Mastering Import and Export Management
Author: Thomas A. Cook
Pub Date: August 2017
Print Edition: $85.00
Print ISBN: 9780814438206
Page Count: 688
Edition: Third Edition
e-Book ISBN: 9780814438213
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Importers have an array of steps they must take to purchase goods from foreign suppliers. Some of these steps are
1. Make sure all of the entities you are doing business with are legitimate. This is general business sense--make sure you check them out, as you would any party within the United States, before you enter an agreement. I am always astonished at the lack of due diligence in checking out foreign suppliers in the face of million-dollar transactions.
2. In addition, you should check all of the U.S. government lists, like Denied Parties, Unverified, Office of Foreign Asset Control (OFAC) Sanctions, and State Department, to make sure the party and individuals you are engaging are not on them. In the appendix, the access to these government sites is provided. It is part of an importer's due diligence to make sure these lists are checked.
3. Make sure that the supplier can meet all of your manufacturing and production needs. I would suggest that before moving all of your business to the new supplier and reaching long-term agreements, you allow a period of testing and review. There should be no reason to rush into a new supplier and arrange a long-term agreement until you are reasonably sure it can meet your needs on a timely and efficient basis. Do not give up your existing supply lines until the new one is solid. You may want to "wean" the new one into full time while the other is gradually turned off.
4. Review all vulnerabilities and set up "plan Bs" and contingency arrangements. Set up a committee with all of those engaged in the inbound supply chain. Make a checklist of "what ifs" and vulnerabilities. Then create a new checklist with a proactive strategy to deal with all of the issues.
5. Work with qualified consultants and attorneys in the United States and locally overseas. Typical "house" counsels lack the expertise required and ultimately can cause more harm than good. Check with outside counsel, trade associations, the Internet, and vendors for names of experienced international legal counsel. The National Institute for World Trade (NIWT.org) is a reputable option in this regard.
6. Develop contracts that limit exclusivity and have arbitration agreements in them. Do not commit to deals that restrict your ability to change or modify the agreement, if you're not satisfied with your supplier's performance. All disputes should be settled in a neutral setting like an arbitration panel in London, Toronto, or Sydney, not in the country where you are sourcing your goods.
7. Do extensive product testing before entering the U.S. market or for use in your full-scale manufacturing. It can become a real embarrassment when you have a "boatload" of goods coming in and the prototypes are not meeting specification. Buying from overseas markets requires patience and thorough diligence.
8. Make sure your suppliers' products meet all regulatory requirements. These include customs, OSHA, USDA/FDA, BATF, DEC, DOT, FCC, and CDC, to name a limited few. It is imperative that the importer coordinates the import legal requirements with the various agencies that govern the specific product line. In many cases, there could be multiple agencies involved with similar or conflicting regulations. Larger corporations may have multiple compliance specialists in the various purviews, like a pharmaceutical company that would have a FDA compliance person, an OSHA compliance person, and an import compliance manager.
9. Make sure your new supplier meets all packing, marking, and labeling requirements. It is an importer's responsibility, typically as "importer of record," to ensure the goods entering the United States meet all requirements for how they are marked, packed, and labeled. For example, a cereal product must have the carton and internal wrapping meet FDA standards. The outside of the carton must meet United States Department of Agriculture (USDA) guidelines on communicating product, handling, and nutritional information.
With new security guidelines in place, like the 24-Hour Manifest Ruling and the Importers Security Filing (ISF), the importer must make sure that the details of what is entering the United States are manifested by the inbound ocean carrier at least twenty-four hours prior to the vessel sailing from the exporter's outbound port.
Timeframes for new changes have occurred since 2008 and continue into 2018.
10. Control the inbound logistics by controlling the terms of purchase. Use free on board (FOB) or (FCA) Outbound Gateway or Ex Warehouse International Commercial (INCO) Terms. This will give you control of the inbound supply chain. This will typically allow you better pricing, control of delivery scheduling, and control of all compliance responsibilities.
Many importers have determined, unwisely, that removing themselves from the hassles of the import process and inbound logistics serves their best interests. My group has studied this circumstance for over twenty years. Every analysis clearly points out that importers are always in a "best served" position when they control the inbound and "importer of record" responsibilities.
The importer benefits in reducing overall logistics costs, managing compliance and security requirements, and maintaining control over the inbound status and disposition of the imported merchandise.
Excerpted from MASTERING IMPORT & EXPORT MANAGEMENT, 3RD EDITION by Thomas A. Cook with Kelly Raia. Copyright © 2017 by Thomas A. Cook. Published by AMACOM Books, a division of American Management Association, New York, NY. Used with permission.
All rights reserved. http://www.amacombooks.org.
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