Global Supply Chain test 2

Asset Turnover

Sales/Total Assets -In most cases higher is better. Means amount of asset generate more revenue and higher turn.

Which infrastructure category does banking belong?

Services infrastructure

Intermodal (also called Multimodal) Transportation refers to:

Shipments that move by more than one mode of transportation

Rail carriers are

Slow, Inexpensive, Offer Point-to-Point PU & DEL

Specific Tariffs

per unit, car, container, fixed rate per unit

Accounts Affected:

-COGS, Inventory, Revenue, AR, PPE; we can have some input in all aspects

Incoterms ( characterizes)

-Can not be used for the sale of services, just the sale of goods. -Originally there were 13 prior to 2013 currently there are 11 -Developed by the international chamber of Commerce Website: incotermsexplained.com

Overall Impact: of supply chain functions

-Supply chain managers use property, plant, and equipment the most -We want a higher inventory turnover; but the days of holding inventory should be lower -The highest the number for fixed assets, total assets, return on assets, -COGS goes down inventory stays the same = inventory turnover would increase -Higher inventory levels or lower inventory levels on balance sheet? You want lower

What is the significance of Flags of Convenience?

-registering a ship in a country that the company is not housed in; US flag on a ship follows US regulations (safety equipment, training, qualifications, etc) Panama has a lot of ships registered there because regulations are less stringent. Literal flag

The 11 incoterms

1. EXW 2. FCA 3.DAT 4. DAP 5. DDP 6. CPT 7.CIP 8 . FAS 9. FOB 10. CFR 11. CIF

Two things Incoterms doesn't do:

1. Ownership (they don't indicate who owns the goods) Bill of lading (same as a title) shows ownership or the contract could show ownerships/who buys the goods 2. Doesn't indicate what the goods cost: doesn't tell us the terms, with how much we pay or what we pay

Different types of Tariffs (3)

1. Specific tariffs 2. Ad Valorem tariffs 3. Compound tariffs

Non-Tariff Barriers(4)

1. absolute quotas 2. tariff quotas 3. Licenses 4. Import quotas

Strategies to Overcome Trade Barriers (6)

1. contract manufacturing 2. joint ventures 3. strategic partnership 4. greenfield 5. brownfield 6. relocating facilities

4 articles to know

1. engine supply delays to slow C series deliveries 2. U.S. slaps hefty tariff on bombardier jets 3. airbus seals bombardier 4. trump imposes tariffs

Which issues are critical to airport infrastructure?

1. runway length 2. curfews

what does infrastructure include

1. services 2. communications 3. transportation 4. utilities 5. legal and regulations

What has caused rail transport to increase in recent years?

1. the creation of the multi-modal container 2. concerns about pollution have increased 3. increase in road congestion

modes of transportation

1. water carriers 2. motor carriers 3. Rail Carriers 4. Air 5. Pipelines

Ad Valorem Tariff

12% of value of chickens, not per chicken

Days of Inventory

365/inventory turnover - lower is better. Means less days in inventory

11 Incoterms

4 of them are solely for water transport, the other 7 are for land and water

Specific tariffs description

A fixed fee levied on one unit of an imported good

What does panamax ship mean?

A ship of the maximum size that can enter the locks of the panama canal.

What does neo-panamax ship mean?

A ship whose size allows its to enter the newest locks of the panama canal

What does post-panamax ship mean?

A ship whose size is too large to enter the locks of the panama canal

What are Trade Barriers

A. Tariffs B. Taxes C. Non-tariffs

In terms of transit time

AIR-- TRUCK-- TRAIN-- WATER (ATTW)

Cabotage allows for which example?

Air India can fly into Charlotte International Airport. Panama ship cannot do domestic work (i.e. stop in Miami, pick up freight, and deliver to Baltimore). Cannot fly domestic flights in other countries. If you see domestic service, it has to be conducted by the country it is being performed in. Worldwide rule.

What is the best description of Flags of Convenience?

Allows a ship owner from one country to register their ship in other country to reduce operating expenses by following the less regulated rules and policies of another country

Which of the following is considered a brown field project?

Apple buying and renovating a factory in Taiwan to produce iPhones

Of the following, which one indicates when transfer of ownership happens?

Bill of Lading

Incoterms are used for...

Both international and domestic trade of goods

Inventory Turnover

COGS / avg inventory -higher means either strong sales or insufficient inventory

What is an example of voluntary export restraint?

China voluntarily reduces its exports of apparel to Guatemala

Principal Commodities Hauled: 5

Coal Farm products Chemicals Transportation equipment' Automobiles

Which example describes total landed cost?

Cost to manufacture, purchase, and ship goods by any mode of transportation

The responsibility for transportation arrangements, costs, and risks are highest for the seller with:

DAT

Motor carriers have the advantage of providing ______.

Door to door service

The responsibility for transportation arrangements, costs, and risks are highest for the buyer with:

EXW

Taxes placed on cigarettes and gas is an example of what kind of tax?

