BA6352005

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Ba447 Distribution
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Key Considerations

• International Channels Intermediaries
• The Steps, Procedures, Regulations Documents
  involved in Exporting Process
• Examine Intl distribution systems, wholesaling
  retailing patterns emerging trends
• International Logistics Supply Chain Mgt.

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International Channel-of-Distribution Alternatives
Home Country
Foreign Country
The foreign marketer or producer sells to or
through
Foreign consumer
Domestic producer or marketer
Foreign agent or merchant wholesalers
Domestic wholesale Middlemen
Foreign retailers
Exporter
Importer
Export MGT Company
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Distribution Strategy Considerations

• Coverage- Middlemen Services
• Costs / Margins
• Channel Continuity Length
• Competition
• Control

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Home Mrkt Middlemen

• Global Retailers
• Export Management Cos
• Trading Companies
• U.S. Export Trading Cos
• Complementary Marketers
• Mfgrs Export Agents
• Home Country Brokers

• Buying Offices
• Selling Groups
• Export Associations
• Foreign Sales Comps
• Norazi Agents
• Export Merchants
• Export Jobbers

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Foreign Country
? Manufacturer's Reps ? Distributors ? Brokers
? Managing Agents / Compradors ? Dealers ?
Import Jobbers ? Wholesalers ? Retailers
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• Preparing Clearing Your Product for Export

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The Exporting Process
Leaving the Exporting Country
Physical Distribution
Entering the Importing Country
International shipping and logistics Packing Insur
ance
LicensesGeneralValidated DocumentationExport
declarationCommercial invoiceBill of
ladingConsular invoiceSpecial certificatesAnd
other documents
Tariffs, taxes Non-tariff Barriers Standards Ins
pection Documentation Quotas Fees Licenses Sp
ecial certificates Exchange permits And other
barriers
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EZ Guide to Getting Export License
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Examples of Commerce Control List Export
Regulations
4997B Viruses or viroids for human, veterinary,
plant, or laboratory use, except hog cholera and
attenuated or inactivated systems. Controls for
ECCN 4997B Unit Report in "
value." Validated License Required Country
Groups QSTVWYZ. GLV Value Limit 0 for all
destinations. Processing Code CM. Reason for
Control National security. Special Licenses
Available See Part 373. 3D94F "Software"
specially designed for the "development"
"production," or "use" of items controlled by
3A80C, electronic test equipment controlled by
3A93F, or manufacturing and test equipment
controlled by 3B91F. Controls for 3D94F Unit
value Validated License Required Country
Groups S, Z, Iran, Syria, South African
military and police. Reason for Control FP
(foreign policy) GTDU (general license) Yes,
except destinations listed under Validated
License Required.
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4996B Western Red Cedar (Thuja Picata Logs and
Timber, and Rough, Dressed and Worked Lumber
Containing Wane-Listed in Supplement No. 4 to
Part 377)
CONTROLS FOR ECCN 4996B UNIT Report in "Million
Board Feet Scribner." VALIDATED LICENSE REQUIRED
Country Groups QSTVWYZ and Canada. GLV VALUE
LIMIT 0 to all destinations. PROCESSING CODE
SS. REASON FOR CONTROL Short Supply. SPECIAL
LICENSES AVAILABLE None.
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The Exporting Process
Physical Distribution
Leaving the Exporting Country
Entering the Importing Country
LicensesGeneralValidated DocumentationExport
declarationCommercial invoiceBill of
ladingConsular invoiceSpecial certificates
other documents
International shipping and logistics Packing Insur
ance
Tariffs, taxes Non-tariff Barriers Standards Ins
pection Documentation Quotas Fees Licenses Sp
ecial certificates Exchange permits And other
barriers
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Export Documents
? Export Declaration ? Consular Invoice or
Certification of Origin ? Bill of
Lading ? Commercial Invoice ? Insurance Policy or
certificate ? Licenses ? Others ? Health
Certificates ? Packing Lists ? Etc.
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The Exporting Process
Leaving the Exporting Country
Physical Distribution
Entering the Importing Country
International shipping and logistics Packing Insur
ance
LicensesGeneralValidated DocumentationExport
declarationCommercial invoiceBill of
ladingConsular invoiceSpecial certificatesAnd
other documents
Tariffs, taxes Non-tariff Barriers Standards Ins
pection Documentation Quotas Fees Licenses Sp
ecial certificates Exchange permits And other
barriers
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Strategic Importance of Packaging

