International Trade and Supply Chain Concepts
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Questions and Answers

What is the primary purpose of converting a Bill of Materials (BOM) into a Supply Chain Map?

  • To provide a comprehensive overview of the company's supply chain costs.
  • To create a detailed inventory of all raw materials used in production.
  • To visualize and analyze the entire flow of goods and services within a supply chain. (correct)
  • To identify potential bottlenecks and inefficiencies within the production process.

    • What is the key difference between a free trade policy and protectionism?

  • Free trade is driven by international agreements while protectionism relies on domestic regulations.
  • Free trade focuses on economic efficiency while protectionism prioritizes national security.
  • Free trade aims to eliminate trade barriers while protectionism seeks to restrict them. (correct)
  • Free trade encourages domestic production while protectionism promotes foreign imports.

    • Which of the following is NOT a common disadvantage associated with international trade?

  • Fluctuations in exchange rates that can impact profitability.
  • Higher demand for products due to broader market access. (correct)
  • Navigating complex regulations and bureaucratic procedures.
  • Increased competition from foreign businesses.

    • What is the most suitable payment method for international transactions when there is a high level of risk associated with the buyer?

    <p>Cash in advance. (D)</p> Signup and view all the answers

    Which Incoterm specifies that the seller is responsible for delivering goods to the named port of destination?

    <p>CIF (Cost, Insurance and Freight). (C)</p> Signup and view all the answers

    In Perlmutter's Internationalization Model, which stage emphasizes country-specific strategies tailored to local markets?

    <p>Polycentric. (D)</p> Signup and view all the answers

    Which of the following is NOT a common strategy for international distribution?

    <p>Vertical distribution. (B)</p> Signup and view all the answers

    Which of the following is a common example of a non-tariff barrier in international trade?

    <p>Product labeling requirements. (A)</p> Signup and view all the answers

    Which of the following is NOT a feature characteristic of liner shipping?

    <p>Specializes in bulk cargo (C)</p> Signup and view all the answers

    What is the main purpose of the 'Terminal Handling Charge (THC)'?

    <p>To cover the cost of loading and unloading containers at a port (D)</p> Signup and view all the answers

    Which of the following is NOT a factor influencing ocean freight rates?

    <p>Available berthing resources at the port (C)</p> Signup and view all the answers

    In which type of shipping market would you typically find a 'Charter Party' contract?

    <p>Tanker Market (C)</p> Signup and view all the answers

    If a container is discharged on July 2nd and the 'Line Free Days' are 5, which date would the container need to be returned to the depot to avoid detention charges?

    <p>July 7th (D)</p> Signup and view all the answers

    What is the primary difference between 'demurrage' and 'detention'?

    <p>Demurrage applies to loaded containers, while detention applies to empty containers (C)</p> Signup and view all the answers

    Which of the following is NOT considered a vital operational need for shipping lines?

    <p>Reliable weather forecasts (B)</p> Signup and view all the answers

    Which of the following shipping markets would likely operate on a 'Tramp Basis'?

    <p>Offshore Market (B)</p> Signup and view all the answers

    Which of the following trade law principles prohibits discrimination among WTO members regarding trade policies?

    <p>Most-Favored-Nation Principle (C)</p> Signup and view all the answers

    What type of trade agreement involves trade deals between two specific nations, like the India-Sri Lanka Free Trade Agreement?

    <p>Bilateral Agreements (C)</p> Signup and view all the answers

    Which of the following is an example of a unilateral trade measure?

    <p>U.S. tariffs imposed on Japanese automobiles (D)</p> Signup and view all the answers

    Which of the following is NOT a primary level of trade law as discussed in the content?

    <p>State Laws (A)</p> Signup and view all the answers

    Which of the following best describes the 'National Treatment Principle' in trade law?

    <p>Imported goods should not be treated differently than domestic items after clearing customs. (C)</p> Signup and view all the answers

    What is the primary reason for heightened security measures at Israeli ports?

    <p>Potential for dangerous cargo being used for terrorism (D)</p> Signup and view all the answers

    What is the main impact of the port delays in Ashdod?

