Compare National & International Logistics

Informative Paper: Comparison between National (Domestic) and International Logistics. 

You are required to write an informative paper about a Logistics topic (HIGHLIGHTED IN YELLOW). The paper must be typed in proper APA format. Use this link: Purdue APA 7  Your paper must be 6 to 8 pages long (minimum of 6 complete pages), not including the cover/reference/work cited page, double-spaced, Times New Roman 12-point type with 1 inch margins

You may use the Internet and local libraries for additional resource material. The paper must include a reference/bibliography/work-cited page of the sources used. Methods of citing the resource materials in the body of the paper and listing them in the bibliography are included in the link above. Because this is a formal academic paper, you are expected to find and verify your information from a variety of sources.. For a paper of this type, you are required to use at least 4 different online sources as a minimum, these sources must be cited in the body of your paper. If you list a reference, it must be cited somewhere in the body of your paper.

Spelling and English worthy of a college student using spell check, etc.

Requirements for the term paper are as follows: MUST BE IN APA FORMAT

1) cover page APA format. (Abstract Not Required)

2) Six to eight complete written pages (minimum of 6 complete pages)–Times New Roman 12 font, one-inch margins, and double-spaced. (Points will be deducted if not in this format)

3) Complete page means top margin to bottom margin

4) Reference/Work Cited Page–Provide at least four on-line sources. Other sources may be used in conjunction with on-line sources Again, if you list a reference it must be cited in the body of your paper.

*NOTE: Your paper should be between 6-8 written pages (minimum of 6 complete pages). This does not include the cover or reference page. If your research paper is less than 6 complete, top to bottom written pages, a reduction in grade will be given.

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ANSWER

Comparison between National (Domestic) and International Logistics

Introduction

Logistics refers to the management of the flow of products, from the point of production to the point of consumption, to meet the requirements of consumers or corporations.  Logistics is often referred to as physical distribution in some cases. According to Kotler (2016), logistics refers to the ‘‘planning, implementing, and controlling the physical flows of materials and finished goods from the point of origin to the point of use to meet the customer needs at a profit”. There are various resources that may be managed in logistics, particularly tangible goods such as equipment, supplies, supplies, and materials. Logistics can be conducted within a country’s borders, referred to as national or domestic logistics. It can also be done across national borders, referred to as international logistics. Domestic or national logistics entails tracking and coordinating the flow of products from their origin until they receive it within the same country.  International logistics deals with more than one country and within the scope of logistics. There are various similarities and differences between national and global logistics.

Similarities

The major similarity between domestic and international logistics is that both entail the movement of goods from one point to another. Helsen and Kotabe (2020) postulate that both encompass the management of material, sourcing, and physical distribution of goods.

Both types of logistics operate using the same principles. The five logistics elements, including storage, inventory, information control, transport, packaging, and unitization, are applicable to domestic and international logistics.

Regulations

In both national and global logistics, a set of regulations are followed. While the rules may differ slightly, there is a need to adhere to such laws in both international and domestic logistics.

Competition

Firms that engage in logistics in both the domestic and international markets all face competition. Several firms are operating in the local market, which poses competition for local logistics parties. Similarly, there are numerous logistics companies in the international market arena, hence competition for these firms (Helsen & Kotabe, 2020). Additionally, the multinational companies also operate in the local markets; hence pose competition to these local firms.

Differences

Scope and Distance

The most apparent difference between the two forms of logistics is the scope. Domestic logistics entails management of the moment of goods and services within the same nation; hence the scope is limited. On the contrary, international logistics involves the management of the transportation of products from one country to another, which could be based in another continent.  Thus, the scope of business is broad for international logistics. In global logistics, the distances that need management are often longer than those of national logistics.  Accordingly, managing the distances becomes the major factor to consider during the design of international logistics systems. Managing distance internationally gives the manager the ability to optimize the distance variable by manipulating inventory, warehousing, transportation, and customer service variables. In the global arena, the considerations of transportation tend to dominate the problem-solving of managers.  Global logistics require the transportation of finished goods, supplies, and parts over longer distances, which could be across continents, unlike in domestic logistics, where transportation is limited within the national borders. A long-distance in international logistics indicates more costs, while domestic logistics, due to the short distance covered, translates to lower costs.

