In this second part about best practices and need to knows when importing freight, I will cover the importance of information in the import process,  supplier importance, your internal team set up, documentation, and what should be included on invoices. In yesterday’s post I covered the introduction to best practices when importing freight covering the important rules, so make sure you give it a read as well. While Thomasholmes does not directly offer products and services as an international freight forwarder,our affiliates and partners do, as well as Chuck can lead you to the best international freight forwarder through his consultancy. Thomasholmes focuses on the freight management for shippers in North America, specifically using freight technology, a TMS, to automate process in the shipment of LTL, TL, and Small Package freight.

Importing Freight Best Practices Part 2

Information Flow is Key

To manage imports effectively, the business community needs to have a better mechanism for managing information flow. You need an automated system for information flow that uses a central database so that you can manage all the way through the supply chain. If you manage your information flow and supply chain from a security point of view, the long-range benefits will outweigh the short-term costs in the process of importing freight.

Your Suppliers are Critical

Importing freight starts with a purchase order to an offshore supplier. The supplier has to get things right so problems are solved in advanced and this will eliminate delays. Whatever the approach, working with suppliers will become even more important to importers, as it is a crucial part of the .

When the Supplier gets ready to ship, they should work with Freight forwarder to consolidate the goods into a container load.

Port strikes do occur and have to be managed by all parties involved in importation. The customer, at times, has to visit the port to where the vessel is sent to and work with longshoremen and steamship lines to expedite their shipment right on the spot. At Schwinn, I was the International Purchasing Manager and Import Manager and flew to Halifax, Nova Scotia to expedite bicycle parts for Schwinn’s assembly line during the New York dock strike. The ships were lined up for miles in Halifax, and efforts to get around it were a challenge, but being on there certainly helped.

Create your Own Import Team

Select forwarders and brokers that will work on their own process improvement when importing freight, and challenge you and your organization to do the same. Then measure their performance, such as evaluating how long it takes the freight forwarder to turn documents over to the customs broker, and how fast the broker clears shipments.

Additionally, provide effective oversight of your providers. About ten years ago, Customs changed the rules of the game with the . This included the concept we now know as ‘reasonable care.

Many companies have not recognized what reasonable care has done in shifting responsibility to the importer. They still lean heavily on their broker, and may not recognize that they’re ultimately liable if the broker makes a mistake. Importers must select and manage brokers carefully, and use the broker as a source of information rather than as the ultimate decision-maker.

Educate, educate, educate

International trade skills are an important part of a logistics or supply chain manager’s knowledge. “Logistics managers need to control the timing and cost of moving goods across the border,” Gould says.

He urges logisticians to get smart about imports. Take courses, and look at the U.S. Customs and Border Protection web site and stay abreast of the state-of-the–art in importation!

And study INCOTERMS for translation of where responsibility for imports lie.

Documents that shall be submitted when Importing Freight

The following import documents shall be submitted with an import declaration, as far as applicable:

Invoices

Invoices shall contain the following information:

Importing freight, while may seem complicated, can easily be mastered by following the fundamental best practices. What thoughts would you like to share when importing freight not discussed in this two part series. Let me know in the comments below, or shoot me an email to discuss further.

The following is the first part in a two part series on managing import freight by 3PL consultant, Chuck Intrieri. While Thomasholmes does not directly offer products and services as an international freight forwarder, our affiliates and partners do, as well as Chuck can lead you to the best international freight forwarder through his consultancy. Thomasholmes focuses on the freight management for shippers in North America, specifically using freight technology, a TMS, to automate process in the shipment of LTL, TL, and Small Package freight.

An Introduction to the Best Practices in Import Freight 

Managing import freight and goods is not a simple task. Importing a single shipment involves dozens of parties and complying with numerous requirements. The complex importing process is complicated further by the evolving requirements of the .

These requirements can have significant impact on a company’s supply chain. Take the 24-Hour Rule, which requires advance manifesting of a U.S.-bound ocean container before it can be loaded at the originating dock. This new rule can add processing fees as well as days to a company’s cycle time.

For companies that import freight, management must understand the total supply chain to make sure they provide their customers with the ultimate solution at the lowest possible cost.

