All posts by mitch

Regulatory Updates

You may be a Deemed Exporter

Posted on LinkedIn today:

Engineering firms, software companies, researchers, manufacturers, and universities need to be aware of the “deemed export” rules. They may be engaged in export transactions without even knowing it.

From the BIS website:

An export of technology or source code (except encryption source code) is “deemed” to take place when it is released to a foreign national within the United States. See §734.13(b) of the Export Administration Regulations (EAR).

Technology is “released” for export when it is available to foreign nationals for visual inspection (such as reading technical specifications, plans, blueprints, etc.).

Per Part 772 of the EAR, technology is specific information necessary for the development, production, or use of a product.

Assuming that EAR99 does not apply and no license exception is available, U.S. entities must apply for an export license when: (1) they intend to transfer controlled technologies to foreign nationals in the United States; and (2) transfer of the same technology to the foreign national’s home country would require an export license.

Regulatory Updates

How’s your customs bond these days?

Posted on LinkedIn:

The China tariffs have resulted in customs continuous bond saturation or near saturation for importers. Continuous bond amounts are calculated using 10% of the total duties, taxes, and fees paid for the previous 12-month period. The minimum continuous bond allowable is $50,000 USD, which covers up to $500,000 USD in duties, taxes, and fees to US Customs and Border Protection(CBP).

If your bond begins to approach saturation, you will be notified by either CBP, your customs broker, or the surety company. Upon notification your company has fifteen days to increase the amount of the bond. If your company’s bond becomes saturated and rendered insufficient by CBP, your company will not be permitted to import goods into the United States until a new bond with a higher limit of liability is established.

The amount of the new bond is a management decision based on input from customs brokers, procurement staff, finance, and insurance carriers. Best to be proactive and check your bond sufficiency now.

Nuts & Bolts

The Square Root Rule

Posted On LinkedIn

Were you told there would be no math?

INVENTORY AT MULTIPLE LOCATIONS: THE SQUARE ROOT RULE

This technique is useful in determining the effect on total inventory levels when adding or reducing distribution centers.

The analysis assumes that total demand remains unchanged. The goal of this analysis is to approximate the aggregate inventory at multiple facilities by multiplying the square root of the number of facilities by the inventory previously stored at a single facility. X2= (X1) (Square root of n2/n1) where n1= number of existing facilities n2= number of future facilities where n2>n1 X1= total inventory in existing facilities X2= total inventory in future facilities

Example: A company distributes product to its customers in the southeastern US from a single facility in Atlanta, GA. It is considering opening a second facility in Nashville, TN to help serve the same market. Assume that average inventory levels at the Atlanta facility are 10,000 units. n1= 1 existing facility n2= 2 future facilities X1= 10,000 total units in the existing facility X2= total inventory in future facilities = (10,000) (Sq root of 2/1) = (10,000) (1.4142) = 14,142 units

Nuts & Bolts

Got Protocols?

Posted on LinkedIn

Whether your logistics provider is a motor carrier, freight forwarder, customs broker, or warehouse, good customer service is essential. While information is almost always available at your fingertips, action requiring human intervention can be elusive. Logistics managers deal with changing schedules, equipment failures, weather delays, regulatory issues, and miscommunication on a daily basis. Most problems, however, are not new. The same situations tend to repeat themselves so they can be anticipated. Developing a set of problem solving protocols for the most common issues in your supply chain will save you time since you will not be starting from scratch when a problem arises. It will also enable your colleagues to act in your absence. A basic protocol defines the problem and lists steps to be followed as well as the resources involved. Your logistics providers can help by providing relevant operations contact info for the identified problem areas. Your account rep should welcome the opportunity as it will save them time as well. Update protocols as needed and make them part of your account review meetings. Finally, if your account rep says “Just call me” don’t accept this response.

Regulatory Updates

Export Compliance = Risk Management

Posted on LinkedIn today:

If you are relying on your logistics service providers or your busy shipping department for export compliance you may be at risk. Both upper management commitment and front line training are essential parts of an Export Management & Compliance Program. While risk management always gets C level attention, export compliance is often a mid-management or lower level function.

Fines and penalties for violations should make export compliance a basic part of risk management. Best practices, including an EMCP, will reduce exposure to steep fines and penalties as described by BIS (Bureau of Industry and Security) on their website https://www.bis.doc.gov/.

BIS offers a number of on-line courses at no cost. Check them out under the Training and Compliance tab and get started!

Penalties Violators of the Export Administration Act of 1979, may be subject to both criminal and administrative penalties. When the EAA is in effect, criminal penalties can reach 20 years imprisonment and $1 million per violation.

Privileges A denial of export privileges prohibits a person from participation in any transaction subject to the EAR.

Nuts & Bolts

Got Wicked Problems?

Posted on LinkedIn today:

I came across the term “wicked problem” in the text for an International Supply Chain Management course. A wicked problem involves multiple stakeholders, each with different interests and values. As a result, there is no single common goal , no clear mission, and no universal solution. Any solution, after being implemented, will generate waves of consequences and can result in making the problem worse. A suggested framework for tackling a wicked problem consists of 4 levels of increasing complexity: Level 1- Process Engineering and inventory management. Level 2- Assets and Infrastructure. Level 3- Organizations and Inter-organizational networks. Level 4- the Macro Environment- PEST (Political, Economic, Social, and Tech). Fortunately, not all logistics problems are wicked problems. In most cases logistics problems are tactical and can be solved using Level 1 and 2 solutions. Supply chain issues are strategic and more complex so best suited to Levels 3 and 4. *Global Logistics & Supply Chain Management

Nuts & Bolts

Incoterms (continued)

Posted on LinkedIn today

Incoterms (continued) Contrary to popular belief Incoterms do not cover title to goods, ownership, or invoice payment. They do cover obligations of buyer and seller for payment for insurance, transport, export and import clearance, and division of other costs of storage or delivery. Incoterms will be updated again in 2020 by the International Chamber of Commerce.

Regulatory Updates

incoterms

Posted on LinkedIn today:

FOB really? A good commercial invoice includes clearly specified Incoterms. Incoterms are rules (not laws) used to facilitate global trade. They were created and are administered by the International Chamber of Commerce and are updated every 10 years. Incoterms 2010 published by ICC Services Publications, Paris. Did you know that, in the 2010 version of Incoterms, FOB applies only to ocean and inland waterway transport? Take the time to review your international documents for accuracy. For help contact Mitch@52.91.45.227

Nuts & Bolts

LinkedIn comment

William Cassidy  • 2nd

Senior Editor, Trucking and Domestic Transportation, The Journal of Commerce5d • EditedThe hashtag#bankruptcy of 101-year-old New England Motor Freight was a shock and a wake-up call for those who expected less volatility this year.

Mitch’s LinkedIn comment today:

Thoughtful analysis and right on target…traditional LTL carriers achieved efficiencies mostly thru managing labor costs…still important but real gains in efficiency will come via technology…