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fall 24 > EXAM 2 global sourcing > Flashcards

EXAM 2 global sourcing Flashcards

1
Q

role of sourcing personnel

A
  • trade shows
  • collaboration
  • review past sales
  • forecast future demand
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2
Q

line review

A

ensures that proposed designs are both attractive and functional in their final garment form
- functionality
- producibility
- affordability

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3
Q

HTSUS

A

harmonized tariff schedule of the United States

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4
Q

HTSUS includes

A

product classification numbers, article descriptions, tariff rates, and special tariff programs
- textile sections: sections 11 & 12, focusing on apparel in 61 (knits) & 62 (wovens)

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5
Q

HTSUS classification system

A
  • 10 digit number for each product category
  • differentiates by gender (odd-men, even-women)
  • includes subheading for garment style, fiber content, and a statistical suffix
  • 3 digit quota category number
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6
Q

classification impact on duty rates

A

fiber content and origin affect duty rates

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7
Q

rules of origin

A
  • preferential: lower rates
  • non-preferential: standard rates
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8
Q

tariff cost reduction strategy

A

compare duty rates based on fiber content and origin to optimize sourcing costs

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9
Q

purpose of macro analysis

A

assess the feasability and potential risks of entering new countries for sourcing
- PEST analysis

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10
Q

PEST analysis

A
  • Political environment
  • Economic environment
  • Social environment
  • Technological environment
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11
Q

IPR

A

Intellectual Property Rights: Protects unique designs and brands from infringement in supplier countries

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12
Q

Patents

A

Protects unique processes and products

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13
Q

US Monitoring

A

Prevents counterfeit and pirated goods from entering thr country
- ICE: Immigration and Customs Enforcement
- CBP: Customs and Border Protection

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14
Q

Protectionism

A

Uses trade barriers to limit imports and support domestic production

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15
Q

Free Trade

A

Allows unrestricted exchange of goods between countries

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16
Q

Trade Barriers

A

Includes tariffs (tax on imports) and quotas (limit on import quantity)

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17
Q

Ad Valorum vs. Specific Tariffs

A

Ad Valorum: Based on product value percentage
Specific: Fixed fee per unit
Combination: Mix of the two

18
Q

Absolute quotas vs. Tariff-Rate quotas

A

Absolute: Fixed quantity limits
Tariff-Rate: Allows a certain quantity at a reduced rate for a limited period

19
Q

textile and apparel quotas were…

A

eliminated among WTO members in 2005

20
Q

FTA

A

Free Trade Agreement

21
Q

TPP

A

Trade Preference Programs: offer duty free treatment for specific products from eligable countries

22
Q

US TPPs

A
  • AGOA (African Growth & Opportunity Act)
  • CBTPA (Caribbean Basin Trade Partnership Act)
  • HOPE Act (duty free access for Hatian textile & apparel goods
23
Q

purpose of micro analysis

A

assess each factory’s strengths and weaknesses within a country to identify the best potential suppliers based on compliance, cost, and efficiency

24
Q

The 5 Rs

A
  • Right Product
    • Right Condition
    • Right Quality
    • Right Time
    • Right Price
25
Q

C-TPAT

A

Customs-Trade Partnership Against Terrorism: voluntary U.S. Customs and Border Protection (CBP) program focused on securing the supply chain from terrorist threats.

26
Q

5 major components of direct costs

A
  • Fabric
    • Labor
    • Trims and embellishments
    • Transportation
    • Duties
27
Q

Ex Point of Origin

A

Supplier covers all costs up to the point of origin

28
Q

Free Along Side (FAS)

A

Supplier delivers goods alongside the vessel

29
Q

Free on Board (FOB)

A

Supplier responsible until goods are loaded onto the vessel.

30
Q

Cost and Freight (C&F)

A

Supplier covers costs up to the destination but not insurance.

31
Q

Cost, Insurance, and Freight (CIF)

A

Supplier includes insurance to the destination.

32
Q

Landed Duty Paid (LDP)

A

Supplier covers all costs to the destination, including duties

33
Q

Delivered Duty Paid (DDP)

A

Supplier covers all costs, including transport to the final destination.

34
Q

Indirect Costs Examples

A
  • Cost of samples, reworking products, and production monitoring.
    • Communication expenses (e.g., emails, calls).
    • Costs due to expedited shipments and potential reputational damage.
    • Indirect costs can be unpredictable, so sourcing agents often add 5-10% to budget for unexpected expenses.
35
Q

Purchase Order

A

official document issued by the buyer, specifying what the supplier will provide, at what price, and under what terms.
- includes a negotiated method of payment to ensure clear financial arrangements.

36
Q

components of a purchase order

A
  1. Product Identification: Unique id number for each product, often linked to a Universal Product Code (UPC) or barcode
  2. Product Descriptions: Details about fabrics, trims, embellishments, and their placement. Technical design sketches, size specifications, production techniques, and label/tag requirements.
  3. Quantity: Total quantity per contract, including size ratios and color choices.
  4. Price & Terms: Per unit and total amount, along with any specific pricing terms.
  5. Delivery Date & Method
  6. Other Terms: Quality assurance polieis, order cancellation policies, contingency plans (actions in case of contract violations)
37
Q

Types of Payment

A
  • Consignment Sales
  • Open Account
  • Documentary Collection (Documentary Draft)
  • Letter of Credit (L/C)
  • Cash in Advance
38
Q

Letter of Credit (L/C)

A

A common method where a bank issues a line of credit to the buyer.
* Provides security for both parties; the supplier is guaranteed payment upon shipping goods and providing documents.
* Requires a good credit rating for the buyer and involves complex coordination among banks.

39
Q

Cash in Advance

A

Buyer pays before shipment; used when the buyer has a poor credit rating or if there is instability in the buyer’s country.
* The supplier assumes no risk of nonpayment, making it the least risky option for them.

40
Q

Documentary Collection (Documentary Draft)

A

Involves the supplier’s bank (remitting bank) and the buyer’s bank (collecting bank). The buyer pays their bank to receive the necessary documents to clear the goods.

41
Q

Open Account

A

Payment term ranges from 30-120 days after receipt. Higher risk for the supplier; not a common method.

42
Q

Consignment Sales

A

Payment is made after the goods are sold to a third party. Low cost and risk for buyer; not commonly used.

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