Here’s what you need to know to optimize imports and speed cycle time while complying with increased regulatory requirements. Effectively managing imports, requires understanding the three flows that are involved in the process:

Understanding fiscal flow means knowing who needs to be paid—including suppliers, customs and tax authorities, 3PLs, packers and others—as well as when and how they need to be paid.

Every time someone touches your goods, whether loading, unloading, or inspecting them, it adds costs and increases the likelihood of damage or pilferage. You must also watch the condition of your import freight at all importation points

Understanding the physical flow also means having a true picture of timing. If you bring in goods from France via ocean freight, they may be locked in an ocean going container for over 20 days and you can’t touch them.

Know the Rules of Import Freight

In addition to understanding the supply chain implications of international trade, importers also must keep abreast of evolving customs regulations. In the post-Sept. 11 world, customs administration is focused more on security than anything else.

Customs, (renamed the U.S. Bureau of Customs and Border Protection (CBP)), has been moved to the Department of Homeland Security with a mission and goal  to protect against terrorism and terrorist organizations, and secondly to protect the flow of legitimate trade.

The foundation for CBP programs such as the 24-Hour Rule is what Customs perceives as the threat that terrorists will infiltrate a legitimate cargo container and place in it a weapon of mass destruction. The means and methods of infiltrating containers exist today. Customs wants potential threats to be identified before they reach ports of entry.

Through its , Customs is asking the business community to help secure the supply chain against terrorism by undertaking self-assessment, using C-TPAT security guidelines, and implementing a supply chain security program. Members of C-TPAT can expect fewer inspections and what Customs calls “an emphasis on self-policing,” rather than on customs verifications.

While becoming C-TPAT certified may take weeks or months, depending on the size and complexity of a company and its imports, investing in certification is well worthwhile.Any company that regularly has import freight and imports goods into the United States and is not participating in C-TPAT is making a big mistake. If your organization doesn’t have the time or resources required to become certified, work with a third party, such as a customs lawyer or broker, to get it done.

Another key program is Custom’s , under which U.S. Customs officials based in major ports around the world perform risk analysis of shipments before they’re loaded. This process requires having advance information on material that is being sent, as dictated by the 24-Hour Advance Notification Rule.

Vessel operators are required to provide electronic manifest information to Customs, based on the information that’s provided to them by the exporter or importer. In order to prepare the required documentation, carriers mandate that shippers provide them with documentation 24 to 72 hours beforehand.

While the requirement currently covers ocean freight only, depending on what happens in the rule-making that is currently in the works, advance notification may be required for shipments traveling via other modes in the near future. As a result, reevaluate your international transit times to ensure you have built in sufficient time.

What import freight best practices would you share? Tomorrow Chuck will cover some more managing import freight best practices covering more information, supplier importance, your internal team set up, documentation, and what should be included on invoices.

In this final part of my series on the Cold Supply Chain, I will discuss considerations for export liability, as well as label and marking considerations in the import/export process of shipping food and frozen food. Part 1 discussed temperature, sanitization, and traceability considerations, where part 2 covered quality specifications and the definitions of the elements and processes of the export process.

It takes a special expertise to pull off with skill and accuracy all while maintaining costs and mitigtating risks. It’s vital to understand the entire process, best practices, and considerations within the cold supply chain in order to stay in line with the FDA’s requirements in the Food & Safety Modernization Act.

NOTE: Thomasholmes is a third party logistics company who specializes in freight management via LTL, TL, and Small Package freight modes. Thomasholmes has many affiliates who can assist in the process of the cold supply chain in the way of warehousing and international import/export. However, Thomasholmes can help you in our North American freight management needs with technology via their transportation management software for LTL and Small Package freight, and has a truckload freight division to handle full truckload shipments.

Export Liability, Physical Export Requirements, and Label & Marking Considerations in the Cold Supply Chain

Export Liability

Export shipments are insured against loss, damage, and delay in transit by CARGO INSURANCE.Depending on the terms of sale, the cargo insurance may be made by either the buyer or seller. The responsibilities of the buyer and seller are based on the negotiated incoterms: If the customer purchases FOB (Free on Board): ex-works, the customer pays for the insurance, freight and all other export costs. If other FOB arrangements are made, the seller pays the insurance: FOB CIF: Cost, Insurance and Freight.

