Wednesday, October 20, 2010

Auld Lang Syne Incoterms 2000

Good-bye, Incoterms 2000. Hello, Incoterms 2010. Changes in Incoterms are set to take effect in January 2011. Incoterms originally began in 1936 as a set of common rules to bring legal certainty and simplification to drafting legal contracts. The terms help define responsibility of goods throughout the shipment process, particularly in international trade.

Significant alterations have been made to the 2010 version to facilitate changes in global business including electronic documentation and security. Divided into two classes, 1) any mode of transport and 2) maritime transport, Incoterms will be reduced from 13 to 11. The most significant modifications will take effect in the 'D' Group terms (think DAT, DAP, DDT, etc.).

While most will welcome the new, updated terms, this coming New Year's Eve, don't forget a little Auld Lang Syne in tribute to Incoterms 2000.

Sample Test Question: Task 2-B-3

EXW (Ex Works) is an Incoterm best described as the which of the following:

A) The seller delivers goods, cleared for export to the buyer's designated carrier at a named location. Delivery may take place when goods are loaded into the carrier's equipment, or when goods are simply made available to the carrier.
B) The seller places goods on a loading dock at which time risk transfers to the carrier.
C) Used in maritime trade, the responsibility for goods transfers when the goods are loaded aboard the vessel.
D) The price quoted by a seller applies to the goods' point of origin. The buyer takes possession at that point and bears all costs and risks in transportation.

Tuesday, October 19, 2010

A Shining Green Standard

The flow of goods and materials into a manufacturing facility should be efficient and reliable. And green. Green? Green is nice, but is it possible? Green is not only possible, but is the standard at Volkswagen Phaeton of Germany. The Phaeton is a luxury sedan marketed by Volkswagen worldwide and is named for the Greek god Phoebus, the "Shining-one".

In a city famous for its operetta, WWII bombing scars, heritage, and royalty,Volkswagen's Phaeton assembly plant is now making Dresden, Germany famous for one more reason: going green. The transportation of goods throughout the city to the Volkswagen manufacturing facility is a model for efficient and environmentally sound transportation. From electric-powered cargo trams in the city, to driverless, battery-operated trolleys controlled by magnets beneath the floor in the factory, the green goal at Volkswagen is achieved.

By avoiding air pollution and congestion, costs and inefficiencies are removed from the Phaeton supply chain. And through this commitment, Volkswagen becomes a "Shining-one" too: a shining example of what is possible when you stick to a green initiative.

Read more:

Sample Test Question: Task 2-B-2

When selecting a mode of transportation, the supply management professional should consider all of the following:

A) Types of goods, which transportation mode best meets the organization's needs, delivery requirements, organizational requirements

Types of goods, which transportation mode best meets the organization's needs, relationships with third-party logistic providers, organizational requirements
C) Types of goods, relationships with third-party logistic providers, delivery requirements, organizational requirements
D) Types of goods, which transportation mode best meets the organization's needs, delivery requirements, relationships with third-party logistic providers

Monday, October 18, 2010

Max Tax or No Tax: Gubernatorial Races Sound Off on Tax Incentives

If you have followed the gubernatorial campaigns this face, you've likely heard the news: $15 million tax incentive to Symmetry in Michigan, $40 million tax incentive to Adobe in Utah, or you could be in the state of Colorado, the state with second highest corporate tax rate, and contemplating a major overall of corporate tax incentives. Regardless of where candidates sit on the tax incentive spectrum, such incentives are repeatedly a topic of hot debate in the gubernatorial races this fall.

A depressed economy is causing some states to dig even deeper to offer tax incentives that large corporations can't ignore. However, don't be fooled into thinking states are writing big checks as they welcome the new businesses. Most tax incentives have performance requirements associated with them. The $40 million Adobe deal in Utah for example, is payable in reduced tax requirements over 20 years. Adobe is expected to bring 1,000 jobs to the state; each job will be required to offer a salary that is 75% higher than the county average.

One might be led to think that with post-performance incentives, states can't go wrong. Others, think it is prudent to build up smaller and existing businesses already doing business in a state, instead of offering tax breaks to large corporations that need it the least. Those candidates in favor of offering tax incentives to new businesses, argue that in order to remain competitive in a increasingly global economy, such incentives are a necessity.

Sample Test Question: Task 2-B-1
When it comes to building a new logistics facility, tax incentives offered by a local government, are an example of what type of consideration:

A) Labor consideration
B) Transportation availability consideration
C) Governmental and political consideration

D) Environmental consideration

Tuesday, October 12, 2010

Walmart Giant Shrinking?

