Logistics, Trade Administration and Supply Chain

Outdated philosophies may prevent us from recognizing and integrating some of the new ways the warehouse or distribution center (DC) can add real value to our operations. Let’s talk about moving dinosaur thinking into the 21st century. Let’s talk about the evolution of warehousing as a means of adding value to your organization. In another “era,” when I first started out, there were basically only four types of warehousing that were thought to benefit an organization: Storage Warehouse: The use of a facility to stockpile inventory for outbound shipment in a make-to-stock plant environment or where MRO items are held for consumption, repair, and service of plant facilities and equipment. The intention is to have long-term storage. Production Warehouse: The utilization of a facility to hold materials and components for inventory prior to their need in processing, production, or manufacturing. The goal is to level demand. Order Fulfillment DC: A facility that holds inventory to meet cust

The pace of change in manufacturing, distribution and retailing has been increasing rapidly in order to support international expansion, while in the face of a wide variety of external challenges. Uncertain economic conditions are presenting CIOs with an almost impossible task: How to transform IT in order to meet the business’s constantly changing and evolving needs while staying within budget, ensuring projects are delivered successfully, and proving new systems have a lower TCO for the ongoing business. This challenge is made more complicated because so many companies are tied into big investments in legacy systems. These behemoths resist change and are so ingrained in the business that the prospect of modernising or replacing them can be daunting from an implementation effort standpoint and challenging from a cost justification perspective. There are however a number of compelling reasons why a business should consider upgrading its legacy systems. The first is the increasing cost

The Packing List is a document prepared by the shipper listing all kinds and quantities of merchandise in a particular shipment. A copy of packing list is often attached to the shipment itself and another copy send directly to the consignee to assist in checking the shipment upon received. In other words, the packing list is also called a bill of parcels. The packing list includes the following elements: Name and address of the seller/shipper/consignor, Name and address of the buyer/consignee, Issuance date, Invoice number, Sales order or contract number, Quantity and description of the goods, Shipping details including weight of the goods, number of packages, shipping marks and shipping numbers, Quantity and description of contents of each package, cartons, crate or container, Any other information as required in the sales contract or documentary credit e.g. country of origin. The packing list is a more detailed version of the commercial invoice but without the price

The Shipper's Export Declaration (SED) is a document prepared by the shipper and presented to a government authority specifying goods expected along with their quantities, weight and destination. Each country has its own SED form. Certain elements are likely to be required in the SED for all countries. The SED typically includes the following elements: Name and address of seller, Name and address of buyer, Issuance date, Export license number (if required, based on certain countries' requirements and goods exported), Country of origin of the goods shipped, Country of final destination of the goods, Quantity and description of the goods, Country of export statistical classification number (some countries do not require this information for shipments under a certain level), Shipping details like, weight of the goods, number of packages and shipping marks and numbers. The SED is used by a nation's customs authority to control exports and compile trade statistic

The Regional Trade Pact Import/Export Declaration is a standardised import/export document used in common by members of a regional trade group containing compliance, administrative and statistical information. This document is typically issued by the exporter or seller (shipper). The typical trade pact import/export declaration contains the following elements: Name and address of the exporter/seller/consignor/shipper, Name and address of the importer/buyer/consignee, Description and value of the goods, A statement of origin of the goods, Country of destination of the goods, Carrier and means of transport, Other compliance, administrative and statistical information. This document is used as an export declaration when exporting from any trade pact member country to a non-member country and as both an import and export declaration when transporting goods across country borders within the trade group. Because of its standardised format, this document is often linked to a

The Inspection Certificate is a document issued by an authority indicating the goods have been inspected, particularly in accordance to a set of industry, customer, government or carrier specifications, prior to shipments and the results of the inspection. Inspection Certificates are generally obtained from a neutral testing organizations e.g. either a government entity or independent surveying company. In some cases, the inspection certificate can come from the manufacturer or shipper but not from the forwarder or logistics company. An Inspection Certificate should include the following details: Details, particularly of the consignor, consignee and the goods' description for the said shipment and other information to be in conformity with other documents e.g. documentary credit, commercial invoice, packing list, etc. Date of the inspection being made. Statement of sampling methodology. Statement of the results of the inspection. The name, signature and/or stamp or se

