Question No. 4 - IBO - 05 - International Marketing Logistics - Master of Commerce (M.Com)

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IBO - 05 - International Marketing Logistics

Master of Commerce (M.Com) - 1st Year

Question No. 4 - Distinguish between the following: 
a) Domestic logistics and International logistics 

Logistic is a phenomenal practice of transporting goods to place within your country or overseas. Logistic companies are burgeoning in every alley around Australia. Whether you’re into business or have nothing to do with, understanding how logistic is important in our everyday life can help you in long run.  Logistic service can be broadly defined in two ways; domestic and international. It’s easy to assume the difference between these two just by their terms, but actually it isn’t when it comes to their different functional sphere.

The Basic Line:

Domestic logistics means distributing goods within you country, while international logistic deals is the transportation of goods beyond your country line. Dealing with domestic transportation is way different than that of international because of proximity involves in the process. Let’s take a look at the basic difference of these two operations.

Management:

When searching for local freight transport service you can book in many ways. Metro transport, full truck load and dangerous goods point to point delivery to down the road or to other part in Australia can be done easily within a day or maybe in week. On the contrary, international logistics requires different set of commercial operational managers who will set an entire plan for the delivery overseas.

Costs:

The costs involved in both the process should be considered individually. The price vary based on transportation modes, technology and man power involved. There are additional taxes involved in international process that make it bit too costly than that of domestic.

 Transportation:

When transporting within your country boundary, you would be able to choose many transportation options such as truck, metro and other road transportation facilities which are designed for palletized, fork-lifted and skidded. But you have very limited option when moving beyond country’s boundary.

b) Inland container depots and Container fright stations 

c) Weight ton and Measurement ton. 

The rates of individual commodities are expressed in different ways, namely, per weight ton (W), per measurement ton (M), and per weight ton or measurement ton (W/M), whichever gives higher revenue.

According to gross weight, i.e., weight ton, which is indicated by "W" in the tariff.

According to volume, i.e., measurement ton, which is indicated by "M" in the tariff.

The unit of measurement of different bases can vary. For example, a weight ton is usually defined as either a metric ton (100 kg) or a long ton (1,016 kg) and a measurement ton in some trades, is defined as 40 cu. feet, while in others 50 cu. feet, or else, as is usually the case today, as 1 cu. meter i.e., 35.5 cu. feet. According to normal practice, a commodity that is being charged on a weight basis will pay according to its weight irrespective of the volume it occupies and a commodity that is charged according to the volume will do so irrespective of its weight. 

d) Reorder Level (ROL) and Reorder Quantity (ROQ)

The reorder level is the level of the stock of a particular item, held by the firm, when an order is needed to be placed for avoiding the risk of being out of stock. It is based on the average time taken by the supplier for replenishment, maximum usage of the item during the replenishment time, and safety stock requirement. It is also known as reorder point.

The reorder quantity is the quantity of the order that is to be placed on a new purchase order for the particular item. The ordered quantity or the number of units needs to be optimum taking into account the various factors like cost of order, cost of transportation, carrying costs, etc. The reorder quantity is the quantity which, given the normal usage, provides the best balance between the various factors like quantity discounts, freight, storage costs, and working capital requirements. 

The main differences between Reorder Level and Reorder Quantity are as under:

• Reorder level is the stock level of a particular item of inventory, at which a firm needs to place an order for the fresh supply or replenishment of the item; whereas reorder quantity is the magnitude or the number of units to be ordered in a new purchase order for the fresh supply of a particular inventory item.
• While reorder level gives a signal regarding when to place a new order for the fresh supply of an inventory item; reorder quantity makes obvious the size of a particular order.
• The reorder level acts as a trigger or indication for placing the order for an item; whereas reorder quantity is the actual act of calculating and placing the size on a new purchase order.
• While in reorder level, the main element is time; in case of reorder quantity, the main element is quantity or number of units.
• While reorder level provides an answer to the question ‘when’; reorder quantity provides an answer to the question ‘how much’.
• While the internal factors involved in reorder level are maximum usage during the lead time, safety level, and replenishment period; the internal factors involved in reorder quantity are carrying cost of inventory per unit, cost of order, etc.
• Whereas the external factor involved in reorder level is lead time taken by the supplier; the external factors involved in reorder quantity are cost of freight, and big order quantity discounts.
• Reorder level has first precedence. first of all, we assess whether the stock level of an inventory item is above the reorder level or below it. if the stock level is below the reorder level, it is the trigger to place a purchase order; reorder quantity is calculated to be placed on the new purchase order, only after it has been decided that a purchase order is to be made.
• While reorder level is a strategic decision; reorder quantity is a tactical decision.
• Reorder level is a policy level or higher management level decision variable; whereas reorder quantity is an operational level and routine decision.
• While reorder level is not only an inventory management, but also business continuity issue; reorder quantity is purely an inventory management issue.
• Reorder level decision is more stable; whereas reorder quantity decision is less stable with more frequent changes.
• The main risk factor in reorder level is being out of stock; whereas the main risk factor in reorder quantity is high cost per unit of the inventory item ordered.
• The other risk factors in reorder level are disruption in production and foregone sales; whereas the other risk factors in reorder quantity are being uncompetitive in pricing of the final product or service offering, and reduction in profit margin per unit in case of higher costs of the inputs.

