Mastering Purchasing Management for Inbound Supply Chains / Edition 1

by Thomas A. Cook

Overview

Importing finished products, components, and raw materials has become the status quo in today’s increasingly competitive business landscape. The lessons of inbound supply, however, can be very costly if learned through a trial-and-error approach—especially foreign purchasing. By not understanding the parameters of landed costs alone, purchasing managers can cause serious and expensive disruptions to their supply chain.

Leaving little to chance, Mastering Purchasing Management for Inbound Supply Chains details the fundamentals regarding logistics and compliance. It emphasizes the importance of bonded warehouses and cost modeling and presents case studies from a wide range of industries that illustrate best practices in imports, logistics, and landed cost modeling.

International trade expert Thomas Cook provides valuable insights for avoiding common foreign trade zone pitfalls. He also explains the best ways to handle and minimize landed costs, including duties, shipping costs, and transfer pricing.

This comprehensive purchasing guide covers the potential risks and complications involved with U.S. Customs (CBP), freight, INCO terms, and title and payment issues. Complete with a multitude of references to additional information in print and on the Web, the text provides the well-rounded understanding needed to avoid costly mistakes and make purchasing one of the strongest links in your global supply chain.

Product Details

ISBN-13:	9781420086195
Publisher:	Taylor & Francis
Publication date:	11/08/2010
Pages:	418
Product dimensions:	6.00(w) x 9.30(h) x 1.00(d)

Table of Contents

Prologue xiii

Acronyms xv

1 Purchasing Management 101 1

What Is Purchasing Management? 1

How Does Purchasing Management Work? 2

Purchasing Management and Corporate Governance 2

What Makes Purchasing Managers Effective? 3

Know What the Needs are of the Corporation Now and into the Future 3

Know What the Options Are in Fulfilling These Needs 3

Know How to Obtain the Best Deal to Fulfill These Needs 4

Know How to Maintain These Deals for the Long Term 4

Additional Best Practices in Purchasing Management 101 5

Master Negotiation Skills 5

2 Foreign Purchasing Management 101 9

Why Is Foreign Purchasing Different from Domestic Purchasing? 9

Distances Involved 10

Demographics and Infrastructure 10

Language 11

Culture 11

Politics 11

In-Country Risks 11

Receivable Exposure 12

Currency Risk 12

Insurance Risks 12

Political Risks 13

Legal Differences 13

Logistics and Supply Chain 13

Dependence on Providers 14

Customs (Domestic and International) 14

Regulatory Affairs 14

Access to Qualified Personnel 15

Travel Costs 15

Sarbanes-Oxley 15

Develop Resources 15

Magazines 15

Key International and Supply Chain Web Sites 16

Risk Management in the Global Supply Chain and Foreign Purchasing 22

Summary 23

3 Import Logistics and Landed Cost Modeling 25

Logistics Management 25

Hire the Very Best Inbound Logistics Provider 25

Know Your True Landed Costs 26

Import Landed Cost Formula 26

Control Lead Times 27

Control the Most Favorable INCOTERMS of Purchase 27

Exercise Due Diligence, Reasonable Care, and Supervision and Control over the Inbound Process 31

Case Study in the Landed Costs in the Import Supply Chain 31

Options in Reducing Landed Costs 33

4 Import Compliance Management 35

Import Management Overview 35

Inbound Supply Chains Have Logistics Costs Escalate 40

Detail to Documentation Was Much More Critical 41

Purchasing Managers Had to Learn New Skill Sets and Establish SOPs in Areas Not Previously Prioritized 42

The Air Carriers Suffered Greatly 42

Financial Consequences to Importers and Global Supply Chain Participants 43

Supply Chain Security and Compliance Management Becomes a New Corporate Concern 43

Reasonable Care 45

Supervision and Control 46

Ultimate Consignee 46

Powers of Attorney 47

Due Diligence 47

Record Keeping 48

Documentation (Invoice) Requirements 48

Methods of Storage of Records 49

Assists 50

Drawback 51

Necessary Drawback Documentary Requirements 52

HTS Classification 52

Imported Product/Origin Markings 53

Valuation 53

Duties and Taxes 53

ISF (10+2) Importer Security Filing 54

5 Customs Bonded Warehouses 57

What Is a Customs Bonded Warehouses? 57

Types of Customs Bonded Warehouses 58

Advantages of Using a Bonded Warehouse 59

Merchandise: Entry, Storage, Treatment 59

How to Establish a Customs Bonded Warehouse 60

Application 60

Other Requirements 60

Bonds Required 60

Where Are Customs Offices Located? 61

6 Foreign Trade Zones 63

What Is a Foreign Trade Zone? 63

Why Were Foreign Trade Zones Established? 63

Advantages of Using Foreign Trade Zones 64

Role of the Foreign Trade Zones Board Staff 65

Role of the U.S. Customs Service 65

Role of the Port Director 66

Frequently Asked Questions to CBP 66

What Are the Types of Foreign Trade Zones? 66

What May Be Placed in an FTZ? 66

What May Be Done in an FTZ? 67

What May Not Be Done in an FTZ? 67

How Is Merchandise Admitted into a Zone? 68

Customs Form 214 Application 68

Direct Delivery 69

What Documents Are Needed for Admission? 69

How Is Merchandise Removed from a Zone for U.S. Consumption? 70

What Are the Four Types of Zone Status? 70

Articles of Mixed Status 71

Where Is Additional Information Available? 71

FTZs: Big-Time Competitive Advantage: An Overview 71

7 Choosing Providers Best Practices 73

Choosing Correctly 73

Determine Your Needs 74

Know Your Options 74

Develop an RFQ/RFP 75

Obtain Referrals 75

Agree to Service Parameters First, Then Price 75

Set a Review Period, before Long-Term Agreements 75

Agree to Stewardship Reporting 76

Periodically Test Your Options 76

Focus on Technology Capabilities 76

View Added-Value Benefits 76

Partnership Mentality 76

Stewardship Reports from Freight Forwarders: An Excellent Management Tool 77

Organizing the Stewardship Report 78

The Process of Selecting Freight Forwarders, Customhouse Brokers, and Other Service Providers 78

Identify Your Expectations, Parameters, Needs, and Service Requirements 79

Interview Potential Candidates 79

Issue the Proposal Outline (RFP/RFQ) 79

Set Deadlines for Responsiveness 79

Eliminate the Peripheral Candidates and Bring the Selection Group from Eight to Ten Persons to Two or Three 79

Meet Again 80

Ask for Pricing and Final Revised Proposals 80

Make the Selection: Set a Time for Testing the Relationship, before Making a Longer-Term Agreement 80

Structure a Review Process 80

Summary 80

8 China and India 81

What Is the HTCG? 82

Successful Best Practices for Purchasing from China, India, and Other Emerging Countries 83

9 What Purchasing Managers Need to Know about Exporting 85

Department of Commerce (DOC)/Bureau of Industry and Security (BIS) 88

U.S. Principal Party in Interest (USPPI) 88

Export Licensing 88

Denied Parties Screening 90

Deemed Exports 91

Antiboycott Compliance 92

Department of Treasury/Office of Foreign Asset Controls (OFAC) 92

Department of State (DOS) 93

Managing TSA Regulations within a Logistics Organization 95

Why Pay Attention? 95

Audits 96

Concluding Remarks 97

Glossary 99

Appendix A 107

Appendix B 159

Appendix C 303

Appendix D 363

Index 389

About the Author 401