The Certificate of Origin is a document issued by a certifying authority stating the country of origin of the goods which are to be exported to another country. The Certificate of Origin should include the following elements: Key details (particularly the consignor, consignee and description of goods) regarding the shipment. Also such details to be in conformity wit other documents e.g. documentary credit, commercial invoice and packing list. A statement of origin of the goods listed therein. The name, authorised signatory and/or stamp or seal of the certifying body, such as the chamber of commerce, trade associations, etc. A NAFTA (North America Free Trade Area) contains the following elements: Name and address of the exporter (shipper). Blanket period of the shipment (for multiple shipments of identical goods for a specified period of up to one year. Name and address of the importer (consignee). Name and address of the producer (manufacturer). Description of the good

The Certificate of Insurance is a document indicating the type and amount of insurance coverage in force on a particular shipment. In documentary credit transaction, the certificate of insurance is used to assure the consignee that insurance is provided to cover the loss of or damage to the cargo while in transit. A complete certificate of insurance should include the following elements: The name of the insurance company, Insurance policy number, Description of the merchandise insured, Points of origin and destination of the shipment. Coverage is indicated by the terms of sale. For example, for goods sold "FOB", coverage commences once the cargo is on board the vessel and continues until the consignee takes possession at either at the seaport or in-land port of destination, Conditions of coverage, exclusions and deductible, if applicable, A signature by the insurance carrier, underwriter or agent for the same, Indication that the cover is effective at the latest

An air waybill is a non-negotiable transport document covering transport of cargo from airport to airport. A complete air waybill contains the following criteria: Name of carrier with a signature identified as that of carrier or named agent for and/or on behalf of the carrier, An indication that the goods have been accepted for carriage as well as the date of issuance or date of loading, In a documentary letter of credit, an indication of the actual date of dispatch if required by the documentary letter of credit or if the actual date of dispatch is not required by the credit, the issuance date of the document is deemed to be the shipment date, An indication of the airport of departure and the destined airport, Appears on its face to be the original for consignor/shipper, Terms and conditions of carriage or a reference to the terms and conditions of carriage in another source or document, Meets any other stipulation of the sales contract or documentary letter of credit. C

A multimodal transport document is a bill of lading covering two or more modes of transport, such as shipping by rail and sea. A complete multimodal transport document should contain the following elements: Name of the carrier or multimodal transport operator with a signature identified as that of carrier, transport operator or ship's master or agent for or on behalf of either the carrier, transport operator or ship's master, An indication that the shipment has been dispatched, taken in charge or loaded on board along with a date, Indication of the place of receipt of the shipment that may be different from the place of actual loading on board and the place of delivery of the shipment which may be different from the place of discharge, A sole original or if issued in multiple originals, the full set of originals, The terms and conditions of carriage or a reference to the terms and conditions of carriage in another source or document other than the multimodal transpor

A non-negotiable sea waybill is a transport document covering port-to-port shipments. It is not a title document, is not negotiable and cannot be endorsed. A complete non-negotiable sea waybill contains the following elements: Name of the carrier with a signature identified as that of carrier, or ship's master, or agent or on behalf of either the carrier or the ship's master An indication or notation that the goods have been loaded on board or shipped on a named vessel. also, the date of issuance or date of loading An indication of the port of loading and the port of discharge as specified in the original sales contract or documentary credit A sole original or if issued in multiple originals, the full set of originals The terms and conditions of carriage or a reference to the terms and conditions of carriage in another source or document In a documentary letter of credit, no indication that the document is subject to a charter party and/or an indication that the nam

The commercial invoice is the key accounting document describing the commercial transaction between the buyer and the seller. The commercial invoice includes the following elements: Name and address of the seller Name and address of the buyer Date of issuance Invoice number Order or contract number Purchase order number Quantity and description of the goods Unit price, total price, other agreed upon charges and total invoice amount stated in the currency of the contract or letter of credit Terms of delivery and payment Shipping details, including weight of the goods, number of packages and shipping marks Authorised signature of the company representative filling out the form Any other information as required in the sales contract or letter of credit Cautions and Notes for Documentary Letters of Credit In transactions involving a documentary letter of credit, it is vitally important that the description of the goods in the commercial invoice correspond precisely

A bill of lading is a document issued by a carrier to a shipper, signed by the captain, agent or owner of a vessel, furnishing written evidence regarding receipt of the cargo, the conditions on which transportation is made (contract of carriage) and the engagement to deliver goods as the prescribed port of destination to the lawful holder of the bill of lading. A bill of lading is, therefore both a receipt for the merchandise and a contract to deliver it as freight. There are a number of different types of bill of lading a number of issues that relate to them as a group of documents. Straight Bill of Lading (Non-Negotiable) A straight bill of lading indicates that the shipper will deliver the goods to the consignee. The document itself does not give title to the goods (making it non-negotiable). The consignee need only to identify himself to claim the goods. A straight bill of lading is often used when payment for the goods has already been made in advance or in cases where

