Managing global supply chains

Managing Global Supply Chains AU6456.indb 1/11/08 9:10:12 AM OTHER AUERBACH PUBLICATIONS Ad Hoc Mobile Wireless Networks: Principles, Protocols and Applications Subir Kumar Sarkar, T.G Basavaraju and C Puttamadappa ISBN 1-4200-6221-2 Operational Excellence: Using Lean Six Sigma to Translate Customer Value through Global Supply Chain James William Martin ISBN 1-4200-6250-6 Computer Fraud: An In-depth Framework for Detecting and Defending against Insider IT Attacks Kenneth C Brancik ISBN 1-4200-4659-4 Physical Principles of Wireless Communications Victor L Granatstein ISBN 0-8493-3259-1 Design Science Research Methods and Patterns: Innovating Information and Communication Technology Vijay K Vaishnavi and William Kuechler Jr ISBN 1-4200-5932-7 Practical Guide to Project Planning Ricardo Viana Vargas ISBN 1-4200-4504-0 Determining Project Requirements Hans Jonasson ISBN 1-4200-4502-4 Digital Privacy: Theory, Technologies, and Practices Alessandro Acquisti, Stefanos Gritzalis, Costas 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Management James B Ayers and Mary Ann Odegaard ISBN 0-8493-9052-4 Security in Wireless Mesh Networks Yan Zhang, Jun Zheng and Honglin Hu ISBN 0-8493-8250-5 Service-Oriented Architecture: SOA Strategy, Methodology, and Technology James P Lawler and H Howell-Barber ISBN 1-4200-4500-8 The Strategic Project Leader: Mastering Service-Based Project Leadership Jack Ferraro ISBN 0-8493-8794-9 Simplified TRIZ: New Problem Solving Applications for Engineers and Manufacturing Professionals, Second Edition Kalevi Rantanen and Ellen Domb ISBN 1-4200-6273-5 Value-Added Services for Next Generation Networks Thierry Van de Velde ISBN 0-8493-7318-2 WiMAX: A Wireless Technology Revolution G.S.V Radha Krishna Rao and G Radhamani ISBN 0-8493-7059-0 1/11/08 9:10:13 AM Managing Global Supply Chains Compliance, Security, and Dealing with Terrorism THOMAS A COOK New York AU6456.indb London 1/11/08 9:10:13 AM Auerbach Publications Taylor & Francis Group 6000 Broken Sound Parkway NW, Suite 300 Boca Raton, FL 33487-2742 © 2008 by Taylor & Francis Group, LLC Auerbach is an imprint of Taylor & Francis Group, an Informa business No claim to original U.S Government works Printed in the United States of America on acid-free paper 10 International Standard Book Number-13: 978-1-4200-6456-8 (Hardcover) This book contains information obtained from authentic and highly regarded sources Reasonable efforts have been made to publish reliable data and information, but the author and publisher cannot assume responsibility for the validity of all materials or the consequences of their use The Authors and Publishers have attempted to trace the copyright holders of all material reproduced in this publication and apologize to copyright holders if permission to publish in this form has not been obtained If any copyright material has not been acknowledged please write and let us know so we may rectify in any future reprint Except as permitted under U.S Copyright Law, no part of this book may be reprinted, reproduced, transmitted, or utilized in any form by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying, microfilming, and recording, or in any information storage or retrieval system, without written permission from the publishers For permission to photocopy or use material electronically from this work, please access www copyright.com (http://www.copyright.com/) or contact the Copyright Clearance Center, Inc (CCC) 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400 CCC is a not-for-profit organization that provides licenses and registration for a variety of users For organizations that have been granted a photocopy license by the CCC, a separate system of payment has been arranged Trademark Notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe Library of Congress Cataloging-in-Publication Data Cook, Thomas A., 1953Managing global supply chains : compliance, security, and dealing with terrorism / Thomas A Cook p cm Includes bibliographical references and index ISBN 978-1-4200-6456-8 (hardback : alk paper) Business logistics Safety regulations Freight and freightage Security measures Shipping Security measures Terrorism Prevention Exports Management Imports Management I Title HD38.5.C658 2008 658.7 dc22 2007048159 Visit the Taylor & Francis Web site at http://www.taylorandfrancis.com and the Auerbach Web site at http://www.auerbach-publications.com AU6456.indb 1/11/08 9:10:13 AM The World Trade Center and the United States are attacked on 11 September 2001 in New York City The photograph below shows the attack on the Pentagon These events have changed global supply chains forever This book becomes the best navigation tool for supply