Presentation on theme: "To: Students 1. Must be punctual (15 minutes rule)"— Presentation transcript:
1 To: Students 1. Must be punctual (15 minutes rule) 2. No telephone, drink & food during lecture3. Do not leave class without permission!Please go to toilet before the class starts.No rule without exception!
2 Evaluations Examination 60% Class performance 20% Class attendance 10% Papers 10%
3 How to proceed this class ? Reading assignment (text book)More discussionQuestions and answersPractical knowledgeCase studiesAttendance and participation to the class– get high point
4 World Population is around 7billion. Topics 1 : BOP BusinessWorld Population is around 7billion.There are 4 billion people is on BOP which is less than US$3000 a year.
5 Base of Pyramid Business Current situation of BOP population world population 7 billionAnnual income per capita4 billion<$3000
6 Background 11) Saturated market of developed countries 2) Size of population and population growth rate 3) Economic growth rate 4) Rate of younger generation 5) Aggressive acceptance of developed technologies etc.
7 EXAMPLE1) 1.6 billion 3rd world residents need glasses, but less than 5% have. 2) Governments are preoccupied with life threatening maladies and urban optical shops are inclined to sell high-end glasses. The failure of both Government & Market
10 SCOJO They started BOP business. Cost (producing & delivery) =$1 SCOJO is a famous reading glasses company in USA which is selling very fashionable & high-end reading glasses US$ 42~US$112.They started BOP business.Cost (producing & delivery) =$1Wholesale price =$2Retail price = $3
11 Back Ground 2 2) 1.6billion would need reading glasses. 1) In BOP, there are many types of job, which can not be sufficiently carried out if your sight is not enough.2) 1.6billion would need reading glasses.Especially, 95% of 35~80 years old population needs reading glasses.
12 Scheme Business SCOJO Local Entrepreneurs BOP (franchising) Training of local entrepreneurs in BOP marketSCOJOLocal EntrepreneursBOP
14 Prologue Now we are in a global society – one world. Economically and culturally, a world become more smaller than ever by media, IT (information technology) and transportation.WTO, ACEAN and FTA will integrate each market into one world market – no border.
15 Recent happenings 2. Technological advance 3. Globalization of trade 1. The growing power of retailers2. Technological advance3. Globalization of trade= International Trade
16 WTO News ReleaseFollowing the record-breaking 14.5% surge in the volume of exports in 2010 world trade growth should settle to a more modest 6.5% expansion in this would be higher than the 6.0% average yearly increase between 1990 and Global supply chains cause goods to cross national boundaries several times during the production process, which raises measured world trade flows compared to earlier decades.
17 Competition is not just in domestic market but also, in international market. The Logistics & SCM is a key for the success in international trade.
18 “Supply Chain Management” This is the reason why we must study“Logistics”&“Supply Chain Management”
19 Topics 2 World Logistics World Bank reported that world rank of “logistics” which is called“Logistics Performance Index”= LPI
20 Germany, Singapore and Sweden are the best 3 Germany, Singapore and Sweden are the best 3. Japan is 7th , USA 15th , China 27th and Thai 35th among 155 countries.WB said the credibility of logistics would be more important than price and cost in international trade.
21 International LPI Ranking 1 Germany Singapore Sweden Netherlands Luxembourg Switzerland Japan U K Belgium Norway 3.93
22 11 Ireland 3. 89 12 Finland 3. 89 13 Hong Kong 3. 88 14 Canada 3 11 Ireland Finland Hong Kong Canada USA Denmark France Australia Austria Taiwan 3.71
23 21 New Zealand 3. 65 22 Italy 3. 64 23 Korea, Rep. 3. 64 24 U A E 3 21 New Zealand Italy Korea, Rep U A E Spain Czech Republic China South Africa Malaysia 30 Poland 3.44
24 35 Thailand 3.29 31 Israel 3.41 32 Bahrain 3.37 33 Lebanon 3.34 34 Portugal 3.3435 Thailand 3.29
27 050456 International Logistics (& Supply Chain) Management Yoshio Maki, Visiting ProfessorMay September 2012AT KKU
28 Part 1. Concept of Logistics (& Supply Chain) 2) Supply Chain ManagementThis is very difficult to teach just Logistics.
29 1) What is Logistics?① Origin The word “Logistics” comes from the Greek logistiki , meaning accounting and financial organization. Logistics is considered to have originated in the military‘s need to supply themselves with arms, ammunition (powder, shot, shrapnel, bullets, cartridges and primers etc.) and rations (foods) as they moved from their base to a forward position. From Wikipedia
30 ② Definition by Council of Logistics Management Logistics is that part of the supply chain process that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services and relate information between the point of origin and the point of consumption in order to meet the customers’ requirements.
31 What is customer’s requirements? needs & wants Seller’s market Buyer’s marketAfter world war II, seller’s market was created because of mass-production.Products had to be marketed not just produced and sold.
32 Mass ProductionThe first “modern” mass-production system was Ford Type T assembly line (conveyer belt) at Highland Park Factory of Ford in 1914.Many factories followed this system and especially, during WWII, mass-production system was developed for the armament industry in USA.
33 Effective “marketing” converts needs to wants. Needs are things people must have to live—food, clothing, and shelter.Wants are things people would like to have but do not need in order to live.Effective “marketing” converts needs to wants.
34 2) Supply Chain ① Definition A supply chain is all activities associated with the flow and transformation of goods from the raw material through to end user as well as the associated information flow. Coordinating not only within organizations but across organizations as well.
35 Change to new ideasNCPDM（The National Council of Physical Distribution Management）was established in 1963.（NCPDM changed its name to CLM (Council of Logistics Management) in 1985.CLM changed its name to CSCMP（The Council of Supply Chain Management Professionals）in 2005.
36 SCM is wider concept than Logistics Logistics is essentially a planning orientation and framework that seeks to create a single plan for the flow of products and information through a business.
37 On the other hand, SCM (Supply Chain Management) builds upon this frame work and seeks to achieve linkage and co-ordination between the processes of other entities in the pipeline, i.e. suppliers and customers and the organization itself.
38 Thus, one goal of SCM might be to reduce or eliminate the buffers of inventory that exist between organizations in a chain through sharing information on demand and current stock.
39 Supply Chain Chart Goods information End user Parts supplier End user RetailerEnd userTransporterMaki FactoryWarehouseEnd userParts supplierSuppliersubassemblyEnd userWholesalerParts supplierinformationEnd User
40 Bullwhip EffectThe term "bullwhip effect" refers to the magnification of demand fluctuations as orders move up the supply chain.Improved forecasting techniques at any one level in the supply chain cannot eliminate the bullwhip effect and may worsen it if used improperly.Information flow and coordination of orders across the supply chain offer the only hope of taming the bullwhip effect.
41 Size of this preview: 800 × 600 pixels. Other resolutions: 320 × 240
44 My Business 1I am importing Bioniche IV Vitamin C around 170,000 vials a year. ①Ｃａｓｈ ｘ 170,000 vials = € 1,173,000 € 1,173,000 x 0.05 = € 58,650 =THB 2,316,000 ②Currency exchange gain (profit) ＪＰＹ１３５－ＪＰＹ９８＝ＪＰＹ３７ ＪＰＹ３７ x € 1,173,000 = JPY43,401,000 =THB 17,360,000
45 I am selling this product to around 300 registered Japanese medical doctors. Yearly Sales unit price JPY1,785 x 170,000 vials =JPY303,450,000=THB121,380,000 Cost €6.555 (CIF Tokyo) x 170,000 x JPY98 =JPY109,000,000 15%(import & delivery charge) + 5% tax=20% 109,000,000 x 1.2 = JPY 130,000,000 Gross profit (= Sales – Cost) 303,000,000 – 130,000,000 = JPY173,000,000=THB69,000,000
49 Part 2. Why Logistics & SCM ? 1) Economic impact of logisticsLogistics cost in GDP is increasing year by year but logistics as a percentage of GDP is decreasing year by year.Logistics cost is around 10% of GDP and one of the most important components in a country’s economy. Logistics also, play an important role in economic growth and development.
50 2) Competitive Advantage Logistics & SCM can provide a major source of competitive advantage.Successful companies either have a cost advantage or they have a value advantage, or combination of two.
51 ① Cost advantageNot just, production cost by economy of scale (achieving bigger sales volume and/or improving market share),Logistics & SCM can provide a multitude of ways to increase efficiency and productivity and hence contribute significantly to reduced unit cost.
52 ② Value advantageMarket have become more service-sensitive.Not just a product itself but also delivery service, after sales services, financial packages, technical support and etc.Customers are looking for reduced lead time, just-in-time delivery and value-added services.Logistics & SMC supports cost reduction & service enhancement.
53 ③ Customer satisfaction Logistics Also Plays a Critical Role in Customer Satisfaction.Many services organizations make the mistake of focusing the vast majority of their customer service and satisfaction activities on external issues, often to the exclusion of key internal issues such as inventory management and logistics.
54 However, these key internal issues can also play an important role in facilitating desired levels of customer service and satisfaction.A services organization should focus not only externally, at its direct customer interface and interaction, but also internally, at its global inventory management and logistics activities as well - especially as they might impact a multinational customer base.
55 3) The best example 1 Manufacturer Logistics started military supply system and the supply chain idea started from Toyota. Toyota is one of the biggest and the most profitable car manufacturers in the world. Toyota “Kanban” and “ JIT (Just in Time) system” is the one of the best examples of Supply Chain.
56 Partnership with each company is the key to success of the supply chain. They must disclose and share the necessary information each other. As a team, these companies to save cost, time and energy to achieve the target of the team.
57 What is Kan-ban? More than 20 years ago, Kanban System was developed , by Mr. Taiichi Ohno, a vice president of Toyota.Kanban scheduling systems operate like supermarkets. A small stock of every item sits in a dedicated location with a fixed space allocation.
58 A Kan-ban (看板） is a card containing all the information required to be done on a product at each stage along its path to completion and which parts are needed at subsequent processes.
59 Customers come to the store and visually select items Customers come to the store and visually select items. An electronic signal goes to the supermarket's regional warehouse detailing which items have sold. The warehouse prepares a daily replenishment of the exact items sold.
