Encompasses planning and management of all activites in sourcing, procurement, conversion and logistics. 

Integrates supply and demand management within and across companies.

1. How to source materials and services.

2. How to make goods and services.

3. How to deliver these goods and services.

The activites required to move and position inventory throughout a supply chain. 

The movement and storage activities that are associated with product and service flow in the focal organization. 

Question surrounding all of procurement: 

To make the product or buy it from outside (outsourcing)? 

Most common: Operational/Transportational

Less often: Customer related, Info Tech, etc.

1. Transportation

2. Warehousing

3. Customs

Soul Sourcing

Single Sourcing

Direct Procurement

Indirect Procurement

Most common option. 

Multiple vendors to choose from and use. 

1. Operating Resource Management

2. Maintenance, Repair and Operating

A type of indirect procurement.

Anything that is not MRO or mission critical to the process. 

A type of indirect procurement. 

Procurement for any types of goods, supplies, services that are determined to be mission critical; ex: direct input into the product itself. Anything that falls under MRO are determined to be mission critical. 

Will not having it affect the operations of the process?

1. Moderate number of orders

2. Few quantities per order

3. Low delivery critically

4. Low ratio of single sourcing

5. Rarely present service contracts

6. Minimal vendor performance measurements

1. Often high number of orders

2. Quantitiy per order varies from one to several thousand

3. Routinely critical delivery

4. High percentage of single source ratios

5. Service contracts almost always present

6. Vendor performance measurements are almost always present. 

A type of contract for direct procurement.

Typically used in government deals. Contracts in which the buying agency will pay the selling agency the cost of the product or service plus a little extra. 

A type of direct procurement contract. 

A buyer will pay a certain price and nothing more. 

Easy to budget if you are a buyer because you are not subject to price fluctuations

1. Request Information

2. Request Quotation

3. Request Proposals

4. Contract Negotiation and Signing

A term used to describe the automation through web-enabled tolls of many elements of the procurement process. 

Works best when there is little difference between vendors. 

Reduces cost and inflation at every step. 

Multiple legal systems, currencies, languages, economies and cultures. 

Movement-specific challenges: longer distances, longer cycle times, additional documentation, domestic and international transportation. 

International Freight: mostly uses ocean, water, etc.

Domestic Freight: mostly uses motor carrier.

The most important part of international freight. 

Absolute accuracy required. 

Shippers Export Declaration

Export License 

Commercial Invoice

Certificate of Origin

eclaration or letter issued by the consignor of the goods to the gov't (your own gov't) stating the value of the goods and the nature of the goods.

Depending on place to place and country to country, certain goods may be exempt from a Shipper's Export Declaration: EX- US requires only value of goods of $2500+ exportation costs to file export declarations. Africa requires all. 

Gov't require these to track the 'balance of trade'.

US Shipper's Export Declaration can be found and filled out online. 

Not all goods require export licenses. It is up to the responsibility of the consignor to know whether a good needs an export license or not. "Not knowing" whether goods need a license or not is not an excuse for not having one. 

An international documentation piece. 

An invoice between companies. Same as one I would receive from online shopping. 

A type of international documentation. 

A listing of the contents of your package to keep track of your order. 

The mother document of everything in freight, logistics, transportation, etc.

Should be received by the consignor from the consignee confirming that the goods have been received. 

A type of import document. 

Where the freight was imported from and where it was made. Certifies that the goods have been 'made' in the country that is stated.

'Made' in a country means that at least 50% of the value added was from the stated country. Most products are not 100% made in one country. 

EX: $1 Wal-Mart product can be 'Made in USA' if $.20 was made in China, $.10 made in Mexico and $.70 made in USA

The oldest mode of transportation. 

Cost effective but slow. 

Used in Ocean Transportation

Extremely important- if it gets lost, the goods may be stuck in one place. 

The receiver must obtain the B/L to receive the goods. 

Used in Ocean Transportation. 

Physical possession of the B/L is not required or expected to receive the goods, less paper work is involved. 

Almost everything in domestic freight is sent by Express B/L.

Container Ships

Bulk Carriers

Ro-Ro

Break Bulk

LASH

ROPAX/CONRO, etc

Type of Ocean Transportation Carrier

Large vessel designed specifically to hold many containers. 

Type of Ocean Transportation Carrier.

Special kind of vessel that carries anything other than containerized cargo. 

Type of Ocean Transportation Carrier

Roll On, Roll Off: special kind of trade vessel designed to carry things that can roll on and roll off. EX: Cars, trailers, etc.

Type of Ocean Transportation Carrier

Walk On, Walk Off: special kind of carrier vessel designed to carry people. EX: ferry or cruise. 

Type of Ocean Transportation Carrier

Hoof On, Hoof Off: special kind of vessel designed to carry animals. 

Type of Ocean Transportation Carrier. 

Lighter Aboard Ship: the ability to buy and sell things from far areas comes the development of LASH. A smaller ship that travels on top of a larger ship- used to travel on intercostal water ways. Allows for purchase of materials outside of port cities. 

Significantly changed the price of international products by dramatically increasing accessibility. 

EXAM QUESTION

Types of Ocean Transportation Carriers

ROPAX: cruise with cars

CONRO: containerized cargo and roll on, roll off. 

PCC: special kind of Ro-Ro, only takes cars. Pure Car Carrier. 

PCTC: Pure Car and Truck Carrier

During transit, it can be packaged from the beginning and not need to be repackaged or opened until the final destination. 

Lower chances for goods to be tampered with or broken. 

Easier to keep up with the goods. Easier shipping, more secure traveling. 

Containers may get lost and the loss is much larger than just losing one product. 

Certain facilities are not designed to carry container cargo. 

Non-Vehicle Operating Common Carrriers 

They allow you to buy space in bulk and give you any size of the container that you want. EX: 1/3, 1/5, etc.

Freigh consolidators.  

"the architecture of freight"

Used to design the movement of the freight. Arranging insurance, ware-housing, etc. They do everything that NVOCC's do plus some. 

A type of Incoterms (International Commerical Terms)

The buyer has the responsibility of picking up the goods, arraging for transportation, freight, shipping, costoms, etc. Seller is responsible for very little- responsibility typically ends when the goods leave the seller's hands. 

Examples of ExWorks:

-When the sellers have more power than the buyers: Oil business

-When the buyers are large corportaions: Starbucks

EXAM QUESTION

A type of Incoterms

Free On Board means that risk pass to buyer including payment of all transportation and insurance cost once delieved on board the ship by the seller. Used for sea or inland waterway transportation.

Some countries insist on doing business only FOB; like African and European companies. 

Seller is responsible for:

-Goods, packing, pre-carriage, export costs, loading

Buyer is responsible for: 

-Main carriage costs, import costs, on-carriage. 

You should expect to pay more for goods bought FOB. 

Most common term of Incoterms trade. 

Most goods are shipped CIF, the seller is responsible for packaging, transportation, etc. 

Under CIF, the seller will also pay for ocen freight and transportation. 

CIF is the easiest term of trade to compare across vendors because the vendro is paying for everything itself.