chain executives to utilize in managing their import/export responsibilities AU6456.indb 1/11/08 9:10:14 AM AU6456.indb 1/11/08 9:10:14 AM Dedication To the heroes of 9/11 and all those who continue to be placed in harm’s way to reduce our threat of terrorism AU6456.indb 1/11/08 9:10:14 AM AU6456.indb 1/11/08 9:10:14 AM Contents Foreword xv Acknowledgments xvii Introduction xix Chapter The Events of 9/11 and How They Affect Global Supply Chains Overview of Issues and Concerns .1 9/11: How Were Supply Lines Affected? It Cost More to Ship More Attention Had to Be Paid to Documentation and Logistics Detail Regulations Changed, Making It More Cumbersome to Import and Export Corporations Had to Modify Their Supply Lines Purchasing and Selling Decisions Were Altered Carriers’ Futures Were Uncertain Increase in Potential Fines and Penalties An Entirely New Corporate Responsibility Was Created in Security and Compliance The Mind-Set of the United States Government The Big Picture .8 The Risks of Global Trade: Now, Add Compliance and Security 11 The Security Concern in Our Transportation Infrastructure 13 Operation Safe Commerce (OSC) 14 Free and Secure Trade (FAST) 15 What Is the FAST Program? 15 What Are the Benefits of the FAST Program? 15 Who Is Eligible to Apply? .16 Where Is FAST Available? 16 ix AU6456.indb 1/11/08 9:10:14 AM Glossary Abandonment: Refusing delivery of a shipment that is so badly damaged in transit, it has little or no value Acceptance: An international banking instrument known as a time draft or bill of exchange that the drawee has accepted and is unconditionally obligated to pay at maturity Ad valorem: A tariff that is calculated based on a percentage of the value of the product Advising bank: A bank operating in the exporter’s country that handles letters of credit for a foreign bank by notifying the exporter that the credit has been opened in their favor Agency for International Development (AID) shipments: A U.S government agency created to provide relief to developing countries that must purchase products and services through U.S companies Specialized export documentation is necessary to complete the transactions All-inclusive: Term of sale used to notate “all charges are included.” Allowance: Typically afforded a consignee as a “credit” or “deduction” on a specific export transaction All-risk cargo insurance: A clause included in marine insurance policies to cover loss and damage from external causes during the course of transit within all the terms and conditions agreed to by the underwriters Arbitration: Wording included in export contracts introducing an independent third-party negotiator into the dispute resolution in lieu of litigation Arrival notice: Advice to a consignee on inbound freight Sometimes referred to as a prealert Contains details of the shipment’s arrival schedule and bill of lading data “As is”: An international term denoting that the buyer accepts the goods as is, it is a connotation there may be something wrong with the merchandise, and the seller limits their future potential liability 185 AU6456.indb 185 1/11/08 9:13:12 AM 186  ◾  Managing Global Supply Chains Automated Broker Interface (ABI): The electronic transmission and exchange of data between a customhouse broker and CBP Automated Export Systems (AES): The electronic transmission of the shipper’s export declaration to Census, BIS, and CBP Automated Manifest System (AMS): The electronic transmission of a carrier’s/ vessel’s manifest between the carrier/steamship line and CBP Balance of trade: The difference between a country’s total imports and exports If exports exceed imports, a favorable balance of trade, or trade surplus, exists; if not, a trade deficit exists Barter: The direct exchange of goods or services without the use of money as a medium of exchange and without third-party involvement Bill of lading: A document that establishes the terms of a contract between a shipper and a transportation company under which freight is to be moved between specified points for a specified charge Usually prepared by the shipper on forms issued by the carrier, it serves as a document of title, a contract of carriage, and a receipt of goods Bond: A form of insurance between two parties obligating a surety to pay against a performance or obligation Bonded warehouse: A warehouse authorized by customs authorities for storage of goods on which payment of duties is deferred until the goods are cleared and removed Breakbulk cargo: Loose cargo that is loaded directly into a conveyance’s hold Bretton Woods Conference: A meeting under the auspices of the United Nations at Bretton Woods, New Hampshire, in 1944, that was held to develop some degree of cooperation in matters of