Documents play a key role in international transactions. Both buyers and sellers need documents for bookkeeping, accounting, taxation, export and import formalities, as well as making payments using letters of credit and other documentary payment methods. This segment will give some examples of the most commonly used documents in the international trade. It is not an exhaustive listing. Specialized trades, special circumstances and different countries of origin and destination may require additional documentation. Transaction Documents The key transaction document is the invoice or commercial invoice. This document is used by all parties to the transaction for accounting and bookkeeping purposes. It is also required for export and import formalities as well as most banking and payment procedures. Export Documents These are documents required by the customs or national export authority of the country of export and vary greatly from country to country. Included are licenses,

C-TPAT qualifications for air carriers: Active air carrier transporting cargo shipments to the US; Have an active Airline Code registered with CBP; Possess a valid continuous international carrier bond registered with the CBP; Have designated company official that will be the primary cargo security officer responsible for the C-TPAT program; Commit to maintaining C-TPAT security guidelines for air carriers; Create and provide CBP with a C-TPAT supply chain security profile, which identifies how the air carrier will meet, maintain and enhance internal policy to meet the C-TPAT security guidelines for air carriers. Security Guidelines for Air Carriers Air Carriers must conduct a comprehensive assessment of their international supply chain based on the C-TPAT security guidelines. Where an air cargo outsource or contracts elements of their supply chain such as conveyance, foreign facility, domestic warehouses or any other elements, the air carrier must work with these busi

Rail carrier must have written and verifiable processes for the screening of new business partners, including the carrier's agents, sub-contracted rail carriers, service providers as well as screening procedures for new customers, beyond financial soundness issues to include security indicators. These processes apply to business partners and service providers not eligible for C-TPAT membership. Security Procedures Written procedures must be in place to address specific factors or practices, the presence of which would trigger additional scrutiny by the rail carrier. The US CBP will work in partnership with the rail carriers to identify specific information regarding what factors, practices, circumstances or risks are relevant. For business partners eligible for C-TPAT endorsement (importers, ports, terminals, brokers, consolidators, etc), the rail carrier must have documentations like C-TPAT certificate, SVI number, etc indicating whether these business partners are or are

Rail carriers must carry out a comprehensive assessment of their security practices based on the C-TPAT minimum security criteria. Recognizing that rail carriers do not control their shippers and have a common carrier obligation to transport goods tendered to them, rail carriers shall work with their shippers on their security practices as set forth in these criteria. These minimum security criteria are fundamentally designed to be the building blocks for rail carriers to institute effective security practices designed to optimize supply chain performance to mitigate the risk of loss, theft and contraband smuggling that could potentially introduce terrorists and implements of terrorism into the global supply chain sector. Rail carriers should periodically assess their degree of vulnerability to risk and should prescribe security measures to strength or adjust their security posture to prevent security breaches and internal conspiracies. The determination and scope of criminal el

Sea carriers must have written and verifiable procedures for the screening of carrier's agents and other service providers contracted to provide transportation services for the carrier. Sea carriers also must have screening procedures for new customers, beyond financial soundness issues to include indicators of whether the customer appears to be a legitimate business and/or posses a security risk. Sea carriers shall also have procedures to review their customer's requests that could affect the safety of the vessel or the cargo or otherwise raise significant security questions, including unusual customer demands, such as specific stowage placement onboard the vessel (beyond a request for below deck or on deck stowage). Security procedures Sea carriers must have written or web-based procedures for screening of new customers to whom they issue bills of lading, which identify specific factors or practices, the presence of which would trigger additional scrutiny by the sea

Sea carriers must conduct a comprehensive assessment of their security practices based on the C-TPAT minimum security criteria. Where a sea carrier does not control a specific element of the cargo transportation service it has contracted to provide, such as a marine terminal operator or a time chatered vessel with whom it has contracted, the sea carrier must work with these business partners to seek to ensure that pertinent security measures are in place and adhered to. The sea carrier is responsible for exercising prudent oversight for all cargo loaded on board its vessel, pursuant to the applicable laws and regulations and terms of this program. C-TPAT recognizes the complexity of the international supply chains and security practices and endorses the application and implementation of security measures based upon risk. Therefore, the program also allows for flexibility and the customization of security plans based on the member's business model or requirements. Security me