• Shipping Handling
• Storage Preservation
• Labeling Display
• Promo Purchase
• Ease-of use
• 2ndary use

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International Transportation Issues

• Transportation infrastructure
• Roads, rail lines, airports, seaports, pipelines
• Availability of transportation modes
• Overland shipping, ocean shipping, air shipping
• Choice of modes
• Transit time, predictability, cost, noneconomic
  factors

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Transportation Modes
Rail cost-effectivefor shipping bulk products,
piggyback
Truck Flexible in routing time schedules,
efficient for short-hauls of high value goods
Water Low cost for shipping bulky, low-value,
non perishable goods, slowest form
Pipeline Ship petroleum, natural gas, and
chemicals from sources to markets
Air High cost, ideal when speed is needed or
distance markets have to be reached
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Ranking Modes of Transportation
Highest
Lowest
Relative cost
Air
Water
Pipe
Truck
Rail
Transit time
Water
Rail
Truck
Air
Pipe
Reliability
Pipe
Truck
Air
Water
Rail
Capability
Water
Rail
Air
Pipe
Truck
Accessibility
Truck
Rail
Air
Water
Pipe
Traceability
Air
Truck
Rail
Water
Pipe
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TEU "Twenty-foot Equivalent Unit" is defined as a
volume equivalent to that occupied by one ISO
twenty-foot container
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Container Ports Throughput by Regions 1999 -
2015 (millions of TEUs)
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The Exporting Process
Leaving the Exporting Country
Physical Distribution
Entering the Importing Country
LicensesGeneralValidated DocumentationExport
declarationCommercial invoiceBill of
ladingConsular invoiceSpecial certificatesAnd
other documents
International shipping and logistics Packing Insur
ance
Tariffs, taxes Non-tariff Barriers Standards Ins
pection Documentation Quotas Fees Licenses Sp
ecial certificates Exchange permits And other
barriers
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Next Major Task
After Entering country- getting it to customer

• In some markets the local distribution system is
  single biggest impediment to successful marketing

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• Examine the types of distribution systems that
  exist worldwide

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World Retail Patterns
Retail Outlets Population Employees Country (000)
per Outlet per Outlet
Argentina 199.5 164 4 Australia 160.2 111 5 Canada
157.2 183 9 India 3540.0 253 NA Japan 1591.2 79 4
Malaysia 170.6 109 8 Mexico 899.3 96 2 Philippine
s 120.1 547 28 South Africa 60.4 675 7 South
Korea 730.0 60 2 U.S.A
1516.3 170
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• International Logistics Supply Chain Management

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International Logistics

• designing and managing of a system that
  controls the flow of materials into, through, and
  out of the international corporation

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The Impact of International Logistics

• Logistical costs are 10 to 30 of total landed
  cost of an international order.
• Factors necessary for the use of logistics as a
  competitive tool
• Close collaboration w/ suppliers customers
• Technologically advanced information processing
  communication exchange capabilities
• An integrated business infrastructure

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Channel Economics

• A Systems Concept Total Cost Approach

Systems Concept
Transportation
Materials Handling
Management views logistics as a system of
interrelated components
Management tries to reduce cost of using
the components as a whole
Order Processing
Inventory Control
Warehousing
Packaging
Total Cost Approach
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Supply-Chain Mgt

• Efficient supply chain design increases customer
  satisfaction and saves money
• reduces inventory holding costs
• increases inventory turnover cycles
• reduces operating costs
• reduces order handling and mailing costs
• makes firm more price competitive

