Logistics and globalization

September 1, 2008

The phenomenon of globalization is representing our present economical and social situation. It influences on us in everyday life. Products we are buying every day are coming to our stores from many different countries and it does not matter, if it is a pepper, tennis shoe or a car. Nowadays companies must work and think globally and follow global trends for successful growth. Analyzing foreign markets and making proper decisions are crucial actions for successful business extension. Logistical companies play double role on the global market:

• Enable and generate globalization processes,
• Conform to global trends and handle new challenges.

Industrial companies concentrate their activities on their key industrial processes and low down the depth of the production. On the other hand they engage more and more outside business cooperators and among them are often logistical companies. In this global organizational structure, companies expect higher quality and lower costs (outsourcing). Many companies order and buy material all around the world (global sourcing) and sell their products on the global market (global selling). With the global activities company explores the market and build up its position on the market (benchmarking). One of the most specific outcomes of globalization is displacement of production to the countries where is cheaper labor or enough raw materials and other resources for profitable production. Logistics must follow all the global changes and response immediately to the changes to serve its purpose. Actions which generate globalization are widening of EU (European Union), industrial development in China and India, etc…Ton kilometers of individual freight transporters are not just result of bigger volume of transported goods but also because of longer distances.

Consequences for companies:

• International offerers are not dependent on their headquarters,
• International competition as regards price, quality and time elements,
• Faster technical development,
• Complex international purchasing, production, sales and logistical processes,
• Additional risk as regards money matters,
• Needs of production on the purchasing market to suit the local needs, etc...