60 These cards are used to control work-in-progress , production, and inventory flow. A Kan-ban System allows a company to use Just-In-Time (J.I.T) Production and Ordering Systems that allow them to minimize their inventories while still satisfying customer demands.
61 A Kan-ban System consists of a set of these cards, with one being allocated for each part being manufactured, that travel between preceding and subsequent processes
62 The Best Example 2 Retailer One of the most advanced products distribution system in retail industry is 7-Eleven.We will study this company as a special study later.
63 4) Logistics & SCM contributes to an Economic Utility An economic utility is the satisfaction that a consumer receives by deciding to purchase a particular good or service from a specific manufacturer or supplier.The actual amount of satisfaction that is achieved can be compared to the ability of similar goods or services to provide a similar level of satisfaction or possible provide even greater benefits
64 ① Possession utility Additional consumer value created by transferring a product's ownership ② Form utility The value given to a product by virtue of the fact that the materials and components which comprise it have been combined to make the finished product.
65 ③Place utility The value given to a product by virtue of the fact that it is where it is wanted. ④ Time utility Enhancing a product's marketability by making it available at a convenient time.
66 5) Logistics activity① （Raw） Material ManagementRaw materials, component parts etc. brought from outside organizations (70% of defects from non-quality materials from outside organizations)
67 Just for your reference This is a presentation material for Pharmaceutical industries in India but very common for any industry.
68 MATERIAL MANAGEMENT DR.I.SELVARAJ, I.R.M.S By Sr.D.M.O (Selection Grade Officer) (on study leave),INDIAN RAILWAYS MEDICAL SERVICEB.Sc., M.B.B.S., D.P.H (Madras medical college, Recognized by MCI)., D.I.H., PGCH&FW (NIHFW, New Delhi)III rd year Post graduate student in M.D Community medicineDepartment of Community medicineSree Ramachandra Medical College,Porur,Chennai
69 DefinitionIt is concerned with planning, organizing and controlling the flow of materials from their initial purchase through internal operations to the service point through distribution.
70 AIM OF MATERIAL MANAGEMENT To get1. The Right quality2. Right quantity of supplies3. At the Right time4. At the Right place5. For the Right cost
71 PURPOSE OF MATERIAL MANAGEMENT To gain economy in purchasingTo satisfy the demand during period of replenishmentTo carry reserve stock to avoid stock outTo stabilize fluctuations in consumptionTo provide reasonable level of client services
72 Objective of material management PrimaryRight priceHigh turnoverLow procurement& storage costContinuity of supplyConsistency in qualityGood supplier relationsDevelopment of personnelGood information systemSecondaryForecastingInter-departmental harmonyProduct improvementStandardizationMake or buy decisionNew materials & productsFavorable reciprocal relationships
73 Economy in material management Containing the costsInstilling efficiency in all activities
74 Four basic needs of Material management To have adequate materials on hand when neededTo pay the lowest possible prices, consistent with quality and value requirement for purchases materialsTo minimize the inventory investmentTo operate efficiently
75 Basic principles of material management Effective management & supervisionIt depends on managerial functions ofPlanningOrganizingStaffingDirectingControllingReportingBudgeting2. Sound purchasing methods3.Skillful & hard poised negotiations4.Effective purchase system5.Should be simple6.Must not increase other costs7.Simple inventory control program
76 Elements of material management Demand estimationIdentify the needed itemsCalculate from the trends in Consumption during last 2 years.Review with resource constraints
77 Functional areas of material management 1. Purchasing2. Central service supply3. Central stores4. The print shops5. The pharmacy6. Dietary& Linen services
79 Objectives of procurement system Acquire needed supplies as inexpensively as possibleObtain high quality suppliesAssure prompt & dependable deliveryDistribute the procurement workload to avoid period of idleness & overworkOptimize inventory management through scientific procurement procedures
80 Inventory controlIt means stocking adequate number and kind of stores, so that the materials are available whenever required and wherever required. Scientific inventory control results in optimal balance
81 Functions of inventory control To provide maximum supply service, consistent with maximum efficiency & optimum investment.To provide cushion between forecasted & actual demand for a material
82 Economic order of quantity EOQ = Average Monthly Consumption X Lead Time [in months] + Buffer Stock – Stock on hand
83 Re-order level: stock level at which fresh order is placed. Average consumption per day x lead time + buffer stockLead time: Duration time between placing an order & receipt of materialIdeal – 2 to 6 weeks.
84 (ABC = Always Better Control) ABC ANALYSIS(ABC = Always Better Control)This is based on cost criteria.It helps to exercise selective control when confronted with large number of items it rationalizes the number of orders, number of items & reduce the inventory.About 10 % of materials consume 70 % of resourcesAbout 20 % of materials consume 20 % of resourcesAbout 70 % of materials consume 10 % of resources
85 ‘A’ ITEMSSmall in number, but consume large amount of resourcesMust have:Tight controlRigid estimate of requirementsStrict & closer watchLow safety stocksManaged by top management
86 Purchase based on rigid requirements Reasonably strict watch & control ‘B’ ITEMIntermediateMust have:Moderate controlPurchase based on rigid requirementsReasonably strict watch & controlModerate safety stocksManaged by middle level management
87 ‘C’ ITEMSLarger in number, but consume lesser amount of resourcesMust have:Ordinary control measuresPurchase based on usage estimatesHigh safety stocks ABC analysis does not stress on items those are less costly but may be vital
88 CONCLUSIONMaterial management is an important management tool which will be very useful in getting the right quality & right quantity of supplies at right time, having good inventory control & adopting sound methods of condemnation & disposal will improve the efficiency of the organization & also make the working atmosphere healthy any type of organization, whether it is Private, Government ,Small organization, Big organization and Household.Even a common man must know the basics of material management so that he can get the best of the available resources and make it a habit to adopt the principles of material management in all our daily activities
89 ② Order processing Between the time a customer places an order and the time it is received and paid by the customer. Operational elements Communication elements Credit & payment elements
90 The actual physical movement of goods from one place to another. ③ Packaging Consumer packaging and Industrial packaging. Industrial packaging is protective packaging that prepare a products for storage and transit. ④ TransportationThe actual physical movement of goods from one place to another.
91 ⑤ InventoryStock of goods that are maintained for a variety of purposes such as for resale to others as well as support manufacturing. (mass production-too much products-too much inventory)
92 Places where inventory can be stored for a particular period of time. ⑥ WarehousingPlaces where inventory can be stored for a particular period of time.⑦ Material handling Short distance movement of products within factory, warehouse.
93 Keeping existing customers happy Five Rights Right products ⑧ Customer serviceKeeping existing customers happyFive RightsRight productsRight placeRight timeRight conditionRight cost
94 6) Factors driving logistics improvement ① Globalization of the economy & market② Government deregulation ③ Transportation technology change④ Information technology change
95 b. Parts & service support c. Reverse Logistics 7) Other activitiesa. Demand forecastingb. Parts & service supportc. Reverse Logisticsd. Communication -Bullwhip effect
96 Reverse LogisticsWe refer to the term "reverse logistics" as all activity associated with a product/service after the point of sale, the ultimate goal to optimize or make more efficient aftermarket activity, thus saving money and environmental resources. Forward Logistics (SC) vs. Reverse Logistics (SC) Supply Chain vs. AfterMarket SC
97 The chart below shows how ReverseLogistics™ comes into play in the Supply Chain.
98 RMA managementIn recovering value from scrap materials received through the product returns, reverse logistics function helps identify hidden value through our return materials warranty evaluation process.During the return material authorization (RMA) management screening process, each component is tested and inspected to identify materials that currently fall under manufacturer warranty for credit recovery
99 Discussion1. Please define Supply Chain and Logistics respectively by yourself.2. Why logistics can be such an important component in country’s economy?3. How does Logistics contribute to time and place utility?4. Explain the significance of the fact that the purpose of logistics is to meet customer requirements.
101 Top 100 Global Franchises Rankings SUBWAY® McDonald's KFC 7 Eleven US ASandwich & Bagel Franchises2McDonald'sFast Food Franchises3KFCChicken Franchises47 ElevenConvenience Store Franchises5Burger King6Pizza HutPizza Franchises7Wyndham Hotel GroupHotel Franchises8Ace Hardware CorporationHome Improvement Retail Franchises9Dunkin' DonutsBakery & Donut Franchises10HertzCar Rental & Dealer Franchises
102 Number of Franchising stores 7Eleven ,004 storesSubway ,900McDonald 33,000KFC ,200KFC begins franchising in 1952 and would be the first franchising company in the world
103 Part 3. Mode of Transport Preface Transportation services has changed dramatically during the last 20 years. Freight rates were relatively fixed by Government regulations until early 1980s. There were was very little differentiation among suppliers of transportation in terms of either quality or price.Deregulation allowed pricing flexibility for carries and also significantly reduced restrictions on transportation services and relationships.
104 Today, a wider range of transportation alternatives exists for product or raw material movement than ever before. For example, a firm may consider for hire-transportation, private transportation or variety of contractual arrangement with different transport specialists.
105 1) PrinciplesThere are two principles guiding transportation management and operations.① Economy of scale Transportation cost per unit of weight decreases when the size of the shipment increases.② Economy of distanceTransportation cost per unit of distance decreases as distance increases.
106 2) Transport Functionality Transportation functionality provides two major functions : Movement & Storage ① Product movementSince transportation utilizes temporal, financial and environmental resources, it is important that items be moved only when it enhances product value.
107 ② Product storageAlthough the major objective of transportation is to move product from an original location to a prescribed destination, there is a less common function: storage. Product storage in transportation can be costly. However, it may be justified from a total cost or performance perspective when loading & unloading costs, or the ability to extend lead times are considered.
108 3） Shipper, Carrier & Consignee The shipper and the consignee have the common objective of moving goods from origin to destination with in a prescribed time at the lowest cost.Today, wide range of transportation alternatives exist for product movement. Carriers and shippers have the flexibility to negotiate responsibility and cost for all transportation services.
