Beruflich Dokumente
Kultur Dokumente
SAMEER KUMAR
2010
49
Importer
Walmart
Target
The Home Depot
Sears Holding Corp
Dole Food Co.
Costco Wholesale
Lowes
LG Group
Philips Electronics
Chiquita Brands
Headquarters
Bentonville, AR
Minneapolis, MN
Atlanta, GA
Hoffman Estates, IL
Westlake Village, CA
Issaquah, WA
Mooresville, NC
Englewood Cliffs, NJ
New York, NY
Cincinnati, OH
TEUs in 2007
720,000
435,000
365,300
248,600
223,200
183,800
182,100
130,000
127,200
116,300
model the success realized by China in satisfying U.S. consumers appetite for low-priced
goods. As these countries gain manufacturing
expertise and labor efficiencies, they will increasingly vie for an opportunity to increase
trade with the United States (see Table 3 for
the top five growing trade partners with the
United States).
Despite increasing trade with the growing
economies listed in Table 3, U.S. trade with
China is unmatched, as Chinas large population base will continue to offer inexpensive
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TRANSPORTATION JOURNAL
as characterized by a typical cross-border shipment requiring the involvement of over twentyfive parties, generation/transfer of thirty-fiveplus documents (Lowson 2001), and over 500
laws and trade agreements (see Table 4 for a
comparison of the domestic versus global supply chain network complexities) (Egan 2002).
As these complex supply chains develop,
retailers are increasingly realizing that to be
competitive, they need to be nimble and positioned for changes to accommodate trade with
these existing and newer sourcing locations.
The speed at which retailers secure products,
from product design and development to product placement in-store, is essential to remaining
viable in the competitive retail environment.
Retailers focus on speed and flexibility needs
to be weighed in conjunction with tight management of supply chain partners and processes
to ensure that a competitive advantage is maintained to drive optimal supply chain and financial results.
Supply chain processes used by retail organizations to ensure consistency in supply chains
for globally sourced goods vary widely across
differing/competing firms. Different sourcing
tracks and lead-time components within the
supply chain can drive significant variability
in landing products into the United States on
time and at the right cost. Any variability jeopardizes the overall consistency to land products
on their prescribed delivery dates and projected
Summer
2010
51
Global Network
2540 days
520 parties
High
8+
3+
Medium to high
Multiple
Significant
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TRANSPORTATION JOURNAL
Summer
Figure 3. Process Map of Global Retail Supply Chain with International Transportation
Focus
Within the context of these key considerations, the analysis will identify recent trends
in global sourcing and logistics from leading
retailers on innovative efforts to drive down
the total cost of ownership in the global supply
chain while positively impacting lead-time
variability within the overall order cycle time.
Analyzing the pre-sourcing activities and supply chain mode within the global sourcing sector will identify measures required to drive
bottom-line financial benefits in the global supply chain.
The approach to realizing these benefits is
related to leveraging incoterms to realize financial benefit and reduced variability. One new
practice being widely used by the retailer IKEA
for business from China to Europe has not been
put into widespread use within global retail
supply chains bringing goods into the United
States. This practice is the movement toward
optimizing international commercial terms, or
incoterms (Murray 2000). Broadly, incoterms
are a series of sales terms used by businesses
throughout the world used primarily to facilitate easier transactions in international trade
by clearly defining the terms, conditions, transaction cost, and ownership/transfer of goods in
a transaction. (See Figure 4 for a breakdown
of the implications of free on board [FOB]
versus free carrier [FCA] incoterms on the supply chain.)
FOB, or free on board, is followed by the
named port of shipment. With FOB the goods
are placed on board the ship by the seller at a
port of shipment named in the sales agreement.
The risk of loss of or damage to the goods is
transferred to the buyer when the goods pass
the ships rail, i.e., off the dock and placed on
the ship. The seller pays the cost of loading
the goods.