international trade and payments and to devise a satisfactory international monetary system to be in operation after World War II The particular objectives intended were stable exchange rates and convertibility of currencies for the development of multilateral trade The Bretton Woods Conference established the International Monetary Fund and the World Bank Bunker Adjustment Fee (BAF): Fuel surcharge issued by a steamship line Bureau of Industry & Security (BIS): Department of Commerce agency responsible for export administration regulations, formerly known as the Bureau of Export Administration Carnet: A customs document permitting the holder to carry or send merchandise temporarily into certain foreign countries without paying duties or posting bonds Certificate of Origin: Document used to certify the country of origin for a product Clingage: When shipping bulk liquids, the residue remaining inside the conveyance after discharge Combi: An aircraft with pallet or container capacity on its main deck and belly holds AU6456.indb 186 1/11/08 9:13:13 AM Glossary  ◾  187 Commission agent: An individual, company, or government agent that serves as the buyer of overseas goods on behalf of another buyer Commodity specialist: An official authorized by the U.S Treasury to determine proper tariff and value of imported goods Consignment: Delivery of merchandise from an exporter (the consignor) to an agent (the consignee) under the agreement that the agent sells the merchandise for the account of the exporter The consignor retains the title to the goods until the consignee has sold them The consignee sells the goods for commission and remits the net proceeds to the consignor Consolidator: An agent who brings together a number of shipments for one destination to qualify for preferential rates Cost, insurance, freight (CIF): A system of valuing imports that includes all costs, insurance, and freight involved in shipping the goods from the port of embarkation to the destination Countertrade: The sale of goods or services that are paid for in whole or in part by the transfer of goods or services from a foreign country Credit risk insurance: Insurance designed to cover risks of nonpayment for delivered goods Currency: National form for payment medium, i.e., dollars, pesos, rubles, naira, pounds, etc Distributor: A foreign agent who sells for a supplier directly and maintains an inventory of the supplier’s products Dock Receipt: Documented receipt the shipment has been received by the steamship line Domestic International Sales Corporation (DISC): Established in 1971 by U.S legislation, DISCs were designed to help exporters by offering income tax deferrals on export earnings DISCs were phased out in 1984 Draft: Negotiable instrument presented to the buyer’s bank for payment Drawback: Duties to be refunded by government when previously imported goods are exported or used in the manufacture of exported products Dumping: Exporting or importing merchandise into a country below the costs incurred in production and shipment Duty: A tax imposed on imports by the customs authority of a country Duties are generally based on the value of the goods (ad valorem duties), some other factor such as weight or quantity (specified duties), or a combination of value and other factors (compounded duties) Embargo: A prohibition on imports or exports as a result of a political eventuality European Community (EC): The 12 nations of Europe that have combined to form the world’s largest single market of more than 320 million consumers The EC includes Belgium, Denmark, France, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, the United Kingdom, and West Germany AU6456.indb 187 1/11/08 9:13:13 AM 188  ◾  Managing Global Supply Chains Export: To send or transport goods out of a country for sale in another country In international sales, the exporter is usually the seller or the seller’s agent Export-Import Bank of the United States (Ex-Im Bank): Ex-Im Bank facilitates and aids the financing of exports of U.S goods and services through a variety of programs created to meet the needs of the U.S exporting community Programs, which are tailored to the size of a transaction, can take the form of direct lending or loan guarantees Export management company: A private company that serves as the export department for several manufacturers, soliciting and transacting export business on behalf of its clients in return for a commission, salary, or retainer plus commission Export trading company: An organization designed to facilitate the export of goods and services It can be a trade intermediary that provides exportrelated services to producers or can be established by the producers themselves, though typically