109 Shipping Chart Shipper Carrier Bangkok Tokyo ETD June 10 ETA June 16 Consignee
110 ４) Five Modes of Transports ① Motor Carriers② Railroads③ Air Carriers④ Water Carriers⑤ Pipelines
111 The 6th mode of transport ⑥ Electronic TransportThis is the fastest and the newest mode of transport.Advantageflexible and cost efficientDisadvantagebe used only for data, music, pictures, book, electric energy
112 ① Motor CarriersHighway transportation has expanded rapidly since the end of WWII.Motor carriers have flexibility because they are able to operate on all types of roadway. Motor carries favor manufacturing and distributive trades, short distance, high value products.Compared to railroads, motor carriers have relatively small fixed investments in terminal facilities and basically maintenance of roads and highways are operated publicly.
113 Advantage of Motor Carriers 1. Speed2. Door to Door Service3. Extensive Road Network4. High Competition5. Low DamageDisadvantage of Motor Carriers1. High Cost2. Low Capacity3. Weather Sensitive
114 ② RailroadsRailroads have handle the largest number of cargos in USA before WWII. Japan and European counties had the same tendency.However, railroad share of revenues and ton-miles is declining because of the extensive development of roads and highways for motor carriers.
115 The Union Pacific in USA is using new information technology and improves their service to customers, and started intermodal service with truckload carriers. Thai railroad is operated by The State Railway of Thailand. Because of development of Bus transportation which is more economical and punctual operation than railroad, railroad transportation is not so popular in Thailand.
116 In December 2010, following Chinese plans to extend their (standard gauge) network to Xishuangbanna(西双版納)on the China-Laos border and further into Laos, the Thai government agreed to start negotiations on building a standard-gauge network. This would initially involve two lines: from Bangkok to the Lao border, and a longer line from Bangkok along the peninsula to the Malay border.
117 Topics 5 Standard gaugeRail gauge is the distance between the inner sides of the heads of the two load bearing rails that make up a single railway line. Sixty percent of the world's railways use a standard gauge of 4 ft 8½ in (1,435 mm).
118 Traces the origin of the 4 ft 8½ in gauge even further back than the coalfields of northern England, pointing to the evidence of rutted roads marked by chariot wheels dating from the Roman Empire.We can see the evidence of 1435mm chariot wheel marked roads at Pompeii and Ercolano, Italy.
119 City of PompeiiThe city of Pompeii is a partially buried Roman town-city near modern Naples in the Italy . Along with Herculaneum, Pompeii was partially destroyed and buried under 4 to 6 m (13 to 20 ft) of ash and pumice in the eruption of Mount Vesuvius in AD 79.
120 Advantage of Railroads 1. Capacity2. Capability3. Low cost4. Reliability & SafetyDisadvantage of Railroads1. Low Accessibility2. Few Operators3. Limited Network4. Long Transit Time5. Double Handling
121 ③ Air CarriersA very new mode of transport is airfreight. The first consignment of cargo carried by air was transported between London and Paris in Since this first cargo, flight the carrying capacity and efficiency of aircraft has developed and increased dramatically. The movement of cargo by air is a highly specialized business, which is, in many respects, very different from moving cargo by sea or overland
122 . It is subject to restrictions that arise from the nature of the aircraft itself. Its significant advantages lies in the speed, and the biggest disadvantage is the high cost.However, this can be traded off for high speed which allows other elements of logistical design such as warehousing and inventory.
123 Two major changes have taken place over recent years in many manufacturing industries and it is due to these changes that air freight is becoming a popular choice for transporting products internationally. The reason for this increase is:The growing volume of technology-based products, these products are becoming lighter and smaller while their value is becoming greater justifying the expense of air freight
124 A substantial reduction in capital requirements The second is the rapidly increasing trend in many industries towards "just-in-time" (JIT) inventories JIT is most effective where the goods in question can be moved by air. The benefits of JIT ordering are:A substantial reduction in capital requirementsA substantial reduction in stockholding
125 Disadvantage of Air Carriers 1. High Cost 2. Limited Accessibility 1. Speed 2. Low Inventory Cost3. Reliable Service4. Low Damage5. High FrequencyDisadvantage of Air Carriers1. High Cost2. Limited Accessibility3. Weather Sensitive
126 ④ PipelinePipelines are significant part of the US transportation system.In addition to petroleum, natural gas, manufacturing chemicals, cement, flour and water. Pipelines operate on 24 hours ,7days a week.Pipelines are the highest fixed cost and lowest variable cost.
127 Disadvantage of Pipe line 1. Low Accessibility 2. Few Operators 1. 24 HR operation2. Low variable costDisadvantage of Pipe line1. Low Accessibility2. Few Operators3. Limited Network4. Highest fixed cost
128 Special Notice Internship To Japan 1) One month March or April 2013At Maki Corporation Tokyo, JapanStudentAirfare B30,000 & Meal B30,000CompanyHotel & commuter fee5) Hopefully 2 boys or 2 girlsMaximum 2 boys & 2 girls6) Application dead line is July 17, 2012VISA to Japan could get in Khon Kaen???Maybe, I could arrange internship in China orHong Kong? No commitment!
129 Topics 6 Smart TVLike a smart phone, the smart TV is developing very much especially by Samsung and LG, Korean manufacturer. Sony introduced “Internet TV”.However, Samsung Smart TV would be much better than Sony, Panasonic, Toshiba and Sharp.TV + PC
131 Accessing Apps, Signature Services and browsing are easy Accessing Apps, Signature Services and browsing are easy. Voice and gesture controls, face recognition, the Smart Touch Remote Control and the Smart View Mobile App, all provide unique ways to interact with your TV. Gesture control Voice control Wifi installed SKYPE camera installed Dual core processor
132 Topics 7 Fortune Global 500 companies U.S. 132 companies China 73 Japan 68 France 32 Germany 32 Britain 26 Thailand 1
133 Top 10 Revenues ($ millions) 1 Royal Dutch Shell 484,489 2 Exxon Mobil 452,926 3 WalMart Stores 446,950 4 BP 386,463 5 Sinopec Group 375,214 6 China National Petroleum 352,338 7 State Grid 259,142 8 Chevron 245,621 9 ConocoPhillips 237, Toyota Motor 235, PTT 79,690
134 Air vs OceanMaki told that 99.7% of international trade used ocean transportation in Japan. Mr. Doi of Mitsui OSK told that 99.5% of international trade between North America and Japan used ocean transportation in terms of volume base. How about percentage of ocean transportation usage for International trade in the world?
135 Transportation Modal Shares of World Trade 1. By volume (millions of metric tons) Seaborne 89.79% Airborne 0.25% Overland/Other 9.96% 2. By value (billions of dollars) Seaborne 72.71% Airborne 12.97% Overland/Other 14.32%
136 ⑤ Water CarriersWater is the oldest and the most important mode of transportation.The original sailing vessels were replaced by steamboats in early 1800s and by diesel power in 1920s.The main advantage of water transportation is the capacity to move extremely large shipments. The main disadvantage of water transport are the limited range of operation and speed.
137 Advantage of Water Carriers 1. Huge Capacity2. Low Cost3. Safe4. PollutionDisadvantage of Water Carriers1. Slow2. Limited Accessibility3. Weather Sensitivity4. Low frequency
139 ① Dry storage container The most commonly usedshipping containers;they come in variousdimensions standardized by ISO. They are used for shipping of dry materials and come in size of 20ft, 40 ft and 10ft.
140 40" Dry Freight Container (L 40' x W 8' x H 9,6') Interior DimensionL 12,052m x W 2,352m x H 2,390mDoor OpeningW 2,340m x H 2,280mTare Weight8.265 lbs – kgCubic Capacity2,390 cuft – 67,7 cbmPay Loadlbs – kg
141 20" Dry Freight Container (L 20' x W 8' x H 8,6') Interior DimensionL 5,898m x W 2,352m x H 2,393mDoor OpeningW 2,340m x H 2,280mTare Weight5.070 lbs – kgCubic Capacity1,172 cuft – 33,2 cbmPay Loadlbs – kg
142 40" High Cube Dry Container (L 40' x W 8' x H 9,6') Interior DimensionL 12,032m x W 2,352m x H 2,698mDoor OpeningW 2,340m x H 2,585mTare Weight8.605 lbs – kgCubic Capacity3.045 cuft - 86 cbmPay Loadlbs kg
143 45" High Cube Dry Container (L 45' x W 8' x H 9,6') Interior DimensionL 13,556m x W 2,352m x H 2,698mDoor OpeningW 2,340m x H 2,585mTare Weightlbs kgCubic Capacity3,045 cuft - 86 cbmPay Loadlbs kg
144 ② Flat rack containerWith collapsible sides, these are like simple storage shipping containers where the sides can be folded so as to make a flat rack for shipping of wide variety of goods.
145 ③ Open top containerWith a convertible top that can be completely removed to make an open top so that materials of any height can be shipped easily.
146 and unloading of materials. ④ Tunnel containerContainer storage units provided with doors on both ends of the container, they are extremely helpful in quick loading and unloading of materials.
147 ⑤ Refrigerated ISO containers These are temperature regulated shipping containers that always have a carefully controlled low temperature. They are exclusively used for shipment of perishable substances like fruits and vegetables over long distances.
148 ⑥ Car carriersCar carriers are containerstorage units made especiallyfor shipment of cars over long distances. They come with collapsible sides that help a car fit snugly inside the containers without the risk of being damaged or moving from the spot.
149 ⑦ TanksContainer storage units used mostly for transportation of liquid materials, they are used by a huge proportion of entire shipping industry. They are mostly made of strong steel or other anti corrosive materials providing them with long life and protection to the materials.
150 Another use of containers Topics 8 Another use of containers
156 6) Containerization History of Containerization Modern container shipping celebrated its 50th anniversary in Almost from the first voyage, use of this method of transport for goods grew steadily and in just five decades, containerships would carry about 60% of the value of goods shipped via sea.The idea of using some type of shipping container was not completely new.
157 In 1955, Malcom P. McLean, a trucking entrepreneur from North Carolina, USA, bought a steamship company with the idea of transporting entire truck trailers with their cargo still inside. He realized it would be much simpler and quicker to have one container that could be lifted from a vehicle directly on to a ship without first having to unload its contents.
158 His ideas were based on the theory that efficiency could be vastly improved through a system of "intermodalism", in which the same container, with the same cargo, can be transported with minimum interruption via different transport modes during its journey. Containers could be moved seamlessly between ships, trucks and trains
159 This would simplify the whole logistical process and, eventually, implementing this idea led to a revolution in cargo transportation and international trade over the next 50 years.Containerization is contributing greatly to international transportation and international trade.
