Driving Risk and Spend Out of the Global Supply Chain  book cover
1st Edition

Driving Risk and Spend Out of the Global Supply Chain

ISBN 9781482226089
Published September 18, 2014 by CRC Press
366 Pages 98 B/W Illustrations

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Book Description

Driving Risk and Spend Out of the Global Supply Chain provides a complete picture of the various risks multinational firms face when they operate overseas and engage in foreign purchasing and sales, import and export trade, and global logistics. Thomas A. Cook, a subject matter expert on global trade management, supplies readers with step-by-step guidance on how to develop an airtight global risk strategy.

This second book in The Global Warrior Series presents a blueprint and operational strategy for executives to consider when charged with the responsibility of reducing risks and costs in their global supply chains. The book reviews a number of key factors, including:

  • The key issues that impact risk and spend in all supply chains
  • How to develop effective risk management strategies, tactics, and action plans
  • Managing requests for proposal (RFPs) to achieve desired results with minimal compromise
  • Risk versus insurance and cargo loss control
  • Business model development for a cost reduction program
  • Maintaining best practices while reducing risks and costs
  • Sarbanes–Oxley issues for public companies
  • How to achieve world-class status in international trade

The book examines all the areas where spend can be reduced and details a specific strategy to help readers reduce spend without compromising values. Providing the most comprehensive and up-to-date compilation of material and tactics currently available for international business professionals, the text supplies a clear understanding of the steps readers must take before taking any action to reduce risk and spend in their import, export, and domestic supply chain operations.

Table of Contents

Overview of Risk and Spend Issues in the Global Supply Chain
Overview of Supply Chain Risk
Contractual and Legal
     Relationship, Relationship, Relationship
     Local Legal Counsel
     Case Study
     Hiring Legal Support: Some Helpful Hints
     International Contracts: Helpful Hints and Best Practices
Physical (Demographics)
     Physical Challenges of Global Trade
Customer, Supplier, and Vendor
Foreign Distributors
     You Lose Control over Distribution and Sales Price and Margins
     You Cannot Control How They Represent You in the Countries They Are Distributing To or In
     Repairs, Service Agreements, and Warranty Handling May Not Be Adequate
     Potential Issues with Intellectual Property Rights (IPR)
     Reexport Is a Potential Exposure
     Resell into the Gray Market Back in the United States or Abroad
     Leveraging Logistics Options
          Reduce Cost with Bonded Warehouses and Foreign Trade Zones
          Freight Forwarders and Custom House Brokers Managing Transportation Service Providers
Trade Compliance
     Trade Compliance Facilities Reviews
     Financial Risks in Foreign Exchange
          How to Export in Foreign Currencies
          Best Practices to Reduce Risk
          Characteristics of a Foreign Currency–Denominated Export Sale
          FX Risk Management Options
Methods of Payment in International Trade
     Letters of Credit
     Documentary Collections
     Open Account
     Political Risks
     Currency Inconvertibility
     Incorrect Utilization of Currency and Exchange Rates
     Risk versus Insurance
     Characteristics of Export Credit Insurance
Overview of Spend
     Managing Landed Costs

Special Need Supply Chains

Industries with Special Needs
Defense and Export Controlled Products
     Failure to Manage the Regulatory Process Proactively
     Failure to Train All Personnel in the Global Supply Chain from Sales to Purchasing, Operations and Logistics, Supply Chain, Legal, and Finance
     Failure to Create a Compliant and Secure Logistics Supply Chain
     Chain of Custody
     FDA Compliance
Communications and Broadcast
     Carnets Can Reduce Risk and Cost
     Carnet Utilization
Relief Agencies
Food Products
     Case Study
Project Business
Clothing and Retail

Developing a Risk Management Strategy

Creating the Necessary Leadership for Risk Management
Assigning Ownership
Building Internal Teams to Tackle Risk Management as a Corporate Responsibility for Everyone
Assessment and Benchmarking
Creating Action Plans
Strategies in Risk Management
Tactics in Risk Management

Summary of Insurance Purchasing for Global Supply Chains

Outline of the Risks in Managing Global Supply Chains
Marine Cargo
     Geographic Areas Covered
     Named Insured
     Modes of Transit Covered
     Limits of Liability
     Underwriting Terms
     Special Terms
     War, SRCC Coverage
     Effective Dates
     Consolidation and Deconsolidation
     Domestic Transit
     Interruptions in Transit
          Loss of Market
          Business Interruption or Consequential Damages
          War, SRCC
          Inadequate Packing
Workers’ Compensation
     Key Risk Management Initiatives in Global Trade
          Players in Global Supply Chain Risk Management, Brokerage, and Underwriting
     Key Initiatives
Disaster Management
     Types of Disasters
     Disaster Prevention
     Disaster Preparedness
     Disaster Relief
     Disaster Recovery
     Global Supply Chain Disaster Management

Mastering Cargo Loss Control

How Do Loss and Damage Occur in International Shipping?
Best Practices: A Company’s Strategy to Combat Loss and Damage in Global Trade
Other Areas That Could Have an Impact on Cargo Outturns

Developing a Cost Reduction Business Model: Creative Leveraging and Aggressive Management Strategies
Change Leadership
Lead by Example
Case Study and Example
     The Wrong Way
     The Right Way
Utilization of Consultants
Areas in Which Spend and Risk Can Be Dealt with Aggressively
Dealing with Change Management Issues
Moving Theory into Results

