Going Global. Global Supply Chain Management and Importing

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Theodore Arnold
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1 Going Global Global Supply Chain Management and Importing

2 Chapter 1 Introduction to Global Supply Chain Management

3 INTRODUCTION What is a global supply chain? What is global supply chain management?

4 MANAGING A GLOBAL SUPPLY CHAIN CHALLENGES Coordinating flow of materials, information and finance Conflicting business objectives and requirements between suppliers and buyers. Intellectual property protection Identifying and assuring the reliability of international business partners Inherent uncertainty between markets and consumer demand Currency fluctuations Assessing finance and insurance Compliance with international regulations and standards

5 Supply chain processes SCOR model

7 Chapter 2 Planning the Global Supply Chain

8 Supply chain planning Level One Refine and confirm the business objectives that the supply chain must support Review the external markets: The economic environment Current regulations in the market Technological developments Cultural, demographic, and infrastructural issues Review the competing organizations in the international marketplace Review internal processes: Product characteristics Service characteristics Operational strategy Competitive strategy analysis

9 Supply chain planning Examine existing supply chain processes and assess how they match business requirements Level Two Network Processes Information systems Organization Risk management

10 Supply chain planning Level Three Plan sourcing strategy Plan reverse logistics or returns Add operational detail to basic supply chain design Plan product build process Plan delivery

11 ELEMENTS OF A SUPPLY CHAIN PLAN Cover page Executive summary Supply chain maps Supply chain strategies Human resources required Sourcing Production Materials management and handling Product modifications (if required) Inventory management

12 ELEMENTS OF A SUPPLY CHAIN PLAN Storage and warehouse space Order processing Shipping and transportation Delivery Quality control After-sales service and customer satisfaction Risk management External support partners Financial requirements Implementation schedule

13 Supply chain plan Implementing the plan Managing organizational change

15 Chapter 3 Managing Procurement and Sourcing

16 Global sourcing Risks involved: What is global sourcing? Quality Ethical considerations Patent protection Transportation costs Shipping and distribution schedules Risks related to extended transit times Cultural differences Documentation intricacies Instability of foreign governments Weather conditions

17 The sourcing process

18 Global sourcing Make or buy analysis E- procurement Efficient sourcing Total acquisition cost analysis Primary and Secondary sourcing Supply base rationalization and consolidation

19 Outsourcing Advantages Reduction in costs Gaining outside expertise Customer service improvements Focus on core competencies Obtaining outside technology Disadvantages Possibility of increased costs Loss of company control Negative impact on company employees Negative impact on customers Relationship problems Considerations Method of payment Payment terms Ensuring receipt

20 Compliance with international law Exporting considerations Exporting documents International export regulations Exchange control licenses Export quotas Commercial invoice Bill of lading Export declaration Packing list Insurance document Certificate of origin

21 Compliance with international law Importing considerations Import regulations Importers liability Importing documents Commercial invoice Bill of lading Import quotas Import declaration Antidumping legislation Packing list Tariff classification Insurance document Certificate of origin

23 Chapter 4 Incoterms

24 Incoterms Summary of Incoterms Departure (EXW) Main Carriage Unpaid (FCA, FAS, FOB) Main Carriage Paid (CFR, CIF, CPT, CIP) Arrival (DAF, DES, DEQ, DDU, DDP)

25 Incoterms

26 Choosing the right Incoterm Location of the purchaser and seller Factors that help determine which Incoterm is the best one for an organization to use A company s experience with international trade Ability for either party to obtain cost advantages for transportation or warehousing

28 Chapter 5 Production Management

29 Production management Materials requirement planning Monitoring performance Scheduling steps Production planning activities Planning demand fluctuations Time buckets and planning horizons Meeting requirements

30 Adapting product design Packaging and transportation Concurrent and parallel processing Standardization

31 Standards Type Performance standards Work standards Customer service standards ISO 9000 standards

32 What is subject to regulations? Production process Product Packaging and labelling

33 Types of regulations Type Health and safety Environmental Packaging Labelling Packing Marking Safety

34 Product release procedures Double checking product specifications and shipment numbers against customer orders Examining random selections of the product for quality problems Confirming all necessary documentation has been completed Examining packaging to ensure it meets required regulations Preparing audit reports confirming quality procedures that were implemented during production Checking that any required certification procedures have been applied to the shipment

36 Chapter 6 Inventory Management

37 Inventory and global supply chains Category Raw material Finished product Work in progress (WIP) Consumables Service, repair, replacement and spare items (S&R items) Inventory type Service Pipeline Contingency Safety stock Efficient procurement

38 Inventory management terminology Term Ordering Inventory levels Descriptions Economic order quantity (EOQ) On-hand stock Net stock Net inventory Stock-outs Finances Demand Stock-outs Average inventory value Inventory carrying cost Lost sales cost Total policy cost Annual demand Forecast annual demand Lead time Lead time demand