160 7) Intermodal Transport Intermodal Transport is using more than two modes of transportation (rail, ship, air and truck), without any handling of the freight itself when changing modes.The method reduces cargo handling, and so improves security, reduces damages and loss, and allows freight to be transported faster.
161 Two modes of transport1. Sea-Rail Link2. Sea-Road Link3. Sea-Air LinkMulti- Modes1. Road –Sea –Air Links2. Rail-Sea-Road Links3. Air-Sea-Rail Links
162 International Multimodal Transport International Multimodal Transport is operated by one carrier using more than two modes of transportation.Operator issues one single transport document to cover more than two modes of transportation and take a responsibility for all modes of transportation.Thailand has Multimodal Transport Act
163 ExampleThailand manufacturers can send their products from Bangkok to Seattle by Sea and then send them to Chicago by truck.International Multimodal transport operator issues one bill of lading to cover Bangkok to Chicago.
164 DiscussionDescribe the five modes of transportation. (Also, 6th mode)What is the most advantage and disadvantage of each mode of transportation.What is intermodal transportation?Why is Motor Carrier Freight Transportation the most preferred method of product shipment?
165 8) Evaluating the suitability of transport modes The exporter & importer involves the process of deciding which is the most ideal mode(s) of transport. The ultimate selection can vary seasonally and by quantity. Some services vary considerably from summer to winter due to market demand and climate conditions.
166 Moreover, the dispatch of a small quantity, urgently required may be ideal for airfreight, but a larger consignment, needed less urgently for later dispatch may be suitable for a deep-sea container and LCL schedule under consolidation arrangements.
167 FCL = Full Container Load FCL is the abbreviation for a “Full Container Load” used in the International shipping Industry for Exporting and Importing sea freight cargo. This term is commonly used to describe an international sea freight service that is designed for ocean freight shipments of cargo where an exporter or importer has exclusive use of a dedicated sea freight container (normally a 20ft or 40ft container).
168 LCL = Less than Container Load When you don’t have enough cargo for a full container (FCL), you need LCL (less than container load) service. This is a sea freight service which groups a number of customers shipments together into a container load and gets your shipment moving without delay.
169 TEU=twenty-foot equivalent unit Standard unit for describing a ship's cargo carrying capacity, or a shipping terminal's cargo handling capacity. A standard forty-foot (40x8x8 feet) container equals two TEUs (each 20 x 8 x 8 feet).
173 The first container ship The world's first purpose-built container ship was the Clifford J. Rodgers, built in Montreal in 1955 and owned by the White Pass and Yukon Route. Its first trip carried 600 containers between North Vancouver, British Columbia and Skagway, Alaska, on November 26
175 Part 4. FreightFreight is the reward payable to the carrier for the carriage of goods.Now, International Transportation is one of the most important factors in Logistics.In many cases, we must get raw materials, parts, finished goods from foreign countries. There are several mode of transports like as vessels, air, tracks, railroads, pipelines and a combination of these modes of transport.
176 1) Basic idea of freightThe most basic is the decision of what kind of transport to use: air freight or ocean freight. Whether you’re a business that will be shipping overseas all the time or an individual moving to a new country, deciding whether to go with ocean freight or air freight is an important choice. There are four key factors you should consider when making this decision.
177 ① CostAirlines bill you by what is called a chargeable weight. Chargeable weight is calculated from a combination of the weight and size of a shipment. Sea carriers charge per container rates for shipping in standard containers (20’ and 40’ being the most common sizes). While weight can factor into the price from sea carriers, their charge tends to be based more on the size of a shipment.
178 If you are shipping less than a container load, your price is often determined by cubic meter. With larger and heavier shipments, it is often much cheaper to ship by sea. As a shipment gets smaller, the margin between the prices gets smaller and sometimes air will even end up less expensive.
179 ② SpeedWhen it comes to speed, there is no question that air freight is usually much faster. Since time is money, this factor could more than make up for a higher cost of flying cargo. Many sea shipments can take around a month to arrive while an air shipment takes a day or two. For most business shipping, faster is better.
180 When it comes to the individual moving a household, it is often good to have the extra time to prepare for the arrival of household goods in a new country. It should be noted that technology keeps moving forward in the international shipping world.
181 ③ ReliabilityAir freight shipping has a much, much shorter history than ocean freight shipping, yet air freight tends to win the battle of reliability. Flights get delayed by weather and other factors, but airlines tend to be very on top of their schedules. Ocean carriers are notorious for being bad about this. It is not uncommon for ships to be off schedule. For many, a day or two here or there doesn’t hurt; however, for many businesses, a day or two could have serious cost effects.
182 With airlines, there are usually daily flights back and forth between major cities around the world. Because of this, missing a flight doesn’t cause much of a delay for a cargo shipment. Ocean lines tend to have weekly schedules. Missing the cutoff at a seaport means a longer delay.
183 ④ Environmental Impact While the social awareness of environmental issues can change the way the public looks at a company and affect its bottom line, we all have a responsibility of taking care of the planet on which we live. It would seem that ocean freight wins this category. CO2 emissions are much higher in air freight transport than ocean freight transport.
184 This causes cargo shipping by air to have a much larger carbon fingerprint than cargo shipping by sea. However, considering oil spills and the water ecosystems affected by ocean freight, gives pause. Perhaps the jury is still out on this final factor.
185 Pollution Reducing Air Pollution from International Transportation Because of their reliance on petroleum-based fuels and their dramatic growth rates in recent decades, air and sea transport are responsible for significant emissions of both traditional (criteria) air pollutants (e.g. sulfur oxides (SOx), nitrogen oxides (NOx)) and greenhouse gases (e.g. carbon dioxide (CO2)).
186 International seaborne and airborne transportation are estimated to produce perhaps more than 7% of total global CO2 emissions from the combustion of fossil fuels at present. But compared to other transport modes, these have few options for transitioning to other fuels in the near- to medium-term.
187 Topics 9 CNGVCNGV is an alternative fuel vehicle that uses compressed natural gas (CNG) as a clean alternative to other fossil fuels. Worldwide, there were 14.8 million CNGV by Compressed Natural Gas Car in Thailand is quite popular now. 1. Clean energy and cost efficient 2. Thailand found a source of natural gas in the Gulf of Thailand in It allows the country to depend on domestic energy sources.
188 Benefits of NGVs 85-99% Methane Clean burning Exhaust emissions from NGVs are much lower than those from equivalent gasoline-powered vehiclesReduced greenhouse gas emissionsNoise reductionsLower costBy Paweenuch Chainuwat
189 ２） Factors determining Freight Rate The pricing of air and sea transport services, usually in combination with land transport services, is dependent on the forces of supply and demand.
190 ① Nature/ Value of commodity Ex. Dangerous Goods Class 1: Explosives Class 2: Gases Class 3: Flammable Liquids Class 4: Flammable Solids Class 5: Oxidizing Substances & Organic Peroxides Class 6: Toxic and Infectious Substances Class 7: Radioactive Material Class 8: Corrosive Substances Class 9: Miscellaneous Dangerous Substances & Articles
191 Ad Valorem (“at value”) An ad valorem freight rate (Ex. 3~5% of cargo value) is one where the freight is based on the value of the goods. An ad valorem bill of lading is one where the value of the goods is shown on the face of the document, which value then becomes the carrier’s limit of liability, in return for this increased liability the carrier will charge an addition to the sea freight
192 ②. The origin & destination of commodity ③ ②. The origin & destination of commodity ③. The nature of packaging & convenience of handling ④. The load-ability of transport unit ⑤. The susceptibility of the cargo to damage & pilferage ⑥.The need heavy lift, strong room, live stock facilities, etc. ⑦. The mode of transport
193 ３) Ｏｃｅａｎ Ｆｒｅｉｇｈｔ Ｒａｔｅ ① Ｆｒｅｉｇｈｔ Ｐｒｉｃｉｎｇ ---- Base rateBase rate + SurchargesMore than 20 years ago, each freight conference has a published class rate, commodity rate etc. They are very strict and must use their published rate if we use the first class carriers. (There are no conference vessels also.)
194 Because of deregulation in USA in 1984 and 1998 , conferences are very weak, they do not publish tariffs. Each ship company negotiates with each customer who wants to use a vessel for transport. Base rate is negotiable.
195 Big companies like Sony are doing a bid every year for their transport of goods for several thousand of containers.For LCL customers, ship-owner company do not collect cargos from customers. Freight forwarder is doing this business on behalf of them.
196 Minimum freight rateLCL SEA FREIGHT RATE ALWAYS HAS A MINIMUM CHARGE ON SHIPMENT.Example:$125 per CBM / $125 minimum charge.It is often less expensive to dispatch small consignments by air than by sea.
197 Cubic MeterA cubic meter is something 1 meter long by 1 meter wide by 1 meter high 1m x 1m x 1m = 1 CUBIC METER Technically cubic meter could be any combination of lengths as long as all three dimensions multiplied together equals m x 0.5m x 4m = 1 CUBIC METER
198 Revenue tonFor calculation of freight If cargo is rated as weight or measure, whichever produces the highest revenue will be considered the revenue ton. Weights are based on metric ton and measures are based on cubic meter. Ocean shipment 1M3 = 1,000kgs Air shipment 1kg = 6,000CM3
199 ② Fees and surcharge Minimum Bill of Lading Charges: a) B/L ChargeMinimum Bill of Lading Charges:Ex. Less Than Container Load Cargo: US$ 100Full Container Load Cargo : General Dry Cargo US$ Refrigerated Cargo US$ Hazardous Cargo US$ All Other Cargo US$ 350b) Freight surchargeFreight surcharge is other than freight base rate like as BAF & CAF.
200 Currency Adjustment Factor (CAF) This arises when freight rate is related to floating currency such as YEN.YEN Appreciation Surcharge=YASIf the rate were based on US dollar, then Japanese yen rate of exchange in June 2012 would go up or down, CAF ( Currency surcharge) is imposed to minimize loss of ship owners.