Transportation

Domestic logistics utilize various transportation options of moving products from one region to another. However, road and rail are the most common mode of transport for domestic logistics. Road transport has a variety of options. On the other hand, due to various distances, international logistics use different modes of transport such as sea or flight (Helsen & Kotabe, 2020).  Unlike domestic logistics, international transport may entail multiple transportations for a single transaction. Multimodal transportation, combined with improved information systems, helps global logistic managers cope with the demands of global sourcing.  Nevertheless, the transportation methods for international shipping are limited as compared to international shipping.

Costs Involved

The costs involved are also another significant difference between domestic and international logistics. While there are similar costs involved in both national and international logistics, there are several differences in the nature and amount of costs involved in both scopes of logistics. In national logistics, the costs that are involved are often technology, logistics workers, and storage facilities. In the international scene, the costs are almost the same, save for tariffs and government taxes and fees. The current exchange rates are also the additional costs involved in international logistics as they may fluctuate favorably or unfavorably (Xu et al.,2017).  The longer distances and intermediaries involve also result in more costs for firms and logistics managers involved in the international market. There are also additional costs that may arise within the operation cycle in international logistics.

Management and Coordination

The management and coordination of domestic logistics are often centralized.  Most domestic logistic firms have one logistics manager who is in charge of overseeing all the planning and execution of the movement of products from one point to another.  In the international arena, there is often a corporate logistics manager who coordinates the movement of products and services across countries. There might also be those in charge of a specific country they are stationed at. More often than not, management of domestic logistics is easy compared to the management of international logistics.

Length of the Supply Chain Process

Another major difference between international and national logistics is the length of time taken to complete the logistics operation cycle. For domestic logistics, the time taken is often shorter than in international logistics, as short as a day or days, owing to the fewer intermediaries and fewer processes that need to be completed. Contrarily, international logistics may take a longer time due to the complexities involved in the international arena; it may take weeks or months. There are often communication delays, financing needs, longer distances that need to be covered, signing of contract laws, and special packaging requirements that may consume more time (Xu et al., 2017).  Additionally, with the numerous intermediaries involved in international logistics, the time taken may be considerably longer than that of domestic logistics. Since the mode of transport in international logistics may be sea, it may take weeks or months to transport products.  The transfer time range for ships often takes 10 to 21 days, and customs clearance processes at the ports may take one day, depending on the country or the nature and amount of products being transported. The various requirements by different nations at the ports may prove time-consuming. Moreover, with the higher costs involved in international trade, there might be a need for loans. International financing trade financing often takes some time as a letter of credit needs to be opened.  Generally, there is consistency in domestic logistics in terms of the length of the logistics operation cycle. In contrast, in international logistics, there are various complexities that may involve which may result in inconsistency in the length of the operation cycle.

Inventories

            The level of inventory also differs in international and local logistics. In local logistics, the inventory transported is often low, which reflects the short-order and improved transport capabilities (Kotler, 2016).  On the other hand, the inventory levels in international logistics are higher, which reflects the uncertainty, longer lead time, and higher demand.

Risk

There are various risks in logistics management, which could include financial and cargo risks. These risks affect the international logistics and local logistics providers differently. Both types of risks affect local logistics providers in a small way compared to international logistics firms. Owing to differences in currency, inflation, interest, and exchange rates, and higher levels of inventory, the financial risk is high (Farahani et al., 2009). Moreover, due to the frequent cargo handling, longer transit time, and different infrastructure encountered in various countries, the cargo risk is high on the global scene.

