Global Supply Management Chapter 12

Thought For They Day The people who get on in the world are the people who get up and look for the circumstances they want, and, if they can’t find them, make them. George Bernhard Shaw

Test #3 Thursday April 23

DL and Proof of Insurance

Global Sourcing Importance Reasons For Reasons Against/Problems Supply Channels: Intermediaries vs. Direct Sources Currency and Payment Political/Economic Alliances

Importance of Global Spend Steadily increasing portion of spend to about ….(CAPS Study Reported in Text) Global trade has massive increases since US imports over $400,000 Billion from China per year.

Globalization or Global Vision

Reasons For Availability Price Labor Costs Exchange rates Government pressure Quality Broader Supply Base

The Lower Price from foreign suppliers does not mean Is total cost of ownership is lower….. Are flights back and forth to and from country associated with price of supplies/materials? Does Walmart compute the “transit inventory” cost of their goods which are now in a ship, and will be for 3 weeks.

Problems or Reasons Against Distance: Source location & evaluation of vendors. Distance: Long Lead Times & Expediting issues Transit Inventories/Pipeline Inventories Administration Costs (services /agents fees) Knowhow: learning curve (or pay agent) Example: Shipping Incoterms Currency fluctuations Warranties/Legal Issues/Claims Language/Communications Supply Chain Risks (less control)

More “Hidden” Costs Customs brokers Translation costs Banking fees (letter of credit) Foreign export taxes Import Tariffs Marine insurance Business Travel Port of Entry Handling Costs

Protectionism What does this mean? What is the average US Tariff? Has constantly been reduced over last 150 years.

Examples of Tariff if you are global Australia 3.3 % US 4.2 % EU 5.2 % China 10 % Brazil12 % Korea 12 % India 15.5 % Morocco 23 %

Supply Channels or Sources Brokers/Freight Forwarders/3PL’s Very small and very large (Steve Gulledge) Domestic Division (of foreign supplier) Import Merchants Coffee in NO. International Purchasing Office zen non Cont Grain Japanese Company in Mandeville Direct From Suppliers

Sourcing/Identifying Suppliers Embassies/Consulates (Gov’t Online Directory ) Business Associations (AMCHAM) International Trade Shows Online Other Supply Management Folks Site visits

Currency and Payment Issues Exchange Rates Letter of Credit

Political and Economic Alliances EU NAFTA CAFTA Entire developed world organized.