201 Bunker Adjustment Factor (BAF) Fuel cost is a substantial proportion of direct voyage cost. Ship-owners are not prepared absorb the variation in fuel prices.If fuel prices increase, ship-owners imposeBAF (Bunker surcharge)
202 Ocean Freight Rate In case of LCL Cargo BASE：US$50 W/M BAF ： US＄8.00/RTN CFS CHARGE : US$ 50/RTN THC： US$35/RTN DOC： US$35/BL Less than 3RTN RTN : US$ 20/BL RTN : US$ 15/BL RTN : US$ 10/BL 4-10RTN : US$8/BL
203 Question Please calculate the freight charge for the following cargo. Furniture cubic meter 1250Kg2) Material handling machine5 cubic meter7500Kg
204 ４) Air freightAirline freight rates are based on a "chargeable weight", because the volume or weight that can be loaded into an aircraft is limited.The chargeable weight of a shipment will be either the "actual gross mass" or the "volumetric weight", whichever is the highest.
205 Airfreight calculation Chargeable weight x Freight rate+Fuel Surcharge (& Other surcharge)
206 Air shipment 1kg = 6,000CM ³Weight：8kgs ＜ Volume weight：10kgs 30cm Ｘ 40cm Ｘ 50cm÷6,000＝10kgs → Chargeable weight is 10kgs
207 Fuel surcharge Thailand Asia (except Southwest Pacific) 20.00 THB /CW Thailand All Destinations (except where indicated below) THB / CWThailand Asia (except Southwest Pacific)20.00 THB /CWThailand Latin America THB/CWThailand Mexico THB/CW
209 InternshipJapan I will accept all 5 students to go to Tokyo to study at my office for one month between March-April China/Hong Kong Maybe I could ask 3 students to go to Guangzhou, Shenzhen, Shanghai or Hong Kong for one month between March-April 2013 , but not confirmed yet.
211 What is a warehouse?A warehouse is a commercial building for storage of goods. Warehouses are used by manufacturers, exporters, wholesalers, retailers, transport businesses, customs (exporters, Importers), etc. They are usually large plain buildings, equipped with loading docks to load and unload consignment from trucks.
212 In simple words, warehouse is a facility where the supply chain holds or stores goods, until they are needed by the customers. Warehouse can be owned by manufactures, wholesalers, retailers to store the goods.
213 Many years ago, individual households functioned as self-sufficient economic units. Consumers performed storage and accepted the attendant risks. Meats were kept in smokehouses, and perishable products were protected in underground food cellars.
214 Transportation capability developed, it become possible to engage in economic specialization. Product storage was shifted from households to retailers, wholesalers, and manufacturers
215 The warehouse initially viewed as a storage facility. Now we have a public warehouse as a business to store the goods for customers.
216 Part 5 Management of Warehouse A warehouse is a typically viewed as a place to store inventory. This perspective of storage created a tendency to consider warehouse as “a necessary evil” that added costs to the distribution process.
217 Companies seeking to operate effectively between points of procurement, manufacturing and consumption gave little attention to internal warehouse operations. However, changing requirement of the retail environment more than offset any reductions in warehousing gained through manufacturing improvements.
218 1) Warehousing Functions A warehouse was a place to store inventory, however, now it is a very important to understand as a switching facility in a logistics system.
219 But manufacturing them all year round. ① Storage Toys and Christmas cakes are seasonable products and sell in a very short period.But manufacturing them all year round.
220 ② Interface Consolidation, Break Bulk and Cross-Docking Warehouse is a point of interconnection between parts suppliers and factory or between factories and customers.Consolidation, Break Bulk and Cross-Docking
221 ConsolidationA warehouse receives and consolidates products from a number of manufacturing plants destined to a specific customer on a single transportation shipment.
222 Consolidation Warehouse MeijiMilkCustomerConsolidation WarehouseCoca ColaTipco F & B
223 Break bulkA break bulk operation receives combined customer orders from manufacturers and ships them to individual customers.
224 Break bulk Customer A Pepci Break bulk Cola Warehouse Customer B
225 Cross-DockingThe term cross docking refers to moving product from a manufacturing plant and delivers it directly to the customer with little or no material handling in between.
226 Cross docking not only reduces material handling, but also reduces the need to store the products in the warehouse In most cases the products sent from the manufacturing area to the loading dock has been allocated for outbound deliveries.
227 In some instances the products will not arrive at the loading dock from the manufacturing area, but may arrive as a purchased product that is being re-sold or being delivered from another of the companies manufacturing plants for shipment from the warehouse.
229 ③ Production Support To steady supply various parts and components to a factory as they need. =JIT ④ Marketing Support To supply various products at one time for customer needs
230 ⑤ Value-added servicea. Packagingb. Labelingc. Blending or Mixing
231 d. FRM (Floor-Ready Merchandise) FRM started from Apparel industry and merchandise is ready to floor of retailer with hanger, labels and price tag. So that retailers could display it at their store within few minutes.
232 Millionaire / Billionaire The RichMillionaire / Billionaire
233 Millionaire= The RichBy Merrill Lynch’s definition, the rich should have more than US$1 Million as financial asset. Japan has 1.4 million people in the rich category. (Around 1 % of population.)William E Heinecke: Expanding waistlines nationwide
234 American sociologist Leonard Begley classifies all households with net worth exceeding USD 1 million as "The Rich". There were 10 million people around the globe who are classified as U.S.-dollar millionaires as of from wikipedia
235 Financial AssetA non-physical asset.Examples of financial assets include bank accounts and shares in a publicly-traded company. Financial assets are distinguished from physical assets like real estate and personal property.
236 Carlos Slim HelúCarlos is the wealthiest people in the world. He was born on January 28, 1940, in Mexico City to a family of Lebanese Christian immigrants. He became a billionaire after the economic crash of 1982 when he purchased investments at low prices that would later be extremely valuable. In 2000, he founded the Foundation for the Historic Centre of Mexico City to restore and save significant buildings.
237 He is the chairman and chief executive of telecommunications companies Telmex and América Móvil. América Móvil, which in 2010 was Latin America’s largest mobile-phone carrier, accounted for around US$49 billion of Slim's wealth by the end of His corporate holdings as of March 2012 have been estimated at US$69 billion.
244 When you see restaurants like Dairy Queen, Burger King and Swensen’s in Thailand, you have one man to thank -- or curse -- in the name of globalization: William E. Heinecke.The 61-year-old founded his company, Minor Group, in 1967, and now owns more than a thousand restaurants and 27 hotels in Thailand and throughout the Asia Pacific region.
245 Other brands his company controls in Thailand include the Marriott, the Four Seasons, Pizza Company and Sizzler. Thailand has been good to Heinecke: he is thought to be worth $425 million. Heinecke was born in the U.S. but his family moved to Thailand when he was a teenager. He is now a Thai citizen.
246 You might not know:The resilient Heinecke beat Pizza Hut at their own game. He bought the Pizza Hut franchise in Thailand in 1980 but had a contract dispute with its U.S. parent company. Pizza Hut then closed in Thailand, but Heinecke built a new company -- Pizza Company --using Pizza Hut’s old store locations. The result: he captured some 70 percent of Thailand's pizza market in just six months.
248 Robin Li $10.2 B 43 Technology Baido China Liang Wengen $8.1 B 55 86Robin Li$10.2 B43TechnologyBaidoChina113Liang Wengen$8.1 B55manufacturing146Zong Qinghou$6.5 B66beverages161He Xiangjian$6.2 B69appliances173Hui Ka Yan$5.8 B53real estate
250 History of warehousing Individual households are self-sufficient units. Consumers performed storage by themselves.Transportation capability developedEconomic specializationProduct storage was shifted to retailers, wholesalers and manufacturers.
251 Warehousing's roots go back to the creation of granaries to store food, which was historically available for purchase during times of famine. As European explorers began to create shipping-trade routes with other nations, warehouses grew in importance for the storage of products and commodities from afar. Ports were the major location for warehouses.
252 World War II impacted warehousing in several ways, including the need to increase the size of warehouses and the need for more mechanized methods of storing and retrieving the products and materials. As mass production grew throughout manufacturing, the needs of efficient and effective warehousing capabilities grew with it.
253 Mass- production Too much Products Need efficient Warehousing capabilities
255 2) Warehouse BenefitsEconomic benefits of warehousing result when overall logistical costs are directly reduced by utilizing one or more facilities.It is not difficult to quantify the return on investment of an economic benefit because it is reflected in a direct cost-to-cost trade-off.
256 For example, if adding a warehouse to a logistical system will reduce overall transportation cost by an amount greater than the fixed and variable cost of the warehouse, then total cost reduced.
257 Changing requirements of the retail environment more than offset any reduction in warehousing gained from through manufacturing improvements. The retail store, faced with the necessity of stocking an increasing variety of products, was unable to order sufficient quantity from a single supplier to enjoy the benefits of consolidated shipment.
258 The cost of transporting small shipments made direct ordering prohibitive. This resulted in a need to utilize warehouses to provide timely and economical inventory assortments to retailers. At the wholesale level of the channel of the distribution, the warehouse become a support unit for retailing.
259 ① Consolidation and Distribution Parts and Products Warehouse ② JIT (Just In Time) Parts Warehouse ③ Production Economies Products Warehouse
261 Parts Wrehouse Manufacturing support VendorAAssembly plantManufacturingWarehouseVendorBVendorC
262 ⑦ Customer Service Policy Service benefits gained through warehouses in a logistical system may or may not reduce costs. A warehouse improve in the time and place capability of the overall logistic system
263 ⑧ Minimizing Total Logistic Cost To reduce total cost is an important idea in logistics system .
264 3) Type of Warehouse -1 General Purpose Warehouse Distribution Center RDC
265 Distribution Assortment P & GCustomerADistribution CenterShiseidoCustomerBKaoCustomerC
266 In Transit Mixing H A&B products I A&C Products J A,B&C Products A B C CustomerHA&B productsFactoryAWarehouseTransit Mixing PointCustomerIA&C ProductsFactoryBFactoryCCustomerJA,B&C Products
267 Warehousing Alternatives 4) Type of Warehouse-2Warehousing AlternativesWe have three options of public, private and contract warehouse.It is very important to decide to have our own warehouse, rent the space at a public warehouse or get specially tailored warehousing services from a contract warehouse .
