rDuty LAST UPDATED ON JUNE 15TH, 2021
EXPORTING: THE FUNDAMENTALS OF LOGISTICS AND INTERNATIONAL TRANSPORT (ENG)
When a company carries out import and/or export operations, it is inevitably confronted with the logistics and management of the international transport of goods. However, do you know what these terms cover, what are the stakes and how to optimize them?
LOGISTICS AND TRANSPORT IN INTERNATIONAL TRADE
The word "logistics" is sometimes confused with the word "transport". Although they interact, these two important functions in international trade are nevertheless different.
FOCUS ON LOGISTICS
According to ASLOG (Association Française de la Supply Chain et de la Logistique), logistics can be defined as "the art and manner of making a given product available at the right time, in the right place, at the lowest cost and with the best quality". Thus, we can say that logistics is the function that manages the flow of goods and merchandise throughout the value chain of a company. However, logistics is not limited to simply managing physical flows. Indeed, to consider logistics from this point of view would be simplistic and erroneous.
Logistics is the management of all the flows of goods and information that pass through a company to achieve a given objective, meeting criteria of quality, quantity, price and deadlines established in advance. This is why logistics is a strategic function for companies, especially those that produce and market goods.
In general, logistics includes the following activities (non-exhaustive list): Supply management and control of purchases (including quality), Management of the storage of raw materials and goods, Administration of information flows (financial, economic, commercial), The management of the logistic information system, Preparation and dispatch of orders, The construction of distribution routes...
Caution: Depending on the organizational structure defined by management, certain activities may or may not be attached to the "logistics" function. In addition, some companies, for reasons of human resources, costs or time, opt to outsource their logistics to a service provider. In addition, a distinction must be made between logistics and international logistics, which, for its part, integrates the international transport of goods into its main activities.
ZOOM ON TRANSPORT
Transportation refers to the movement of goods and people from a point of departure to a point of arrival. The activity of transport, on the other hand, refers to the means used to carry out the movement of goods or people and the administrative procedures associated with this action.
The transport of goods is therefore an activity that interacts with the logistics and commercial functions. Just as logistics must collaborate with different functions of the company (e.g. production, trade, accounting...), the transport function must work in collaboration with all the dimensions of the company in order to carry out its missions in the best possible way.
The missions generally associated with the transport of goods are (non-exhaustive list): Loading and unloading of goods, The routing of the goods, Monitoring of the goods during transport, The management of customs operations... Goods can be transported by road, air, sea, river or rail. Moreover, the transport activity can be internalized to meet a strategic challenge of the firm or externalized to reduce costs and focus on the know-how and business of the company. As a result, if the transport missions are carried out by a transport provider, the latter can offer different types of complementary services such as storage or the management of payment against goods, for example.
WHAT ARE THE STAKES FOR INTERNATIONAL LOGISTICS?
International logistics is, for companies carrying out import and/or export commercial transactions, a primary function. Indeed, the management of international flows and transport is of great importance because it is integrated into the company's value chain. The knowledge of Incoterms, as well as the implementation of a logistic and transport management adapted to its needs is mandatory to carry out its international trade activity efficiently. To do so, you can choose to manage part of your "logistics & transport" activity internally or outsource it.
Whatever you decide, you should know that few companies currently manage their logistics from A to Z from one source. This requires significant human resources and financial investment. Not to mention that you will need to have resources in all the countries where you wish to carry out import-export operations.
On the other hand, it is necessary to remember that the outsourcing of an activity does not exempt you from controlling it. A regular audit (every year or even every six months) can prove to be judicious to ensure that the chosen service provider(s) respect(s) the specifications established when the contract was signed.