Damaging weather conditions, rough handling by carriers, and other common hazards to cargo make MARINE INSURANCE important protection for exporters. If the terms of sale make the firm responsible for instance, it should either purchase its own insurance policy or insure cargo under the freight forwarders policy for a fee. Even if the insurance burden is on the buyer, the seller should not assume (or take the buyer’s word) that adequate insurance has been obtained. If the buyer neglects to obtain insurance coverage or obtains too little, damage to the cargo may cause major financial loss to the exporter of record.

Insurance coverage has to be on a door-to-door basis to protect you if you are responsible for insurance coverage to protect the shipment.

The terms and conditions of the purchase agreement: Purchase Order/ Purchasing Agreement, should have detailed Terms and Conditions to protect ACS in a court of law should that ever occur.  If the Supplier has terms and conditions in their documents, and you do not, the case will be automatically won by the supplier.

*See theft/pilferage avoidance below under physical export requirements.

Meet FDA/USDA Certification requirements: Electronic Export Information (see above under export food documentation).

Shelf life considerations: temperature management to insure proper shelf life of the frozen food. Breakage, weight, moisture and pilferage

All necessary documentation outlined above.

Physical Export Requirements in the Cold Supply Chain

Since proper packing is essential in exporting, often the customer specifies packing requirements. If the buyer does not so specify, be sure the goods are prepared with the following considerations in mind:

Export Labeling & Markings Considerations in the Cold Supply Chain

Because the goods are being shipped by unknown carriers to distant customers, the exporter must be sure to follow all shipping requirements to help ensure that the merchandise is packed correctly so it arrives in good condition, labeled correctly to ensure that goods are  handled properly and arrive on time and at the right place, documented correctly to meet local and foreign government requirements as well as proper collection standards and insured against damage, loss and pilferage, and in some cases, delay.

Your questions or input are welcome, and if you have any specific questions, feel free to email me or .

In the first post in the Cold Supply Chain series, I discussed cold chain logistics requirements for temperature, sanitization, and traceability of frozen food at all stages of the cold supply chain. There are many factors in the cold supply chain and in cold chain logistics one must know in order to meet the requirements of your customers, but more importantly of the FDA’s Food and Safety Modernization act.  When working in-house with supply chain colleagues and those in the logistics department, make sure they are aware of the following information, as these are great considerations to understand when working through cold chain logistics.

Quality Specifications in Cold Chain Logistics

Frozen Food Export Documentation Required

In Cold Chain Logistics, you will undoubtedly work with a forwarder to ship your frozen food. The following describes a relationship with a forwarder and their role, as well as a customs broker, and some key definitions and elements in the cold chain logistics process of exporting frozen food:

Definitions & Elements in Export Process of Cold Chain Logistics

In tomorrow’s third and final post on the Cold Supply Chain and Cold Chain Logistics, I will cover the liability considerations as well as label and markings considerations when shipping frozen food.

Please feel free to leave a comment, or send me an email with any questions at cmiconsulting93@gmail.com or feel free to .

Shipping Frozen Food: The Ins, Outs, and Wherewithal

In this three part series around shipping frozen food freight, we will cover the ins and outs and best practices one must consider when shipping frozen food in order to stay compliant with the FDA’s Food Safety Modernization Act (FSMA). In this post we will cover the temperatures best practices from origination to destination, sanitary provisions, and traceability of food and technology around traceability. Please let us know in the comment section at the end, your thoughts and additions to the below when shipping frozen food. When it comes to frozen food, this is often referred to as the Cold Chain. A

Temperatures for cold supply chain:

Sanitary Provisions when Shipping Frozen Food

Food traceability when Shipping Frozen Food

Combination RFID and TRACEABILITY when Shipping Frozen Food

In the next part of this series about shipping frozen food freight, we will cover Quality Specifications and export documentation. Remember, if you have any thoughts, please let us know below!

In this week’s guest blog post from, , he offers an allegorical editorial on how making time for Logistics and Supply Chain Management is important even in the busiest (and more profitable times).

