TXMI 4260 quiz 3

ABC (activity based costing)

DDP is reliant on ____

direct product profit

DPP stands for:

factory management

Establishes visibility into outsourced production and improves factory compliance to increase supply certainty and enable advanced product flow directly from source to end-customer

true

T/F: GMROI and Turn & Earn are essentially the same thing calculated in different manners

true

T/F: a bill of lading is required document for all shipments

true

T/F: all of the shipping documents are kept in the Captain's Pouch

true

T/F: logistics is the science of planning and carrying out the movement and maintenance of forces

true

T/F: supply chain intelligence enables analysis of transportation partner performance

procure-to-pay

Term used in the software industry to designate a specific subdivision of the procurement process.

service, inventory, financial

Vendor Performance Measures

service

Vendor Performance Measures: % shipped on time, % perfect orders % back orders, % back orders filled

financial

Vendor Performance Measures: cost, revenue, GM, GMROI

inventory

Vendor Performance Measures: turns units ordered, produced, shipped, residual

supply chain, logistics, distribution

What are 3 components of supply chain management?

are intended primarily to clearly communicate the tasks, costs, and risks associated with the transportation and delivery of goods

What do Incoterms do?

"Delivered Duty Paid" means that the seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination

What is DDP?

"Free On Board" means that the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered

What is FOB?

supply collaboration

What reduces supply chain variability by sharing demand and supply forecast with customers and suppliers across multiple tiers?

5,000

a cargo ship that will carry 10,000 TEU's would carry ___ 40 foot containers

SBF (Bunker Adjustment Factor)

a charge to account for the fluctuation in bunker costs (oil used by the vessels) that changes on quarterly basis

date and terms of sale, quantity, weight and/or volume of shipment, type of packaging, complete description of goods, unit value and total value, insurance, shipping and other charges

a commercial invoice must identify the buyer and seller, and clearly indicate:

full value cost analysis

a comprehensive tool which aids industry professionals to consider, and include often-missed components of costing

bill of lading

a document issued by a carrier, or its agent, to the shipper as a contract of carriage of goods. it is also a receipt for cargo accepted for transportation, and must be presented for taking delivery at the destination

incoterms (international commercial terms)

a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC); widely used in international commercial transactions or procurement processes; series of 3-letter trade terms related to common contractual sales practices are intended primarily to clearly communicate the tasks, costs, and risks associated with the transportation and delivery of goods; accepted by governments, legal authorities and practitioners worldwide for the interpretation of most commonly used terms in international trade; intended to reduce or remove altogether uncertainties arising from different interpretation of the rules in different countries

documentation charges

a service providing the necessary transport documents at the origin and destination, based on shipping instructions

TEU (twenty food equivalent unit)

a standardized way of measuring the capacity of cargo ships; even though most of the containers are 40 foot containers

standby line of credit

A sum of money, not to exceed a predetermined amount, that can be borrowed in part or in full from a credit granting institution if the borrower needs it

trade promotion officer, chamber of commerce

certificate of origin is commonly issued by a __ ___ ____, or a ___ ___ ___ in the exporting country

free trade status

certificate of origin is required to claim __ ___ ___

Beneficiary's certificate for L/C or CAD (optional but recommended)

complete set of non-negotiable documents have been sent to the importer certifying that goods have been shipped as per specification, description, quality and quantity; declaration that goods have been shipped as specified in sales contract; required documents have been sent to the buyer/importer or their agent

direct costs, indirect costs, macro costs

costing items fall under the 3 categories

direct costs

costs which are directly related to the actual garments; one variable in the cost equation which can be negotiated by buyers, as a buyer's reach will not be able to modify indirect or macro costs

absolute yardstick

goal is to produce as high a return on investment as possible; higher is better than lower; different items with either have or not have management's favor based upon their GMROI; merchandising activity and sales emphasis can then be channeled towards those items with the highest return on investment

