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Impact of Globalization on Manufacturing Logistics

Introduction

One of the considerably significant activities constituting the economy of a country is logistics. The term 'logistics' in itself could have many connotations, including military logistics relating to the movement of resources and retention of one's supply lines while disrupting those of the enemy camp. However, business logistics referring to the routing of raw materials and finished goods, and more specifically, production or manufacturing logistics is all about movement of goods at different stages of production between various steps of the assembly line.

The IMF (1997) defines globalization as "the growing interdependencies of countries worldwide through the increasing volume and variety of cross-border transactions in goods and services and of international capital flows and also through the rapid and widespread diffusion of technology." The phenomenon of globalization has a number of far reaching impacts, one of the areas being manufacturing logistics. The present brief assesses this impact and outlines a number of steps that transnational firms can take in order to harness the benefits of globalization and face the challenges that it presents.

Lean thinking warehousing strategies

The practice of JIT (Just in Time) has become widely prevalent over the past two decades as cost saving techniques towards optimising the efficiency and effectiveness of the logistics function.  However, it also has the effect of leaving a manufacturing organisation exposed to any glitches in the JIT delivery, potentially causing the manufacturing activity to be completely stalled, thereby interrupting production and possibly affecting sales. A possible solution to this is to accept a residual inventory cost as a fait-accompli, and build in some spare capacity in the downstream manufacturing process (Jolly, 2003), thereby addressing a bulk of the risks associated with JIT logistics and warehousing, like damage / spoilage, and at the same time, eliminating the likelihood of non-availability of components which would affect production.

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