    <p>Increased shipping costs for importers (D)</p> Signup and view all the answers

    Which of the following industries is NOT directly affected by supply chain disruptions from Russia and Ukraine?

    <p>Tourism and travel (D)</p> Signup and view all the answers

    What is the primary goal of companies in assessing their dependence on Russian/Ukrainian suppliers?

    <p>To minimize the risk of supply chain disruptions (A)</p> Signup and view all the answers

    Which of the following is NOT a key factor in improving the efficiency of port operations?

    <p>Increasing the number of customs inspections (A)</p> Signup and view all the answers

    What is the primary reason behind the rising global competition among ports?

    <p>Increased demand for port services due to global trade growth (A)</p> Signup and view all the answers

    What is the most likely outcome of successful port management strategies?

    <p>Improving the competitiveness of a nation's economy (A)</p> Signup and view all the answers

    According to the content, which of the following is an example of a service provider in port operations?

    <p>A company that provides piloting services to guide vessels into port (D)</p> Signup and view all the answers

    Which of the following is NOT a factor influencing the design of a distribution network?

    <p>Marketing Strategies (B)</p> Signup and view all the answers

    Which of the following statements is TRUE about the role of warehousing in supply chain management?

    <p>Warehousing can be used to streamline processes, improve efficiency, and enhance customer service. (B)</p> Signup and view all the answers

    Which cultural framework focuses on the distinction between universal rules and situational context in how individuals approach situations?

    <p>Trompenaars' Cultural Dimensions (C)</p> Signup and view all the answers

    Which of the following is a key characteristic of a successful distribution network design (DND) that aligns with contemporary supply chain trends?

    <p>Integrating global trends, aligning with corporate strategy, and adapting to local factors. (C)</p> Signup and view all the answers

    Which of the following is NOT a component of 'Mindset' as part of the Intercultural Competence Framework?

    <p>Effective Communication (A)</p> Signup and view all the answers

    Identify the customs and trade compliance regime that primarily focuses on goods intended for consumption within a specific country.

    <p>Consumption Regime (A)</p> Signup and view all the answers

    Which of the following is an example of a demand-driven supply chain trend?

    <p>Utilizing forecasting data to anticipate and fulfill customer needs. (C)</p> Signup and view all the answers

    What is the primary benefit of using automated guided vehicles (AGVs) in warehousing?

    <p>Reduced reliance on manual labor in warehousing operations. (A)</p> Signup and view all the answers

    Which of the following is NOT a factor that impacts the determination of compensation for cargo damage?

    <p>The location of the cargo damage (B)</p> Signup and view all the answers

    In the context of cargo damage, what does the term "Force Majeure" refer to?

    <p>Events beyond the control of the carrier that cause damage to the cargo (B)</p> Signup and view all the answers

    What is the primary purpose of a "before and after" clause in a shipping contract?

    <p>To limit the liability of the carrier for damage caused during loading and unloading (B)</p> Signup and view all the answers

    Which of the following is NOT a specific convention that imposes liability limits on carriers?

    <p>International Chamber of Commerce (ICC) Incoterms (A)</p> Signup and view all the answers

    Which of the following hedging strategies involves purchasing the right to buy a currency at a specific rate before a set date?

    <p>Currency options (D)</p> Signup and view all the answers

    In the context of hedging, what is the primary advantage of using a forward contract?

    <p>It allows companies to lock in a predetermined exchange rate, mitigating currency risk (A)</p> Signup and view all the answers

    Which of the following scenarios BEST demonstrates the use of a put option for hedging?

    <p>A company purchasing a put option to sell a commodity at a specific price, hoping the commodity price will decrease (D)</p> Signup and view all the answers

    In the example of an importer hedging a $2 million payment in 9 months, why did the importer choose to hedge using a forward contract instead of purchasing a put option?

    <p>The importer was expecting a decrease in the exchange rate and wanted to lock in a higher rate (D)</p> Signup and view all the answers

    Flashcards

    Supply Part

    Identifies production processes, transport modes, routes, and costs in supply chains.