268 1) Public WarehouseA public warehouse is operated as an independent business offering an range of service like as storage, handling and transportation. Public warehouse are used extensively in logistical systems. Almost any combination of services can be arranged with the operator either for a short term or over a long duration.
269 Classification of Public warehouse ① General merchandize ② Refrigerated ③ Special commodity ④ Bonded ⑤ Household & furniture
270 a. Advantage of Public Warehouse ① Lower variable cost-lower pay scale, better productivity ② Greater operating & management expertise
271 Variable & Fixed CostsAll the costs faced by companies can be broken into two main categories: fixed costs and variable costs.
272 Variable costsVariable costs are costs that vary with output. Generally variable costs increase at a constant rate relative to labor and capital. Variable costs may include wages, utilities, materials used in production, etc
273 Fixed costsFixed costs are costs that are independent of output. These remain constant throughout the relevant range and are usually considered sunk for the relevant range (not relevant to output decisions). Fixed costs often include buildings, machinery, etc.
274 ④ Flexibility to change location, size and number of facilities ③ Financial Flexibility④ Flexibility to change location, size and number of facilities⑤ Economies of Scale
275 b. Disadvantage of Public Warehouse ① Space Availability- cannot expect to get a space any time② Specialized Service- cannot expect to accept easily specialized service like as a private warehouse③ Communication – cannot expect better communication like as a private warehouse
276 2) Private WarehousePrivate warehouse is operated by the company owning the product. However, actual facilities maybe owned or leased.
277 a. Advantage of Private warehouse ① Control - The company has a decision making authority. ② Flexibility- The company can adjust customers’ special needs.
278 ③ Cost - Less cost than public warehousing because of no profit markup ③ Cost - Less cost than public warehousing because of no profit markup. ④ Market Presence- 7-eleven RDC in Khon Kaen is more responsive to local customers in this area for quick response and delivery
279 b. Disadvantage of Private Warehouse ① Investment – big investment for land, facilities and material handling equipments② Flexibility - No flexibility to change location, size etc. No financial flexibility
280 3) Contract WarehouseContract warehousing combines the best characteristic of both private and public operations.
281 ③ lower cost than public warehouse ① long term relationships② To share risks③ lower cost than public warehouse④ Expertise, flexibility, economies of scale
282 4) Special Purpose Warehouse ① Refrigerated Warehouse② Chilled Warehouse③ Flammable Storage Warehouse④ Bonded Warehouse⑤ Silo
287 Part 6 MODERN ISSUESThe warehouse industry found itself recovering from a recession at the start of the twenty-first century, partially brought on by the hype of the dot-com bubble and the excess production created after it burst.
288 It also coped with new methods of distribution, such as just-in-time (JIT) manufacturing—where warehousing is unnecessary because products are shipped directly to customers. Warehousing companies are now striving to become more than simply storage facilities.
289 They are transforming themselves into "third-party logistics providers" or "3PLs" that provide a wide array of services and functions. In addition to packing and staging pallets, contemporary warehousing facilities offer light manufacturing, call centers, labeling, and other non-storage options.
290 3PLThird party logistics refers to outsourced tasks for businesses which help them manage their supply chain, such as warehousing, picking, packing, shipping and inventory management. Some 3PLs might also help with the administrative side of these tasks, such as invoicing and accounts receivable
291 4PLFourth party logistics companies serve as consultants who manage the relationship between the principal company and one or more 3PLs to make sure all operations are running smoothly. They can carry various levels of responsibility, from advice on choosing the best companies, right up to the day-to-day management of essential logistical tasks being performed for the principal company.
292 Future of warehousingWe are looking at how warehousing will be transformed into a highly automated environment. There would be no labor required in the first place, in fact they will be no space for humans to walk (except for service engineers).
293 There will be rails and tracks all around on which automated pick Robots would move to pick and put away pallets and cases around the warehouse. These robots would move on horizontal and vertical tracks and can reach every location within each zone where they operate. There will be sensors all over the warehouse to guide robots, round the clock.
294 Part 7 Global LogisticsWhy global logistics become more and more important?
295 1) Domestic and GlobalWhereas an effective logistics system is important for domestic operations. Domestic logistics focuses on performing value-added services in a relatively controlled environment. Global logistic operations must accommodate all domestic requirements and also deal with increased uncertainties associated with distance, demand, diversity, and documentation.
296 2) Localized focus and global production For more than 20 years, there has been a steady trend towards the worldwide marketing of products under a common brand umbrella --- like Apple, Coca-Cola, IBM, Toyota, Sony etc.
297 At the same time, the global company has revised its previously localized focus; manufacturing and marketing its products in individual countries, and now instead will typically source on a worldwide basis for global production and distribution.
298 The global company seeks to grow its business by extending its markets whilst at the same time seeking cost reduction through “scale of economies” in purchasing and production and through focused manufacturing and/or assembly operations.
299 Strategy change of the global company Seeking scale of economiesLocalized focusGlobal production & distribution.
300 In this direction, we have two challenges. a In this direction, we have two challenges. a. World markets are not homogeneous. b. We need a high level of co-ordination the complex logistics of managing global supply chains which may result in higher cost and extended lead times.
301 How to mange the links in the global chain from sources of supply through to end user? There is a danger that some global companies in their search for cost advantage may take too narrow a view of cost and only see the purchasing or manufacturing cost reduction that may be achieved through using low cost supply sources.
302 In reality, it is a total cost trade-off where the costs of longer pipelines may outweigh the production cost saving.The trend towards global organization of both manufacturing and marketing is highlighting the critical importance of logistics and supply chain management as the key to profitability.
303 Localized Focus Global distribution & manufacturing Mfg. Cost Reduction > Logistic CostManagement of Logistics& Supply chain is critical.
304 3) Globalization in the supply chain To remain competitive in this new global environment, companies will have to seek ways in which costs can be lowered and service enhanced, meaning that supply chain efficiency and effectiveness will become ever more critical.
305 Three ways are implemented as their global logistics strategies. What degree of centralization is appropriate in terms of management , manufacturing and distribution, and how can the needs of local markets be met at the same time, as the achievement of economies of scale through standardization.Three ways are implemented as their global logistics strategies.
306 Three Global Logistic Strategies ① Focused Factories② Centralization of Inventories③ Postponement and Localization
307 ① Focused FactoriesBy limiting the range and mix of products manufactured in a single location, the company can achieve considerable economies of scale.
308 The global business will treat that the world as one market and produce fewer products in volume. The nationally oriented business will have “local for local” production. However, a number of crucial logistics trade-offs maybe overlooked.
309 a. The most obvious trade-offs is the effect on transport costs and delivery lead times. The cost of shipping products , often of relatively low value, across greater distances may erode some or all of production cost saving.
310 b. Similarly the longer lead times involved may need to be countered by local stockholding, again possibly offsetting the production cost advantage.
311 c. The needs for local packs with labeling in different languages or even different brand names and packages for the same products.
312 d. No flexibility to produce “variety “ of products at focused factories where volume and economies of scale are critical issues.Sony decided to bring back assembly line of digital camera and camcorders to Japan. Sony was producing these products in China to seek lower labor cost.
313 ② Centralization of inventories The globalization trend has encouraged companies to rationalize production into fewer locations, so too has it led to a trend toward the centralization of inventories.
314 ③ Postponement & Localization Although the trend to global brands and products continues, there are still significant local differences in customer and consumer requirements.
315 Postponement is based on the principle of seeking to design products using common platforms, components or modules but where the final assembly or customization does not take place until the final market decision and/or customer requirement is known.
316 ④ Thinking global and acting local The implementation of global pipeline control is highly dependent upon the ability of the organization to find the correct balance between central and local management. Increasingly, the difference between success and failure in global marketplace will be determined not by sophistication of product technology but rather by the management and control of global logistics pipeline.
317 ⑤ The future of global sourcing Offshore sourcing was a big trend for more than 20 years to seek “low cost”. However, true cost of global sourcing is greater than originally thought.
318 Losses from global sourcing ① Increasing cost of transportation② Needs higher level of inventory becauseof longer lead timeMark-downs or write-offs because ofshort life cycle market④ Quality problems⑤ Loss of intellectual property
319 Local for local Global sourcing Global + Local Seeking low cost Realizing true total costGlobal + Local
321 Special studyThe biggest franchising system in the world.７-ELEVEn
322 Seven & i Holdings7-Eleven is a part of Seven & I group in Japan. This company group started as Ito-Yoka Do, super market chain stores.
323 Now Seven & I group is the biggest retail company in Japan and Asia. Ito-Yoka Do bought out 7-Eleven (convenience store), Seibu and Sogo (Department stores) and many other retailers.Now Seven & I group is the biggest retail company in Japan and Asia.
324 7 & I is the 14th biggest retailer in the world with sales US$5 7 & I is the 14th biggest retailer in the world with sales US$5.7billion . Walmart is the largest retailer in the world. and is also the biggest private employer in the world with over two million employees.
325 Store Network of Seven & i Holdings Global : approx. 48,000 storesJapan : approx. 15,000 storesNumber of Customer Store-Visits per Day Global : approx. 48 millionJapan : approx. 17 million
326 World Top 15 retail Company (Million US$)1 Wal-Mart Stores U.S ,9522 Carrefour France ,6423 Tesco U.K ,1714 Metro Germany ,9315 Kroger U.S ,1896 Schwarz Germany ,1197 Costco Wholesale U.S ,255
327 8 Home Depot U.S ,9979 Walgreen U.S ,42010 Aldi Germany ,11211 Target U.S ,78612 Rewe Germany ,134CVS Caremark U.S ,345Seven & Japan ,055Auchan France ,212
328 1. What is 7-Eleven?１）7-Eleven is an international franchiser, licensor, and operator of a chain of convenience stores.２） It is also, since March 2007, the largest chain store in any category, beating Subway & McDonald's by 10,000 stores.
329 ３） Its stores are located in more than eighteen countries, with its largest markets being Japan, the United States, Thailand, Korea, Taiwan and Malaysia.
330 Number of Franchising stores 7Eleven ,004 storesSubway ,900McDonald 33,000KFC ,200KFC begins franchising in 1952 and would be the first franchising company in the world
331 2 Convenience store & 7-11 Japan Franchising system 1）What is a convenience store?Small centrally located store featuring ease of access, late-night hours, and a limited line of merchandise designed for the convenience shopper. Convenience stores charge above-average prices compared to large supermarkets that generate large-volume sales.