World Class, Best Practices, and SOX: While Reducing Risk and Spend
Typical Global Supply Chain Scenario
     Move Freight in a Timely Manner
     Move Freight Safely
     Move Freight Cost Effectively
     Move Freight Securely and Compliantly
Senior Management Leadership
Experienced Management with Global Trade Experience
Utilization of Technology
SWOT Analysis Mindset
Alignment with Quality Service Providers, Advisors, Channel Partners, and Professional Service Organizations
Partner Mentality with Channel Partners
Assessment and Benchmarking
Industry and Trade Organization Participation
International Travel and Relationship Building
Connectivity in the Organization with a Global Supply Chain
Investing in Skill Set Training
Bringing International Culture into the Organization
Leveraging Supply Chain Options—FTZ
Keeping International Travel and Entertainment Costs in Line

Managing RFPs and RFQs: Maximizing Results
What Are RFPs and RFQs?
Step 1: Define Stakeholders
Step 2: Mine
Step 3: Assess Needs
Step 4: Define Deliverables (Parameters May Be Required)
Step 5: Assign a Committee Approach (Buy-In)
Step 6: Create Basic RFP Outline
Step 7: Identify Potential Partners Who Will Be Invited In to Bid on the RFP
Step 8: Conduct Preliminary Meetings with RFP Participants
Step 9: Establish Metrics or Measurement System for the RFP
Step 10: Send Out Basic RFP Outline—No Pricing Involved
Step 11: Set Dates for Second Meetings with RFP Participants
Step 12: Move Participants List to a Manageable Amount
Step 13: Bring Price into the Equation
Step 14: Move Participants List to One to Three Options
Step 15: Set Full-Blown "Dog and Pony" Show
Step 16: Make Selection, Implementation Strategy, and Follow-Up Evaluation
     Implementation Strategy
     Review Meetings
          The RFP Committee

Spend Issues: Global Operations, Trade Compliance, and Regulatory Management
Trade Compliance Manager
Senior Management Support
Point Person and Committee
Assessment and Benchmarking

Import and Export Trade Compliance: Risk and Spend Concerns
Driving Risk and Spend Out of the Global Supply
Chain—Import Perspective
     Understanding Incoterms® Rules
     Ultimate Consignee
     Managing the Import Process
     Purchase Order Management
     Import Invoices
     Import Compliance
     Reasonable Care
          General Questions for All Transactions
          Questions for Merchandise Description and Tariff Classification
Centers of Excellence
     Managing the Customs Broker Relationship
     Harmonized Tariff Classification
     Country of Origin
     Importer Security Filing
     Record Keeping
Driving Risk and Spend Out of the Global Supply Chain—Export Perspective
     Export Compliance
     Due Diligence
     Export Licensing and License Exceptions
          Best Practices against Diversion
     Foreign Trade Regulations
     Restrictive Trade Practices
          Examples of Boycott Requests
     Export Record Keeping
     Managing Freight Forwarders
     International Traffic in Arms (ITAR) Regulations
     Export Control Reform 
     Free Trade Agreements
          U.S.–Australia Free Trade Agreement
          U.S.–Bahrain Free Trade Agreement
          CAFTA–DR–U.S.–Peru Free Trade Agreement
          U.S.–Chile Free Trade Agreement
          U.S.–Colombia Trade Promotion Agreement
          U.S.–Israel Free Trade Agreement
          U.S.–Jordan Free Trade Agreement
          U.S.–Korea Free Trade Agreement (KORUS)
          U.S.–Morocco Free Trade Agreement
          U.S.–Oman Free Trade Agreement
          NAFTA (North American Free Trade Agreement)
          U.S.–Panama Trade Promotion Agreement
          U.S.–Peru Trade Promotion Agreement
          U.S.–Singapore Free Trade Agreement
Export Red Flags
     Export Documentation
Effective Compliance Management





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Thomas A. Cook has been involved in international business and global supply chain management for more than 30 years. He is a graduate of the NYS Merchant Marine Academy with a BS and MS in transportation and business management. He has spent more than six years in the U. S. Naval Reserve and the U. S. Merchant Marines. He founded American River International, a premiere logistics and supply chain management consulting company, in 1982. Last year he stepped down from his position as CEO and managing director and sold his company to existing shareholders.

Cook is a subject matter expert on global trade management, and has published more than 12 books and 300 articles about international business, supply chain management, RFP, negotiation, and world business development. He has sat or currently sits on numerous boards and advisory groups that assist corporations, associations, and industry trade groups in the best practices of running their businesses. He sits or has sat on the board of, or is involved in corporate training with, the following companies: American Management Association (AMA), American Pet Products Association (APPA), Council of Supply Chain Management Professionals (CSCMP), Institute for Supply Management (ISM), and National Association of Purchasing Managers (NAPM), to name a few.

Cook has experience in a number of subjects concerned with general management, including sales, negotiations, customer service, operations, supply chain, logistics, RFP management, business development, and training. He is cofounder of the World Academy, which equips international business executives and operational personnel in supply chain with the skills necessary to operate successfully in global trade.

Currently, Cook is managing director of Blue Tiger International (www.bluetigerintl.com), a management consulting organization focused on international purchasing and RFP enhancements. He is also working on an eight book series entitled The Global Warrior (Taylor & Francis/ CRC Press). Each book gives strategies on the skill sets necessary for the corporate executive of the future to compete in global trade.