export-trading companies not take title to goods Ex Works (EXW) from Factory: The buyer accepts goods at the point of origin and assumes all responsibility for transportation of the goods sold Also: Ex Warehouse, Ex Mine, Ex Factory as defined in Inco Terms, Chapter Fair trade: A concept of international trade in which some barriers are tolerable as long as they are equitable When barriers are eliminated, there should be reciprocal action by all parties Force majeure: Expressed as “acts of God.” Conditions found in some marine contracts exempting certain parties from liability for occurrences out of their control, such as earthquakes and floods Foreign Corrupt Practices Act of 1977: U.S legislation with stringent antibribery provisions and guidelines for recordkeeping and internal accounting control requirements for all publicly held corporations The act makes it illegal to offer, pay, or agree to pay money or any item of value to a foreign official for the purpose of getting or retaining business Foreign Credit Insurance Association (FCIA): An insurance program, previously government managed and underwritten, now privately held, that insures commercial and political risks for U.S exporters Foreign sales agent: An individual or company that serves as the foreign representative of a domestic supplier and seeks sales abroad for the supplier Forfaiting: The selling, at a discount, of a longer-term receivable or promissory note of a buyer Franchising: A form of licensing by the service sector for companies that want to export their trademark, methods, or personal services Free along side (FAS): A system of valuing imports that includes inland transportation costs involved in delivery of goods to a port in the exporting country, but excludes the cost of ocean shipping, insurance, and loading the merchandise on the vessel AU6456.indb 188 1/11/08 9:13:13 AM Glossary  ◾  189 Free domicile: Terminology used for “door to door” deliveries Free on Board (FOB): A system of valuing imports that includes inland transportation costs involved in delivery of goods to a port in the exporting country and the cost of loading the merchandise on the vessel, but excludes the cost of ocean shipping and insurance Free port: An area such as a port city into which merchandise may legally be moved without payment of duties Free trade: A theoretical concept to describe international trade unhampered by governmental barriers such as tariffs or nontariff measures Free trade typically favors the reduction or elimination of all tariff and nontariff barriers to trade Free trade zone (FTZ): A port designated by the government of a country for duty-free entry of any nonprohibited goods Merchandise may be stored, displayed, or used for manufacturing within the zone, and re-exported without the payment of duties Freight all kinds (FAK): A mix of cargoes traveling as one General Agreement on Tariffs and Trade (GATT): A multilateral treaty to which 85 nations (or more than 80 percent of world trade) subscribe; it is designed to reduce trade barriers and promote trade through tariff concessions, thereby contributing to global economic growth and development Generalized System of Preferences (GSP): Notes duty free/reduced tariffs on imports from the countries listed on the GSP list Harmonized Tariff System of US (HTSUS): System of classifying products imported into the United States by number Harter Act: Legislation protecting a ship owner from certain types of claims that are due to actions of the crew Haz-mat: Hazardous materials regulated by various government agencies, e.g., DOT/CFR Title 49, IATA, IMCO, Coast Guard, etc Personnel who interface with Haz-mat cargoes need to be certified to so Hedging: A mechanism that allows an exporter to take a position in a foreign currency to protect against losses due to wide fluctuations in currency exchange rates Hold: The space below deck inside an ocean-going vessel In bond: Transportation of merchandise under custody of a bonded carrier Irrevocable letter of credit: A letter of credit in which the bank guarantees the specified payment if all terms and conditions are met by the drawee (buyer) See also Revocable letter of credit ISO 9000: Issued in 1987 by the International Organization for Standardization, ISO 9000 is a series of five international standards that establish requirements for the quality control systems of companies selling goods in the European Community It now includes many additional countries and companies throughout the world AU6456.indb 189 1/11/08 9:13:13 AM 190  ◾  Managing Global Supply Chains Joint venture: A business undertaking in which more than one company shares ownership and control Letter of credit: A document issued by a bank per