Walmart, the department store mega-superstar, might not be so mega after all. At least not at every retail location. Apparently Walmart is considering numerous smaller retail locations, particularly in urban areas where the traditional mammoth-sized retail locations may not make sense, or may not be possible. The smaller, urban Walmart is most likely coming to the downtown streets of New York City, Chicago, and Los Angeles. Some locations may be as small as a measly 5,000 square feet.

The plans for this unique expansion are under wraps for now and protected by non-disclosure agreements. However, the information that is available is largely speculation based on real estate executives spilling the beans. Rumors have been circulating for a few weeks, but an official announcement from the grandiose retailer is expected tomorrow.

Sample Test Question: Task 2-A-3

The following are all contractual concerns that should be considered when drafting a non-disclosure agreement EXCEPT:

A) Protecting publicly available, non-proprietary information
B) Define how proprietary information may be used
C) Prevent disclosure of confidential information to unauthorized third parties

D) Use reasonable care to protect confidential information

Monday, October 11, 2010

U.S. Economy: License to Recover

Although already officially declared over, many Americans are still reeling from the effects of the recession, or even double dip recession as it has been called. August 2010's producer price index and jobless claims were mildly good news. September's report on the same is due out this Thursday. So this week, economists are as anxious as a teenager about to get his driver's license.

The report of jobless claims provides insight not only to how many Americans are not employed and looking for work, but is also a measure of underlying market trends. The August number (reported in September) was slightly down, even though analysts expected it to be slightly higher. So it was good news - times two.

The produce price index is adjusted for seasonal, weather, and other unique conditions. With seasonal adjustments, the farm commodity measure was up in the August numbers, even more than analysts had predicted. Another good omen for the economy. Some experts view this as a measure of inflation, others consider it simply a measure in the volatility of commodity prices.

While economic recovery is not going to be a straight upward arrow, the August numbers were encouraging. And like the nearly licensed-to-drive teenager, a few more restless nights and soon we'll know if September's numbers will confirm the story of continued economic recovery.

Sample Test Question: Task 2-A-2

The producer price index (PPI) may be BEST used by supply management professionals to do all EXCEPT which of the following:

A) predict price inflation.
B) negotiate price increases in contracts.
C) unilaterally define economic conditions.
D) assess reasonableness of supplier pricing on commodities.

Friday, October 8, 2010

Marine Measure Complete

(Pictured is an octopus from the Great Barrier Reef.)

At the conclusion of a detailed ten-year study involving 2,700 scientists, a benchmark of marine life has been set. The census resulted in thousands of new ocean species being identified. The study went broader and deeper than scientists have ever gone before. Some newly discovered creatures include a shrimp that was thought to have gone extinct during the Jurassic Period.

With such an exhaustive benchmark complete, changes in ocean life can be more accurately monitored by scientist going forward.

Sample Test Question: Task 2-A-1

benchmark is

A) an evaluation of an organization's strengths, weaknesses, opportunities, and threats.
B) a standard or reference point.
C) an evaluation of the market in terms competition, geography, and cooperation.
D) an assessment to describe competition.

Wednesday, October 6, 2010

Ford Dealers to be Seeing Any Color - So Long as it is Black

Henry Ford, the father of the over 100 year-old motor company that bears his name, is credited with saying, "Any color - so long as it's black." While he was speaking of the not-so-wide-range of paint colors available for the Model T from 1915-1925, the color is always highly sought after on accounting books.

With struggling economic times, more and more car dealers are seeing red these days. But black is the color Ford is hoping their franchisees will see soon. To assist in this effort, one step Ford is taking is to drastically downsize their dealers. With a hope to reduce the 500 franchisees in the top markets by one-third, Ford plans to meet and discuss plans with their dealers at least twice over the next few months. It is hoped that Ford's offering of financial incentives to relinquish the Ford franchise will be the needed spoonful of sugar to help the medicine go down.

Although it is a tough situation, Ford is committed to their enhancing their high-end Lincoln brand and hoping to elevate their remaining dealers' ability to be profitable. The reduced dealer network in strategic markets, should enable them to do both.

Ideally, the personal meetings and the financial incentives will stay the hand of negative publicity and be an effective way to assist the terminated dealers, their businesses, and the surrounding community.

Sample Test Question: Task 1-F-6
Supplier management professionals should be acutely aware of, and plan carefully for downsizing as it impacts a community, for all of the reasons below EXCEPT:

A) Many states have passed community impact laws that define processes for plant downsizing or shutdown.
B) Negative publicity can harm the buying organization.

C) Negative publicity can harm the supplier.

D) Phase-outs need to be avoided during the organization's high volume periods.