Excise

Shortline Carriers

Freight over short distance

Greenfield

Full ownership of new start-up operation

Risks/issues with Marine Ports

Get really busy and a lot of congestion, throw off your supply chain

West coast ports are in need of increased capacity. What is the one way they can increase capacity?

Increase productivity

when to use motor carriers

Less-than-truckload (LTL) & Truck-load (FTL) carriers move small shipments and the fees are HIGHER

Pipelines is

Limited in variety they can carry, materials hauled in a liquid or gaseous state

Railroad Carrier Types

Linehaul Carriers Shortline Carriers

As a logistics person for ABC Beverage Company, you are aware that less-than-truckload shipments are _______ per unit to transport than full-truckload shipments.

More expensive

Cash Flow

Movement of the money you receive and the money you spend.

Return on Assets (ROA)

Net Income/Total Assets On balance sheet

Value Added Tax (VAT)

Not a tariff as much as a manufacturing - Raw material --> Finished good - When you start adding value, a taz is added per step ( ex: yeast for beer)

Absolute Quotas

Number of items that can be shipped into a country; once we hit that limit, no more. - Honda back in the 80s Back in the day honda made motorcycles in japan, let's say 500k could come from honda in japan. US does not do this much.

Relocating Facilities

Option if new barriers are implemented

Three Majors Routes

Panama Canal, Suez Canal, Strait of Malacca

FAS Free Alongside Ship ( just water)

Requires the seller to deliver goods to a named port alongside a vessel designated by the buyer.

In terms of accessibility

TRUCK-- TRAIN -- WATER -- AIR (TTWA)

In terms of how reliable

TRUCKS - AIR - TRAIN - WATER (TATW)

Tariff Quotas

Tariff rates that raise after a certain amount of items have come in. ex: washing machines. - Ex. commodities subject to import quotas on US customs and border protection website like brooms, tuna, ethyl alcohol, olives, wool, cotton

INCO Terms are developed and revised periodically by __________________________.

The International Chamber of Commerce

Ex Works (EXW) Buyer -water/land

The buyer assumes all the risk and transportation costs of the shipment and the seller is only required to make the goods available for pickup (preferably at the seller's business location)

FOB Free on Board ( just water)

The buyer or seller deliver the goods on a designated vessel and either may assume all the risk and transportation costs depending on whether the goods are sold under the shipping point or destination point.

Brownfield

buying existing infrastructure

What does draft mean?

The minimum depth of water that a ship needs to float

Linehaul Carriers

The movement of freight with any mode of transport between distant cities.

If you were an exporter from the United States and exporting raw materials to a manufacturer in Poland, you would NOT use Incoterms to establish __________.

The purchase price of the raw materials

what is dredging

The removal of sediment from the bottom of a water channel to increase its depth

Delivered Duty Paid (DDP)Seller -water/land

The seller assumes all risk and transportation costs as well as clear goods for export at the shipping port and import at the final destination. (seller pays export and import duties)

Delivered at Terminal (DAT) Seller -water/land

The seller assumes all risk and transportation costs until the goods have successfully arrived at the terminal and been unloaded and the buyer assumes all the risk and transportation costs from the terminal to the final destination.

Free Carrier (FCA) Buyer -water/land

The seller delivers the goods and clears them for export at a named place and from there the goods can be delivered to a carrier nominated by the buyer or other parties.

Carriage Paid To (CPT)

The seller delivers the goods at their own expense/risk to a carrier or another person nominated by the seller. These goods are delivered at a mutually agreed upon location by the buyer and sellers and the risk of damage or loss to the goods being transported are transferred from seller to buyer as soon as the goods have been delivered to the carrier.

CFR - Cost and Freight (just water)

The seller is required to arrange the goods by seat to a port of destination and provide the buyer with the necessary documentation to obtain the goods from the carrier. The seller does not have to obtain marine insurance against risk or loss/damage of goods during transit.

Delivered at Place (DAP) Seller -water/land

The seller is ultimately responsible for arranging and delivering goods as well as properly unloading goods to the preferred place/location.

CIF (cost, insurance, freight) - just water

The seller must deliver the goods to a port and load on a specific vessel, seller is responsible for paying all transportation and insurance costs to the port as well as the cost to load the shipment onto the vessel. Buyer assumes cost and risk with transporting the shipment from the designated port to its business.

Carriage and Insurance Paid To (CIP)

The seller pays freight and insurance to deliver goods to a party at a pre-approved location. All risk or damage or loss of goods transfers from seller to buyer as soon as goods have been delivered to carrier. Under CIP, seller is obligated to insure goods while in transit for 110% of the contract value.

Cash to Cash Cycle Time

The time it takes for cash to flow back into a company after it has been spent on raw materials. Synonym: Cash Conversion Cycle.

The country exporting places quotas on themselves. Why?

To avoid a more strict tariff, better to punish yourself. Better to punish yourself then to let someone else punish you. Like when a university takes action on themselves.

What is an example of cartage (drayage)?

