Supply Chain Chapter 10: Global Logistics

Benefits of Trade Compliance System

- increased level of compliance compared to a manual process - decreased number of physical inspections by US customs - faster release of shipments by US customs - avoidance of fines and penalties

12 Pillars of Cempetitiveness

1. Institutions 2. Infrastructure 3. Macroeconomic stability 4. Health and primary education 5. Higher education and training 6. Goods market efficiency 7.Labor market efficiency 8. Financial market sophistication 9. Technological readiness 10. Market size 11. Business sophistication 12. Innovation

Global Facility Types (basic to complex)

1. Offshore Factory 2. Source Factory 3. Server Factory 4. Contributor Factory 5. Outpost Factory 6. Lead Factory

Location Evaluation Techniques

1. Weighted-factor Rating Model 2. Break Even Model

Steps in weighted-factor rating model

1. identify the factors 2. assign weights to each factor 3. multiply the factor score by the weight, then sum the weighted scores 4. the location with the highest total weighted score is the recommended location

Goods are not legally entered into US commerce until:

1. the shipment has arrived within the port of entry 2. delivery to the shipping destination has been authorized by CBP 3. Estimated duties have been paid

Server Factory

A factory set up to take advantage of government incentives, reduce taxes/tariff barriers to meet regional needs Ex: Coca-Cola bottling. Mix the final ingredients to take advantage of exchange rates, tariff, and taxes

Contributor Factory

Factory focused on product development and engineering for products they manufacture Ex: 1973 Sony built a factory in Wales and then 15 years later got involved in development, planning, etc. and is now a ____________ factory.

Outpost Factory

Factory set up in an area with an abundance of advance supplier, competitors, research facilities, etc. Ex: Raleigh

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_____ states have laws protecting the right of employees to decide whether or not to join or support a union

Offshore Factory

a factory set up for manufacturing or assembly in a country where labor and/or raw materials are less expensive, for eventual import back into the manufacturer's home country Ex: clothing produced in Bangladesh, Indonesia

Weighted-Factor Rating Model

compares the attractiveness of several locations along a number of quantitative and qualitative dimensions

World Trade Organization (WTO)

deals with the global rules of trade between nations. Its main goal is to ensure that trade flows as smoothly, predictably, and as freely as possible 164 member countries

Source Factory

factory that manufactures products at a low cost but with skilled workers and significant managerial resources Ex: Hewlett-Packard Singapore factory produced calculators and keyboards

Tariffs

federal taxes designed to protect local businesses

Business Clusters

geographic concentrations of interconnected companies and institutions

U.S. Department of Homeland Security (DHS)

government agency who's mission is to: 1. prevent terrorist attacks within the US 2. Reduce America's vulnerability to terrorism 3. Minimize the damage from potential attacks and natural disasters

Trade Compliance Systems

have become a vital tool for every major importing and exporting company in the US

Trade Compliance

is a major concern and dozens of laws, regulations, and rules have to be checked and complied with for every import and/or export transaction

Customs Brokers

move global shipments through customs and handle documentation

International Freight Forwards

move goods to and from foreign destination

Non-Vessel-Operating Common Carriers (NVOCC)

operate like freight forwarders but use only scheduled ocean liners

U.S. Customs and Border Protection (CBP)

originally established in 1789, this organization controls the import process Mission is to safeguard America's borders thereby protecting the public from dangerous people and materials while enhancing the Nation's global economic competitiveness by enabling legitimate trade and travel

Foreign Trade Zones (FTZ)

physical area inside the US supervised by U.S. customs and border protection that are considered to be outside of the US territory

Trading Companies

put buyers and sellers from different countries together and handle export/import arrangements, documentation, and transportation

Lead Factory

source of product and process innovation and competitive advantage across the entire organization (world-class) Ex: Intel factory in Penang, Malaysia opened in mid 1970's, now is a ______ factory.

Deemed Export

the release of technology or source code that is subject to the Export Administration Regulations, to a foreign national located in the US

Break Even Model

useful location analysis technique when fixed and variable costs can be determined

Export Process

when a shipment is ready to be exported, the shipper will file export documents for the goods at the port of departure

Import Process

when a shipment reaches the US, the importer of record (purchaser) must file entry documents at the port of entry