Container integrity must be maintained to protect against the introduction of unauthorized materials and/or persons. At the point of staffing, procedures must be in place to properly seal and maintain the integrity of the shipping containers. A high security seal must be affixed to all loaded containers bound for the United States. All seals must meet or exceed the current PAS ISO 17712 standards for high security seals. Container Inspections Procedures must be in place to verify the physical integrity of the container structure prior to stuffing, to include the reliability of the locking mechanism of the doors. A 7-point checklist or inspection process is recommended for all containers based on the following circumstances: Front Wall Left Side Right Side Floor Ceiling/Roof Inside/Outside Doors Outside/Undercarriage Container Seals Written procedures must also elaborate how seals are to be controlled and affixed to the laden containers, to include procedures for

In the last episode on March 2012 , we had given some brief introduction on what is C-TPAT and now, we are going to continue with the topic today which covers the requirements for importers. C-TPAT Security Criteria for Importers Importers must conduct a comprehensive assessment of their international supply chains based on the C-TPAT security criteria. Where an importer outsource or contracts elements of their supply chain, such as foreign facility, conveyance, domestic warehouse or other elements, the importer must work with those business partners in order to ensure that pertinent security measures are in place and adhered to throughout their supply chain. The supply chain for C-TPAT purposes is defined from the point of origin (manufacturer, supplier or vendor) through to point of distribution and recognizes the diverse business models C-TPAT members employ. C-TPAT recognizes the complexity of international supply chain and endorses the application and implementation of se

The contracting of management and/or execution of a business or operational function to an external third party contractor or sub-contractor. Outsourcing can refer to either a product or service but most commonly refers to services. Outsourcing has been a feature of the business world for hundreds of years and it is simply a typical modernised term for "contracting out". Note that the business or operational function can be outsourced to either a domestic or foreign third party contractor. The key factor here is that the service be performed by an external third party contractor, not simply by a department or division of the same company. Benefits of outsourcing: the acquisition of specialized services required on a limited or temporary basis; quick solution to a temporary overload work or task; ability to concentrate on the organization's focus on its core competencies; potential to save money. Almost any business or operational function can be outsourced,

Sourcing is the location, acquisition and management of all the vital inputs required for an organization to operate. This includes raw materials, component parts, products, spares, labour in all forms, locations and services. Sourcing is therefore a key function of any business enterprise or organization and while successful sourcing does not necessarily translate to a successful business, unsuccessful sourcing almost always translates into a failed enterprise. A key to understand sourcing is that whether it is: a product or service; purchased in small lots or large quantities; pick up by a staff member from a local store during lunch hour or send along a 10,000 mile supply chain; acquire domestically or from a foreign supplier, it is sourcing. What is Sourced? If an organization spends money on it, it is sourcing. What is sourced includes, raw materials, component parts, intermediate products, supplies, tools, machinery, equipment, motor vehicles, energy, productio

Order Fulfillment: Another activity area that logistics may control is order fulfillment, which generally consist of activities involved with receiving and completing customer orders. Initially, one might question why the logistics area would concern itself directly with order fulfillment. However, one important physical distribution factor is the time elapsing from the time when a customer decides to place an order for a product until the time those goods are actually delivered in a satisfactory condition, i.e. the lead time. Forecasting: Another activity essential to the logistics area is inventory forecasting. Accurate forecasting of inventory requirements and materials and parts is essential to effective inventory control. This is particularly true in companies using a just-in-time (JIT) or materials requirement planning (MRP) approach to control their inventory. Logistics personnel should develop forecasts in those situation to ensure accuracy and effective control. Too fre

Transportation: Transportation is a very essential part of the logistics system. A major focus in logistics is upon the physical movement or flow of goods or upon the network that moves the product. This network is composed of transportation agencies that provide the service for the firm. The logistics manager is responsible for selecting the mode or modes of transportation used in moving the raw materials and finished goods or for developing private transportation as an alternative. Storage: A second area, which has a trade-off relationship with transportation, is storage or in some circumstances called warehousing. It involves two separate but closely related activities i.e. inventory management and warehousing. A direct relationship exist between transportation and the level of inventory and the number of warehouses required. For instance, if firms use a relatively slow means of transport, they usually have to keep higher inventory levels and usually have more warehousing spa