Exchange rate fluctuations

In domestic logistics, since the country of operation is one and the clients are those within national borders, the currency used is one. On the other hand, international logistics involve the use of multiple currencies.  The exchange rates also vary, and thus international logistics is often affected by currency fluctuations. Consequently, global logistic firms should adjust their planning to incorporate these fluctuations and changes in exchange rates.

Regulations

In domestic logistics, the logistics managers are often required to adhere to one nation’s regulation on documentation, packaging, customs procedures, and labeling. On the other hand, there are multiple national regulations and intermediaries participating in the transaction and the channels of distribution in international logistics. Each nation may have a different set of rules and regulations that logistic firms must adhere to. Since there are various intermediaries such as brokers, banks, and forwarders, there are contract laws that need to be followed in international logistics (Xu et al., 2017).  These contract laws between suppliers and the buyers can be chosen from either the country of origin of the buyers or the sellers. It can also be one that is applicable and acceptable by both countries.  In national logistics, it is important to note only the laws of one nation, where the logistics activities are conducted, are considered.

Culture

Culture is an essential factor in international trade and logistics. An understanding of the suppliers’ culture and language is essential for the success of the transaction. Without this understanding, there are risks of communication challenges, conflicts, and misunderstanding. In domestic logistics, there are often one or fewer cultures or languages involved in the distribution channel, as it is within the nation (Farahani et al., 2009). However, global logistics may entail entirely different cultures, which may cause clashes and disagreements. It is advisable that logistic firms that operate in the international arena study the culture and language of the customers to avoid such misunderstanding.

Supply Chain partnerships

In domestic logistics, the buyer and the supplier are often few and may entail few agents, particularly in rail transport.   However, there are often multiple parties and intermediaries involved in the supply chain cycle in global logistics. These intermediaries may be customer brokers, forwarders, translators, among others. Partnerships are crucial in international logistics as they help in reducing and understanding the regulations and other complexities involved in international business.

Complexities

In global logistics, there are several complexities involved as compared to domestic logistics. Since there are more agents, costs, and regulations involved, the complexities in international logistics may prove a challenge. Additionally, there are various documents that may be required in international logistics (Kotabe & Helsen, 2020).  Minimal documentation is often required in domestic logistics, which may include bills of lading, purchase order, and invoice. In contrast, in international logistics, there is a variety of paperwork that needs to be filled in the logistics operation cycle.

Conclusion

Ultimately, logistics has become an essential part of business across the world. With the increasing globalization, there has been an increase in international logistics. There are a few similarities between domestic and global logistics, which include the function, regulations, and competitions. Nonetheless, there are multiple differences between the two. There are many differences in the scope of operations, length of time management, and the risks involved in the supply chain partnerships. These differences affect the efficiency and effectiveness of the logistics process. While the scope covered and the inventory level in international logistics are not limited, there are numerous risks and costs involved.  The risks include cargo risks, financial and cultural risks. Logistics companies involved in the international market should study the market they are involved in and take preventive measures to reduce these risks. Besides, diversification of the supply chain may help mitigate risks. Companies should also maintain sufficient insurance coverage and create comprehensive and reliable contracts to help reduce liability.  Engaging in partnerships is also instrumental in the reduction of language and cultural barriers, which may be detrimental in the transaction. These partnerships also help understand the engaging demands, tastes, and preferences in the particular nation and understand the regulations and laws of that country.

References

Farahani, R. Z., Asgari, N., & Davarzani, H. (Eds.). (2009). Supply chain and logistics in the national, international and governmental environment: concepts and models. Springer Science & Business Media. https://www.springer.com/gp/book/9783790821550

Kotabe, M. M., & Helsen, K. (2020). Global marketing management. John Wiley & Sons. https://www.wiley.com/en-us/Global+Marketing+Management%2C+7th+Edition-p-9781119298717

Kotler, P. (2016). A framework for marketing management. Pearson Education Limited. https://www.pearson.com/store/p/framework-for-marketing-management/P100001326359

Xu, D., Jiang, D., & Pretorius, L. (2017). A domestic and foreign literature review on the risk prevention and control of logistics project management.

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