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BAI2300 > Chapter 12: Logistics and Distribution > Flashcards

Chapter 12: Logistics and Distribution Flashcards

1
Q

Logistics: Your competitive advantage

A

• Logistics –” a group of services that is concerned with the effective movement of materials and information from their source to the point of consumption “
-Emergence of global supply chains makes has increased the importance of logistics

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2
Q

Logistics has two key functions

A
  1. Materials management

2. Physical distribution

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3
Q
  1. Materials management
A

Involves the movement of raw materials or components from domestic suppliers to the company’s production line and through the manufacturing process.

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4
Q
  1. Physical distribution
A

Involves the movement of goods or services from the manufacturing process to the customer.

• The distribution of products occupies the other end of the logistical chain
–For small shipper with limited time and resources, or a larger volume shipper with little knowledge should use a freight forwarder

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5
Q

Freight Fowarders have:

A
  • Detailed knowledge of distribution modes and methods used around the world
    • Can consolidate small shipments
    • May offer column-rate opportunities
    • Provides documentation and makes freight arrangements
    • Offers a specific logistical services such as crating, marking, and warehouse
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6
Q

The role of freight forwarders:

A 
• Moving the freight
	• Generate shipping documentation
	• Security
	• Timeliness
	• Cost effectiveness
	• Work closely with customs brokers
Can be a source of competitive advantage
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7
Q

The role of customs brokers:

A
  • Dealing with border regulations
    • Generate customs documentation
    • Ensure shipments conform to border requirements
    • Ensure taxes and duties are paid to government
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8
Q

Complexities of international trade make the use of freight forwarders more critical:

A
  • Language
    • Unfamiliar regulations and distribution networks
    • Currencies
    • Documentation
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9
Q

Modes of Transportation

A 
Ocean freight
Air freight
Rail transport
Road transport
Multi-modal
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10
Q

Modes of transportation depend on

A
  • Cost of shipping
    • Transportation time required
    • Importer’s preferences
    • Competitor’s price
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11
Q

Air freight

A
  • Fast delivery, greater security and lower insurance costs because if is in transit for a shorter period of time
    • More expensive to sip products.
    • Some products have to be air freight because of time sensitivity (perishable nature)
    • Small shipments in special containers made specifically for different models of aircraft.
    • Charged by the weight of the dimensions
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12
Q

Rail transport

A
  • Offers relatively fast shipment of land at lower costs than trucks
    • High volume of product
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13
Q

Road transport

A

Trucks are involved in one way or another in nearly every movement of goods between suppliers and customers.

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14
Q

Multi-modal

A

Mix of two of more

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15
Q

Ocean freight

A

• Three types of ocean carriers
○ Conference carriers–> primarily carry manufactured products and charge standardized rates.
○ Independent shippers–> have lower rates, service the major routes regularly and accept reservations on a first-come , first-serve basis
○ Tramp vessels–> offer lowest rates but do not offer regular service because they go wherever they are hired to carry freight on a “spot” basis.
• Shipped with steel containers

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16
Q

Advanced logistics

A

Advanced logistics refers to the new technologies that have dramatically affected how goods are handled as they are transferred from one leg of their journey to another in distribution centers and other transportation modes.

  • Objectives:
    • Shorten lead times
    • Minimize inventory
    • Cut costs
    • Maximize efficiency and productivity
  • Means of attaining objectives:
    • Sophisticated software
    • Computerized conveyor systems
    • Automated warehousing operations
    • Electronic scanning of bar-coded packages
17
Q

Incoterms: International Commercial Terms

A
  • Purpose:
    • Clearly define the rights and obligations of each party involved in an international shipment
    • Simplify the logistics process
    • Minimize misunderstandings between importers and exporters

• Means:

* 11 acronyms to define various shipping terms and arrangements between exporter and importer
* Assign responsibilities, costs and risks between the exporter and the importer
* Risk, ownership, and responsibility for payment may transfer at different points
18
Q

11 rules - two distinct classes:

A 
RULES FOR ANY MODE OR MODES OF TRANSPORT
	• EXW EX WORKS
FCA FREE CARRIER
CPT CARRIAGE PAID TO
CIP CARRIAGE AND INSURANCE PAID TO
DAT DELIVERED AT TERMINAL
DAP DELIVERED AT PLACE
DDP DELIVERED DUTY PAID
RULES FOR SEA AND INLAND WATERWAY TRANSPORT
	• FAS FREE ALONGSIDE SHIP
FOB FREE ON BOARD
CFR COST AND FREIGHT
CIF COST INSURANCE AND FREIGHT
19
Q

EXW–>

A

EX WORKS
seller handles product until they are ready to ship it out of factory, buyer has to arrange for transportation and the loading of the product onto the boat

20
Q

FOB–>

A

freight on board–> sellers responsibility stops as soon as the product is on the boat

21
Q

CIF

A

Cost Insurance and Freight–> sellers responsibility ends when the shipment is received by the buyer at the dock, the unloading of the product is the buyers responsibility

22
Q

DDP-

A

delivered and duty paid – sell is responsible for everything until there is a confirmation of receipt .

23
Q

Exportation documentation

A

• Documents serve a number of purposes:
• Communicating information about the buyer, seller and the products being shipped to the many parties involved in and regulating the movement.
–Countries have their own documentation requirements (some are universal)

24
Q

commonly used exportation documents

A
  • -commercial: Invoice
  • -Financial: Letter of Credit (L/c)
  • -Shipping: Bill of Lading (B/L)
    • Regulatory “ Certificate of Origin
  • -Health& Safety: Dangerous Goods Certificate
25
Q

–commercial: Invoice

A

Identify supplier and customer, value of transaction, duty and tax information

26
Q

–Financial: Letter of Credit (L/c)

A

Banking information, release funds to supplier at appropriate time

27
Q

–Shipping: Bill of Lading (B/L)

A

Identify supplier, contents, destination, transportation particulars

28
Q

– Regulatory “ Certificate of Origin

A

Ensure shipment is in compliance with appropriate trade rules

29
Q

–Health& Safety: Dangerous Goods Certificate

A

Ensure dangerous shipment is authorized

30
Q

Health and safety: Product compliance

A

products must conform to regulations designed to ensure that when used, they do not harm consumers, property or the environment.

31
Q

Health and safety:Packaging:

A
  • Exported without damage to the integrity and quality of the goods
    • Transported without damaging or harming people, other goods or the environment
    • Transported at minimal cost
32
Q

Health and safety: Labelling:

A 
• Language
	• Best-before dates
	• Safety information
	• Format
	• Information on the product itself or the packaging in which is is sold
		○ Two types
			§ Required by law
			§ Provided by manufacturer
33
Q

Security: mitigating risks: Threats to the cargo:

A
  • Damage from mishandling
    • Damage caused by water, temperature, or contamination
    • Theft
34
Q

Security: mitigating risks: Threats from the cargo:

A

• Leak or escape of dangerous materials

-Terrorism

BAI2300 (12 decks)

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