Question No. 3 - IBO - 05 - International Marketing Logistics - Master of Commerce (M.Com)

Solutions to Assignments 

IBO - 05 - International Marketing Logistics

Master of Commerce (M.Com) - 1st Year

Question No. 3 - Briefly comment on the following: 
a) “Objectives and policies for functioning of the supply chain are usually in conflict both within and across operational units.” 

Supply Chain Management refers to handling of the entire production flow of goods and services to maximize quality, customer experience and profitability. It involves right from the raw components to delivering the final product to customers.  In this article we shall take a look at the objectives and functions of Supply Chain Management.

Objectives of Supply Chain Management

We have discussed some of the important objectives of SCM below.

1. To maximize overall value generated

The higher the SCM profitability, the higher is the success for supply chain. The Supply chain profitability is the difference between the amount paid by the customer to purchase a product and the cost incurred by an organization to produce and supply the product to the customer.

2. Cost quality improvement

This is another essential objective of SCM. It looks to achieve cost quality balance and optimization.

3. To look for sources of Cost and Revenue

Customer is the only source of revenue. Therefore there should be appropriate management of the flow of information, product or funds. It is a key to the success of supply chain.

4. Shortening the time to order

SCM aims to reduce the time required for ordering and fulfilling the same.

5. Delivery optimization

The SCM aims to meet the demands of the customer for guaranteed delivery of high quality and low cost with less lead time.

6. Demand fulfilment

Managing the demand and supply is a key yet challenging task for a company or management personnel. Its objective is to fulfil customer demand through efficient resources.

7. Flexibility

SCM aims for flexibility. A Well managed supply chain provides flexible planning and better control mechanism.

8. Better Distribution

SCM aims to ensure improved distribution. It can maximize the distribution side efficiency. Marketer or distributor can achieve optimized level distribution by using all resources that are available properly.

9. Cost Reduction

It’s another objective of SCM to reduce the system wide cost of a company to meet service level requirement.

Functions of Supply Chain Management

The functions of SCM include the following:

1. Purchasing

The first function of SCM is purchasing. During manufacturing process, raw materials are needed. It is essential that these materials are procured and delivered on time. Then only the production can begin. In order to make this happen, coordination with suppliers and delivery companies is needed to avoid delays.

2. Operations

Forecasting and demand planning is needed before materials are procured as the demand market shall dictate how many units are to be produced and how much material is needed for production.  This function in SCM is vital as organizations accurately forecast demand to avoid having too little or too much inventory that would lead to revenue losses. Therefore, forecasting and demand planning should be tied in with inventory management, production and shipping.

3. Logistics

Logistics is a part of SCM that co-ordinates all planning aspects, purchasing, production, and transportation aspects to ensure that products reach the end consumer without hindrances. It is essential to have co-ordination with multiple departments so that products are quickly shipped to customers. 

4. Resource Management

Resource management[1] ensures that right resources are allocated to the right activities and that too in an optimized way. It ensures that optimized production schedule is created to maximize operations efficiency.

5. Information workflow

Sharing information and distribution is that what keeps all other functions of supply chain management on track. If this information workflow and communication is poor, it can hurt the entire chain.

b) “The world economic situation and the world trade are very closely related.” 

The world economic situation and the world trade are very closely related and

consequently whatever developments, whether positive or negative, take place in the former have

a direct impact on the latter. Hence, with the changing economic trends, it is very likely that the

movement of trade will also be affected. This results in the creation of cyclical fluctuation in the

demand and supply for goods in the world trade. Since the ships carry a sizeable quantity of goods

traffic in world trade, the fluctuations will have an impact on the movement of seaborne trade.

The global economic recovery that began in 1993 continued till 1996, when the world output grew

by 2.8% over 1995, However, growth belied the hopes that the world economy would enter a new

era of sustained growth not in excess of 3% which was expected to be achieved by 1997, Growth

in the developed market economies sf the world, as a whole, was slower than what had been

expected.

The growth of world merchandise trade slowed down sharply in 1996, it was 4.6% as against 10%

in the preceding two years, falling more than what had been expected at the beginning of the year.

The divergence between trade and output growth, which had been increasing since 1990, was

greatly reduced in 1996.

