Discuss how developing nations ensure that a good portion of supply chain transactions are conducted within their borders. What are some of the challenges associated with the international logistics?
There are increased costs associated with international logistics in addition to logistics activities associated with goods that are sold across national boundaries. It’s important to recognize that international logistics is both more costly and more challenging than domestic logistics. One reason for the increased cost is that the relevant documentation requirements for international shipments are more substantial and more complex than those associated with domestic shipments. International logistics is characterized by greater distances between origin and destination points and requires trade-offs between transportation and inventory holding costs. The challenges associated with international logistics come from a number of sources. When one country’s currency is weak relative to other currencies, it becomes more costly to import products, but exports often surge. Differences between countries in regulations, laws, and legal systems also add to the challenges of international logistics, and the degree of enforcement of existing regulations and laws is not uniform from country to country. Firms involved in international trade must give careful thought to their inventory policies. Most nations represent smaller potential marketing areas than the United States; thus, the inventory necessary to serve any one of them will be smaller. An inventory held in one nation may not necessarily serve the needs of markets in nearby nations because there may be minor, but significant, variations in the specifications of the product sold in each country. Return items are virtually impossible to accommodate in an international distribution operation, especially if the return involves movements of the goods across a national boundary. This has important implications for a firm trying to achieve a high level of customer service standards on an international basis because it may be unreasonable to tell buyers to return a defective item to the factory where it was built. Warehousing is another inventory-related consideration associated with international logistics. Whereas warehousing facilities in economically developed countries have been developed to meet the requirements of contemporary logistics systems, the warehousing facilities in other countries can be more problematic. Inefficient warehousing practices can affect inventory carrying costs through increased storage, handling, obsolescence, or shrinkage costs. In China, for example, the combination of poor warehousing facilities and unskilled warehousing management has led to high levels of inventory loss, damage, and deterioration