Subject INTERNATIONAL LOGISTICS AND GLOBAL SCM

Teacher Sir Saheer Ali

Quiz 2
Name Sohail Wahab
Roll # SP21 MSEE 0007

Question 1: Briefly describe the factors which are important for Asset Management in the supply
chain?

Asset Management refers to “a systematic approach and a coordinated activity of an organization to

realize value from assets to achieve organizational objectives”.
There is a separate issue of ISO 55000 for Assets Management which provides an overview of asset
management, its principles and terminology, and the expected benefits from adopting asset
management.

Following are the factors which are important for Asset Management in Supply Chain
1. Enhances transparency in supply chain processes, decreases inventory write-offs and lowers
inventory holding costs.
2. Effective inventory management practices enable organizations to analyze product
requirements and prevent shortages.
3. It increases productivity by automating data entry tasks and eliminating human errors.
4. Asset management enables the organization to trace the products accurately in different
locations.
5. Brings more efficiency to the supply chain operations by enabling businesses to analyze the
assets closely.
6. Businesses can optimize their operations including planning, resourcing, and implementation.

Question 2: Explain the factors which drives Global supply chain management?

The Supply Chain Management is treated as strategic part of a company. Effective check and control on
entire supply chain are critical to success of the company performance.

To define the most important key factors within International Supply Chain Management means a
deeply understanding of both Supply Chain’ s components, procedures, workflow, processes and by
analyzing its elements: Plan, Source, Make, Deliver, Return, Enable.

Following are the key factor which drives the Global Supply Chain Management (GSCM);

Digitalization
In my opinion “Digitalization” is one of the most important key factor in GSCM.
Technology can be used to map a business’s supply chain more accurately, at all levels and beyond. An
accurate and in-depth supply chain map can more clearly identify riskier points along the chain, allowing
businesses to mitigate that risk and make their chain more reliable.
For example, quick access to sales information and predictions could allow suppliers to more accurately
determine the amount of stock that is needed.

Localization and ‘Nearshoring’

Localization and Nearshoring is one of the important factor in GSCM. It means using most of the local
materials in production and material which cannot be sourced locally it can be easily arranged from
another country, as per requirement.
Nearshoring means relying on suppliers that are geographically closer to production facilities to reduce
transport costs and time, improve product quality and reduce risk. Sometimes nearshoring is a better or
more realistic alternative to localization, as some products may use materials that cannot be sourced
locally.

Diversification of suppliers:
This means the importance of having multiple sources of supply instead of relying on Single Source.
Diversification together with geographical position can be advantageous in trade arraignment that
promotes export and a company can serve as Hub in GSCM.

Strategic partnerships
Partnering with suppliers of key raw materials can increase visibility and a business’s control of their
supply chain.

Monitoring free trade agreements

Supply chain professionals should keep abreast of free trade agreements and what they mean for their
respective supply chains.

Government initiatives
Government can play a role in facilitating smooth trade and putting in place temporary supportive
measures to help businesses struggling with supply chain disruption. For example, subsidies
Electricity/Fuel rates, relaxation in Taxes, helping in Custom Clearances etc. for exporting Industries

Question 3: Does Lean Supply chain workforce is important? Why do organizations implement a
lean supply workforce in their organization?

In simple words Lean Supply Chain Workforce is a method for making a manufacturing process more
efficient i.e. Better, Cheaper & Faster. In today’s customer-driven supply chain management, the
organizations are compelled to implement a Lean to workforce management.

Combining the challenges of today’s pull economy with the complexities of global supply chains requires
a new look at how to drive cost and time out of supply chain operations. Using Lean principles offers a
viable method for addressing this challenge for an organization. Lean principles can also be applied to
workforce management i.e. with the right number of workers, with the right skill sets for the job at hand,
working safely and productively without errors. It utilizes performance monitoring system to uncover
training issues and other barriers to success, as well as to identify and reduce non-productive and
indirect time.
Those organizations which employs a Lean Workforce creates a Win-Win situation where workers are self-
motivated and self-accountable, supervisors become coaches, and management has a more productive
work

Question 4: Explain the term Trade Finance? What are the factors required while negotiating the
contract?

There are several explanation of the term Trade Finance, in simple words, it is;

1. An exporter requires an importer to prepay for goods shipped by a secure medium/means.

2. The importer wants to reduce risk by asking the exporter to document that the goods have been
shipped.
3. The importer’s bank assists by providing a letter of credit to the exporter (or the exporter's bank)
providing for payment upon presentation of certain documents, such as a bill of lading.

There are some important Critical Factors while negotiating and entering into a Contract that are;

1. The Details of the Trading Company: The details of the trading companies before entering into a
legal contract, that must be accurate. From the registered address to the nature of their business,
a simple background verification will render the required information and save the organization
from getting duped.
2. Venue for Conflict Resolution: it is imperative to select a neutral venue for conflict resolution other
than the country of importer/exporter.
3. Currency & Mod of of Payment: Agreeing on Common currency for payments with fixed or
fluctuating value e.g. payment in USD, Euros, Yuan etc. Equally important to finalize the mode of
payment i.e. Cash, %age of Advance Payment, LC, Wire transfer, Escrow Services etc.
4. The Law of the Land: The governing laws vary with the country, and sometimes the county too.
For example, employing certain percentage of local employees, religious/cultural holidays
(Ramadhan timings) etc. It is essential to comply with the laws and regulations as stated by the
jurisdiction and evaluate the contract documents with legal support to avoid inconveniences.

5. The Terms on Settling a Conflict: Conflicts are a part of the business. When differences arise
between the contract partners, oftentimes it requires legal intervention for it to be settled
amicably. However, it is better to set down rules regarding dispute resolution.

6. Penalty for Non-Compliance: Non-compliance [Such as penalties for Non Performance, delay in
delivery, etc.] with the contract terms is a wide-spread phenomenon, it is essential for the
involving parties to determine the penalties and the number of notifications given prior to
invoking the penalty.

Question 5: Define the following:

As per latest edition of INCOTERMS 2022, following are the definition of each;

1) FCA: Free Carrier, the seller of the goods is required to deliver thegoods to the carrier,
 seaport, airport, terminal, warehouse, or another person nominated by the buyer at the
seller’s premises, or another named place. The transportation cost is responsibility of seller
until goods received by carrier. Once goods are delivery, the responsibility will be transferred
to buyer from that point onwards. Insurance or goods risk is negotiable.
2) EX-Work: a seller is responsible for the manufacturing of products andmaking that product
available at a specific location with export quality packaging. Buyer is responsible for the
arrangement of transportation of production, exporting, shipping and importing the cargo
to their desired destination.
3) DAP: Delivered At Place, the seller is responsible for delivering goods to a named location I.e.
Export packing, loading in origin, export taxes, custom clearance,terminal handling, other
documentations charges such as BL, COO etc. and make available for unloading. This means
unloading in the responsibility of the buyer. Risk of damage and losses can be negotiable.
4) FAS: Free Alongside, the seller must arrange for the goods to bedelivered when the goods
are placed alongside the nominated by the buyer at the named port of shipment. Purchased
goods to be delivered next to a vessel in the port to make this ready in the waiting ship.
Seller is responsible for the packing, loading, custom clearing and terminal handling and
ensuring that the goods are already cleared for export. Insurance or goods risk is negotiable.
5) LC: A letter of credit, or a credit letter, is a letter from a bank guaranteeing that a buyer’s
payment to a seller will be received on time and for the correct amount. If the buyer is unable
tomake a payment on the purchase, the bank will be required to cover the full or remaining
amount of the purchase.