,
so the time to deliver is increasing.
In France, the Rungis International Food
distribution village is a critical part of the
food logistics process. This is a huge
Distribution Center, and almost everything bound
for Paris and a lot of other places goes through
here. There are separate rows of buildings for
meat, dairy, fruit/vegetables, frozen products
and flowers.
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Summary, from a logistics standpoint, heres
what you need to set up, manage and cost..
1. Source and cost of materials and components

• Process for moving materials/components to
• production sites modes of transportation

3. The cost of moving inputs to production sites

• Whether to produce yourself or use contract
• manufacturers Capital availability???

5. Cost per unit to manufacture
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• Methods and costs for transporting finished
  product
• Rail, truck, air

• Need for warehousing, whether to outsource and
  the
• cost of same expertise??

8. Cost of transportation to the retailer/final
customer
9. Need for middlemen, and the associated cost
Commissions/markups, market coverage

• Extraordinary costs brokers, customs, taxes
• and duties

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Totaling up the Logistics/Operations costs
Materials cost
_________________
Transport cost, materials
_________________
Production costs
________________
Warehouse cost
________________
Transport cost, finished product ________________
Selling costs
________________
Extra cost (duties, customs, etc)
________________
TOTAL COST ________________
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Some Useful Websites
1. http//www.manufacturing.net/lm/
Logistics Management magazine
2. http//www.shipping-worldwide.com/courier.html
Cargo rate quotes
3. http//www.maersk-logistics.com/
Maersk site on operations and rates
4. http//www.logisticsworld.com/
Logistics World go to the International area
5. http//www.logisticsworld.com/logistics/intern
ational.htm
This site has a list of websites dealing with
logistics for several countries
6. http//www.supplychainbrain.com/index.htm
Some great case studies on country-specific
logistics
7. http//www.logisticsfocus.com/articles/
Good articles on logistics conditions in various
countries
8. http//www.valuenotes.com/
Good articles on logistics conditions in various
countries
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And, Here You Go!
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