instructions from a buyer of goods that authorizes the seller to draw a specified sum of money under specified terms, usually the receipt by the bank of certain documents within a given period of time Licensing: A business arrangement in which the manufacturer of a product (or a company with proprietary rights over certain technology, trademarks, etc.) grants permission to some other group or individual to manufacture that product (or make use of that proprietary material) in return for specified royalties or other payment Logistics: The science of transportation covering the planning and implementation of specific strategies to move materials at a desired cost Mala fide: Misrepresentation or in bad faith Maquiladora: A tax-free program allowing the import of materials into Mexico for manufacturing of goods for export back to the United States Now declining in importance as a result of NAFTA Marine insurance: Insurance covering loss or damage of goods during transit It covers all modes of transport Market research: Specific intelligence about the market in which a seller proposes to sell goods or services This information is gathered through interviews, commissioned surveys, and direct contact with potential customers or their representatives Marks and numbers: The references made in writing to identify a shipment on the exterior packing, typically referenced in the documentation North American Free Trade Agreement (NAFTA): An agreement that creates a single unified market of the United States, Canada, and Mexico Office of Foreign Asset Controls (OFAC): Department of Treasury office issuing regulations on transfers/funding of money Open account: A trade arrangement in which goods are shipped to a foreign buyer without guarantee of payment The obvious risk this method poses to the supplier makes it essential that the buyer’s integrity be unquestionable Overseas Private Investment Corporation (OPIC): A government-sponsored organization that promotes investment in plans and equipment in lessdeveloped countries by offering guarantees comparable to Ex-Im Bank Paperless release: Electronic release of a shipment by CBP prior to hard copies being presented Political risk: In exporting, the risk of loss due to such causes as currency inconvertibility, government action preventing entry of goods, expropriation, confiscation, or war Power of attorney: A document that authorizes a customs broker or freight forwarder to act on the exporter’s/importer’s behalf on issues relative to customs clearance, transportation, documentation, etc AU6456.indb 190 1/11/08 9:13:14 AM Glossary  ◾  191 Premium: Insurance dollars paid to an underwriter to accept a transfer of risk Prima facie: At face value Pro forma invoice: (1) Invoice prepared by the supplier to the buyer, usually as a means to secure financing (2) Invoice prepared by an importer when the supplier’s invoice does not meet the invoice requirements set forth by CBP Protectionism: The setting of trade barriers high enough to discourage foreign imports or to raise the prices sufficiently to enable relatively inefficient domestic producers to compete successfully with foreign producers Purchasing agent: An individual or company that purchases goods in their own country on behalf of foreign importers, such as government agencies or large private concerns Remarketers: Export agents, merchants, or foreign trading companies that purchase products from an exporter to resell them under their own name Revocable letter of credit: A letter of credit that can be canceled or altered by the drawee (buyer) after it has been issued by the drawee’s bank Compare to an irrevocable letter of credit, which is totally binding without both parties’ written agreement Tariff: A tax on imports or the rate at which imported goods are taxed Terminal handling charge: Fee assessed by a terminal for handling a shipment Time draft: A draft that matures in a certain number of days, either from acceptance or date of draft Tracking: A forwarder’s or carrier’s system of recording movement intervals of shipments from origin through to final destination Trade acceptance: See Acceptance Transfer risk: The risk associated with converting a local foreign currency into U.S dollars Transmittal letter: Cover communication outlining details of an export transaction and accompanying documentation Twenty-foot equivalent (TEU): Twenty-foot equivalent or standard measure for a 20-foot ocean freight container Two TEUs represent one 40-foot standard container Uniform Customs & Practice: International rules governing documentary collections Warehouse receipt: Receipt given to signify goods have been received into a warehouse Ullage: Measuring the amount of liquid or dry bulk