Chapter 10 ITSCM

Global Logistics Intermediaries

-Customs Brokers -International Freight Forwarders -Trading Companies -Non-Vessel-Operating Common Carriers(NVOCC)

Benefits of Trade Compliance Systems

-Increased level of compliance compared to a manual process. -Decreased number of _physical inspections_by US Customs & Border Protection -Faster _release_of shipments by US Customs & Border Protection. -Avoidance of _fines _and penalties. -Opportunity to interface with other systems.

12 Pillars of competitiveness

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

Right-to-work Laws

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

Deemed Exports

A Deemed Export is the release of technology or source code that is subject to the Export Administration Regulations, to a foregin national_ (i.e., non-US citizen) located in the United States. An intentional or unintentional export of controlled technology can easily occur within the walls of your company, even if located within the borders of the United States_.

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.

Server Factory

A factory set up to take advantage of government incentives , and/or reduced tax/tarrif barriers , to meet regional or local market needs

Land Availability and Costs

As land and construction costs in big cities continue to escalate, the trend is to locate in the suburbs and rural areas.

Penalties for international trade violations can be substantial. Which of the following is NOT a typical penalty for these types of violations? Criminal Penalties Statutory Sanctions Capital Punishment Civil Penalties

Capital Punishment

Which of the following would be considered a "quality-of-life" issue in making a global location decision?

Community Safety

Global Location Decisions

Companies can locate anywhere in the world due to increased globalization, technology, transportation, and open markets.

The weighted Factor Rating Model

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

Global Location Factors

Competitiveness Taxes and Incentives Currency Stability Access and Proximity to Markets Labor Issues Right to Work Laws Access to Suppliers and Cost

Which global facility type is focused on product development and engineering for products that they manufacture?

Contributor Factory

Penalties For Violations Can Be Substantial

Criminal Penalties Civil Penalties Statutory Sanctions

U.S. Customs and Border Protection is part of what U.S. Federal Department?

Department of Homeland Security

Outpost Factory

Factory set up in an area with an abundance of advanced suppliers , competitiors, research facilities , etc.

A Deemed Export is the release of technology or source code that is subject to the Export Administration Regulations, to a US citizen located in the United States True False

False

A country that imposes high tariffs encourages foreign-based companies to import goods True False

False

Two models that utilize quantitative data, to help determine the attractiveness of one location versus another, are the Break-Even Model and the Extrapolated Average Cost Model True False

False

Contributor Factory

Focused on _product development and engineering for products that they manufacture

Business Clusters

Geographic concentrations of interconnected companies and institutions. Research parks and special economic / industrial zones serve as magnets for business.

Environmental Issues

Global warming, air pollution, and acid rain are debated as being the price of industrialization.

Trade Compliance Systems (or Global Trade Management systems)

Have become a vital tool for every major importing and exporting company in the US. Really the only way to keep current with all of the continuously changing laws, regulations and procedures.

Which one of the following is NOT a Quality of Life issue used to help make global location decisions? Culture Infrastructure (e.g., roads, ports, utilities, institutions, etc.) Mobility (i.e., the ability to easily move around in a country, city, community, etc.) Economy

Infrastructure (e.g., roads, ports, utilities, institutions, etc.)

Labor Issues

Labor availability, productivity, and skill. Unemployment / underemployment rates Wage rates; turnover rates; labor force competitors.

International Trade Compliance

Managing international trade activities is a complex process.

Source Factory

Manufactures products at low cost but with _skilled workers_and significant managerial resources Basically, an offshore factory that includes: Plant management involvement in supplier selection Plant management involvement in production planning More developed local infrastructure Access to skilled workforce

Customs Brokers

Move global shipments through customs and handle documentation.

International Freight Forwarders

Move goods to and from foreign destination

Which global facility type describes a factory set-up primarily to produce products at a low cost with minimal technical and managerial resources?

Offshore Factory

Global Facility Types

Offshore Factory Source Factory Server Factory Contributor Factory Outpost Factory Lead Factory

Non-Vessel-Operating Common Carriers(NVOCC)

Operate like freight forwarders but use only scheduled ocean liners.

Challenges

Operating your supply chain globally can also present challenges: Tariffs or duties (i.e., import taxes) Transporting goods across borders can be complex_and involve new/diffrent partners

Global Supply Chain - Opportunities

Operating your supply chain globally can present opportunities: increased revenue _through global business (i.e., more customers) and economic opportunities increased sourcing options__with more potential sources of supply to choose from including potential economic opportunities

U.S. Customs and Border Protection (CBP)

Originally established in 1789, U.S. Customs and Border Protection controls the import process. - became part of the US Department of Homeland Security in 2003 - protects U.S. through _active inspections _at ports of entry. -has a strong base of industry partnerships and technologyto safeguard the American public and promote legitimate international commerce.

Trading Companies

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

Taxes and incentives

Several levels of government must be considered when evaluating potential locations. Tariffs are federal taxes that are designed to protect local businesses.

Lead Factory

Source of product and process _innovation_and competitive advantage across the entire organization (world-class)

Access to Suppliers and Cost

Supplier proximity influences the delivery of materials and the effectiveness of the supply chain.

Utility Availability and Cost

Supply of electricity has not always kept pace with the high speed of development.

Goods are not legally entered into US commerce until:

The shipment has arrived within the port of entry Delivery to the shipping destination has been authorized by CBP (following submission and review of required documentation) Estimated duties have been paid.

Access and Proximity to Market

The trend in manufacturing is to be within delivery proximity of your customers.

International Freight Security

Transportation across national boundaries introduces added complexity, particularly security.

The Weighted-Factor Rating Model is one of the methods used to compare the attractiveness of several global locations along a number of quantitative and qualitative dimensions. True False

True

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. Shipments must conform to Export Administration Regualations

Import Process

When a shipment reaches the US, the importer of record (i.e., the owner, or purchaser) must file entry documents at the port of entry.

Quality of Life Issues

You will need people to work at these locations - so consider the following Quality-of-Life issues in terms of maturity, sophistication, robustness, etc., in each location, and do a comparison/evaluation:

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.

Currency Stablity

impacts business costs and consequently location decisions.

U.S. Department of Homeland Security (DHS)

is the government agency whose mission is to On March 1st 2003, assumed responsibility for securing our nations borders and transportation systems which straddle 350+ official ports of entry and connects our homeland to the rest of the world.

Foreign Trade Zones (FTZ's)

physicals areas inside_the US supervised by U.S. Customs and Border Protection that are considered to be _outside of the U.S. territory_. Usually located at or near a port of entry. While in the FTZ, merchandise is not subject to U.S duty or excise tax.