I was talking to one of our customers recently. He’d been talking about a Transportation Management System (TMS) for nearly a year, so I thought the delay in confirming the order was probably due to the economy.

How wrong I was!

His problem is that he has been too busy trying to cope with the best year that he has ever done. He has no time to plan an expansion to his IT systems. A problem, no doubt, many 3PLs would love to have!

It reminds me of the story of the American war between the Army and the Native Americans. The Native Americans are trying to fight off the military with bows and arrows. A salesman with a Gatling gun is tapping the shoulder of the Indian chief. “Chief, can I interest you in this?”

The response, “Go away, can’t you see I’m trying to fight a war.”

Sometimes in business, we all have to reflect whether we need to put time aside now, to improve our profitability in the future.

This analogy happens frequently to many of us. We sometimes are too busy “fighting the battle”, the business battle, to hear any new ideas that may help us become a better manager for your company. We must sell our products to meet the sales quota deadline. We must purchase the right components, at the right quality, at the right price, and at the right time to support the production line.

In Logistics, we have to find the right transportation cost for our customer to get their order, to move their freight for them, and meet their customer’s delivery date. We are pressured to obtain the (LTL) less than a truckload freight, load it, and apply dun age to avoid loosening up in the trailer, not damage it in any way, consolidate it, and move it to the right destination on time, every time.

Transportation Management Systems (TMS) can help you find the best routes & lanes for potential shipments. TMS offer benefits for shipping management, trading partner collaboration, freight payment and freight optimization. It can help you find the best routes and lanes for potential savings for the customer and logistics partner.

Finding the right TMS for you can be daunting, you can choose from:

  1. Cloud based
  2. Traditional on-site installation targeted to freight moving over the road, by rail, ocean going container or parcel shipments.

The receptionist calls the Logistics Manager: “There is a salesman/woman here in the lobby who represents a TMS system software solution, they say.”

The manager to the receptionist: “Don’t you realize that I am very busy analyzing my transportation excel spread sheets currently? I can’t see a TMS representative now? Are you kidding me?”

Let us know if you are proactive as a Logistics Manager, even in the most prosperous times, below!

In the first post about how to product by value analysis, we gave you the initial steps of a value analysis method or technique which will allow you and your manufacturing facility to conduct a brainstorm first by understanding the goals and gathering information. Ultimately, once you then execute past the information and gathering steps, you will output information which will allow you to realize cost reductions on current products, and learn how to work towards developing new products which help grow revenue and reach new customers and keep current customers.

We conclude our value analysis method today, from guest blogger and 3PL consultant, , by talking about the execution process of the value analysis method.

Evaluation

The evaluation should be done after an interval, at best about two days after the brainstorm, to allow the group to gain perspective.

Now the group analyzes each idea. They group similar ideas. When evaluating, do not think why the idea would not work, why it is not possible. Develop each idea, making it more practical, making it function better. Estimate a very approximate cost for each idea and investigate carefully ideas with an apparently low cost. When an idea is canceled, that should be based on facts, not opinions.

Identify barriers and eliminate them tactfully.

Barriers are excuses or preconceived ideas that cannot be substantiated with numbers, facts, detailed and precise information or experimental evidence. Barriers can be honest beliefs. Normally there is gold behind a barrier.

Now select the two to four ideas having the lowest cost.

Development of the two to four ideas selected

Make a real effort to develop the ideas of lowest cost that do the main function. Make tests, prototypes, get quotes of cost. Estimate costs of short term alternatives, of long term alternatives and of any new ideas produced during the evaluation.

At the end of this process, the idea of least cost should have been identified. Ask yourself: “Would I spend my own money on this solution?” If not, modify it.

Recommendation

If you work in an organization or enterprise, be sure that the person really interested in applying the solution gets to see it. Present the final solution in writing, on a single sheet of paper, to the person that should implement it. Give a copy to his boss. This sheet should state the savings, costs and a detailed plan for implementing the idea. It should have all the information needed so that a person that does not know this subject can understand it and do it. The value analysis group should not itself implement the idea, if this is outside its normal area of work.

