Questions from Lecture ends.

Question 1

Driving Forces of Globalization Process?

Answer 1

Global market forces
Technology forces
Political Macroeconomic forces
Global cost forces

Question 2

How can we conceptualize the design of global supply chain? What is the relationship between global SC configuration and requirements for international logistics?

Answer 2

The SC can be conceptualized by 3 main stages:

1. Source - Suppliers, and where they are located
2. Make - Plants, Where and how they operate
3. Deliver - Markets, where and how want the customers have the products

Question 3

What are the main implications on SC configuration of increasing economies of scale, reducing transportation costs, increasing trade barriers.

Answer 3

Larger factories bigger batches.
Easier to operate over large areas
Hard import and export goods when the barriers are larger.

Question 4

How could regional trade agreements (trade blocs) affect the SC configuration.

Answer 4

Increased amount of plants and trade in the region. For example by benefits when importing goods etc.

Question 5

Global company, what are the pros and cons of having plants in only US rather than US and overseas plants.

Answer 5

Benefits of Centralized, no need to take big country and political risks. But also harder to reach other markets. worse service levels. Also expensive labor in US. For a low cost product this can be problematic in comparison to locate plants in Asia. Also depends on where the sourcing takes place and where the markets are located.

Question 6

What are the Main application fields of RORO and LOLO services.

Answer 6

Short haul is often RORO since the ships are not as densely loaded as the LOLO. LOLO is good if you want to utilize the space/volume to its max. Hence, LOLO is more common on long haul sea routes.

Question 7

What are the main criteria to choose container size?

Answer 7

FCL is good since no re-loading will be needed for the certain container. Cost efficient, lower risk of damage, shorter transit time.

FCL may increase the need for increased inventory size. Since FCL may require fewer and more seldom deliveries.

LCL may also allow shipment closer to the end destination. Not possible to drop off a container at the store in the city center for example.

Question 8

China to EU shipments, what are the options?

Answer 8

Sea-air for
Sea
Train

Question 9

Is the statement true? “forwarders are only specialized in cross-border shipments”

Answer 9

No freight forwarders are handling the full logistics chain for their clients. This includes cross border shipments but also many other activities. Such as booking of liners, customer clearance, domestic transports etc. They are the spider in the logistics network web.

Question 10

What is the main trade-off in inspections by customs?

Answer 10

The speed and safety. The faster the process it is, less safety it is for the port authorities.

Technology may enhance this.

Question 11

According to shippers perspective, how does customs affect logistics?

Answer 11

This is a point of uncertainty and can hurt the flows if the port is not fast in their customer clearance procedures.

The choice of port is therefore crucial to the flows of goods. Depending on relations with trade blocs etc the procedures may be enhanced for the shipper.

Question 12

Bonded warehouse?

Answer 12

This is a warehouse often located in a Free trade zone. This gives the opportunity for duty deferral. Assembly and so on. Economic enhancements may be obtained.

Question 13

In your opinion, is AEO certification more appropriate for import or export processes?

Answer 13

It depends on who is taking care of the shipping, think Incoterms. It is beneficial for both importer and exporter since it simples the customer clearance procedures.

Question 14

What are the Incoterms? Do the incoterms involve freight forwarders?

Answer 14

It does not involve freight forwarders directly but the freight forwarders must be aware on what Incoterms that may be chosen. The freight forwarders work as agents against sellers and buyers and hence a close communication is often necessary to assist the clients of theirs.

Question 15

What are the main criteria for choosing Incoterms rule? In your opinion, what could be the best Incoterms rule for a small manufacturer? And for a multinational company?

Answer 15

Small manufacturer selling to a big multinational company may rather rely on the big players network since this would benefit the larger network. Since the shipping procedures are often very detailed and time consuming small companies often don’t want to spend time on this.

Question 16

In case of a relationship with a not reliable supplier, what incotermsrule would you use? And in case of a reliable supplier?

Answer 16

Unreliable supplier EX-works are useful. This since i can manage the shipment on my own and doesn’t need to bother about the bad reliability. Given that i know how to manage the flows myself.

Reliable, meet somewhere half way. Where the Incoterm that suits both parties can apply.

Question 17

What are the risks of EX-Works in selling products?

Answer 17

Lack of expertise, this can lead to hurting my company since me as a buyer might over estimate my own proficiency.

Seller has minimal visibility of the operations which makes him a bit confused.

Low cost for the seller. Buyer may apply additional costs over to the supplier.

Question 18

What are the main pros and cons of the trade channel activities?

Answer 18

The decision of your trade channel decides how much you are involved in overseas operations. If you are to open up a subsidiary or a joint venture you expect to operate in the country for a longer time span and invests in future opportunities. While if you are unaware on how much you will sell abroad it can be useful to make use of agents or indirect services to sell your products abroad. Risk/profitability is to consider in other words.

Question 19

For a typical medium size Italian company, in your opinion, what would be the best option among different trade channels?

Answer 19

A joint-venture could be of interest for this type of business. Since the upfront investment is not as big as a sales subsidiary. That would be the riskier option, but it depends on the culture of the company.
For a company that is unaware, Agents or Licensing could be a good option to start smooth.

Question 20

How could SC configuration help in reducing the risk of parallel import?

Answer 20

Authorized Distribution networks, technological features such as tracking of goods and further legal actions that decrease parallel import simplicity.

Intellectual property protection.

Question 21

Why are trade and logistics channel design related to each other?

Answer 21

Since the trade channel decides how much products and the physical presence in the importing country this is of big importance. If the company does not have any physical sites nor legal status in the country the logistic procedures will be very much different.