Logistics is key for international business success
When it comes to expanding your business internationally, logistics can make or break the entire operation. You can find a great supplier, negotiate great prices, goods quality and terms of payment . But if you can’t get the goods you need shipped to the customer as expected all your efforts can end up with nothing.
It is a well known fact that carriers like Fedex, UPS, DHL are stronger in some markets and weaker in others. For instance DHL is stronger in certain countries of Eastern Europe while UPS providers better services in Western Europe and Fedex in the US. When considering international operations one has to consider options that depend on the local market conditions.
There are many choices available and they fit different levels of needs:
• Drop-ship suppliers
• 3PL Logistics and freight forwarders
• On-site logistics providers
Drop-ship suppliers will ship the product directly to the customer address. In order to do this you should have a clear integration between your own order processing and fulfillment on the supplier side but it does not have to be at the IT level. You can generate orders to suppliers, get back the estimated delivery time and proof of delivery. You have to be careful with what you promise customers. In my personal experience when an order is placed directly to Asian supplier, it can easily take 3-4 weeks before the customer will see the product. This model works well for small volumes or for finished goods.
3PL logistics and freight forwarders will take over at the moment of product being ready for shipment at the shipping dock from manufacturer’s facility or warehouse. The responsibility for shipment in this case is on your logistics provider that acts as an extension of your own operation. This requires tighter integration and involves a lot of preparation on your side as well as review of your internal business processes.
On-site logistics providers would have their employees embedded with your supplier staff. This option is typically not for small businesses because it is only justified for large shipping volumes. But in this case you get full coordination from forecasting to manufacturing to shipping.
In no way we have discussed all the options available for businesses for their logistics needs. We just wanted to make a point that understanding your supply chain for international setup is crucial.
Valery Zelixon
Founder and Managing Partner
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Comments: 0; Published: July 08, 2010; Permalink
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