Prof. Dr. Ass.
STUDY THE STRATEGIC STRUCTURING OF
LOGISTICS ACTIVITIES IN MULTINATIONAL COMPANIES
Nowadays, an effective way for Multinational companies (MNCs) to achieve global success is through deepening their
value chain in foreign locations. As a consequence, logistics becomes an area
of strategic importance and a source for competitive advantage, because it is of great value-added potential and
best position to provide supply chain optimization in the international
transaction process.
The objective of the paper is to
present approach for studyhow MNCs structure their logistics activities in the global
business environment with regard to strategic competitive performance. The
main research question can be divided into several partial research questions:
1. What impacts do the variables: logistics strategy,
supply and distribution structure, location determinants, and regional
logistics infrastructure have on the design of MNCs’
international logistics structure? 2. What strategic considerations,
corresponding to the variables presented above, should be involved in the
process of structuring logistics activities in MNCs?
The use of appropriate distribution channels in
international markets increases the chances of success dramatically.Logistics
strategy is no longer solely a functional strategy, especially in the global
context. Global logistics strategy enables MNCs to meet the challenge of global competition, because it has great impacts
in unifying formerly disparate responsibilities into new patterns of efficiency.
Industrial firms do not operate independently, but
rather in a chain of organizations, which includes the goods flow from the
extraction of raw materials via required manufacturing processes and
intermediate transports up to and including the distribution of finished
products to customers. National resource conditions exert a dominant influence
on a firm’s competitive advantage and a firm’s location.
International distribution includes various activities
involved in the flow of goods from plants to customers located in different
countries. These activities are categorized as: transportation, handling-in,
handling-out, storage, and reconditioning. A firm’s international distribution
structure should be designed to guarantee the efficient organization of
finished product flows.
Economies of scale can be used to determine the annual
capacity and number of manufacturing plants and distribution centers. The trade-off
between economies of scale in manufacturing and distribution costs would
provide a good first approximation for plant capacity and plant number
decisions.
An MNC’s choice of its
manufacturing and distribution location affects its cost competitiveness since
countries may differ with respect to the availability and the price of
production factors. There are three groups
of plant location determinants: proximity to other network nodes,
access to factors of production, and national and regional characteristics that
can be applied in the design of logistics activities.
The research methodology includes
interview and questionnaire. This research emphasizes the multinational
companies. The interview questions are divided in two sections. First, eleven
questions are discussed during the interview. Two other questions regarding the
location determinants are answered by the respondents after the interview.
Section One
Design International Logistics Activities includes following questions:1.How do you look at the strategies for logistics and distribution that your
company has today? 2.Do you see logistics activities
as a weapon of competition? 3. How do you describe your current distribution
structure? 4.How do you describe your current supply
chain structure? 5. Can you basically describe your process of developing
logistics and distribution strategy? 6. What is your view upon third-party
services for warehousing or transportation? 7. What’s your opinion about the
character of the Regional logistics infrastructure in terms of air, railroad,
telecommunications, motorways and water? 8.How do you
describe the necessary improvements of the existing regional logistics
infrastructure with regard to the efficiency of the supply chains and the
distribution chains of today? 9. How do you treat the environmental issues
e.g., air pollution with regard to the existing logistic structure? 10.What do you think about building of Regional Logistic
Infrastructure Centers? 11. Do you think that regional logistic infrastructure
centers including different logistic companies and services would increase the
coordination and efficiency of your company’s logistic activities and
functions?
Section Two
Location Determinants includes the following questions. 1. To what degree did the following factors e.g., closeness to important
markets, customers, suppliers; access to raw materials, energy, capital, labor;
protected markets; tax conditions; regional trade barriers; government
subsidies; exchange rate risk;language; culture; politics;labor practices and regulation; environment
regulation influence your plant location
decision? 2. To what degree did those factors list above influence your
distribution location decision e.g., regional logistics center, international
logistics center?
This paper examines approach for research of the manufacturingand logistics interaction in international
manufacturing. The overall purpose is to determine the impact of a firm's
globalization perception and manufacturing/logistics integration on competitive
performance. In relation to this overall purpose, there are two sub-purposes.
The first is to identify the major impacts of the research variables on the
design of international logistics structure. The second is to identify the
significant strategic considerations of global logistics strategy and evaluate
relevant determinants to support MNCs’
decision-making in structuring their logistics activities.
List of references:
1. Choi, C. J.Global competitiveness and national attractiveness,International Studies of Management and Organization;
2. Grant, R. M.Contemporary strategy analysis, Blackwell
Business, 2010.
3. Pfohl, H., Zöllner, W., and Weber, N.
Economies of scale in customer warehouses: Theoretical and empirical analysisJournal of Business Logistics, Vol. 13,
2002.
4. Wood, D. F., Barone, A., Murphy, P. and Wardlow, D. L.“International logistics”,