International Trade and Supply Chain Management Concepts

MITI

Japan's Ministry of International Trade and Industry.

Sogo shosha

Japanese trading companies; a key part of the keiretsu, the large Japanese industrial groups.

Target market

Needs 3 criteria: identifiable, reachable, and profitable.

Export Management Company (EMC)

Export specialist that acts as an export marketing department for client firms. They have product and country knowledge.

Export processing zones (EPZ)

Designated areas for export-oriented production.

Foreign trade zone (FTZ)

A designated area where goods can be imported without paying tariffs.

Letter of credit

Issued by a bank, indicating that the bank will make payments under specific circumstances.

Bill of exchange

An order written by an exporter instructing an importer, or an importer's agent, to pay a specified amount of money at a specified time.

Draft

An order written by an exporter telling an importer what and when to pay.

Sight draft

A draft payable on presentation to the drawee.

Time draft

A promise to pay by the accepting party at some future date.

Bankers acceptance

When a time draft is drawn on and accepted by a bank.

Trade acceptance

When a time draft is drawn on and accepted by a business firm.

Bill of lading

A document issued to an exporter by a common carrier transporting merchandise. It serves as a receipt, a contract, and a document of title.

Packing list

List of the contents.

Export-import bank (EXIM Bank)

Agency of the U.S. government whose mission is to provide aid in financing and facilitate exports and imports.

CIF

Cost, insurance, freight.

Export credit insurance

Allows firm to cover a major portion of the loss, if the customer defaults.

Countertrade

The trade of goods and services for other goods and services.

Barter

Trade of goods for goods; the direct exchange of goods or services between two parties without a cash transaction.

Counterpurchase

A reciprocal buying agreement.

Offset

Agreement to purchase goods and services with a specified percentage of proceeds from an original sale in that country from any firm in the country.

Switch trading

Use of a specialized third-party trading house in a countertrade arrangement.

Buyback

Agreement to accept a percentage of a plant's output as payment for contract to build a plant.

Production

Activities involved in creating a product.

Supply chain management

The integration and coordination of logistics, purchasing, operations, and market channel activities from raw material to the end-customer.

Purchasing

The part of the supply chain that includes the worldwide buying of raw material, component parts, and products used in manufacturing of the company's products and services.

Logistics

The part of the supply chain that plans, implements, and controls the effective flows and inventory of raw material, component parts, and products used in manufacturing.

Upstream (inbound supply chain)

The portion of the supply chain from raw materials to the production facility.

Downstream

The portion of the supply chain from the production facility to the end customer.

Total quality management (TQM)

Management philosophy that takes as its central focus the need to improve the quality of a company's products and services.

Six sigma

Statistically based methodology for improving product quality.

ISO 9000

Certification process that requires certain quality standards that must be met.

Minimum efficient scale

The level of output at which most plant-level scale economies are exhausted.

Flexible manufacturing technology (lean production)

Manufacturing technology designed to improve job scheduling, reduce setup time, and improve quality control.

Mass customization

The production of a variety of end products at a unit cost that could once be achieved only through mass production of a standardized output.

Flexible machine cells

Flexible manufacturing technology in which a grouping of various machine types, a common materials handler, and a centralized cell controller produce a family of products.

Global learning

The flow of skills and product offerings from foreign subsidiary to home country and from foreign subsidiary to foreign subsidiary.

Offshore factory

A factory that is developed and set up mainly for producing component parts or finished goods at a lower cost than producing them at home or in any other market.

Source factory

A factory whose primary purpose is also to drive down costs in the global supply chain.

Server factory

A factory linked into the global supply chain for a global firm to supply specific country or regional markets around the globe.

Contributor factory

A factory that serves a specific country or world region.

Outpost factory

A factory that can be viewed as an intelligence-gathering unit.

Lead factory

A factory that is intended to create new processes, products, and technologies that can be used throughout the global firm in all parts of the world.

Make-or-buy decision

The strategic decision concerning whether to produce an item in-house ("make") or purchase it from an outside supplier ("buy").

Value-to-weight ratio

When high, produce close to market.

Quality vs costs

Consideration in the decision-making process regarding production.

Control

The ability to manage and direct production and supply chain processes.

Upstream

The portion of the supply chain that involves the sourcing of materials and components.

Short term vs Long term

Considerations in production strategy and decision-making.

