Inventory Types and Roles for Inventory in the Supply Chain

Five Things About International Trade Part One

Heading into the world of international trade? Over the next two days we shall be looking at useful things you need to know before you get started. The first five are:

1. Ecommerce – Trading online is more popular than ever thanks to the growth of the Internet. Ecommerce it is now easier than ever to begin trading on an international scale.
2. WTO – Understand that the World Trade Organisation regulates trading.  It is responsible for ensuring expectations are met for consumers and producers.
3. Trade in undeveloped countries – Undeveloped countries rely on their produce, such as coffee, cotton or wood as well as tourism and travel whereas richer counties tend to offer more business or financial services.
4. Mercantilists – They support the increase of exports rather than imports in order to maintain trade surpluses. This helps ensure the host country is able to retain gold and silver received through trade.  This can result in one country gaining and the other experiencing losses.
5. Tariff - This refers to tax that is usually applied by governments of the country that the goods are being imported to.  The tax on goods is put in place to level out the playing field by protecting domestic industries or raising revenue as a way to create a barrier for entry.

Return tomorrow for five more points you need to know for international trade.

Trade Barriers Getting in the Way of Business

Some countries are able to provide services and products at much cheaper rates than others. Why is that? There are usually several reasons but one of the main ones to concentrate on is trade barriers.

These are barriers that have been put in place to encourage local business to thrive and make it more difficult for foreign traders to compete. Other reasons are to help encourage local firms into the world of exporting as well as:

• Reduce dependence on foreign supplies
• Protecting new businesses
• Help local production grow and replace imports
• Promote exportation
• Promotion of political objectives

Trade barriers can result in raising costs of goods so they are more expensive for local buyers to take advantage of. This in turn results in businesses seeking exports and imports to help reduce their own costs.

If you are interested in transforming your businesses to reach overseas markets we can help. Ask us about our International Logistics services.

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Important Transportation Productivity Ratios

Skills That Every International Business Manager Needs

International business happens when transactions are made from countries outside of your own. To conduct international business you either need to use an export and import agent or grow your business to include sales, finance and marketing teams. 

Managers taking on international business will find they need to use new skills that may work on a domestic level but fail when it comes to international trading. 

These skills include:

Cultural awareness - Cultures vary and an International Business Manager needs to be aware of, and respect, other cultures to enhance the business relationships. Things like negotiation skills, tone of voice and body language all play a huge part in securing deals.

Multilingual – It will help a great deal if your International Business Manager has more than one language they are fluent in. If this is not possible, the managers will need to learn how to communicate in English in a way that can be easily understood such as avoiding local slangs and phrases that may confuse, use short sentences and having clear explanations for all processes. It will also make a world of difference to have product and service information available in multiple languages.

A global management philosophy – create a management system that is able to make the most of international opportunities and quickly adapt to changes in potentially volatile markets.

Need assistance with your international logistics? We can help, contact inquiries@royaleinternational.com.

How to Measure Order Fulfilment Cycle and other Metrics Formulation Calculations

Yesterday we have been defining the Order Fulfilment Cycle and discussed on the points to be take notice on.  Perhaps you would wonder how should a fulfilment cycle being measure?

The best way to measure the average fulfilment cycle is by looking at the total time it took for the order to be delivered to the address after the initial order was placed which can be worked out using this formula:

If you would like to calculate the cycle time taking into account the source, make and delivery you will need to use the proportional to formula which compares the order fulfilment cycle time against the source cycle time which looks like this:

Order Fulfilment Cycle Time Proportional to Source Cycle Time + Make Cycle Time + Delivery Cycle Time

In fact, in order to measure the efficiency and effectiveness of a business, there are a lot of factors which has to be considered.  As the cycle time is so important you will need to keep a close eye on it and work out ways that it can be improved.

We have put together some important metrics that we feel maybe helpful to you and your business:

·    Internal Metrics – use when measuring the performance of the system or the internal components of the logistics systems ( production plants, warehouses, transportation equipment)

·    External Metrics – reflects the expectations of the organisation by external entities (customers, stock markets, government, 3^rd party agencies)

·    Inventory turnover ratio – use to evaluate the speed of goods movement through a company. It is determines the number of times inventory is turned over during the year. The higher the ratio the better.

·    Transit Time Variability (TTV) – a non financial metrics that captures the variation in transit time and indicates the reliability of transportation function.  The less the TTV index, means it helps customers plan the work more efficiently.

·         Percentage of Demand Met – this helps indicate operational capabilities of a company. A low % usually implies poor forecast, insufficient capacity, low inventory levels, poor quality and unreliable production & distribution systems.

·    Defectives – it is not a fixable have to scrapped bringing down the production rate

Defectives = unit cost of production increases - cost of repair + labour + materials

·    Percentage of Good Parts – this measure the reliability of the supply in terms of the quality of the delivered parts. If the % is below 100, it might leads to a shortage of parts and additional cost on reverse logistics, i.e. increase the return of goods.

·    Percentage Of Rejects – measure the goods rejections rate.

·    Average Active Maintenance Time – measures the mean to repair or to perform a corrective maintenance.

·    Earnings per share & Financial Leverage – measures the monetary terms of the company performances.

The metrics above illustrates only some of the important metrics and formulas but there are still many more that a business need to consider.   Contact our team for more help: inquiries@royaleinternational.com or contact us by tel/hotline at http://www.royaleinternational.com/contactus2.php.