332 2）Difference CS vs Super Market like Big C CS vs Wholesale Club like Makro
333 7-Eleven Japan Franchise system 1) Type of ownershipa. Land and buildings Franchisee providesb. Seven-Eleven Japan provides
334 2) Sales equipments, computers, etc 2) Sales equipments, computers, etc. Seven-Eleven Japan provides 3) Contract period 15 years Utilities Seven-Eleven Japan 80%; Franchisee 20%
335 4) Seven-Eleven charge (royalty) 43% of gross profitAn amount calculated on a sliding scale based on gross profit5) 5-year incentives and 15-year contract renewal incentives (reductions in franchise fee are offered)
336 Market Concentration Strategy 7-Eleven’s fundamental strategy is market concentration, whereby a high concentration of stores is positioned within one region.
337 Effects of area market concentration strategy 1) Greater familiarity with customers2) Efficient construction of production bases3) Effective sales promotions
338 4) Efficient construction of distribution structure 5) Improved efficiency in guiding franchised stores6) Preventing entry by competitors
339 3. 7-Eleven History from Wikipedia 7-Eleven has its origins in 1927 in Dallas, Texas, USA. When an employee of Southland Ice Company started selling milk, eggs and bread from an ice dock.
340 Although small grocery stores and general merchandisers were present in the immediate area, the managers of the ice plant discovered that selling "convenience items" such as bread and milk were popular. Eventually, several locations would open up in the Dallas area.
341 By 1952, 7-Eleven opened its 100th store. Initially, these stores were open from 7 a.m. to 11 p.m., The company began to use the 7-Eleven name in 1946.By 1952, 7-Eleven opened its 100th store.In 1962, 7-Eleven first experimented with a 24-hour schedule in Austin, Texas.In 1963, 24-hour stores were established in Las Vegas, Fort Worth, and Dallas.
342 The Japanese company gained a controlling share of 7-Eleven. In the 1980s the company ran into financial difficulties and was rescued from bankruptcy by Ito-Yokado, its largest franchisee.The Japanese company gained a controlling share of 7-Eleven.
343 Number of 7-Eleven as of September 30, 2007 Japan ,837 U.S.A 6,173Taiwan ,651Thailand ,199South Korea ,568China ,337 Total 33,220
344 Number of 7-Eleven Japan as of February 29, 2012 and other area as of June, 2012 U.S , ( 6,173)THAILAND , ( 4,199)SOUTH KOREA , ( 1,568)TAIWAN , ( 4,651)CHINA , ( 1,337)Total 47,298（33,220）
345 4. 7-Eleven Japan (opening 1250 stores in 2012.) 7-11 Japan announced that they would like to open more than 1,500 stores (and close less than 600 stores) in 2013 fiscal year.(opening 1250 stores in 2012.)
346 It is a big tendency in Japan that more the aged and housewives become their customers recently. Because of Market concentration Strategy, there are 7 prefectures out of 47 prefectures which has no 7-11 stores. They are preparing to open 7-11 stores in these prefectures.
347 The daily sales turnover at new opening stores is JPY 600,000 (THB240,000) in March-May (JPY520,000 =THB200,000 in 2019)After 2011 Tohoku earthquake and tsunami, people have come to a new understanding of the convenience stores.
348 Number of Convenience stores in Japan 7-Eleven Japan ,311 as of July 2012Lawson ,457Family Mart ,834Circle K Sunkus ,169Other CVS ,326Nationwide ,791
349 5. 7-ElevenThailandThe franchise in Thailand is the Charoen Pokphand Group. Their name was changed to CP ALL.There are 6,660 7-Elevens in Thailand, of which more than 1,500 are in Bangkok, making Thailand have the 3rd largest number of stores after Japan and US.
350 7-11 Regional Distribution Center 1) RDCRegional Distribution CenterFor 7-11, RDC in KK was the pilot distribution center and this size of Distribution Center would be more cost efficient compared with their big distribution center.
351 2) Chilled warehouseThey have a Chilled warehouse for butter, cheese ,milk, sausage, ham, etc.3) FIFOFirst In, First Out.FIFO accounting is a common method for recording the value of inventory. A firm records the last units purchased as inventory value.
352 4) LIFOLast In , First OutLIFO accounting, a historical method of recording the value of inventory, a firm records the first units purchased as inventory value.5） QC Quality Control
353 Seeing is BelievingWe will visit 7-Eleven RDC in Khon Kaen from 9:30 AM~12:00 on 29th August.
354 6. 7-Eleven China1) 7-11 started to establish Seven -Eleven (Beijing) Co. Ltd. and wanted to make a original China model store. Ex. Chinese loves warm foods than Japanese customer. So, each store has a kitchen to cook warm foods.Now, 7-11(Beijing) has 147 stores and 7-11 (Chengdu) has 41 stores.
355 2) April 2009, 7-11 established 7-11 China and gave franchise right for Shanghai to President Chain Stores (統一超商） which has 4,651 store in Taiwan. Now they have 1,604 stores in Shanghai area.
356 How to calculate Freight? Ocean freightRevenue Ton (RNT)2) Air freightChargeable weight
357 1) Revenue ton For calculation of Ocean freight If cargo is rated as weight or measure, whichever produces the highest revenue will be considered the revenue ton(RNT). Weights are based on metric ton and measures are based on cubic meter.Ocean shipment 1m3 = 1,000kgs
358 Furniture Volume 3m3 Weight 1250Kg Revenue ton 3m3 1250 Kg--------> X RTN BASE： US$50 RTN BAF： US＄8.00/RTN CAF : 12% of base rate CFS CHARGE:US$ 50/RTN THC：US$35/RTN DOC: US$35/BL
359 Furniture Volume 3m3 Weight 1250Kg Revenue ton ３m3＞1250Kg---> 3RTN BASE： US$50 RTN x = 150BAF： US＄8.00/RTN 8x = 24CAF : 12% of base rate 150x0.12 =18CFS CHARGE:US$ 50/RTN 50x =150THC：US$35/RTN 35x =105DOC: US$35/BL = 35 = US$482
362 2) Chargeable weight 1 metric ton = 6 m3 The Chargeable Weight is the Actual Gross Weight or the Volumetric weight of the shipment – whichever is the greater. The chargeable weight is calculated as follows:1 metric ton = 6 m3
363 Stationery Weight：8kgs Volume：30cm x 40cm x 50cm Actual Gross Weight is 8kgs Volumetric weight 30 x 40 x 50 = 60,000 60,000/6000= 10 kg
364 Answer10kgs is greater than 8kgs, so the Chargeable Weight will be 45kgs
365 Ex. 2Maki Company is planning an import shipment into Thailand from Varun Company in Germany. The shipment consists of 3 boxes, each weighing 15kgs, and each measuring 48cm (length) x 34cm (width) x 34cm (height). Using our instructions above:-
366 Answer Actual Gross Weight = 3 boxes x 15kgs each = total 45kgs Volumetric Weight in kg= (48 x 34 x 34cm) x 3 boxes / 6000 = 27.74kgs45kgs is greater than 27.74kgs so the Chargeable Weight will be 45kgs
368 1) What is Terms of Sale (Trade Terms) The buyer and the seller should determine when & where to transfer the goods, payment etc.a) The goodsb) Payment for the goods, freight charges, insurance for the in-transit goods.Legal title to the goodsRequired documentationResponsibility for controlling or caring for the goods in-transit
369 Because they have no clear definition on trade terms. 2) Common Trade TermsEven professional businessmen do not use proper trade terms at the real business occasions.Because they have no clear definition on trade terms.It is very important to understand the correct interpretation of delivery trade terms.Incoterms and usual trade terms have a big difference in most cases.
370 The 3 most common trade terms a) Ex Factory =Ex Works / Incotermsb) FOB (Free On Board)= FCA / IncotermsIn USA, they are still using their own trade terms from “American Foreign Trade Definitions” in FOB terms are using very differently from Incoterms.c) CIF (Cost, Insurance & Freight) = CIP/ IncotermsThis is not a product trade but a document trade.
371 a) Ex FactoryEX-FACTORY is where a seller’s responsibility ends when the buyer at point of origin, i.e., factory, accepts merchandise. This can also be written as Ex-Warehouse, Ex-works, Ex-Mill, etc.
373 Ex. 1Sunny, 22 years old Thai, wants to sell his watch to Japan. Maki, Japanese guy asked him to pick it up at his shop in Khon Kaen. Watch Patek Philippe THB2 million FEDEX charge to Tokyo, Japan THB2500 Insurance THB3500
374 b) FOBFree on Board" means that the seller delivers the goods on board of the vessel, nominated by the buyer at the named port of shipment or procures. The risk of loss of or damage to the goods passes when the goods are on board the vessel by the seller, and the buyer pays all costs from that moment onwards.
375 FOB may not be appropriate where goods are handed over to the carrier before they are on board the vessel, for example goods in containers, which are typically delivered at a terminal.In such situations, the FCA rule should be used in Incoterms .
376 FOB requires the seller to clear the goods for export, where applicable. However, the seller has no obligation to clear the goods for import, pay any import duty or carry out any import customs formalities.
378 Ex. 2The seller (exporter) is in Khon Kaen, Thailand wants to sell a pick-up tracks to the buyer in Japan. FOB Bangkok US$20,000 The seller pay all charges until the warehouse at Leam Chabang Port and the cost to clear the custom for export. The buyer (importer) will pay freight to Tokyo and insurance. Title of the goods passes at Leam Chabang Port.
379 c) CIFCIF (COST, INSURANCE & FREIGHT) is a shipment where all shipping costs are paid by the exporter, including insurance.
381 Ex.3Narin, 23years old ,Khon Kaen, Thailand wants to buy a washing machine from Whirlpool, Chicago USA. The product cost : US$ 2,000 Ocean freight : US$400 Insurance : US$80 Custom clearance charge in Thai THB1500 Import duty : 35% Truckage LC Port to Khon Kaen : THB850
382 3) Difference from USA Trade terms FOB shipping point (or FOB shipping point, freight collect) = FCA shipping pointFOB shipping point, freight prepaid= CPT destinationFOB destination (or FOB destination, freight prepaid) = DAT destinationFOB destination, freight collect=No Incoterm equivalent
383 4) Incoterms ① What is Incoterms? Incoterms was created by International Chamber of Commerce (ICC) in 1936.Exporters(Sellers)&Importers(Buyers) had a lot of troublesrelating to the rights andobligations of each parties.