GMROI

gross margin return on inventory

buyer's plan, selling price, cost, replenish strategy, consumer demand and behavior

inputs of simulation analysis

logistics

key component of Global Supply Chain

inventory/materials, transport strategy, customer service, facility/location

logistics challenges

inventory management, inbound transportation, supply and demand planning, outsourcing management, fleet management

logistics management

move fabric from textile mill to sewing factory, move trip items from supplier to factory, move finished product from sewing factory to port, consolidate with other shipments to fill container, load container on ship, sail to US port, move container from ship to rail or truck, move across country to major hub cities, remove container from rail or truck, truck to deconsolidation center, truck to retail DC, warehouse, perform QC functions and sort by store location, truck to stores, back room activity at store, move to sales floor

logistics steps in supply chain

outright loan

lump sum of money that the borrower intended to use for certain

super container ships

maersk triple E, June 2013

FOB Free On Board

means that the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered; The risk of loss of or damage to the goods passes when goods are on board the vessel, and the buyer bears all costs from that moment onwards

CIF Cost, Insurance, and Freight

means that the seller delivers the goods on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.; The seller also contracts for insurance cover against the buyer's risk of loss or damage to the gods during the carriage. The buyer should note that under CIF the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements

CFR Cost and Freight

means that the seller delivers the goods on board the vessel or procures the goods already so delivered; The risk of loss of or damage to the goods passes when the goods are on board the vessel. The seller must contract for a pay the costs and freight necessary to bring the goods to the named port of destination

indirect costs

services offered by factories required by customers; include many pre-production tasks such as pattern making, lab dip submission, screen print strike-offs, procurements of trims and more

accurate

setting a GMROI goal is a comforting exercise, but not completely ____

air

shipping: might save a customer for the long term even though you lose money in the near term

sea

shipping: much less expensive by factor of 5 to 10

Inspection Certificate (optional but recommended)

statement from you employee or a 3rd party that prior to shipment an audit was performed and it was determined that the goods are acceptable for shipment

SKU

stock keeping unit; style, color, size

Model Stock

strategy: no demand re-estimation, replenish to model stock quantities in buyers plan, equivalent to ordering to maintain a presentation stock

Traditional Build to Plan

strategy: program received in advance of season, mix and volume of garments based upon buyer's plan, no reordering, no re-estimation of demand

Target Weeks Supply

strategy: re-estimate demand periodically based on POS, order enough to satisfy demand for a fixed number of weeks after order is received

Newsboy

strategy: similar to QR, reorder quantity on target service level considering time until next reorder delivered or end of season

Quick Response (QR)

strategy: similar to VMI, stronger partnership, agile manufacturing at vendor, re-estimate Demand by SKU periodically, shipments match demand driven reorders, adjusts for error in previous forecast

Vendor Managed Inventory (VMI)

strategy: vendor produces buyer's plan 40-50% of program shipped in advance of season, retailer makes weekly POS-based reorders, vendor ships as stock allows, can accommodate some increase in volume

transportation management system

subset of supply chain management concerning transportation operations and may be part of an enterprise resources planning system

sourcing and procurement, manufacturing, coordination and collaboration, integration of supply and demand management

supply chain management

costing

the accumulation of ALL expenses in bringing your product to market

$200,000, 9

the cost for a ship to cross the Panama Canal is ____ per crossing and takes __ hours

166, 139

the cubic size of a package divided by ___ for domestic shipments, and ___ for international shipments

inbound logistics

the movement of finished product from the manufacturer, or point of ownership transfer, through Customs clearance and into Warehouse (distribution point)

outbound logistics

the movement of materials to the place of manufacture; includes fabrics, trims, and sundries

logistics

the process of moving and storing product through the supply chain from raw material to finished product on the sales floor

logistics

the science of planning and carrying out the movement and maintenance of forces

a vessel stow plan, container status message

the two data elements that carriers must file with CBP are as follows:

GM%, inventory turnover

the underlying strength of GMROI is that is provides a return on investment perspective to inventory management and provides 2 levers to improve performance: increasing the ____ or increasing the ___ ____

full package cost

theoretically a cost quote that is all inclusive; typically quoted as EXW, FAS, FOB, named place; imperative to know exactly what is included

cost, price

there is not a direct relationship of ___ to ___

deflation

top challenge facing apparel retailers today

order management, pack and ship, supplier financing

trade xpress components

first cost

typically refers to the initial price quote that you get from a manufacturer based on the way they currently conduct business; necessary to determine what is included in this price

landed cost

typically the Full Package Cost plus the following: freight to destination point customs and brokerage fees insurance

pricing

typically the perceived value to the consumer and some percentage above cost

Safe Port Act

under this, CBP now requires importers to file certain data elements before cargo destined for the US is laden on board a vessel at a foreign port

inventory/materials, transport strategy, customer service, facility/location

what are the 4 categories of logistic challenges?

driving to work

which is NOT a logistic step in the supply chain? a. driving to work b. move fabric from textile mill to sewing factory c. move container from ship to rail or truck d. warehouse, perform QC functions and sort by store location

identifies payer, transfer of risk, point of exchange

why use incoterms?

PLM (product lifecycle management)

focus on product

Bunker Adjustment Factor (SBF), Terminal Handling Charges (THC), Documentation Charges

Ocean Freight Surcharges

cash against documents

A payment arrangement in which an exporter instructs a bank to hand over shipping and title documents to the importer when the importer fully pays the accompanying bill of exchange or draft

FOB, FAS, FOT, FOR, Free Delivered CIF, C&F

1923 - first 6 rules before Incoterms by ICC National Committees

manufacturing cost, wholesale

20-60% price markup

athleisure, affordable luxury, discount

3 categories that beat the trend that overall apparel pricing at retail continues to resist increase

PLM, ERP, SCM

3 comprehensive approaches

retail

70-100% price markup

transportation management system

A ___ is a subset of supply chain management concerning transportation operations and may be part of an enterprise resource planning system.

letter of credit

A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount; In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase

trade xpress

Allows suppliers to manage all of their customer orders, factories and internal processes on a single cloud-based platform

supply chain intelligence

Collects and presents crucial data from all trading partners in easy-to-use, customizable dashboards on a computer or tablet

Irrevocable letter of credit

Correspondence issued by a bank guaranteeing payment for goods and services purchased by the one requesting the letter

open account

Credit relationship in which the buyer pays upon the receipt of goods, or on deferred payment basis

exchange rate

Currency arbitrage is a form of ___?

landed cost

Customs and brokerage fees (duties and tariffs) are included in this cost

gross margin percentage, inventory turnover ratio

GMROI allows firms to make decisions regarding whether the best way to improve GMROI is to increase the ____ or the ____

stronger

GMROI assumes that the 2 levers (GM and turnover) are of equal strength, but in fact GM is much ____

easy to understand and use

GMROI has the advantage of being ______

expenses

GMROI ignores ____

inventory management

GMROI is one of the foundations of ___ ____

overstates, understates

GMROI is seriously biased in terms of measuring return on investment. It always _____ the performance of items with a low GM% and ____ the performance of items with a high GM%

first cost, landed cost, full package cost, standard cost

Global Sourcing focused costs

all of the above

How much money has US Customs and Border Protection spent on the Automated Commercial Environment? a. an amount equal to the gross domestic product of Montenegro b. an amount equal to the cost of a Nimitz class aircraft carrier c. $14 for every man, woman, and child in the US d. All of the above

EXW, FCA, CPT, CIP, DAT, DAP, DDP

Icoterms - rules for any mode or modes of transport

CAD

If you are doing business with an unknown source, which payment method should you choose?

cannot predict future, forecasting is based on history, POS data is not 100% accurate, consumer is fickle, buyers have performance measures, offshore sources are cheaper