Transporting goods from Mexico just over the border into the US; Transporting a container off of a ship at a port and to the other side of the port and putting the container on a rail car for future transportation; A SHORT DISTANCE MOVE BY A THIRD PARTY

small package carriers

UPS, FedEx, DHL, United States Postal System (USPS), deliver smaller shipments—often door to door. The larger players offer warehousing, packaging, light assembly, import/export and other services.

Different types of taxes (2)

Value Added Tax(VAT) Excise Tax

In terms of the cost

WATER-- TRAIN-- TRUCK -- AIR (WTTA)

How to use the DuPont Model

a "what-if" tool, helpful for risk and scenario planning, if we make a change the model shows us how it will affect the company financially. Gives us ratios to interpret to help with important business decisions.

What is an example or examples of cartage (drayage)?

a. Transporting goods from Mexico just over the border into the U.S. B. Relocating and transporting a container from a ship at a port to the other side of the port and putting the container on a rail car for further transportation.

ad Valorem tariffs description

according to value

6.7% of the value of goats imported to Chile is an example of which kind of import tariff?

ad valorem

When an import tariff is described as follows, 12.9 % of the value of imported leather shoes, this is an example of what type of tariff?

ad valorem

DuPont Model

an expansion of the return on investment calculation to margin x turnover

you use air carriers when

carry light, high value goods over long distances -- quick delivery! Use when importance of speed > cost ex) emergency shipments

Compound Tariffs

combine specific and ad valorem ex: fixed rate (number of chicken) and percent ( dollar value of chickens) apply percent value

Compound tariffs

combines specific and ad valorem tariffs

Which infrastructure category does internet access belong?

communications infrastructure

Which infrastructure category does mail service belong?

communications infrastructure

types of water carrier

container-ships bulk carriers tankers (carrying petroleum) general Cargo Ships (has crane) Roll-on-Roll-on (cargo that can be rolled on own)

Working Capital

current assets - current liabilities

joint venture

partners share ownership of a third newly created business entity

Air Carriers are

expensive and fast

total landed cost

flows into COGS: nothing more than how much I am paying in order to bring something to me so that I can use it Purchase a raw material or a good must buy ship pay tax pay all fees in order to bring it.

Licenses

have to be applied to things harmful to humans (chemicals) or if coming from certain countries (N Korea). Click on licenses in powerpoint BIS.gov (weapons/ other items from more dangerous countries)

what is a berth

in a port, a location at which a ship can load and unload its cargo

Water Carrier

inexpensive, slow and inflexible

Incoterms

international commercial terms

when do you use rail carriers

large quantities of low-value-to-weight (bulk)

Which infrastructure category does intellectual property belong?

legal and regulatory infrastructure

strategic partnerships

linkage b/t 2 companies to jointly pursue a common goal

Common Commodities:

mail fashion flowers jewelry

Drayage carrier acts as

middleman when crossing items across border

Motor carriers are

more expensive and flexible

Transportation mode calc. example: we are moving Go Pro Camera from malaysia to the UK. The cost value of the cameras being shipped in 170,500. The company's holding cost of inventory is 40% of the cost of the products being shipped.

option 1: Truck, rail, boat Days in transit: 20 Shipping cost: 9,000 (170,500*.40)/365 = 186.85 (cost per day) 186.85*20 = 3736.99 (total holding cost) 3736.99 + 9,000 = 12,736.99 (total cost) option2: Air and truck days in transit: 15 shipping cost: 12,000 (170,500*.40)/365 = 186.85 186.85*15 = 2,802.75 2802.75 + 12,000 = 14802.75 (total)

contract manufacturing

provide specs to local manufacturers (sub-contract, outsourcing)

Incoterms shows

responsibility but don't have ownership

Excise tax

sin tax

$1,200 per 1,000 pairs of imported leather shoes is an example of which import tariff?

specific

Which import tariff best describes the following, $1,200 per 1,000 pairs of imported leather shoes?

specific

Air carriers have the advantage of providing ______.

speed

Imported Kawasaki motorcycles are taxed at one rate until 5,000 of them are imported. Starting with imported Kawasaki motorcycle number 5,001, the rate goes up. This is an example of which kind of quota?

tariff quota

Value added tax description

tax that is placed on a product whenever value is added

Specialized carriers

transport liquid petroleum, agricultural commodities, building materials, & other specialized items.

Know the order of the DuPont Model

use the chart

Piggyback Service:

used by major motor carriers Combines cost-efficiency of RR long haul with flexibility of truck PU and DEL ex: loading truck trailers or flatbed trailers carrying containers on railcars to provide both speed and flexibility

Which infrastructure category does electricity belong?

utilities infrastructure

Which infrastructure category does energy pipelines belong?

utilities infrastructure

Drayage/Cartage

very short transportation (ex: moving container from ship to yard, taking a container from Mexico to US) you don't see trucks from Mexico b/c we are protecting the US trucking industry. Their safety standards are different than ours (inspections, seatbelts, emissions)

Import quotas:

voluntary export restraints.