    Distribution Centers

    Facilities like RDCs and LDCs responsible for storing and distributing products.

    Monthly Review Report (MRR)

    Documents supply chain events, impacts, proposed changes, and performance KPIs.

    Free Trade vs. Protectionism

    Free trade promotes trade; protectionism imposes tariffs and quotas.

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    Types of Import & Export

    Includes direct/indirect export, re-importation, and B2B/B2C imports.

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    Payment Methods in Trade

    Includes cash in advance, letters of credit, and open account transactions.

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    Common Customs Tariff (CCT)

    A standard tariff applied by the EU on imports, including VAT and excise duties.

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    Perlmutter's Internationalization Model

    Describes four stages: Etnocentric, Polycentric, Regional, Geocentric in international strategy.

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    EU-Mercosur Trade Deal

    The EU's largest trade agreement facing environmental concern and competition issues.

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    Israel Port Post-Hamas

    Transportation through Israel is normalizing but with war risk surcharges.

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    Port Operations Efficiency

    Focus on smooth berthing and minimizing vessel stay times to enhance services.

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    Cargo Security Measures

    Heightened measures for dangerous cargo; carriers may redirect shipments.

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    Supply Chain Risks

    U.S. and European companies heavily depend on suppliers in Russia and Ukraine.

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    Port Logistics Stakeholders

    Includes port authorities, shipping companies, and service providers crucial for operations.

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    Learning Goals in Port Management

    Objectives like understanding port operations and evaluating strategies.

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    Key Port Structures

    Comprise land areas, access channels, wharfs, quays, and piers.

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    Contractual Exclusion of Liability

    Clauses excluding liability for damage outside loading/unloading phases.

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    Force Majeure

    Carriers must prove reasonable measures to prevent damage in tough situations.

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    Compensation Determination

    Process of deciding how much should be compensated for damage.

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    Liability Limits

    Specific conventions limiting the liability amount for damages.

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    Montreal Convention Liability Limit

    Limits liability to 19 SDR per kilogram for cargo damage.

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    Exceptions to Liability Limits

    Certain exceptions can override standard liability limits.

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    Currency Forward Contract

    An agreement to exchange currencies at a fixed future rate.

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    Currency Options

    Contract granting the right to buy/sell a currency at a set rate before a date.

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    Liner Trade

    A shipping method operating on fixed schedules and routes, primarily for general or containerized cargo.

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    Tramp Shipping

    A flexible shipping method that operates based on supply and demand without fixed schedules, specializing in bulk cargo.

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    Booking Notes

    A contract used within liner trade to outline the customer's cargo details and booking confirmation.

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    Bill of Lading

    A document that serves as a receipt and contract between shipper and carrier for transportation of goods.

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    Demurrage

    Charges incurred when containers remain at the terminal longer than the allowed free days.

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    Detention

    Charges applied when empty containers are returned late to the container depot after use.

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    Terminal Handling Charge (THC)

    Fee for the loading and unloading of containers at a port terminal.

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    Free Days

    The number of days allowed for unpacking and returning containers without incurring charges at ports or line facilities.

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    Trade Law

    Regulates international trade through sales contracts and policies.

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    Most-Favored-Nation (MFN) Principle

    Prevents discrimination among WTO members in trade relations.

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    National Treatment Principle

    Imported goods must receive equal treatment as domestic goods after customs.

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    Multilateral Agreements

    Trade regulations involving multiple countries, like GATT and WTO.

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    Bilateral Agreements

    Trade deals made between two countries to regulate trade.

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    Administration in Supply Chain

    Involves scheduling, routing, tracing, and auditing of supply chain operations.

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    Key Supply Chain Documents

    Includes bill of lading, freight bills, and shipment manifests for tracking shipments.

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    Benefits of Warehousing

    Offers consolidation, sorting, cross-docking, and seasonal storage advantages.

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    Customs Regimes

    Types of customs regulations: Manufacturing, Consumption, and Trading regimes.

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    21st-Century Supply Chain Trends

    Trends include being demand-driven, integrated, globally connected, and sustainable.