freight in the hold of a vessel by measuring the height of the stow from the opening on deck United States Agency for International Development (USAID): A U.S governmental agency that carries out assistance programs designed to help the people of certain lesser-developed countries develop their human and economic resources, increase production capacities, and improve the qual- AU6456.indb 191 1/11/08 9:13:14 AM 192  ◾  Managing Global Supply Chains ity of human life as well as promote the economic or potential stability in friendly countries Value-added tax (VAT): An indirect tax assessed on the increase in value of goods from the raw material stage through the production process to final consumption The tax to processors or merchants is levied on the amount by which they have increased the value of items that were purchased by them for use or resale This system is used in the European Community Weight breaks: Discounts to freight charges are given as the total weight increases at various weight breaks: 50 pounds, 100 pounds, 500 pounds, etc Wharfage: Charges assessed for handling freight near a dock or pier With average: A marine insurance term meaning that shipment is protected for partial damage whenever the damage exceeds an agreed percentage Zone: Certain geographic areas called zones often determine freight tariffs AU6456.indb 192 1/11/08 9:13:14 AM Index A B Accounting firms, 75–76 Accounting issues, 93–97 Acronyms, 182–184 Action plan (example), 166–167 Advance Passenger Information System (APIS), 22 Agents in export, 72–73 Agents in imports, 73–74 Air cargo, 82–83 Air carriers, 70–72 uncertainties faced by, regulations on, 79–82 Air passengers, screening of, 21–22 Allbaugh, Joe M., 85 American Management Association (AMA), 63–65 Anti–boycott compliance, 47–48 Anti–terrorism efforts, by CBP, 21–22 Arms Export Control Act, 51 Arms trafficking regulations, 51–52 Automated Commercial Environment (ACE), 22, 24, 35–37 Automated Export System (AES), 22, 41, 112 Automated Targeting System (ATS), 22, 148 Automatic identification and data collection (AIDC) technology, 116 Background checks, 80–81, 107 Banks, 74–75 Best practices, 54 “Best Practices for Container Seals,” 111–115 Bio-terrorism, 33 Bonds, 156–157 Border security, 23, 24–25, 29–30 Bureau of Customs and Border Protection See Customs and Border Protection (CBP) Bureau of Industry and Security (BIS), 42–48 Business travelers, 134–137 C Canada, partnership with, 22–23 Cargo See also Containers best practices for, 111–115 data requirements, 150–151 Carriers, 70–72 air, 70–72, 79–82 ocean, 70–72, 151–153 regulations on, 79–82 safety assessments, 106 Castro, Fidel, 48 193 AU6456.indb 193 1/8/08 10:36:12 AM 194  ◾  Managing Global Supply Chains CBP See Customs and Border Protection (CBP) Census Bureau, 40–41 Chlorofluorocarbons (CFCs), 124 COAC See Departmental Advisory Committee on Commercial Operations of Customs and Border Protection and Related Functions (COAC) Coast Guard, 107–109 Commerce Control List (CCL), 42, 44 Commerce Country Chart, 44–45 Committee structure, 60 Communication systems, 60–61 Compliance anti–boycott, 47–48 corporate responsibility for, 6–7 FDA, 132–133 global trade and, 11–12 in hazardous materials transportation, 104–107 issue awareness, 160–161 Sarbanes–Oxley and, 93–97 technology issues in, 111 Compliance and security committee, 163–164 Compliance and security management programs challenges, 171–172 committee structure for, 60 development of, 57–66 disaster and contingency planning, 65–66 infrastructure and communication systems, 60–61 resource development, 61–65 risk analysis, 57–59 risk management attitude, 65 self-assessment of, 66 senior management involvement in, 59 SOPs for, 60 technology issues in, 111 Consolidation/de–consolidation facilities, 72 Consultants, 55, 75–76 Containers “Best Practices for Container Seals,” 111–115 RFID for, 115–120 security, 137–153 status messages, 151–152 Container Security Initiative (CSI), 5, 22, 30–32, 108–109 Contingency planning, 1, 65–66 Corporate responsibility, 6–7 AU6456.indb 194 Corporations modification of supply lines by, self-auditing by, 54–55, 66, 168 Cost-effective logistics, 78–79 Country of origin, 27–28 CSI See Container Security Initiative (CSI) Customhouse brokers, 69–70 Custom initiatives, since 9/11, 29 Customs and Border Protection (CBP), 15, 19–39 accomplishments of, 29–32 border security, 24–25 FDA and, 33–34 goals of, 21 import management, 25–29 inspection technology and equipment, 23–24 outbound inspections, 24 partnerships by, 22–23 partnership with, 30 proposal for advance trade data elements, 148–153 targeting by, 21–22 Customs bonds, 156–157 Customs brokers, 28 Customs Self-Assessment (CSA) program, 15 