An important factor leasing to a slowdown in the world trade was a sharp deceleration of import

growth in developed countries, which account for about two-thirds of the world import demand from

11% in 1994 to only 5.2% in 1996.

The industrial production of the OECD countries is also a fundamental indicator for the global

maritime transport sector. The diverging growth rates in OECD countries industrial production and

world seaborne trade in the period 1991 -93 was mainly attributed to the decrease in production of

crude steel, iron ore, cooking coal, petroleum products, nonferrous metals and fertilizer, and to the

decline in the prices of these commodities. However, increasing trade in other manufacturers

maintained the growth of world seaborne trade.

c) “Shippers-Ship owners consultation arrangements in India leave much scope for Improvement.” 

In India, All India Shipper's Council, regional level shipper's associations, and concerned Government department like the Ministry of Commerce regularly consult shippers. The US Government does the same through provisions of FMC( Federal Maritime Commission), established under the Shipping Act, 1916.

Currently, there are five association at the regional level for resolving shipper's problems:

a.) Eastern India Shipper Association (EISA), headquartered in Kolkata.

b.) Western India Shipper Association(WISA), headquartered in Mumbai.

c.) Southern India Shipper Association(SISA), headquartered in Chennai.

d.) South Western India Shipper Association(SWISA), headquartered in Cochin.

e.) North India Shipper Association(NISA), headquartered in New Delhi.

Shippers-shipowners consultation in India leaves much scope for improvement. The statement is true considering the following aspects:

1.) The consulting arrangements have been found to have inadequate secretarial staff and meeting space. These associations largely depending chambers for meeting space and staff.

2.) There is a lack of adequate resources to organize seminars, conferences, workshops for creating awareness.

3.) Not all shippers represent themselves in the association, hence negotiations and decisions represent only a part of the consultation.

4.) The association has no representative on the Board of trustees of ports.

5.) They lack the expertise to present the cases scientifically and objectively.

6.) At times, Shippers and Chamber of Commerce approach authorities directly. This hampers the growth and repute of associations.

d) The rate of return from warehousing business is low and the gestation period is rather long. 

The Rate of Return (ROR) from warehousing business is low and the gestation period is rather long. Warehousing has several strategic decisions like the number of warehouses, warehouse capacity, their location, and type of ownership. These involve heavy investments.

A warehouse is involved in various functions like assortment, storage of goods, etc. These start generating revenue over and above the investment made, as the warehouse change for consignment held, as per the time period.

The cost of ownership of a warehouse involves initial cost and financing the same. Similarly, owing more warehouses would mean better customer service but involves ownership and maintenance costs. By making the product available at the place where it is needed and when it is needed, the distribution system adds both time and place utilities to the product. For achieving this, the company must critically decide on the number of warehouses and the type of transport system to be used for product delivery.

Question No. 2 - IBO - 05 - International Marketing Logistics - Master of Commerce (M.Com)

Solutions to Assignments 

IBO - 05 - International Marketing Logistics

Master of Commerce (M.Com) - 1st Year

Question No. 2

(a) Discuss briefly the various constraints faced by Indian shipping industry. 

Transportation of shipment through means of shipping companies has numerous advantages like cost-effectiveness and being environmentally friendly. Shipping companies in India have not been able to realize their fullest capacity due to a few constraints. Let’s us check out a few challenges faced by shipping companies in India which deter growth in the logistics sector:

1. Institutional Challenges

The rigidity of the Indian bureaucracy and its reluctance to give up control adds to the delay. Multiple involvements of the central, state and local governments with overlapping powers add to the chaos. Lack of a single window clearance system has made it challenging for shipping companies in India.

2. Infrastructural Challenges

Capacities of all major and minor ports in India need to be increased urgently. Due to transhipment points in other countries, the cycle time of Indian cargoes has rendered the uncompetitive on a global scale. Besides this development of road network, electricity and overall infrastructural development is also the need of the hour.

3. Financial Challenges

Shipping companies in India do not have access to any lucrative government schemes that have been available to other channels. The burden of taxes like Customs Duty on Bunkers, Landing Fees, Income Tax etc. without negligible exemptions have made it difficult for shipping companies to thrive.

4. Slow Process

The shipment procedures undertaken by shipping companies is quite cumbersome in comparison to other modes of transportation. This, in turn, wastes valuable shipping time and labour time which goes into the logistic process.

5. Vessel Size

The sizes of vessels are getting bigger owing to the rise in demand for shipping services. While it might sound like an improved trend, many ports in India are still struggling to keep up, and many of these large vessels cannot be called on into most of the ports.

(b) What is Maritime Fraud? State the various factors that lead to commitment of maritime frauds.