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International Supply Chain
Suppliers
Corporation
Customers
Inbound Materials
Through-flow
Outbound Materials
Domestic/ImportSourcing
Domestic/ImportSourcing
Order Processing
Order Placement
Order Processing
Order Placement
Trans-portation
Trans-portation
Trans-portation
Trans-portation
Materials Management
Physical Distribution Management
Customer Service
Physical Distribution Management
Supplier-Firm Interface
Customer-Firm Interface
Inventory Management
Storage
Storage
Storage
Inventory Management
Inventory Management
Forward and Reverse Flows of Information and,
Products, and Funds
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The Dynamics of the Supply Chain
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Order Cycle Time

• The total time that passes between the placement
  of an order and the receipt of the merchandise.
• Length of the total order cycle
• Longer cycle in international marketing than
  domestic
• Consistency of the order cycle
• More complicated delivery mode reduces
  consistency
• Altering cycle times
• Change transportation methods
• Change inventory locations
• Change ordering process

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Information Distortions and the Bullwhip Effect
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The Bullwhip Effect increase in variability is
an increasing function of the lead time.
Customer Demand
Order Size
Time
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Causes.

• Promotional sales
• Volume Transportation discounts
• Batching
• Inflated orders
• Long cycle times
• Lack of Visibility to demand information

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The Bullwhip Effect

• Inventory is insurance against supply chain
  uncertainties

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How to mitigate Bullwhip Effect
strategy, referred to as Quick Response, in which
manufacturing, warehousing, sales and retailers
are linked together

• 1. Integrated Information Systems
• Global EDI network that links agents with
  production
• and inventory information
• EDI order transmission to HQ
• EDI linkage with carriers
• Data linked to manufacturing
• 2. Integrated distribution strategy
• cross-docking

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• Supply chain management substitutes information
  for inventory

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Logistics Costs Continue to Fall
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Logistics Wal-Marts remarkable success

• The starting point was relentless focus on
  satisfying customer needs
• Wal-Mart goal - provide customers access to goods
  when and where they want them and develop cost
  structures that enable competitive pricing
• The key to achieving this goal was to make the
  way the company replenished inventory the
  centerpiece of its strategy.

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Logistics Wal-Marts remarkable success

• This was obtained by using a logistics technique
  known as cross-docking
• goods continuously delivered to Wal-Marts
  warehouses where are dispatched to stores w/out
  ever sitting in inventory.
• This strategy reduced Wal-Marts costs
  significantly

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Characteristics of Cross-Docking

• Goods spend at most 48 hours in the warehouse,
• Avoids inventory and handling costs,
• Wal-Mart delivers about 85 of its goods through
  its warehouse system, compared to about 50 for
  Kmart,
• Stores trigger orders for products.

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System Characteristics

• Requires linking Wal-Marts distribution centers,
  suppliers and stores to guarantee that any order
  is processed and executed in a matter of hours,
• Wal-Mart operates a private satellite-communicatio
  ns system that sends point-of-sale data to all
  its vendors allowing them - clear vision of sales
  at all stores

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System Characteristics

• Wal-Mart has a dedicated fleet of 1000s of
  trucks that serve their warehouses
• This allows them to
• ship goods from warehouses to stores in less than
  48 hours
• replenish stores twice a week on average.

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The Future is Not What it Used to Be

• DC (Direct-to-Customer)

• Reduce cost
• Increase Profit
• Increase service level
• Increase flexibility

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A new Supply Chain Paradigm

• A shift from a Push System...
• Production decisions are based on forecast
• to a Push-Pull System
• Parts inventory is replenished based on forecasts
• Assembly is based on accurate customer demand

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E-Fulfillment Requires New Logistics
Infrastructure
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Push-Pull Supply Chains
The Supply Chain Time Line
Customers
Suppliers
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• International
• Direct Marketing
• Companies
• Tactics
• Results

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Marketing Channel Strategy
direct
indirect
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International - toothpaste retailing outlets
vary by country
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A salesperson may be allocated to only one
channel within a country (i.e. wholesale sales
force) and cannot work in more than one country.
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