384 Because, each country has deferent interpretations and practices. The purpose of Incoterms is to provide a set of international rules for the interpretation of commonly used trade terms in foreign trade.
385 ② Problems on Incoterms Incoterms is the most common rules of international & domestic trade. If the exporters and the importers use Incoterms, we will reduce a lot of troubles between two parties. However, not so much companies are using Incoterms and many of them do not understand the details of Incoterms.
386 Especially, FOB and FCA terms are misusing at everywhere in the world and make it more complicated. Many students are studying Incoterms at colleges & universities, but they do not have much chance to use at real business word after graduation.
387 ③ History In order to remedy the trade troubles from misunderstandings, disputes and litigation, with waste of time & money, ICC published a set of international rules for the interpretation of trade terms called Incoterms in 1936.In 1953, 1967, 1976, 1980,1990, 2000&2010 Incoterms was added and/or amended to adjust the current international trade practices. Now we are using Incoterms 2010.
388 ④ Scope of IncotermsThe scope of Incoterms is limited to matters relating to the rights and obligations of the parties to the contract of sales with respect of the goods sold. (not including intangibles like as computer software)
389 ⑤ Misconception of Incoterms There are 3 common misconceptions on Incotermsa) Incoterms should apply to the contact of sales not to the contract of carriage.b) Incoterms is limited to the rights& obligation of the parties on thedelivery of goods sold. (Not all theduties in the contract of sales.)
390 c) This is not an international law for international trade c) This is not an international law for international trade. The exporters & the importers wishing to use Incoterms 2010 should clearly specify that their contract is governed by Incoterms 2010 in their contract of sales.
391 If you want the Incoterms 2010 rules to apply to your contract, you should make clear in the contract, through such words as, the chosen Incoterms rule including the named place followed by Incoterms 2010.
393 Incoterms 2010The International Chamber of Commerce has released the table of contents to the Incoterms 2010.Incoterms 2010 consists of only 11 Incoterms, a reduction from the 13 Incoterms 2000.
394 The Incoterms 2010 are organized into two categories; Incoterms for any Mode or Modes of Transport&Incoterms for Sea and Inland Waterway Transport Only.
395 Any Mode or Modes of Transport E-Term EXW- Ex Works F-Term FCA - Free Carrier C-Term CPT - Carriage Paid to CIP - Carriage and Insurance Paid to D-Term DAT - Delivered At Terminal (new) DAP - Delivered At Place (new) DDP - Delivered Duty Paid
396 Sea & Inland Waterway Transport Only FAS - Free Alongside Ship FOB - Free On Board CFR - Cost and Freight CIF - Cost, Insurance and Freight
399 EXW (Ex Works)The buyer bears all costs and risks involved in taking the goods from the seller's premises to the desired destination. The seller's obligation is to make the goods available at his premises (works, factory, warehouse). This term represents minimum obligation for the seller. This term can be used across all modes of transport.
400 The Seller’s Obligations A1 General obligations of the sellerThe seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that maybe required by the contract.Any document referred to in A1~A10 may be an equivalent electronic record or procedure if agreed between the parties or customary.
402 A2 Licenses, authorizations, security clearances & other formalities Where applicable, the seller must provide the buyer, at the buyers request, risk & expense, assistance in obtaining any export license, or other official authorization necessary for the export of the goods. Where applicable, the seller must provide the buyer, at the buyers request, risk & expense, any information in the possession of the seller that is required for the security clearance of the goods.
403 A3 Contract of Carriage & insurance The seller has no Obligation to the buyer to make a contact of carriageb) contact of insuranceThe seller has no Obligation to the byer to make a contact of insurance. However, the seller must provide the buyer, at the buyer’s request, risk and expense (if any), with information that the buyer needs for obtaining insurance.
404 A4 DeliveryTo place goods at disposal of the buyerA5 Transfer of risksMust bear all risk & loss until A4A6 Allocation of costsTo pay all cost until A4A7 Notice to the buyerMust give sufficient notice
405 A8 Delivery documentNo ObligationA9 Checking-Packaging-MarkingMust pay cost of checking, packaging & markingA10 Assistance with information & related costsMust render assistance any documents forexport/import and necessary information for insurance
406 The Buyer’s Obligations B1 General obligations of the buyerMust pay the price as provided in thecontractB2 Licenses, authorizations, security clearances & other formalitiesMust obtain any export & import license atown risk & expensesB3 Contracts of Carriage & insuranceNo Obligation
407 B4 Taking DeliveryMust take delivery of the goodsB5 Transfer of riskMust bear all risk & loss after A4B6 Allocation of costsMust pay all cost after A4B7 Notices to the sellerMust give sufficient notice
408 B8 Proof of delivery.To provide evidence of having taken deliveryB9 Inspection of goodsMust pay the costs of pre-shipment inspection including inspection by the authority.A10 Assistance with information & related costsMust pay all costs & charges for A10 and reimburse .
410 FCA (Free Carrier)The seller's obligation is to hand over the goods, cleared for export, into the charge of the carrier named by the buyer at the named place or point.
411 If no precise point is indicated by the buyer, the seller may choose within the place or range stipulated where the carrier shall take the goods into his charge. When the seller's assistance is required in making the contract with the carrier the seller may act at the buyers risk and expense. This term can be used across all modes of transport.
414 CPT (Carriage Paid To)The seller pays the freight for the carriage of goods to the named destination. The risk of loss or damage to the goods occurring after the delivery has been made to the carrier is transferred from the seller to the buyer. This term requires the seller to clear the goods for export and can be used across all modes of transport.
416 CIP (Carriage & insurance Paid to) The seller has the same obligations as under CPT but has the responsibility of obtaining insurance against the buyer's risk of loss or damage of goods during the carriage. The seller is required to clear the goods for export however is only required to obtain insurance on minimum coverage. This term requires the seller to clear the goods for export and can be used across all modes of transport.
419 DAT (Delivered At Terminal) New Term - May be used for all transport modes. Seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal at the named port or place of destination. "Terminal" includes quay, warehouse, container yard or road, rail or air terminal
420 Both parties should agree the terminal and if possible a point within the terminal at which point the risks will transfer from the seller to the buyer of the goods. If it is intended that the seller is to bear all the costs and responsibilities from the terminal to another point, DAP or DDP may apply.
422 ResponsibilitiesSeller is responsible for the costs and risks to bring the goods to the point specified in the contract.Seller should ensure that their forwarding contract mirrors the contract of saleSeller is responsible for the export clearance procedures.
423 Importer is responsible to clear the goods for import, arrange import customs formalities, and pay import duty.If the parties intend the seller to bear the risks and costs of taking the goods from the terminal to another place then the DAP term may apply
424 DAP (Delivered At Place) New Term - May be used for all transport modes The Seller delivers the goods when they are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination. Parties are advised to specify as clearly as possible the point within the agreed place of destination, because risks transfer at this point from seller to buyer.If the seller is responsible for clearing the goods, paying duties etc., consideration should be given to using the DDP term.
426 ResponsibilitiesSeller bears the responsibility and risks to deliver the goods to the named place. Seller is advised to obtain contracts of carriage that match the contract of sale. Seller is required to clear the goods for exportIf the seller incurs unloading costs at place of destination, unless previously agreed they are not entitled to recover any such costs.Importer is responsible for effecting customs clearance, and paying any customs duties.
427 DDP (Delivered Duty Paid) The seller is responsible for delivering the goods to the named place in the country of importation, including all costs and risks in bringing the goods to import destination. This includes duties, taxes and customs formalities. This term may be used irrespective of the mode of transport.
430 FAS (Free Alongside Ship - named port of shipment) The seller must place the goods alongside the ship at the named port. The seller must clear the goods for export. Suitable only for maritime transport but NOT for multimodal sea transport in containers (see Incoterms 2010, ICC publication 715). This term is typically used for heavy-lift or bulk cargo.
431 FOB (Free On Board - named port of shipment) The seller must load themselves the goods on board the vessel nominated by the buyer. Cost and risk are divided when the goods are actually on board of the vessel (this rule is new!). The seller must clear the goods for export.
432 The term is applicable for maritime and inland waterway transport only but NOT for multimodal sea transport in containers. The buyer must instruct the seller the details of the vessel and the port where the goods are to be loaded, and there is no reference to, or provision for, the use of a carrier or forwarder.
433 Misuse of FOBThis term has been greatly misused over the last three decades ever since Incoterms 1980 explained that FCA should be used for container shipments.
434 CFR (Cost & Freight)The seller must pay the costs and freight required in bringing the goods to the named port of destination. The risk of loss or damage is transferred from seller to buyer when the goods pass over the ship's rail in the port of shipment. The seller is required to clear the goods for export. This term should only be used for sea or inland waterway transport.
435 CIF (Cost, Insurance & Freight) The seller has the same obligations as under CFR however he is also required to provide insurance against the buyer's risk of loss or damage to the goods during transit. The seller is required to clear the goods for export. This term should only be used for sea or inland waterway transport.
436 FIFOFirst In, First Out.FIFO accounting is a common method for recording the value of inventory.A firm records the last units purchased as inventory value, but it does not necessarily mean that the exact oldest physical object has been tracked and sold.
437 LIFOLast In , First Out LIFO accounting, a historical method of recording the value of inventory, a firm records the first units purchased as inventory value. This method is not fit to International Financial Reporting Standards. .
438 Reference books1) Logistical Management by Donald J. Bowersox 2) Essential of Supply Chain Management by Michael H. Hugos 3) Logistics & Supply Chain Management by Martin Christopher ===================================== Built to Last: Successful Habits of Visionary Companies by Jim Collins & Jerry I. Porras
439 BHAGA Big Hairy Audacious Goal is a strategic business statement which is created to focus an organization on a single medium-long term organization-wide goal which is audacious, likely to be externally questionable, but not internally regarded as impossible.
440 ClosingThank you very much for taking my class. I hope all of you would have a nice future. I would like to help you as much as possible. If you need me please contact me at the following address.