Driving risk and spend out of the global supply chain

356 Pages·2013·4.477 MB·English

by  Thomas A Cook

Supply Chain Management / Logistics Cook
The Global Warrior Series
T h o m a s A . C o o k
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Driving Risk and Spend Out of the Global Supply Chain provides a r
complete picture of the various risks multinational firms face when they i
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operate overseas and engage in foreign purchasing and sales, import DDrriivviinngg RRiisskk aanndd
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and export trade, and global logistics. Thomas A. Cook, a subject matter n
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expert on global trade management, supplies readers with step-by-step

guidance on how to develop an airtight global risk strategy. R
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This second book in The Global Warrior Series presents a blueprint and s SSppeenndd OOuutt ooff tthhee
operational strategy for executives to consider when charged with the k
responsibility of reducing risks and costs in their global supply chains.
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The book reviews a number of key factors, including n
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• The key issues that impact risk and spend in all supply chains GGlloobbaall SSuuppppllyy CChhaaiinn
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• How to develop effective risk management strategies, tactics,
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and action plans
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• Managing requests for proposals to achieve desired results with n
minimal compromise d
• Risk versus insurance and cargo loss control
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• Business model development for a cost reduction program
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• Maintaining best practices while reducing risks and costs
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• Sarbanes–Oxley issues for public companies
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• How to achieve world-class status in international trade
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The book examines all the areas where spending can be reduced and h
details a specific strategy to help readers reduce spending without e
compromising values. Providing the most comprehensive and up-to-date
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compilation of material and tactics currently available for international
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business professionals, the text supplies a clear understanding of o
the steps readers must take before taking any action to reduce risk b
and spend in their import, export, and domestic supply chain operations. a
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Considered a foremost expert on global supply chain u
management, author Tom Cook is the recipient of numer- p
ous awards and accolades, including an International p
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Partnership Award bestowed by former president Bill y
Clinton. He is currently managing director of Blue Tiger
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International (www.bluetigerintl.com), a management h
consulting organization focused on international a
purchasing and RFP enhancements. i
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K22468

Driving Risk and
Spend Out of the
Global Supply Chain
The Global Warrior SerieS
Series Editor: Thomas A. Cook
Driving Risk and Spend Out of the Global Supply Chain,
Thomas A. Cook (2015)
Mastering the Business of Global Trade: Negotiating Competitive
Advantage Contractual Best Practices, Incoterms,®
and Leveraging Supply Chain Options,
Thomas A. Cook (2014)
The Global Warrior Series
T h o m a s A . C o o k
Driving Risk and
Spend Out of the
Global Supply Chain
Boca Raton London New York
CRC Press is an imprint of the
Taylor & Francis Group, an informa business
A PRODUCTIV ITY PRESS BOOK
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Version Date: 20140721
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To my sister Ilene—courageous, caring, cool, with chutzpah!

Contents
Preface ...................................................................................................xv
About the Author. ...............................................................................xvii
Chapter 1 Overview of Risk and Spend Issues in the
Global Supply Chain ..........................................................1
Overview of Supply Chain Risk ................................................1
Economic ......................................................................................3
Political .........................................................................................6
Contractual and Legal ................................................................8
Relationship, Relationship, Relationship .............................8
Local Legal Counsel ...............................................................9
Case Study................................................................................9
Hiring Legal Support: Some Helpful Hints ......................10
International Contracts: Helpful Hints and
Best Practices .........................................................................11
Physical (Demographics) ..........................................................12
Physical Challenges of Global Trade ..................................13
Customer, Supplier, and Vendor ..............................................14
Foreign Distributors ..................................................................15
You Lose Control over Distribution and Sales Price
and Margins ..........................................................................15
You Cannot Control How They Represent You
in the Countries They Are Distributing To or In .............15
Repairs, Service Agreements, and
Warranty Handling May Not Be Adequate ......................16
Potential Issues with Intellectual Property Rights (IPR) ....18
Reexport Is a Potential Exposure .......................................18
Resell into the Gray Market Back in the United
States or Abroad ....................................................................19
Logistics ......................................................................................19
Leveraging Logistics Options .............................................22
Reduce Cost with Bonded Warehouses and
Foreign Trade Zones ........................................................22
Freight Forwarders and Custom House Brokers .........23
vii
viii • Contents
Managing Transportation Service Providers ...................24
Trade Compliance .....................................................................26
Trade Compliance Facilities Reviews ................................27
Financial ....................................................................................34
Financial Risks in Foreign Exchange ................................34
How to Export in Foreign Currencies .........................34
Best Practices to Reduce Risk .........................................35
Characteristics of a Foreign
Currency–Denominated Export Sale ............................35
FX Risk Management Options .......................................35
Methods of Payment in International Trade ....................37
Letters of Credit ...............................................................38
Documentary Collections...............................................38
Open Account ..................................................................38
Consignment ....................................................................39
Risks .......................................................................................39
Political Risks ...................................................................39
Currency Inconvertibility ..............................................40
Devaluation .......................................................................41
Incorrect Utilization of Currency and
Exchange Rates .................................................................41
Risk versus Insurance .....................................................42
Characteristics of Export Credit Insurance .................45
Overview of Spend...............................................................46
Managing Landed Costs ................................................46
Summary ....................................................................................50
Chapter 2 Special Need Supply Chains ............................................51
Industries with Special Needs .................................................51
Defense and Export Controlled Products ..............................52
Failure to Manage the Regulatory Process Proactively ....52
Failure to Train All Personnel in the Global Supply
Chain from Sales to Purchasing, Operations and
Logistics, Supply Chain, Legal, and Finance ....................53
Failure to Create a Compliant and Secure Logistics
Supply Chain ........................................................................54
Pharmaceuticals .........................................................................55
Chain of Custody ..................................................................55