Customs-Trade Partnership Against Terrorism (C–TPAT), 14, 15, 23, 30, 95, 97, 110–111, 137–148 business partner requirements, 139–147 information and technology security, 147–148 security requirements for validation of participants, 138 security training, 147 D Data definitions, 153–154 Data elements, 155 Decision making, affect of 9/11 on, 4–5 De-consolidation facilities, 72 Deemed Export rules, Deemed exports, 46–47 Denied parties screening, 45–46 1/8/08 10:36:12 AM Index  ◾  195 Departmental Advisory Committee on Commercial Operations of Customs and Border Protection and Related Functions (COAC), 87–91 Department of Commerce Bureau of Census, 40–41 Bureau of Industry and Security (BIS), 42–48 Department of Homeland Security (DHS), 19, 20 “Best Practices for Container Seals,” 111–115 COAC, 87–91 FEMA, 83–87 Department of State, 51–52 Department of Treasury, Office of Foreign Asset Control (OFAC), 48–51, 74–75 Disaster planning, 1, 65–66 Distributors purchasing, 73–74 selling, 72–73 Documentation for imports, 27–29 increased, 3–4 Sarbanes–Oxley and, 93–97 DOT Hazardous Material Regulations (HMR), 98–103 Export supply chains, 39–55 External resources, 162–163 “Ex works,” 128–129 F Facilities review, 164–165 Facility security checklist, 105–106 Federal Emergency Management Association (FEMA), 83–87 Finance houses, 74–75 Fines increased, for violating trade sanctions, 51 Food and Drug Administration (FDA), 22, 33–34, 122–123, 132–133 Food supply, 33–34, 133 Foreign Corrupt Practices Act (FCPA), 121–122 Free and Secure Trade (FAST) program, 15–17, 148 availability of, 16–17 benefits of, 15–16 eligibility for, 16 Freight, documentary procedures for, 3–4 Freight forwarders, 69–70 E Economy, affect of 9/11 on, Education, 165, 168 Employee background checks, 80–81, 107 Employee training, 103, 165, 168 Environmental Protection Agency (EPA), 123–124 Equipment, inspection, 23–24 Execution strategy, 162 Export Administration Regulations (EAR), 44, 47–48, 111 Export compliance programs, 52–55 Export Control Classification Number (ECCN), 42, 44 Export licensing, 42–45 Exports, 39 deemed, 46–47 regulations on, routed export transactions, 129–131 AU6456.indb 195 G Global service providers See Service providers Global supply chains See also Supply chains affect of 9/11 on, 1–7 hazardous materials transportation in, 104–107 Sarbanes–Oxley (SOX) and, 93–97 Global trade, risks of, 11–12 H Harmonized Traffic Classification number, 25–26 Hazard classes, 98 1/8/08 10:36:13 AM 196  ◾  Managing Global Supply Chains Hazardous Material Regulations (HMR), 98–103 employee training, 103 hazard classes, 98 marking and labeling requirements, 100–101 MOT and, 104 packaging, 102–103 segregation of hazardous materials, 102 shipping papers, 99–100 Hazardous materials EPA regulations, 123–124 transportation, 104–107 Homeland security issues, transportation infrastructure and, 13–14 Hydrobromofluorocarbons (HBFCs), 124 I Importer Self Assessment (ISA), 32–33 Imports classifications, 25–27 origin markings, 27–28 purchasing decisions, 37–38 record keeping, 27–29 regulations on, valuation, 27 Import supply chains, 19–38 INCO terms, 128–131 Information security, 147–148 Infrastructure, 60–61 Inspections, outbound, 24 Inspection technology and equipment, 23–24 Integrated Border Enforcement Teams (IBET), 23 Intercompany transfers, 96 Internal assessment, of export compliance, 54–55 Internal Revenue Service (IRS), 134 International law firms, 76–78 International Port Security Program, 107–109 International Traffic in Arms Regulations (ITAR), 51–52 International travel, difficulty of, K “Known shipper” program, 80 AU6456.indb 196 L Labeling, of hazardous materials, 100–101 Law firms, 76–78 Legislation, 173–182 Logistics, cost–effective, 78–79 Logistics details, 3–4 Logistics services, M Macy, John, 85 Marking requirements, for hazardous materials, 100–101 Materials of trade (MOT), 104 Mexico, partnership with, 22–23 Milosevic, Slobodan, 49 Money transfers, 96 Montreal Protocol, 124 Mugabe, Robert, 49 N National Targeting Center (NTC), 22, 30 9/11 affect of, on global supply chains, 1–17 customs initiatives since, 29 legislation related to, 173–182 mindset of U.S government after, 7–11 No license required (NLR), 47 Non-Intrusive Inspection (NII) technology, 23–24 O Ocean carriers, 70–72, 151–153 Office of Foreign Asset Control (OFAC), 48–51, 74–75 Operation Safe Commerce (OSC), 14–15 Organization for Economic Cooperation and Development (OECD), 123 Origin markings, 27–28 OSHA compliance, Outbound inspections, 24 1/8/08 10:36:13 AM Index  ◾  197 P Packaging, of hazardous materials, 102–103 Partnerships by CBP, 30 with other countries, 22–23 Partners in Protection (PIP) program, 15 Password protection, 147–148 