Importance of Speed and Flexibility

FAS, FOB, CFR, CIF

Incoterms - rules for sea and inland waterway transport

all

Key Retail Planning Strategies include: a. assortment b. pricing c. delivery d. vendor offerings e. all

assortment, pricing, delivery, offerings

Key Retail Planning strategies

Letter of Credit, Cash Against Documents, Open Account

Payment methods

expenses

Perhaps the biggest problem with using GMROI as a management tool is that is does not account for a. GM b. expenses c. inventory d. average inventory e. none of these

supply planning collaboration

Real-time collaboration on capacity plans, forecasts, and supply schedules. Ensure capacity and resources will meet forecasted demand and identify potential problems. Alert trading partners to demand changes.

supply collaboration

Reduces supply chain variability by sharing demand and supply forecast with customers and suppliers across multiple tiers

supply chain finance

Refers to the set of solutions available for financing specific goods and/or products as they move from origin to destination along the supply chain

supply chain finance

Refers to the set of solutions available for financing specific goods and/or products as they move from origin to destination along the supply chain.

Traditional Build to plan, VMI, QR, Newsboy, Model Stock, Target Weeks Supply

Strategies evaluated

$174,000

Suez Canal cost per crossing

SCV (Supply Chain visibility)

The ability of parts, components or products in transit to be tracked from the manufacturer to their final destination; goal: to improve and strengthen the supply chain by making data readily available to all stakeholders, including the customer

inventory management

The overseeing and controlling of the ordering, storage and use of components used in the production of the items; The overseeing and controlling of quantities of finished products for sale

exchange rate

The price of a nation's currency in terms of another currency.

standard cost

This cost is used for budgeting purposes and for monitoring variances against actual costs incurred

first cost

This typically refers to the initial price quote that you get from a manufacturer based on the way they currently conduct business

tier 2 collaboration

Tier 2 supplier collaboration on forecasts, plans, and commitments. Track actual orders against commitments and receive alerts in the event of potential pre-orders, over-consumption, under-utilization, or excess.

replenishment strategy, service level, assortment strategy, forecasting, make to order/make to stock, lead time, initial inventory, minimum order quantities, collaboration, supply chain inventory placement

Top 10 Levers for Financial Performance (other than price)

making production changes

Which is NOT an importance of speed and flexibility in sourcing a. cannot predict future b. forecasting is based on history c. POS data is not 100% accurate d. consumer is fickle e. making production changes

dimensional weight

You must measure the length, width, and height of the package in inches using the longest point on each side, taking into account any bulges or misshaped sides to determine this

saving space

__ __ is critical in keeping cost lower

assortment diversity

__ ___ decreases GM$

GMROI, DDP

___ &___ are primary methods of Measuring price performance

techniques

___ for costing apparel are seemingly infinite, as different companies pursue different methods

price

___ is a key determinant to retail performance

costing

___ is the accumulation of ALL expenses in bringing your product to market a. costing b. pricing c. marketing strategies d. peanut butter accounting

logistics

___ means having the right thing, at the right place, at the right time

DPP

___ measures the actual dollar profit that is being generated by every SKU, every merchandise category, every department or even every vendor

replenishment

____ increases GM$

standard cost

an estimation of all costs incurred up to the point of receipt in the Distribution Center; based on actual history and adjusted for any anticipated changes; used for budgeting purposes and for monitoring variances against actual costs incurred

declaration of origin

another name for certificate of origin

downward

apparel prices on ___ trend

increase sales to spread expenses over a large volume, raise GM%, lower inventory to reduce inventory carrying costs, rethink commission plan to lower sales expenses, adjust the buying pattern so that stocking costs are lowered, change sales pattern so that order picking costs and order processing costs are reduced

attack points

THC (Terminal Handling Charges)

based on the cost of handling the container in the terminals, including loading and discharging containers to/from the vessel

