A benefit that results only after duty has been previously paid is termed Drawback. Drawback is an old concept going back to the U.S. Tariff Act of
16 “Maquila Meltdown Plants Flee Mexican Wages,” NOW online edition, Nov 28, 2002
1789 that was enacted by the First Congress. Its purpose has always been to encourage American commerce and manufacturing. Duty drawback helps a manufacturer to compete in foreign markets without having duty as part of product costs.
Drawback is covered under Section 1313, Title 19 of the HTSUSA Code.
Drawback is a refund of U.S. Customs duties paid upon importing materials or goods that are sold abroad at a later date. Ninety-nine percent of the amount of duty paid can be recovered under drawback, while the remaining one percent is retained by Customs to defray their costs. Interestingly, government statistics show that drawback rebates are often about 10% of what U.S. companies could claim. Customs form CF7553 contains instructions. How much profit is your company giving up in missed drawback opportunities?
THE INTERNET AND GLOBAL INFORMATION NETWORKS
8.
When referring to the Internet, many say, “This changes everything!”
While this may be a bit overstated, the impact on worldwide communications is profound. With the ability to send text messages or data to anywhere in the world with access to a phone or cable connection, new possibilities to manage supply chain transactions are constantly being developed. Consider the impact of e-mail alone. In the past for a buyer in North America to communicate with a supplier in Asia, he or she was forced to use mail, facsimile or telephone. The fastest of these was the telephone, but it required one or the other to be working outside normal business hours because of time-zone differences. This resulted in significant delays or in leaving a message to call back, with the resultant telephone game of “tag”.
E-mail makes it possible to send the message when the sender is ready and the recipient can receive it at his or her convenience and issue an immediate response. The usefulness of this global network is being further expanded by connection to the Internet via wireless media such as cellular phones and by satellite transmission.
Today, requests for bid may be sent electronically to suppliers anywhere.
Suppliers can likewise respond in minutes rather than days or weeks as with conventional mail services. An even faster method of soliciting supplier bids that has been enabled by the Web is for the buyer to post a requirement to which anyone with access to the Web may respond. To use this method, the buyer usually posts the specifications for the potential buy to a website or portal and alerts all potential suppliers where to locate and respond to the offering. Using this portal it’s possible for the buyer to update requirements
data, extend the response date, add items to the bid package, and respond to sellers questions, all without initiating new correspondence with each potential bidder. There is the additional benefit that bidders are uniformly advised of requirements changes and the buyer needs only to enter the information at a single place.
While the ability to request bids from suppliers anywhere in the world is perhaps the most obvious use of the Internet for buyer-seller communications, there are many other uses for this high-speed global communications medium, including:
Transmission of forecasts and schedules or MRP (Material Requirements Planning) data from production scheduling to suppliers
Suppliers sending shipping notices, and transporters providing regular updates on the location of the shipment and expected arrival date Acknowledging receipt of goods and authorizing payment Suppliers sending invoices electronically
Electronic funds transfers for payment of invoices
Suppliers providing immediate notification of changes in capacity or delivery leadtime
Reporting supplier quality and delivery performance information Tracking supplier and customer inventory levels
Design collaboration, either by sending preliminary documents for supplier review and comment or by on-line meetings where buyer and supplier engineers exchange information back and forth in real-time, much like a personal “chat” session
Virtually all of the tasks described in this chapter may be enhanced by the use of the Internet. For example, the author needed updated GDP statistics. For this edition, within 5 minutes the worldwide GDP data was on his computer’s “desktop”. Also consider the communications requirements of the letter of credit shown in Figure 6-1. The transmission of all documents among buyer, seller, issuing bank, advising bank and customs broker may be performed over the Web. Time saving and error reduction are frequently cited as the major benefits of these Web-based communications, though the security of such financial transactions over the open Internet has slowed progress in this area. However, improvements are continually being made in the security of Web-based transactions and electronic signatures are now becoming acceptable to most participants in such transactions.
A remaining obstacle to widespread use of the Internet in global transactions is the lack of global standards for the application software being developed. This need is being addressed however; examples include the UNSPSC (United Nations Standard Products and Services Code), a global
electronic commerce standard for the classification of goods and services (often called commodity codes). This standardization will have a profound effect on systems used to analyze the enterprise’s spending patterns.
Other important standards include the use of XML (eXtensible Markup Language) for Internet transactions and an initiative called the Universal Description, Discovery and Integration Project (UDDI). UDDI is designed to create a platform-neutral standard based on XML to make transactions possible between differing legacy systems. Fortunately, the current lack of standards will likely disappear soon as a real deterrent to global Internet communications.
Well into the future there will be further evolution of the buyer dealing in global markets with economic acumen. So, we need a global outlook since the marketplace, customers, and competitions are global. Chapter 7 will look in detail at how we can evolve the supplier relationship to top-level status.
We will explore the natural frictions that exist in the buyer/seller interface, and further explore ways to smooth those frictions for mutual benefit.