1
Global Supply Chain Management
2
Overview of Issues 3
Executive Summary 3
Suppliers Market 5
Route to Market 6
Sea shipment 7
Origin Port : Hong Kong to Canada 7
Origin Port : Hong Kong to USA 8
Origin Port: Shanghai to USA 8
Origin Port: Shanghai to Canada 10
Freight Charges 13
Incoterms: 13
Value Chain Initiatives, 16
Container Size: 16
Cost of Goods Sold (COGS) and Custom Duty Cost Savings 21
Broken Chains in the Value Chain 21
Supply Planning Issue 22
Shipping Documents Issue 23
Freight charges 23
Custom Clearance 24
Intermodal issues 24
Risk Managements 24
Shipping Documents Issue 25
Centralized Warehousing 29
References 32
3
Overview of Issues
Having reviewed entire supply chain of ABC company , following points have been observed
and considered as a gap in entire supply chain management process which could be potential
milestones for improving the entire supply process
● there are three vendors in below cities
○ 1) Shanghai, 2) Beijing, and 3) Hong Kong.
● ABC is importing to the following locations :
○ Canada POD: 1) Toronto, 2) Montreal, 3) Halifax, 4) Vancouver, 5) Edmonton,
and 6) Saskatoon
○ USA POD: 1) New York, 2) Los Angeles, 3) Miami, 4) Houston, and 5) Boston.
Areas of improvements noted include the following:
● Paying $1400/container in freight charges, and need a reductions
● Shipments are being delayed at various points of entry due to customs and non-customs
issues
● The various participants are not cooperating with each other, thus, creating a “clogged”
channel
● Delays in customs are adding to demurrage charges
Executive Summary
Given the scenario presented, we looked at ways to make this process more efficient.
While it was not explicitly said, it appears there are too many links in the supply chain, and
consolidation should be looked at throughout the chain. We found that rather than using a
decentralized warehousing method, it would be much more efficient to use a centralized method.
Having reviewed all the logistics process of ABC company, we have found some gaps and
challenges as below which could create numerous Cost Saving and Time Saving in to the entire
supply chain of ABC company. Covering below gaps not only bring more added value to company
but also change supply chain to entire Value Chain as below.
4
In terms of remedying the “clogged” channel, we looked into adopting a matrix
management system in the supply chain. Supply chains incorporate a number of jobs that have
always been organized by function such as purchasing, manufacturing, logistics and distribution,
etc. It’s proven to be advantageous having all functions working from the same set of systems
and having access to the same information. Therefore when all job functions are linked,
cooperation will follow and channels will no longer be “clogged”.
Cost
Component/Issue
Potential Action Plan
Privilege
Risk Assessment/
Priority
Port of Dispatch
Consolidate orders/using
Shanghai and Hong Kong as HUB
Cost Saving/ more shipment
availability
Priority/ not urgent
Port of Discharge
Considered Vancouver for all far
east orders in Canada
Cost saving/ less lead time/ less
working Capital
High priority
Transit Time
Changing POD and POA/
alignment between stakeholders
Minimize demurrage
/detention/warehouse issue
High priority
Freight Charges
Negotiating term on higher
volume/change POD and
POA/using intermodal
Minimize demurrage/ detention
warehouse issue
High priority
Shipping line/3pl
Service Level
Finding the best freight forwarder
as 3pl and business partner
outsource tasks to expertise and
focus more on sales
Just recommendation
Shipment Schedule
Changing POD/ shipping line to
have more flexible routes
on time order delivery and
minimize out of stock
Priority
Container Size
Changing to 40 ft and 40 ft high
cube depends on MOQ,MOP
Huge cost saving and smooth
deliveries
High priority
Loading Pattern
Pallet loading or loose pallet
More capacity in container but
risk of bad goods
Just recommendation
Intermodal Routes
Using rail instead of road for
inland transportation
Cost saving/ better dispatch
schedule/ reliable service in
Priority
5
winter
Cost of Goods sold
Initiatives on re-packing and
stickering depends on the
consumer acceptance
More products in container: less
freight charges per product
Less packaging materials would
decrease COGS
Just recommendation
Supply Planning
Using integrated planning tools
Introducing MRP to vendors
Just recommendation
Shipping documents
Delegating to 3pl for more
accuracy
have more cost but decrease
hidden cost in P&L
such as demurrages, banking
revised charges, detention, due
to shipping documents
discrepancy
High priority
Centralize warehouse
Using 3pl/4pl for outsourcing
entire distribution and
warehousing
Availability of products for
ordering on less MOQ
Less cost of transportation by
using container higher size
Possibility of consolidating orders
from 3 different vendors and
having more sales
Just recommendation
Suppliers Market
There are 3 overseas manufacturers in Shanghai, Beijing and Hong Kong, there is possibility of
Mixing Beijing and Shanghai orders depends on the minimum order quantity, minimum order
productions cycles ,orders volume and orders cycles as Beijing orders would be shipped from
Shanghai port. Shanghai would be the best port in terms of frequency of services but Hong Kong
would be too far to consolidate with mainland china products and should be shipped from Hong
Kong port.
6
❖ Shanghai is number one in the recommended port list of china
❖ Shanghai and Hong Kong distances
Route to Market
Containers are imported via different delivery ports for different delivery locations such as Toronto,
Vancouver Montreal , Halifax ,Edmonton and Saskatoon. We have been observed that the best
route from Shanghai and Hong Kong to Canada would be through Vancouver port and using
intermodal transportation to deliveries location .It is recommended to use rail transport from
Vancouver port to delivery locations.
Sea shipment
We have considered below parameters for finding the best sea shipments routes
1. Origin Port
2. Destination Port
3. Transit Time
4. Freight Charges
5. Service Type