39 Inventory management Select a system for storing inventory Inventory tracking

40 Maintaining optimum inventory levels Optimal levels Apply JIT Quick response strategy Vendor managed inventory

41 Planning storage Warehouses and distribution Centralized and decentralized warehousing Selecting locations

43 Chapter 7 Managing Delivery

44 Managing delivery

45 Planning transportation Preparing a Transportation Activity Profile Origins and destinations for required shipments between different supply chain locations, such as warehouse to retail store or supplier to manufacturing site Required frequency of shipments between different supply chain locations Time required to transport goods from origin to destination Modes of transport available for the required shipments and their transit times Transportation costs for each available mode of transport

46 Transportation activity profile Shipping frequency Carrier contract negotiation What needs to be planned Modes of transportation Shipment rating Route selection Carrier

47 Upon arrival Using foreign cargo facilities Customs clearance Receiving payment

49 Chapter 8 Managing Intermediaries

50 Intermediaries Types of intermediaries Freight forwarders NVOCC Trading houses Insurance agents Financial institutions Export merchants Export agents Import agents Import merchants

51 Third party logistics (3PLs) Services offered: Inbound freight Customs and freight consolidation Warehousing Order fulfillment Distribution Management of freight to customers

52 Cargo insurance Insurance conditions Free of Particular Average (FPA) American Conditions (FPAAC) FPA British Conditions (FPAEC) With average (WA) All risk Special clauses Marine extension clause War clauses Exemptions Act of God Enemies of the Queen or State Defect or inherent vice in the goods Act of default of the shipper or owner

53 The reverse supply Type of Return Close-outs Buy-outs Job-outs Surplus Defectives Non-defective defectives Salvage Returns Safety issue returns Recalls

55 Chapter 9 Managing Returns

56 Managing the returns process

58 Chapter 10 Managing IT

59 Information technology System Customer Relationship Management System (CRM) Product Data Management System (PDM) Product Lifecycle Management System (PLCM) Inventory Management System (IMS) Transportation Management System (TMS) Warehouse Management System (WMS)

60 e-commerce solutions Procurement and purchasing Online retail sales Customer relationship management (CRM) Inventory Management Transportation management Warehouse management Collaborative planning

61 Benefits of e-commerce Cost efficiencies Simplification Customer service improvements Tracking Automatic notifications Auditing Labelling Reduced administrative costs

63 Chapter 11 Trade Documentation

64 Trade documentation Standard Export and Import Documentation Export Commercial invoice Bill of lading Packing list Insurance document Certificate of origin Export declaration Import Commercial invoice Bill of lading Packing list Insurance document Certificate of origin Import declaration

65 Trade documentation Export documentation Export licenses or permits Dangerous goods declaration Exchange control document Inspection certificates Safety certifications Import documentation Special certificate of origin Customs bond Certified consular invoice Additional documentation Packing declaration Inspection certificate Quality certificate Phytosanitary certificate Fumigation certificate Veterinary certificate Public health certificate ATA carnet

66 Transportation documents Document Waybill Bills of lading Straight bill of lading Short-form bill of lading House bill of lading Intermodal bill of lading Forwarder s receipt

68 Chapter 12 Managing Risks

69 Supply chain risks

70 Security initiatives The Customs Trade Partnership against Terrorism (C-TPAT) The International Ship and Port Security Code (ISPS Code) The Container Security Initiative (CSI) Partners in Protection (PIP) Free and Secure Trade Program (FAST)

72 Chapter 13 Completing Import Documentation

73 Required documentation Bill of lading Carrier s manifest (Cargo Control Documents) Canada Customs Invoice or Commercial Invoice Import permits, certificates or licenses (as required) Other documentation required to satisfy CBSA or other government departments Certificate of origin (if applicable)

74 Sample: Bill of Lading

75 Sample: Cargo Control Document

76 Sample: Canada Customs Invoice

77 Certificate of Origin NAFTA (North American Free Trade Agreement) CIFTA (Canada-Israel Free Trade Agreement) CCFTA (Canada-Chile Free Trade Agreement) CCRFTA (Canada-Costa Rica Free Trade Agreement) Form A Certificate of Origin from certain developing countries For Canadian importers, the NAFTA certificate of origin is the one that is most likely to be used, because the majority of imports into Canada come from NAFTA countries.

78 Sample: Certificate of Origin

79 Consolidated shipments What are consolidated shipments? What are the documentary requirements?

80 Electronic data interchange systems Advance Commercial Information (ACI) Accelerated Commercial Release Operations Support System (ACROSS) Customs Self Assessment (CSA) Release Notification System

81 The importing procedure

82 Release procedures Release with full accounting and payment Release on minimum documentation (RMD) G7 Import One Step Release on Full Documentation (RFD)

84 Chapter 14 Clearing Imports Through Customs

85 Clearance procedures Accounting Cargo Control Document Invoice Canada Customs Coding Form (B3) Certificates of origin

86 Calculating tariffs and duties When to pay GST Assessing value of imported goods Making payments Penalties and interest Self adjustments Re-determinations Duty drawbacks

87 Dispute resolution Making an appeal Appealing the decision

New INCOTERMS effective January 1, 2011

New INCOTERMS effective January 1, 2011 The International Chamber of Commerce (ICC ) has published revisions to its International Commercial Terms, also known as INCOTERMS, that take effect on January