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    Goals of Distribution Network Design

    Aim to minimize costs, maximize service, and enhance profit.

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    Factors in Distribution Network Design

    Include demand, response time, and location for efficiency.

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    Intercultural Competence Framework

    Focuses on mindset, skillset, and heartset for effective cross-cultural communication.

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    Study Notes

    Make-or-Buy Decision

    • The first and second layers of the Bill of Materials (BOM) are always part of the end-to-end supply chain.
    • Items comprising 80% of the product's weight require full process mapping, including raw-material extraction (e.g., mining/harvesting).
    • The remaining 20% of components are sourced externally without mapping the complete production process.

    Example: T-Shirt Production Process

    • The process encompasses steps from raw materials (cotton) to fabric processing, sewing, packaging, warehousing, and retail distribution.
    • Logistics involve regional and local distribution centers (RDCs & LDCs), warehouses, and e-commerce storage.

    Converting a BOM to a Supply Chain Map

    • Supply Chain Mapping:
      • Identify production processes, sourcing locations, and transportation routes.
      • Consider distribution hubs, ports, and terminals to consolidate effectively.
      • Calculate distances, transit times, transport costs, and handling fees.
      • Include these elements in the Global Supply Chain Map.
    • Distribution Network Mapping:
      • Define RDCs and LDCs, excluding stores.
      • Outline transport modes and consolidation points.
      • Include logistics data in the Global Supply Chain Map.
    • Monthly Review Report (MRR) Example:
      • Front Section: Includes event descriptions, impact analysis, proposed supply chain changes, visual updates, and key performance indicator (KPI) dashboards.
      • Back Section: Presents a visualization of the current supply chain, including sourcing, production, assembly, transport details, hubs, costs, and distribution centers.

    End-to-End Supply Chain Considerations

    • Make or Buy Decision:
      • The first two tiers of the BOM (Bill of Materials) are included.
      • Make parts require detailed process mapping (e.g., raw material extraction).
      • Buy parts are sourced from suppliers without further breakdown.
    • Converting a BOM to a Supply Chain Map:
      • Identify production processes, sources, transport, modes, routes, costs, and consolidation hubs for supply parts.
      • Define distribution centers (DCs), transport methods, and logistics routes for distribution.
      • The example is T-shirt production, covering all steps from harvesting to delivery.
    • Monthly Review Report (MRR): Documents supply chain events, impacts, proposed changes, and performance KPIs.

    Cross-Border Supply Chains & Trade

    • International Trade & Globalization: Driven by cost differences, production shifts, phases of internationalization, and company expansion for market growth and risk diversification.
    • Trade Policies & Organizations: Focuses on free trade vs protectionism (WTO, IMF, GATT), outlining import duties, quotas, and non-tariff barriers, as well as new protectionist measures (e.g., trade restrictions, subsidies, managed trade).
    • Import & Export Management: Includes direct/indirect export, re-importation, transit, B2B/B2C imports, advantages (lower costs, market expansion, and profit growth).

    Disadvantages

    • Payment Methods: Options range from cash in advance to open accounts, letters of credit, and documentary collections.
    • Import & Export Duties: The EU applies a Common Customs Tariff (CCT) and various taxes (VAT, excise duty, and anti-dumping levies).
    • Incoterms: International trade rules outlining the buyer's and seller's responsibilities.
    • Distribution & Transport: Describes the modes for intermodal/multimodal transport, tailored to corporate strategies and sustainability goals, including intensive, selective, and exclusive distribution strategies.
    • Perlmutter's Internationalization Model: Outlines the etnocentric, polycentric, regional, and geocentric models for internationalization.
    • Current Events: The EU's largest trade deal with Mercosur (Brazil, Argentina, Paraguay, and Uruguay).

    Israel's Port and Logistics Post-Hamas Attack

    • Transportation through Israel has largely normalized but with increased costs due to war risk surcharges.
    • Port-specific impacts vary: Ashkelon saw limited cargo unloading, while Ashdod and Haifa experienced delays related to workforce reduction.

