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How to Select the Best Supply Chain for Your Business

supply chain

How to Select the Best Supply Chain for Your Business

All businesses, no matter how small, need a reliable supply chain so they can deliver their products to their customers in the shortest time possible. The delivery system needs to be accurate, prompt and cost-effective.

Standards to consider when selecting a suitable supply chain

If the existing supply chain is missing just one of the above three elements, then you should consider redesigning it. In addition, business owners need to understand that supply chains have three different classifications:

-High inventory turns and low inventory volume – equivalent to Just-In-Time inventory

-Low inventory turns and high inventory volume – applicable when you have a long lead time with suppliers

-High inventory turns and high inventory volume – if your business is in the fresh or frozen food industry, you need sufficient produce to replace any expired or spoiled goods

When creating or adjusting your supply chain, other essential elements should include:

-Location of your business, customers, and suppliers

-Local regulations and tax laws

-Logistics lead times

-Logistical costs and savings

You can also measure your supply chain’s success based on the following:

-Flow of goods

-Costs of the flow of goods

-The time needed for such goods to flow

Ultimately, you will need a delivery system that will satisfy all your customers at the lowest possible cost. To determine which supply chain is most suited to your business, consider the following factors.

The location of your typical customer

-Do you ship globally, regionally or locally?

-Do customers come to you to pick up their orders?

For example, if you have to ship your goods across the globe, it can take up to two months for buyers to receive them. Therefore, you will need to design a supply chain that can handle international freight and customs issues.

However, if your customers pick up their purchases personally, then the delivery element can be the extension of your inventory and management control.

If your business requires fast order-to-delivery lead time, you will need a high inventory but low turns. This will mean that you need to allocate more resources to your inventory, but at least this will keep your customers happy.

If your product is in high demand or is perishable, you also need to keep a high inventory and deliver it quickly before the expiration date.

Accounting for supply chains

To successfully manage your product deliveries, you will need to know:

-What exactly you have in your inventory

-Where your stocks are located

-The costs of procuring your products

-The costs of holding them until they are sold or delivered

If you have hundreds or thousands of products, you will need a warehouse management system. Alternatively, you can hire a third-party logistics provider to take care of your inventory management and sales deliveries.

However, if you are just a small business, these options may prove to be too much of an investment. Despite the lack of huge resources, you still need to know your exact inventory. Fortunately, you can keep track of this information using spreadsheets and accounting software such as QuickBooks. This accounting service provider has several resource articles that can help you decide which software is most suitable for your business.

As your business continues to grow, you will need specific software that includes a component called enterprise resource planning (ERP). This system incorporates all the internal and external data in your electronic records and departments, such as accounting and sales.

Accountants, and specifically cost accountants, use the supply management chain as a tool to improve a company’s purchasing, manufacturing and inventory processes. This is a technique that analyzes the movement of goods; for example, from the raw materials to the finished products.

Locate your suppliers

You will have a long supplier lead time if the products will only arrive after

-Two months of sea travel. Shipping them by air is much quicker, but very expensive and the costs are usually unjustifiable

-Lengthy manufacturing cycles

High inventory volume and low inventory turns are normal for businesses such as Apple, although this tech company is using its market position to reduce its high inventory costs. For example, if you are an Apple supplier, you ship the products to the company, but it won’t issue an invoice upon receipt. You only receive payment once Apple releases the products to its retail stores.

Conclusion

In the end, the supply chain you choose must satisfy all your customers’ requirements so they can receive your products whenever and wherever they want. Nevertheless, the cost to you should also be reasonable. Achieving this goal requires a smart strategy and careful planning. However, the financial side of the supply chain will entail employing the services of an accountant who specializes in cost accounting. They will probably recommend a supply management system to monitor every process in the chain.

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Written by Nishi Patel, founder of Northants Accounting.

 

customs

Traits of Reliable Customs Clearance Agents

Do you know anything about freight forwarding companies and customs clearance agents? If you are getting ready to ship your belongings abroad, you need to get familiarized with these two notions. In order to complete a successful freight forwarding process, choosing reliable customs clearance agents is essential. These entities are essentially agents who specifically handle the customs clearance aspect of the shipping process. Given how your belongings will be in the hands of customs clearance – you want them to be experienced and trustworthy.

Every shipment delay can turn out to be harmful to you, whether you are a trader or just an individual trying to send goods overseas. And customs brokers are there to help your shipment avoid latency and to clear the goods you want to have shipped from all ports and officials.

So, what kind of traits should you look for when searching for a reliable freight forwarder? Let’s take a look at some of the things you should pay attention to.

Experienced customs clearing agents should be able to handle every organizational challenge

One of the most significant traits of reliable customs clearance agents is the organizational skills they possess. Your customs brokers need to be organized and able to handle each and every piece of shipping documentation. All of the services they offer should be tackled efficiently and in an organized manner. You, as a client, will be the one who pays the ultimate price if anything during the shipping and clearance process goes wrong and not according to initial plans. Overseas freight forwarding is a serious endeavor and any disorganization may cause great problems. Your goods might even end up being shipped to the wrong country!

Experienced and reliable companies offer insurance for issues such as this one. However, there’s no need to waste any time or money on this tiresome actions. All you need to do is make sure your customs clearance agents don’t lack organizational skills and experience.

Before you hire a customs clearance agent:

Make sure they have a proper license

The customs broker you hire needs to be licensed and approved by the respective country’s government. Naturally, the set of policies, regulations, and rules that are necessary for someone to be a licensed customs clearance agent can vary from one country to another. If we take a look at the US Customs and Border Protection Agency, we can see that it has a set of strict rules and policies. So in order to make your freight forwarding process seamless, choosing an agent that has the necessary licenses.

