This module explores two subsets of international supply chain management – global logistics and international transportation. Logistics management is responsible for the entire process of moving goods from point A to point B, which includes working with suppliers and vendors on schedules, creating import and export documentation, securing transportation services, and arranging for delivery to foreign destinations. Transportation management focuses on the means and methods of transportation, as well as the transfer of shipments from one mode of transportation to the next. Together, effective logistics and transportation management are crucial for the fast and efficient flow of goods and materials around the globe.

We change direction in this module from logistics and supply chains to foreign exchange. As we shall see, foreign exchange risk has a large financial impact on foreign operations, especially on supply chains. In the first lesson, we define money and currency, and then introduce details and examples of foreign currency transactions. In the second lesson we turn to foreign exchange risk, often abbreviated as "forex" exposure. We find that any business or organization that has international transactions is exposed to translation, transaction, and operating risk. With examples, we show that the downside outcomes of forex risk can be large. Anyone dealing with cross-border currency transactions needs to be aware of, and wary of, foreign exchange risk!

In the previous module, we defined three types of foreign exchange (forex) risk and presented examples of its potential financial impacts. You might ask, “OK, I get it, but what to do about it?” This week we answer that question with a discussion of forex hedging techniques. Hedging methods are generally tools used to reduce financial risk. In the case of forex risk, we will cover non-financial hedging methods such as cash flow netting, as well as financial hedging methods including forwards, swaps, futures, and options. In the second lecture we will review the amazing global financial markets where foreign exchange and forex hedging transactions occur.