2010
53
Figure 4. FOB versus FCA Incoterms in the Global Retail Supply Chain
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TRANSPORTATION JOURNAL
Summer
MANAGERIAL IMPLICATIONS
The overriding objective in logistics is to
have the right product at the right place at the
right time at the right cost. The implications
of this analysis across the retail organization
are meaningful, practical supply chain solutions that will help reduce variability within
the global supply chain, while providing bottom-line savings to a retail organization. However, the relative unfamiliarity of managers
dealing with incoterms and their subsequent
distance from this decision-making process in
the overall sourcing/negotiation process with
product manufacturers can lead to challenges
2010
55
of fully identifying opportunities and implementing new terms. This analysis attempts to
bring visibility to the logistics routing flexibility and financial benefit of leveraging incoterms within the supply chain with little impact
to the overall structure of the merchandise
buyer within the retail organization.
Before a manager or supply chain practitioner can leverage these terms to move his
supply chain toward FCA incoterms, further
research on the potential risk associated with
assuming FCA incoterms includes:
- Understanding of the fragmented trucking
market in China.
- Scalability of trucking companies in the
China trucking market to take additional
volume.
- Better understanding of foreign markets
both locally and regionally within China.
- Understanding of the cost components of
changing incoterms to negotiate new terms
and product first-cost to secure savings.
- Systems implications or limitations to support FCA incoterms.
- Understanding of product lines being
sourced overseas and their duty status as
more items migrate toward duty-free
status.
CONCLUSIONS
Many factors are involved in the push to drive
a more efficient supply chain: Competition, financial awareness, and increasing customer demand for immediate gratification are reducing
lead times and placing businesses under growing pressure to consistently meet those lead
times. Optimizing inland routing via buying
terms or incoterms drives flexibility into any
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TRANSPORTATION JOURNAL
supply chain. Flexibility around leveraging optimal load ports can drive full supply chain efficiencies that fit a companys overriding supply
chain mission. Stepping outside commonly
used buying terms to take greater control of a
supply chain cannot only improve consistency,
but drive optimal costs within the process.
REFERENCES
Anonymous (2003). Supply Chain Best Practices:
Companies Must Define What Works for Them.
SupplyChainEdge. Tompkins Associates. August.http://
www.tompkinsinc.com/publications/competitive_edge/
articles/08-03-Best_Practices.asp.
Christensen, W.J., R.N. Germain, and L. Birou (2007).
Variance vs. Average: Supply Chain Lead-Time as a
Predictor of Financial Performance, Supply Chain
Management: An International Journal, Vol. 12, No. 5, pp.
349-357.
Deming, W.E. (1975). On Some Statistical Aids toward
Economic Production, Interfaces, Vol. 5, No. 4, pp. 1-16.
Guiffrida, A., M. Jaber, and R. Rzepka (2008). An
Economic Model for Justifying the Reduction of Delivery
Variance in an Integrated Supply Chain, INFOR, May,
Vol. 46, No. 2, pp. 147-153.
Harrison A. and C. New (2002). The Role of Coherent
Supply Chain Strategy and Performance Management in
Achieving Competitive Advantage: An International
Survey, The Journal of the Operational Research Society,
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Heizer, J. and B. Render (2006). Operations Management,
Prentice-Hall, Upper Saddle River, NJ, USA.
Murray, M. (2000). International Commercial Terms.
Accessed 22 June 2010. http://logistics.about.com/od/
legalandgovernment/a/Incoterms.htm.
Koudai P. (2005). Unlocking the Value of the Global
Supply Chain, World Trade (July), pp. 24-28.
Kumar, S., C. DuFresne, and K. Hahler (2007).
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Partnership,
Information
Knowledge
Systems
Management. Vol. 6, pp. 343362.
LaMacchia, C. (2004). Ten Ways to Reduce Inventory,
While Maintaining or Improving Service, The Progress
Summer
Savings
Zhuhai
Zhongshan
Panyu
ChangAn
Zhangmutou
Donguan
Guanlan
Henggang
Shenzhen
Buji
$775
$675
$500
$375
$375
$375
$275
$275
$275
$275
$350
$325
$275
$200
$175
$175
$125
$100
$125
$125
$425
$350
$225
$175
$200
$200
$150
$175
$150
$150
/
/
/
/
/
/
/
/
/
/
$1,450
$1,300
$1,175
$925
$950
$950
$825
$800
$800
$800
/
/
/
/
/
/
/
/
/
/
$550
$500
$450
$300
$275
$300
$200
$175
$175
$175
/
/
/
/
/
/
/
/
/
/
$900
$800
$725
$625
$675
$650
$625
$625
$625
$625
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