Penalties for export violations, 40 increased, Personal Radiation Detectors (PRDs), 24 Pesticides, 124 Placarding requirements, 101 Point person, 161 Port security, 107–109, 109–111, 148–153 Prior Informed Consent (PIC) procedures, 124 Private sector, CBP partnerships with, 23 Professional Association of Import and Export Compliance Managers (PACMAN), 54 Purchasing control, 37–38 Purchasing decisions, affect of 9/11 on, 4–5 Purchasing distributors, 73–74 R Radio frequency identification (RFID), 115–120 Rail carriers, 70–72 Record keeping, 27–29 regulations on, 132–133 Sarbanes–Oxley and, 97 Records storage methods, 28–29 Regulations on air cargo, 82–83 anti-boycott, 47–48 arms trafficking, 51–52 on carriers, 79–82 EAR, 44, 47–48, 111 EPA, 123–124 FDA, 122–123 hazardous material, 98–103 on imports and exports, Sarbanes–Oxley (SOX), 93–97 Resource Conservation and Recovery Act (RCRA), 123 Resource development, 61–65 AU6456.indb 197 Responsibility for export compliance, 52–55 in routed export transactions, 129–131 Risk analysis, 57–59 Risk management attitude, 65 Risks, of global trade, 11–12 Routed export transactions, 129–131 S SAFE Port Act, 109–111, 148, 152 Safety assessments, 106 Sanctions, trade, 48–51 Sarbanes–Oxley (SOX), 93–97 Screening, for denied parties, 45–46 Secure Electronic Network for Traveler’s rapid Inspection (SENTRI), 23 Security container, 137–153 corporate responsibility for, 6–7 global trade and, 11–12 technology issues in, 111 transportation infrastructure and, 13–14 “Security Awareness Training” requirements, 104 Security checklists, 105–106 Security Filing data, 152–153 Security plans, 104–105 Security training, 147 Self-audits importer, 32–33 by organizations, 66, 168 Selling decisions, affect of 9/11 on, 4–5 Selling distributors, 72–73 Senior management authorization of, 161 involvement of, in compliance and security management, 59 Service providers agents in export, 72–73 agents in import, 73–74 banks, 74–75 carriers, 70–72 consolidation/de-consolidation facilities, 72 customhouse brokers, 69–70 finance houses, 74–75 freight forwarders, 69–70 miscellaneous, 75–78 overview of, 67–69 1/8/08 10:36:13 AM 198  ◾  Managing Global Supply Chains purchasing distributors, 73–74 selling distributors, 72–73 third-party providers, 74 warehouses, 72 Shipments, ultimate consignee for, 125–128 Shipper’s Export Declaration (SED), 40–41 Shipping costs, increased, Shipping papers, 99–100 Simplified Network Application Process (SNAP), 45 Skill set, for post–9/11 business, 12 Smart and secure trade lanes (SST), 115–120 Smart Border Declaration, 22 Standard operating procedures (SOPs), 53–54 creation of, 60 Strategic Council on Security Technology (SCST), 116 Student and Exchange Visitor System (SEVIS), 22 Supply chain management RFID for, 115–120 ten steps for, 159–169 Supply chains See also Global supply chains benefits of SST for, 121 export, 39–55 import, 19–38 Supply lines, affect of 9/11 on, 1–7 Transportation Security Administration (TSA), 79–82 Travel business, 134–137 facilitation of, 21 Trucking companies, 5, 70–72 24 Hour Manifest Rule, 4, 30, 150 U Ultimate consignee, 125–128 United States, travel to and from, 3–4 U.S Coast Guard, 107–109 U.S Customs and Border and Protection (CBP) See Customs and Border Protection (CBP) U.S Customs Service, 19 U.S Customs-Trade Partnership Against Terrorism (C-TPAT) program See Customs-Trade Partnership Against Terrorism (C-TPAT) U.S government mindset of, 7–11 Web sites, 10–11 U.S Principal Party in Interest (USPPI), 42 U.S Visitor and Immigrant Status Indication Technology (US–VISIT), 22 T Technology AIDC, 116 inspection, 23–24 radio frequency identification, 115–120 security, 147–148 Technology issues, 111 Third–party providers, 74 Threat awareness, 147 Toxic chemicals, 124 Trade See also Global trade facilitation of, 21 FAST program, 15–17 Trade Act (2002), 22, 152 Trade sanctions, 48–51 Training, 165, 168 Transfer pricing, 133–134 Transportation infrastructure, security concerns in, 13–14 AU6456.indb 198 V Vessel stow plan, 151–152 W Warehouses, 72 Web sites, government, 10–11 Witt, James L., 85 Z Zone of security, 22–23 1/8/08 10:36:13 AM ... competitive global supply chains AU6456.indb 20 1/11/08 9:10:17 AM Chapter The Events of 9/11 and How They Affect Global Supply Chains This chapter reviews the events of 9/11 and how supply chains. .. 34 Automated Commercial Environment (ACE) 35 Managing Inbound Supply Chains: Purchasing Control 37 Chapter Export Supply Chains 39 Department of Commerce Census Bureau ... the Pentagon These events have changed global supply chains forever This book becomes the best navigation tool for supply chain executives to utilize in managing their import/export responsibilities