Mastering Purchasing Management for Inbound Supply Chains

Thomas A. Cook

CRC Press
Taylor & Francis Croup Boca Raton London New York CRC Press is an imprint of the Taylor St Francis Croup, an informa business

Contents
Prologue Acronyms 1 Purchasing Management 101 What Is Purchasing Management? How Does Purchasing Management Work? Purchasing Management and Corporate Governance What Makes Purchasing Managers Effective? Know What the Needs Are of the Corporation Now and into the Future Know What the Options Are in Fulfilling These Needs Know How to Obtain the Best Deal to Fulfill These Needs Know How to Maintain These Deals for the Long Term Additional Best Practices in Purchasing Management 101 Master Negotiation Skills Foreign Purchasing Management 101 Why Is Foreign Purchasing Different from Domestic Purchasing? Distances Involved Demographics and Infrastructure Language Culture Politics In-Country Risks Receivable Exposure Currency Risk Insurance Risks Political Risks Legal Differences Logistics and Supply Chain Dependence on Providers xiii xv 1 1 2 2 3 3 3 4 4 5 5 9 9 10 10 11 11 11 11 12 12 12 13 13 13 14

VII

viii Contents
Customs (Domestic and International) 14 Regulatory Affairs 14 Access to Qualified Personnel 15 Travel Costs 15 Sarbanes-Oxley 15 Develop Resources 15 Magazines 15 Key International and Supply Chain Web Sites 16 Risk Management in the Global Supply Chain and Foreign Purchasing ...22 Summary 23 Import Logistics and Landed Cost Modeling Logistics Management Hire the Very Best Inbound Logistics Provider Know Your True Landed Costs Import Landed Cost Formula Control Lead Times Control the Most Favorable INCOTERMS of Purchase Exercise Due Diligence, Reasonable Care, and Supervision and Control over the Inbound Process Case Study in the Landed Costs in the Import Supply Chain Options in Reducing Landed Costs Import Compliance Management Import Management Overview Inbound Supply Chains Have Logistics Costs Escalate Detail to Documentation Was Much More Critical Purchasing Managers Had to Learn New Skill Sets and Establish SOPs in Areas Not Previously Prioritized The Air Carriers Suffered Greatly Financial Consequences to Importers and Global Supply Chain Participants Supply Chain Security and Compliance Management Becomes a New Corporate Concern Reasonable Care Supervision and Control Ultimate Consignee Powers of Attorney Due Diligence Record Keeping Documentation (Invoice) Requirements Methods of Storage of Records 25 25 25 26 26 27 27 31 31 33 35 35 40 41 42 42 43 43 45 46 46 47 47 48 48 49

Contents
Assists Drawback Necessary Drawback Documentary Requirements HTS Classification Imported Product/Origin Markings Valuation Duties and Taxes ISF (10+2) Importer Security Filing 5 Customs Bonded Warehouses What Is a Customs Bonded Warehouse? Types of Customs Bonded Warehouses Advantages of Using a Bonded Warehouse Merchandise: Entry, Storage, Treatment How to Establish a Customs Bonded Warehouse Application Other Requirements Bonds Required Where Are Customs Offices Located? Foreign Trade Zones What Is a Foreign Trade Zone? Why Were Foreign Trade Zones Established? Advantages of Using Foreign Trade Zones Role of the Foreign Trade Zones Board Staff Role of the U.S. Customs Service Role of the Port Director Frequently Asked Questions to CBP What Are the Types of Foreign Trade Zones? What May Be Placed in an FTZ? What May Be Done in an FTZ? What May Not Be Done in an FTZ? How Is Merchandise Admitted into a Zone? Customs Form 214 Application Direct Delivery What Documents Are Needed for Admission? How Is Merchandise Removed from a Zone for U.S. Consumption? What Are the Four Types of Zone Status? Articles of Mixed Status Where Is Additional Information Available? FTZs: Big-Time Competitive Advantage: An Overview

ix
50 51 52 52 53 53 53 54 57 57 58 59 59 60 60 60 60 61 63 63 63 64 65 65 66 66 66 66 67 67 68 68 69 69 70 70 71 71 71

Contents

Choosing Providers Best Practices Choosing Correctly Determine Your Needs Know Your Options Develop an RFQ/RFP Obtain Referrals Agree to Service Parameters First, Then Price Set a Review Period, before Long-Term Agreements Agree to Stewardship Reporting Periodically Test Your Options Focus on Technology Capabilities View Added-Value Benefits Partnership Mentality Stewardship Reports from Freight Forwarders: An Excellent Management Tool Organizing the Stewardship Report The Process of Selecting Freight Forwarders, Customhouse Brokers, and Other Service Providers Identify Your Expectations, Parameters, Needs, and Service Requirements Interview Potential Candidates Issue the Proposal Outline (RFP/RFQ) Set Deadlines for Responsiveness Eliminate the Peripheral Candidates and Bring the Selection Group from Eight to Ten Persons to Two or Three Meet Again Ask for Pricing and Final Revised Proposals Make the Selection: Set a Time for Testing the Relationship, before Making a Longer-Term Agreement Structure a Review Process Summary China and India What Is the HTCG? Successful Best Practices for Purchasing from China, India, and Other Emerging Countries What Purchasing Managers Need to Know about Exporting Department of Commerce (DOC)/Bureau of Industry and Security (BIS) U.S. Principal Party in Interest (USPPI) Export Licensing Denied Parties Screening

73 73 74 74 75 75 75 75 76 76 76 76 76 77 78 78 79 79 79 79 79 80 80 80 80 80 81 82 83 85 88 88 88 90

Contents
Deemed Exports Antiboycott Compliance Department of Treasury/Office of Foreign Asset Controls (OFAC) Department of State (DOS) Managing TSA Regulations within a Logistics Organization Why Pay Attention? Audits Concluding Remarks Glossary. Appendix A Appendix B Appendix C Appendix D Index About the Author

xi
91 92 92 93 95 95 96 97 99 107 159 303 363 389 401