International Trade and Supply Chain Concepts

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).