    Port Logistics and Operations

    • Ports are critical for transshipment, storage, and as hubs in supply chains.
    • Efficiency focus includes minimizing vessel stay times and smooth berthing/unloading/loading operations.
    • Structures like wharves, quays, and piers support shipping activities.
    • Stakeholders include port authorities, shipping companies, brokers, agents, terminal operators, and service providers.

    Understanding, Application, and Creation (General Overview)

    • General overview of port operations, challenges, and economic issues.
    • Managing ship port calls, estimating costs, and evaluating port strategies.
    • Design efficient port layouts to improve operations.

    Key Concepts: Liner Trade and Tramp Shipping

    • Liner Trade: Operates on fixed schedules/routes, handles general/containerized cargo, and relies on agencies for bookings and connecting customers (contracts include booking notes and bills of lading).
    • Tramp Shipping: Based on supply-demand, handles bulk cargo, utilizes broker networks, and employs charter parties and bills of lading in contracts.

    Operational Needs for Shipping Lines

    • Reliable vessel scheduling advice, adequate berth resources, available berths and efficient terminal operators are essential for shipping lines.

    Ocean Freight Rates

    • Depends on container size (20', 40', 45') and type (refrigerated/non-refrigerated).
    • Terminal Handling Charge (THC) covers loading/discharging containers.
    • Demurrage is charged for exceeding container storage time limits.
    • Detention is charged for late return of empty containers.

    Cargo Damage and 7 Questions

    • Transport law (e.g., Dutch Civil Code and AVC conditions) covers cargo damage in the Netherlands.
    • Liability depends on the carrier's actions or omissions.
    • Contractual clauses (e.g., "before and after" clauses) can exclude liability for damage outside loading/unloading phases.
    • Force majeure considerations include whether the carrier took reasonable precautions.
    • Compensation amounts are determined based on damage.
    • Specific conventions limit liability (e.g., Montreal Convention, CMR, Hague-Visby).
    • Exceptions to liability limits exist.

    Currency Forward Contract and Options

    • A binding agreement to exchange currencies at a fixed rate in the future.
    • Currency exchange rates are set in advance and differ from spot rates.
    • Currency options give the right (not obligation) to buy or sell a currency at a set rate before a specific date.
    • A premium is required for options contracts.

    Discount Analysis and SCF

    • Customers typically pay invoices after 42 days.
    • Cost of capital is 12% annually.
    • A 1% discount is offered for payments within 8 days.
    • Supplier credit analysis finds that the 1% and 2% discounts are less attractive than the existing 12% cost of capital, but the company may find options to offer or implement incentives.
    • SCF optimizes cash flow across the supply chain by allowing suppliers to receive early payments at a lower interest rate.
    • Reverse factoring leverages the strong credit rating of large buyers to access financing for smaller suppliers.
    • The process involves invoice issuance, buyer confirmation, upload to a platform (like Flinqer or Taulia), early payment with a discount, and reduced financial strain for suppliers.

    Multilateral and Bilateral Trade Agreements

    • Multilateral agreements are most effective but hard to negotiate, involving three or more countries (e.g., GATT, WTO). These govern 97% of international trade.
    • Bilateral agreements are easier to negotiate but less effective than multilateral deals overall. They cover bilateral relationships (e.g. India-Sri Lanka, EU-Canada).
    • Unilateral measures by individual countries are effective and frequently involve protectionist actions; e.g., US tariffs on Japanese cars and the dispute over EU tariffs on Brazilian orange exports.

    Cross Border Supply Chains

    • Application of transport, commercial, and contract law to advise in situations involving international trade.
    • Understanding of trade law (in stricter aspects, like contract terms and broader economic policies).
    • Trade law principles: Most-favored-nation (MFN), national treatment, and multilateral and bilateral trade agreements is explained (e.g., GATT, WTO; India-Sri Lanka and EU-Canada deals).

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    Summary: Considerations for End-to-End Supply Chain PDF

    Description

    This quiz covers essential concepts related to international trade and supply chain management, including topics like free trade policies, Incoterms, and payment methods in high-risk situations. Test your understanding of important strategies, barriers, and costs associated with global commerce.

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