Government assistance

Support provided by the government that can influence production location decisions.

Tariffs

Taxes imposed on imported goods that can affect production costs and location.

Quota

A limit on the quantity of a product that can be imported or exported.

Global distribution center

A facility that positions and allows customization of products for delivery to worldwide wholesalers or retailers or directly to consumers anywhere in the world; also called a global distribution warehouse.

Global inventory management

The decision-making process regarding the raw materials, work-in-process (component parts), and finished goods inventory for a multinational corporation.

Packaging

The container that holds the product itself. It can be divided into primary, secondary, and transit packaging.

Perform

The ability of the product in the package to handle being transported between nodes in the global supply chain.

Storage ability

The ability of the product to be stored for typical lengths of time for a particular product category.

Convenience

The package providing the convenience expected by both the supply chain partners and the end-customers.

Protect

The ability to contain the products properly.

Preserve

The ability to maintain the freshness or newness of the products.

Provide security

To ensure the products reach their end destination safely.

Inform

Logical and sufficient instruction for the use of the products inside the package, including specific requirements to satisfy local regulations.

Product guarantee

Where applicable, a statement of a compelling product guarantee.

Service information

Information about service for the product if and when needed.

Primary packaging

Individual packaging (e.g., toothpaste in a box).

Secondary packaging

Case packs.

Transportation

The movement of inventory through the supply chain.

Transit packaging

Freight.

Reverse logistics

The process of moving inventory from the point of consumption to the point of origin in supply chains for the purpose of recapturing value or proper disposal.

Just-in-time (JIT)

Inventory logistics system designed to deliver parts to a production process as they are needed, not before.

Just-in-case

A strategy where the firm holds a larger buffer stocks of critically important inventory just-in-case of future supply chain disruptions.

Blockchain technology

A database mechanism that allows for the transparent sharing of information within a business network such as a supply chain.

Global supply chain coordination

The shared decision-making opportunities and operational collaboration of key global supply chain activities.

Strategic levels of global purchasing

Five strategic levels—from domestic to international to global—can be undertaken by a global company.

Level 1

Engaging in domestic purchasing activities only.

Level 2

Engage in international purchasing as needed.

Level 3

Engage in international purchasing as part of the firm's overall strategy.

Level 4

Global purchasing activities that are integrated across worldwide locations.

Level 5

Engaging in global purchasing activities that are integrated across worldwide locations and functional groups.

Responsiveness

global firms' ability to satisfy customers' requirements across the global supply chain function promptly

Variance reduction

integrating a control system across global supply chain functions to eliminate global supply chain disruptions

Inventory reduction

integrating an inventory system, controlling asset commitment, and increasing turn velocity across global supply chain disruptions

Shipment consolidation

using various programs to combine small shipments and provide timely, consolidated movement

Quality

integrating a system so it achieves zero defects throughout global supply

Life cycle support

integrating the activities of reverse logistics, recycling, after-market service, product recall, and product disposal across global supply chain functions

Marketing mix

Choices about product attributes, distribution strategy, communication strategy, and pricing strategy that a firm offers its targeted markets.

Market segmentation

Identifying groups of consumers whose purchasing behavior differs from others in important ways.

Intermarket segment

A segment of customers that spans multiple countries, transcending national borders.

Business analytics

The knowledge, skills, and technology that allow for the exploration as well as deeper investigation of a company's international business strategies and activities to gain insight and drive future strategy development and implementation.

Big data

A massive volume of structured and/or unstructured data that are so large they may be difficult to process using traditional database and software techniques.

Descriptive analytics

the use of relatively simple statistical techniques to describe what is contained in a dataset

Predictive analytics

the use of advanced statistical techniques to identify and build predictive models that can help to identify trends and relationships not readily observed in descriptive analyses.

Prescriptive analytics

the use of management science methodologies to guide a company in its endeavors to best use allocable resources

International market research

The systematic collection, recording, analysis, and interpretation of data to provide knowledge that is useful for decision making in a global company.

Concentrated retail system

A retail system in which a few retailers supply most of the market.

Fragmented retail system

A retail system in which there are many retailers, none of which has a major share of the market.

Channel length

The number of intermediaries that a product has to go through before it reaches the final consumer.

Break even

FC/P-VC

Channel exclusivity

Exclusive distribution channel: A distribution channel that outsiders find difficult to access