consignor's and consignee's name, name of the ports of departure and destination, name of the vessel, dates of departure and arrival, itemized list of goods being transported with number of packages and king of packaging, marks and numbers on the packages, weight and/or volume of the cargo, freight rate and amount

bill of lading requirements

air freight

billable weight will always be subject do dimensional weight

SCM (supply chain management)

focus on logistics

logistics

defined as a business planning framework for management of material, service, information, and capital flows; includes the increasingly complex information, communication and control systems required in today's business environment

volume error

difference between Total Demand and Forecast for entire line

mix error

difference in the Fraction of Demand for each SKU

inventory carrying costs, commissions, stocking costs, order picking costs, order processing costs

direct expenses examples

warehousing, inventory control, order administration, outbound transportation, materials handling, sit location analysis, packaging, data processing, communication

distribution

commercial invoice

document required by customs to determine true value of the imported goods, for assessment of duties and taxes

certificate of origin

document that certifies a shipment's country of origin; it is used between members of a trading block or where special privileges are granted to goods produced in certain countries

freight costs

drayage, chassis placement fee, harbor maintenance fee, bunker charges, volume minimum, container detention fees, dim/weight - volumetric

1936

first published Incoterms

ERP (enterprise resource planning)

focus on finance

FCA Free Carrier

means that the seller delivers the goods to the carrier or another person nominated by the buyer at the seller's premises or another named place; parties are well advised to specify as clearly as possible the point within the named place of delivery, as the risk passes to the buyer at that point

CPT Carriage paid to

means that the seller delivers the goods to the carrier or another person nominated by the sell at an agreed place (if any such place is agreed between parties and that the seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination)

CIP Carriage and insurance paid to

means that the seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such place is agreed between parties) and that the seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination); the seller also contracts for insurance cover against the buyer's risk of loss of or damage to the goods during the carriage. The buyer should not that under CIP the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements

DDP Delivered Duty Paid

means that the seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination; The seller bears all the costs and risks involved in bringing the goods to the place of destination and has an obligation to clear the goods not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities

EXW ex works

means that the seller delivers when it places the goods at disposal of the buyer at the seller's premises or at another named place; seller does not need to load the goods

FAS free alongside ship

means that the seller delivers when the goods are placed alongside the vessel (e.g., on a quay or a barge) nominated by the buyer at the named port of shipment; The risk of loss of or damage to the goods passes when the goods are alongside the ship, and the buyer bears all costs from that moment onwards

DAP Delivered at place

means that the seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination; the seller bears all risks involved in bringing the goods to the named place

DAT Delivered at Terminal

means that the seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal at the named port or place of destination

325

more than ___ US ports

hidden costs

moving fabric or trim from a 3rd country, overhead inefficiencies, power outages, production/shipping delays (loss of time and money)

dimensional weight

must measure length, width, and height of the package in inches using the longest point on each side, taking into account any bulges or misshaped sides

2010

newest publication of Incoterms

sales, lost sales, MD loss, GM, service level, inventory turns, GMROI/DPP

outputs of simulation analysis

15,000

panama canal serves ____ ships per year

truck high-jacked at any point in route, ship sinks or container falls overboard, floods, bridges out, dock strikes, truck wreck, tsunami, hurricane, fire at DC, computer failure, pilferage by employees at any of the steps

potential hazards

24

pre-importation importer security filing must be filed at least __ hours prior to the loading of the cargo on an ocean vessel bound for the US

macro costs

related to specific countries and their infrastructure, financial institutions, corruption, communications, bureaucratic inefficiencies, tariffs, safeguard impositions, and similar factors; extremely difficult to quantify and use in costing analysis

bill of lading

required in all claims for compensation for any damage, delay, or loss; and for the resolution of disputes regarding ownership of the cargo

GMROI

review inventory decisions from a return on investment perspective

faster is better

rule of thumb, "___ __ ___"