Essay about Global Sourcing & Logistics

1944 Words 8 Pages
Introduction
Logistics is a concept that entails translocation of products from the selling point to the designated destination. This includes movement of products across international borders and delivering them to designated locations. Such translocations have inherent risks and other associated costs that must be covered by different parties based on the agreements. Dynamics of operations in different countries has led to unification of various logistics standards and related issues. Some regions possess higher risks and overhead translocation costs due to restrictions and infrastructure condition in such regions. To harmonize logistics operations in global and international trade, HS Codes and Incoterms have been enacted. On the other
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Globalization makes it possible to conduct trade in any part of the world, which makes it easier to transport products from the manufacturers or sellers to buyers across borders with little restrictions (Kumar 52). However, due to the scope of products being moved, harmonization becomes a defining concept that enables similar products to be grouped under one code for ease of processing. This codification is done under the Harmonization System Code (HS Code).
By definition, INCOTERMS are a conventional three-letter standard trade term that have been devised to ease cross border transactions and are embedded in international contract when dealing to selling of goods (New INCOTERMS 1). These three letters are used to describe or inform the buyer and seller on issues dealing with cost coverage, obligations of each party and risks involved in movement of products from the seller to the buyer (New INCOTERMS 1). The contract offers details on who will cover associated costs like insurance cost and transportation costs. Some regions like India have inherently higher transportation cost that has been associated with over 40 % of the total cost of the product (Kilgore, Joseph, and Metersky 38; Lee, Rammohan, and Sept 54+). If the seller is the one covering transportation cost to a specific destination inside India, such

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