Global Logistics For Dummies Cheat Sheet
Turning your successful domestic business into a successful global one requires a considerable amount of thought and planning. All the economic advantages you imagine (new markets, manufacturing cost savings, labor cost savings, and so on) can quickly be outweighed by physical and cultural challenges. And if you’ve done your homework and are one of the companies out there who have made a successful go of global logistics, you are likely to be asked at some point to provide support services to Humanitarian and Disaster Relief (H&DR) efforts. If so, it’s important to know what you’ll be getting into.
What to Consider Before Going Global with Your Logistics Operations
You may be considering globally expanding your successful domestic business operations; or providing logistics services for a foreign customer. There are many good reasons for “going global,” but a majority of companies — both large and small — fail in their initial efforts.
Before you make the final decision to “go global,” much research and planning is required to address and answer the following questions.
- Do you have to make changes to your product(s) or the packaging to ensure compatibility with your new foreign customer base? Will you have to accommodate a different measurement system (for example, metric) or operate on a different power source or voltage?
- Are there different ecological or safety restrictions in any or all of your global markets that will affect either the manufacture or use of your products?
- Will you have to modify your packaging to be more durable or climate resistant?
- Will you need to translate or expand your installation and repair instructions to accommodate additional foreign languages?
Your manufacturing processes
- Are you planning on using a different set of production equipment?
- Will the equipment warranties and other maintenance requirements be supportable at your new locations?
- Do you need to modify your internal manufacturing processes and procedures to accommodate your new workforce?
- Do you have the right production metrics in place for a facility in a foreign location?
- Are your new foreign facilities secure and sustainable, and do they comply with national, regional and local regulations?
Your distribution processes
- Have you established new supply and distribution chains for both the raw materials you need to support your production, as well as for the delivery of your finished products?
- Are there customs and other cross-border regulations that will affect your supply and distribution chains?
- Do you have to modify your raw material inventories to account for new procurement challenges?
- Will you have to adjust your product inventory levels and processes to accommodate foreign order and ship times?
- Do you know if your domestic transportation and movement processes and levels of in-transit security can be sustained in your foreign operations?
- Have you examined the various foreign transportation routes and modes to promote efficiency and prevent loss?
- Do you need to consider outsourcing some or all of your distribution?
Your marketing strategy
- Do you know what adjustments need to be made to your marketing policies and practices to accommodate the culture and traditions of your foreign markets?
- Do you have to change the way you market your product, in order to avoid misinterpretation?
- Are you going to be using traditional brick-and-mortar outlets or focusing on sales via the Internet?
- Will you have to modify your return policies to accommodate your new foreign customer base?
- Are you going to relocate your domestic workforce to manage your foreign facilities? Have you evaluated the tangible and intangible monetary and social costs associated with their housing, safety, health, and transportation?
- Are you going to employ expatriates, foreign nationals, local nationals, or a combination of employee types?
- Do you understand the national, regional, and local laws concerning all your workforce, to include work visas, work hours, overtime, leave, and required benefits?
- Do you know what the restrictions are (if any) for employing female workers or minors?
- Do you have to modify your employee training programs to accommodate local languages, cultures and traditions?
Your “bottom line”
- Will you need additional or different types of insurance to protect your foreign facilities, your foreign distribution chain, and your employees?
- Are there any additional liabilities that would have to be addressed or resolved under foreign, rather than domestic, legal channels?
- Have you reviewed your strategy for protecting your intellectual property in your foreign location?
- Will your domestic data management software and equipment operating and security policies have to be hardened to ensure prevention of or recovery from compromise, loss, or theft at your foreign sites?
- Can you get your foreign employees bonded, if necessary?
- Do you know what legal recourse you have should your foreign operations be affected by political disruption or sabotage?
- Have you investigated the instances of counterfeiting in your new market, and have a plan to protect your product and your brand?
- Will your domestic operations be able to assume the foreign operations’ product and service output should there be a stoppage or loss of foreign production capability?
- If your foreign expansion fails, how will it affect the company?
Providing Logistics Support to a Team of International Humanitarian and Disaster Relief (H&DR) Providers
Once your company becomes comfortable with its global logistics operations, it is highly likely that at some point in time you may be asked to provide humanitarian and disaster relief logistics support services. Your options could be donating funds, providing needed material, or the more complex task of providing logistics personnel in direct support of the disaster relief effort.
Donating funds is relatively easy, as there are many international relief organizations (including United Nation agencies) that set up accounts for a specific disaster relief operation. Donating cash is usually preferred by those running the disaster relief operation, as it enables them to procure exactly what is needed at each phase of the operation, often using local vendors to help stimulate the affect country’s economy at a time it is needed the most.
Donating material becomes more complicated. First, a relief organization that has been identified as part of the specific disaster relief effort must approve the material you wish to donate. You are then usually responsible for the procurement and shipment of the goods into the affected country, to include being able to manage all customs tariffs, fees, and other cross-border requirements. You also have to provide documentation — to both the affected country government and the receiving aid organization — of having met applicable quality assurance requirements.
Providing H&DR logistics services in the affected country is a third option; but one that cannot be undertaken without a significant amount of preparation and corporate commitment. A major challenge during international relief efforts can be workers who lack training, have little experience in operating in the extreme weather and other severe conditions that are often present, or lack the necessary cultural sensitivity. Specific protocols and procedures must be in place, connecting your personnel to the international response community, before attempting this type of commitment.
The United Nations and its many agencies has recognized the value that businesses of all sizes can bring to international relief efforts. It has established initiatives to assist businesses and business associations in using existing technology networks to create platforms for disaster risk reduction, emergency preparedness, and response and recovery.
No matter how prepared your logistics team may be domestically, operating as part of an international relief effort in remote and unstable environments requires a level of individual and corporate commitment that offers as much risk as reward.