Ch. #14: Global Supply Management

Ch. #14: Global Supply Management

1. G. Ruby Gómez Castellanos. - A01227400. Referencia: Johnson, F., Leenders, M. R., Flynn, A. E. (2006). Purchasing and supply management [Digital Version PDF] (Fourteenth Edition). New York: McGraw-Hill.

2. Reasons for global purchasing

   • Unavailability of items domestically.
   • Price and total cost.
     • The labor cost of manufacturing.
     • The exchange rate.
     • The equipment and processes.
     • The international supplier may be concentrating on certain products, and pricing ex- port products at particularly attractive levels to gain volume.
   • Government Pressures and Trade Regulations.
   • Quality.
   • Faster Delivery and Continuity of Supply.
   • Better Technical Service,
   • Technology.
   • Marketing Tool.
   • Tie-in with Offshore Subsidiaries.
   • Competitive Clout.

3. Potential Problem Areas.

   • Source Location and Evaluation.
   • Lead Time and Delivery.
     • Establishing credit for a first-time international buyer often involves obtaining a letter of credit, which is a document that assures payment.
     • Even with improvements in transportation, the buyer may still experience delays, par- ticularly with inland carriers in the foreign country.
     • Delays in domestic customs are also possible. Proper documentation and customs bonds help expedite shipments through customs.
     • The time goods are in port, for both outbound and inbound, also depends on the number of ships in line for unloading and hours of port operations.
   • Expediting.
   • Political, Labor, and Security Problems.
   • Hidden Costs.
     • Foreign exchange premiums.
     • Commissions to customs brokers.
     • Foreign taxes imposed.
     • Import tariffs.
     • Packaging and container costs.
     • Customs documentation charges.
     • Transportation costs.
   • Currency Fluctuations,
   • Payment Methods.
     • Bill of exchange (draft).
     • Letter of credit,
   • Quality.
   • Warranties and Claims.
   • Tariffs and Duties.
   • Administration Costs.
   • Legal Issues.
     • Convention on Contracts for the International Sale of Goods (CISG).
     • Uniform Commercial Code (UCC) .
   • Rotterdam Rules.
     • The United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea, known as the Rotterdam Rules, has been signed by 21 nations (including the United States) representing over 25 percent of 2008 world trade vol- ume
   • Services.
     • The choice of law will depend on the countries represented in the deal. The supplier is likely to want to apply the laws of its country; the U.S. Courts may prefer U.S. federal laws.
   • Logistics and Transportation.
     • Third-party logistics (3PL)
   • Language,
   • Communications.
   • Cultural and Social Customs.
   • Ethics and Social Responsibility.

4. Selecting and managing offshore suppliers.

   • Global Sourcing Organizations.
     • Regional purchasing offices.
     • Global commodity management organization.
     • International purchasing offices (IPO).
   • Regional Purchasing Offices.
   • Global Commodity Management Organization
   • International Purchasing Office (IPO).
   • Intermediaries.
     • Import brokers and agents.
     • Import merchant.
     • Seller’s subsidiary.
     • Sales representatives.
     • Trading company.
       • Convenience.
       • Efficiency
       • Lower costs.
       • Reduced lead times.
       • Meeting quality specifications.

5. Information Sources for Locating and Evaluating Offshore Suppliers.

   • The Internet.
   • Government sources.
   • Chambers of commerce.
   • Supply department.
   • Supply chain partners.
   • Supplier locator directory.
   • Importers and foreign trade brokers.

6. Incoterms.

   • EXW
   • FAS
   • FCA
   • FOB
   • CFR
   • CIF
   • CIP
   • CPT
   • DAF
   • DDP
   • DDU
   • DEQ
   • DES

7. Tools for global supply.

   • countertrade
     • Barter/Swaps
     • Offset Arrangements
     • Counterpurchase
     • Buyback /Compensation
     • Switch Trade
   • foreign trade zones
     • General purpose zones
     • Subzones
     • Manufacturing.
     • Transshipment.
     • Storage.
     • Manipulation.
     • Refunding of duties, taxes, and drawbacks.
     • Exhibition and display.
     • Maquiladoras
   • bonded warehouses.
   • duty drawbacks
   • Emerging markets.

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