Implementation and Follow Up

It is good to have a recorder on the cross-functional team to write the minutes. A Captain is appointed to lead the discussion. Assignments are given to all members with due dates for replies. Always solicit Suppliers. They are the specialists in their field. Get your suppliers involved. Consider using a Supplier Day Conference for an item or commodity to gather ideas and collaborate with your suppliers.

Cost Reduction is assured using this value analysis approach. How do you conduct a value analysis? Let us know in the comments below!

Thomasholmes friend and experienced engineer and 3PL consultant, Chuck Intrieri, , is featured again as a guest blogger. This time he offers a two part series on a value analysis technique you can employ in any industry to gather ideas to better your company, but more specifically in the process of creating new products to manufacture in order to lower costs of goods and increase your bottom line.

What is a Value Analysis?

It is an orderly and creative method to increase the value of an item. This ” item” can be a product, a system, a process, a procedure, a plan, a machine, equipment, tool , a service or a method of working. Value Analysis, also called Functional Analysis was created by L.D. Miles of General electric Company…

The value of an item is how well the item does its function divided by the cost of the item (In value analysis value is not just another word for cost):

Value of an item = performance of its function / cost

Select the item to be studied and form a cross-functional study group team:

Value Analysis

The value analyst should always be aware of functions, not of products, shapes, or processes. The main function is what the item does, is that which somebody wanted to archive by creating the item. Express this function (if possible) with just two words, a verb and a noun.

If the item is composed of various parts, it is useful to ask for the function of each part, and how they contribute to the main function of the item.

Do not be distracted by mere aggregate functions such as the rubber on a pencil’s end or the ice producing part of a refrigerator. These were functions added since it was economical or easy to do so. They have no relationship with the main function.

Gather information

Find the main function and the secondary functions of an item. Get the cost of realizing each function. The attitude of a value analyst should be critical, aggressive, nonconformist, never satisfied with what she/he receives for the money given. The first action of the group should be to gather all the information about the item. Ask the best specialist of the field, not the person most accessible. Get a detail of costs. Collect drawings, specifications, all the written data on the item. Don’t be satisfied with verbal information.

For a pencil, for instance:

(This example, the pencil, is already a high value item).

Center the attention of the value analysis group on the main function, because, during the analysis, the secondary functions may change. The group may choose different secondary functions to realize the main function.

It is not important that the individual costs assigned are imprecise. Because even an imprecise numerical value is much better than an expression such as “very costly” or “of low cost”. Use Pareto’s 80/20 principle for cost analysis… That means 20% of the items are 80% of the total costs. Focus on these 20% first.

Measure the value of the way each secondary function is realized, is materialized:

Investigate the cost of a function. Put a dollar sign on tolerances and strict specifications. See what’s thought to be necessary and which somebody put in, just to be on the safe side. Remember: All that does not contribute to the main function is waste and should be eliminated.

Creativity (the brainstorming session)

The objective is to find a better way to do the main function. We try to find a different material, or concept, or process, or design idea, that realizes the main function.
People looked for conditions under which the human mind produces really original ideas, a method that helped creativity. These conditions and procedures are stated below and need strict adherence:

  1. State the main function clearly and shortly on paper or a blackboard (verb and noun), so that the group can fix their attention on it. State it without mentioning the physical object or the specific process. (Do not state secondary or aggregate functions).
  2. The leader of the group says “We begin now” and when the ideas do not flow so fast anymore (about 15 to 20 min.) The leader says “That’s all”.
  3. Members of the group state loudly any solution to the problem they can think of. It is very important that they do not analyze their own thoughts or those of others. They should not smile or react when exotic, improbable or senseless ideas are stated. They should not criticize or speak with others. They should only let their imagination run wild and state ideas. An idea can be inspired by a previous idea. (If no rare ideas are stated, then the members are analyzing, not making a brain storm).
  4. The leader registers all ideas on paper, a flipchart, white board or a blackboard.
  5. When the session has finalized, if there is any doubt what was meant by an idea, the leader clarifies the idea with the help of members. He does not analyze or discard any idea.

This finalizes the brainstorm.

In tomorrow’s post we will go over the rest of the steps of the technique in order to conduct a value analysis and to know how to work towards making products at a lower cost. These include: Evaluation, potential barriers and how to eliminate them, development, recommendations, and then implementation and follow up.

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