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Global Supply Chain Terms
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Bullwhip Effect
The bullwhip effect is a phenomenon in supply chain where small changes in consumer demand cause increasing fluctuations in orders upstream. It's important in international logistics as it can lead to inefficiencies and higher costs due to the need for more inventory and capacity.
Just-In-Time (JIT)
JIT is an inventory management strategy that aligns raw-material orders with production schedules. It's used in international logistics to reduce inventory costs and increase efficiency, but requires accurate demand forecasting and reliable suppliers.
Lean Manufacturing
Lean manufacturing is a production philosophy aimed at minimizing waste within manufacturing systems. In international logistics, it's important to reduce costs, improve product quality, and achieve faster delivery times.
Agile Supply Chain
An agile supply chain is a fast and flexible supply chain that can respond quickly to changing market conditions. Its importance in international logistics lies in its ability to quickly adapt to customer needs and market changes, which can provide a competitive advantage.
Customs Brokerage
Customs brokerage involves clearing goods through customs barriers for importers and exporters. This service is critical in international logistics as it helps to ensure compliance with government regulations and smooth transit of goods across borders.
Intermodal Transportation
Intermodal transportation involves moving freight by using two or more modes of transportation. In international logistics, it's essential for optimizing transport routes and costs, increasing flexibility, and reducing carbon footprint.
Incoterms
Incoterms are a set of international rules that define the responsibilities of buyers and sellers in international transactions of goods. They are important for providing clarity and avoiding legal complications in international logistics.
Freight Forwarder
A freight forwarder is an agent who acts on behalf of shippers to arrange the transportation of goods. They are important in international logistics as they provide expertise, help manage the complexities of shipping, and can consolidate loads for cost savings.
Bill of Lading
The bill of lading is a legal document between a shipper and carrier detailing the type, quantity, and destination of goods being carried. It serves as a shipment receipt, contract, and document of title in international logistics.
Containerization
Containerization is the use of standardized containers for the efficient transport and handling of goods. It revolutionized international logistics by reducing costs, improving loading efficiency, and making intermodal transfers easier.
Cross-Docking
Cross-docking is a logistics process where incoming shipments are directly transferred to outgoing vehicles, bypassing traditional storage. This method is important in international logistics for reducing handling costs and lead times.
Economic Order Quantity (EOQ)
EOQ is a formula used to determine the ideal order quantity that minimizes both ordering and holding costs. In international logistics, maintaining optimum inventory levels is crucial for cost efficiency and service level.
Supply Chain Visibility
Supply chain visibility refers to the ability to track products as they move from supplier to customer. It's important in international logistics for managing risks, reducing disruptions, and improving customer satisfaction.
Third-Party Logistics (3PL)
3PL providers offer outsourced logistics services, which may include transportation, warehousing, picking and packing. They are important in international logistics for enhancing operational efficiency and enabling businesses to scale flexibly.
Reverse Logistics
Reverse logistics manages the return and recycling of goods from the customer back to the producer. It's important in international logistics for economic recovery of returned products and environmental sustainability.
Supply Chain Integration
Supply chain integration involves aligning and synchronizing a company's supply chain with those of its suppliers and customers. It's important in international logistics to enhance collaboration, reduce costs, and improve service performance.
Value-Added Services
Value-added services are additional services provided by logistics companies, such as product customization, special packaging, or quality checks. They are key in international logistics for differentiating offerings and adding value to meet specific customer requirements.
Ocean Freight
Ocean freight is the transport of goods by sea, typically using container ships. It's a cornerstone of international logistics due to its cost-effectiveness for large volumes and its role in global trade.
Air Freight
Air freight refers to the transportation of goods by aircraft. It's important in international logistics for fast delivery times, high-value goods, and maintaining the freshness of perishables.
Demand Planning
Demand planning is the process of forecasting customer demand to optimize supply chain decisions. It's vital in international logistics to balance inventory levels with customer service and minimize costs.
Globalization
Globalization refers to the increased interconnectivity and interdependence of the world's markets and businesses. In international logistics, it has led to expanded opportunities and complexities due to the broader geographical spread of supply chains.
Fourth-Party Logistics (4PL)
4PL providers are integrators that manage all aspects of a supply chain. In international logistics, they offer a higher level of supply chain management service, including strategy and analysis, for businesses seeking end-to-end supply chain solutions.
Tariff
A tariff is a tax imposed on imported goods and services. Tariffs are significant in international logistics as they impact the cost of goods, trade flows, and can influence sourcing and distribution decisions.
Free Trade Zone (FTZ)
An FTZ is a geographic area where goods may be landed, handled, manufactured, or reconfigured without customs authority intervention. This is important in international logistics for minimizing duties and taxes and facilitating quicker market access.
Landed Cost
The landed cost is the total price of a product once it has arrived at buyers' hands, including the cost of goods, transportation, and all associated fees. Knowing the landed cost is essential in international logistics for pricing strategies and comparing supplier options.
Inventory Turnover
Inventory turnover is a ratio showing how many times a company's inventory is sold and replaced over a period. It's a key metric in international logistics for measuring efficiency and effectiveness in inventory management.
Certificate of Origin
A Certificate of Origin is a document declaring in which country a commodity or good was manufactured. This certificate is important in international logistics for customs clearance, trade agreements, and determining tariffs.
Capacity Planning
Capacity planning is the process of determining the production capacity needed to meet changing demands for products. It's a critical aspect of international logistics for ensuring the efficient use of resources and meeting delivery commitments.
Lead Time
Lead time is the total time that elapses between the initiation and completion of a production process. In international logistics, managing lead time is crucial for on-time delivery, maintaining service levels, and reducing carrying costs.
Supply Chain Risk Management
Supply chain risk management is the identification, assessment, and mitigation of potential risks within the supply chain. It's important in international logistics to minimize disruptions, protect resources, and ensure business continuity.
Vendor Managed Inventory (VMI)
Vendor Managed Inventory is a business model where the supplier takes responsibility for maintaining the customer's inventory levels. In international logistics, it can lead to better inventory optimization and improved supplier-customer relationships.
Cold Chain
The cold chain is a temperature-controlled supply chain used for the preservation of perishable goods. It is crucial in international logistics for maintaining the quality and safety of food and pharmaceutical products.
Supply Chain Analytics
Supply chain analytics refers to the use of data analysis tools to improve the efficiency and effectiveness of the supply chain. In international logistics, it's important for making informed decisions and enhancing competitiveness.
Sustainable Logistics
Sustainable logistics involves operations that minimize environmental impact and promote social responsibility. Its importance in international logistics is growing as companies seek to reduce carbon footprints and meet regulatory and consumer demands for sustainability.
Outsourcing
Outsourcing in supply chain management refers to contracting external organizations to perform certain supply chain functions. This is important in international logistics to access specialized expertise, cost reductions, and to enable a focus on core competencies.
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