Maritime fraud occurs when one of the parties involved in an international trade transaction like the buyer, seller, shipowner, charterer, ship’s master or crew, insurer, banker, broker or agent illegally secures money or goods from another party to whom, on the face of it, he has undertaken specific trade, transport and financial obligations. To check the c/p frauds all care should be taken by the master while issuing any b/l under that c/p to provide the true description of goods on the b/l. If any letter of authority is given to the agent for signing the B/L then such letter of authority should clearly mention the description of the goods so that he may not make any false declaration on behalf of the master

'Maritime fraud is a generic term commonly used to describe the obtaining of money, or services, or property in the goods, or a pecuniary advantage by one or more parties to a transaction from the other party or parties, by unjust or illegal means

Question No. 1 - IBO - 05 - International Marketing Logistics - Master of Commerce (M.Com)

Solutions to Assignments 

IBO - 05 - International Marketing Logistics

Master of Commerce (M.Com) - 1st Year

Question No. 1
(a) What are the various factors taken into consideration while selecting the mode of transportation for export cargo. Explain. 

1. Cost of Service:

The cost of transportation adds to the cost of the goods so it should always be kept in mind. Rail transport is comparatively a cheaper mode of transport for carrying heavy and bulky traffic over long distances. Motor transport is best suited and economical to carry small traffic over short distances. Motor transport saves packing and handling costs.

Water transport is the cheapest mode of transport. It is suitable to carry only heavy and bulky goods over long distances where time is not an important factor. Air transport is the most costly means of transport but is particularly suited for carrying perishable, light and valuable goods which require quick delivery.

2. Speed of Transport:

Air transport is the quickest mode of transport but it is costliest of all. Motor transport is quicker than railways over short distances. However, the speed of railways over long distances is more than that of other modes of transport except air transport and is most suitable for long distances. Water transport is very slow and thus unsuitable where time is an important factor.

3. Flexibility:

Railways, water and air transport are inflexible modes of transport. They operate services on fixed routes and at preplanned time schedules. The goods have to be carried to the stations, ports and airports and then taken from there. Motor transport provides the most flexible service because it is not tied to fixed routes or time schedules. It can operate at any time and can reach the business premises for loading and unloading.

4. Regularity of Service:

Railway service is more certain, uniform and regular as compared to any other mode of transport. It is not much affected by weather conditions. On the other hand, motor transport, ocean transport and air transport are affected by bad weather such as heavy rains, snow, fog, storms etc.

5. Safety:

Safety and security of goods in transit also influence the choice of a suitable means of transport. Motor transport may be preferred to railway transport because losses are generally less in motor transport. Water transport exposes the goods to the perils of sea and, hence from safety point of view, sea transport is thought of as a last resort.

6. Nature of Commodity:

Rail transport is most suitable for carrying cheap, bulk and heavy goods. Perishable goods which require quick delivery may be carried through motor transport or air transport keeping in mind the cost and distance.

7. Other Considerations:

A number of special services such as warehousing, packing, loading and unloading are also taken into consideration while deciding about a mode of transport. From the above discussion it is clear that each mode of transport is suited for a particular type of traffic.

The rail transport is particularly suited for carrying heavy and bulky goods over long distances. Motor transport is suitable for carrying small consignments over short distances. Air transport is suited to light and precious articles which are to be delivered quickly. Ocean transport is appropriate for carrying heavy bulky goods over long distances at the cheapest possible cost.

(b) Describe the responsibilities of ship owners and the charterers under different forms of chartering arrangements. 

IBO - 05 - International Marketing Logistics - Master of Commerce (M.Com)

Solutions to Assignments 

IBO - 05 - International Marketing Logistics

Master of Commerce (M.Com) - 1st Year

Question No. 1

(a) What are the various factors taken into consideration while selecting the mode of transportation for export cargo. Explain. 

(b) Describe the responsibilities of ship owners and the charterers under different forms of chartering arrangements.                                         CLICK HERE

Question No. 2

(a) Discuss briefly the various constraints faced by Indian shipping industry. 

(b) What is Maritime Fraud? State the various factors that lead to commitment of maritime frauds.

                                                                CLICK HERE

Question No. 3 - Briefly comment on the following: 

a) “Objectives and policies for functioning of the supply chain are usually in conflict both within and across operational units.” 

b) “The world economic situation and the world trade are very closely related.” 

c) “Shippers-Ship owners consultation arrangements in India leave much scope for Improvement.” 

d) The rate of return from warehousing business is low and the gestation period is rather long. 

                                                                CLICK HERE

Question No. 4 - Distinguish between the following: 

a) Domestic logistics and International logistics 

b) Inland container depots and Container fright stations 

c) Weight ton and Measurement ton. 

d) Reorder Level (ROL) and Reorder Quantity (ROQ)

                                                                CLICK HERE

Question No. 5 Write short notes on following: 

a) Public Warehouse. 

b) Commercial Shipping 

c) Multi-Modal Transport Document 

d) Privatisation of Ports                        CLICK HERE