Your customs clearance agent should go through the right training process

Just like in every industry, customs clearance requires trained professionals. In order to possess all the necessary knowledge and skills to perform their duties, customs brokers need to undergo proper training process. Being a reliable customs clearance agent means being familiar with all the rules and regulations. Also, they should be familiar with trade-related information and understand all the mandatory rules.

Your reliable agent should be updated with the most recent changes in freight forwarding policies

Whether you’ve been aware of this or not, freight forwarding and shipping policies can be really complicated. They are known to be able to cause many headaches to customs clearance agents. So, in order to ensure your shipment has a seamless clearance process, you need to hire agents who keep track of these rules and stay updated with the latest changes in freight forwarding policies and rules. A well-connected and experienced customs broker should have no issues with this requirement.

Whatever goods you need to have forwarded, your agent should have the necessary knowledge about it

No matter what line of industry you are a part of, your agent needs to have knowledge about it. In order to provide you with a professional piece of advice about your shipments and merchandise, your chosen customs clearance agent ought to be well-informed about the type of goods you are having forwarded. Since they have so many responsibilities when it comes to your merchandise, they need to know essential information about it.

There are certainly many benefits of hiring responsible, experienced and reliable customs clearance agents. But you need to be careful and choose the right one – your goods and the entire process of your shipment may become jeopardized if you make the wrong choice. So, try not to rush things. Take your time and make sure your agent has all the traits that mark a reliable customs broker. You won’t regret doing so.

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Jamie Lynch is a blogger and freelance content writer. His years of experience working with international companies such as Kokusai Express Japan have enabled him to share his knowledge about freight forwarding and international shipping.

packaging

China’s Packaging Materials Market Is Slowing Down Due to Weak Demand

IndexBox has just published a new report: ‘China – Packaging Materials – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

The revenue of the packaging materials market in China amounted to $69B in 2018, going down by -6.1% against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price). Over the period under review, the total market indicated buoyant growth from 2008 to 2018: its value increased at an average annual rate of +2.5% over the last decade. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period.

Based on 2018 figures, packaging materials consumption increased by +17.4% against 2016 indices. The pace of growth appeared the most rapid in 2017 when the market value increased by 25% year-to-year. In that year, the packaging materials market reached its peak level of $73.5B, and then declined slightly in the following year.

Production in China

Packaging materials production in China totaled 63M tonnes in 2018, waning by -8.3% against the previous year. The total output volume increased at an average annual rate of +2.9% over the period from 2008 to 2018; however, the trend pattern indicated some noticeable fluctuations being recorded over the period under review. The pace of growth appeared the most rapid in 2009 with an increase of 9.3% against the previous year. Over the period under review, packaging materials production attained its maximum volume at 69M tonnes in 2017, and then declined slightly in the following year.

In value terms, packaging materials production stood at $73.1B in 2018 estimated in export prices. In general, the total output indicated a buoyant increase from 2008 to 2018: its value increased at an average annual rate of +2.9% over the last decade. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, packaging materials production increased by +24.2% against 2016 indices. The pace of growth was the most pronounced in 2017 when production volume increased by 32% year-to-year. In that year, packaging materials production reached its peak level of $77.5B, and then declined slightly in the following year.

Exports from China

In 2018, the exports of packaging materials from China stood at 2.9M tonnes, going up by 4.7% against the previous year. Overall, packaging materials exports continue to indicate a buoyant expansion. The pace of growth was the most pronounced in 2014 with an increase of 33% year-to-year. Over the period under review, packaging materials exports attained their maximum at 2.9M tonnes in 2016; however, from 2017 to 2018, exports remained at a lower figure.

In value terms, packaging materials exports stood at $3.1B (IndexBox estimates) in 2018. Overall, packaging materials exports continue to indicate a buoyant increase. The most prominent rate of growth was recorded in 2014 with an increase of 36% y-o-y. Exports peaked in 2018 and are likely to continue its growth in the immediate term.

Exports by Country

Viet Nam (183K tonnes), Iran (136K tonnes) and Bangladesh (127K tonnes) were the main destinations of packaging materials exports from China, together accounting for 16% of total exports.

From 2008 to 2018, the most notable rate of growth in terms of exports, amongst the main countries of destination, was attained by Bangladesh, while the other leaders experienced more modest paces of growth.

In value terms, Viet Nam ($223M), the U.S. ($158M) and Iran ($118M) appeared to be the largest markets for packaging materials exported from China worldwide, together accounting for 16% of total exports.

Among the main countries of destination, Viet Nam experienced the highest growth rate of exports, over the last decade, while the other leaders experienced more modest paces of growth.

Export Prices by Country

In 2018, the average packaging materials export price amounted to $1,073 per tonne, surging by 4.2% against the previous year. Over the period from 2008 to 2018, it increased at an average annual rate of +1.9%. The most prominent rate of growth was recorded in 2011 when the average export price increased by 11% against the previous year. The export price peaked at $1,145 per tonne in 2012; however, from 2013 to 2018, export prices remained at a lower figure.

There were significant differences in the average prices for the major foreign markets. In 2018, the country with the highest price was India ($1,471 per tonne), while the average price for exports to Bangladesh ($788 per tonne) was amongst the lowest.

From 2008 to 2018, the most notable rate of growth in terms of prices was recorded for supplies to India, while the prices for the other major destinations experienced more modest paces of growth.

Imports into China

Packaging materials imports into China totaled 2.3M tonnes in 2018, picking up by 3.4% against the previous year. Over the period under review, packaging materials imports continue to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2017 when imports increased by 13% against the previous year. Over the period under review, packaging materials imports reached their peak figure in 2018 and are expected to retain its growth in the immediate term.

In value terms, packaging materials imports amounted to $2.2B (IndexBox estimates) in 2018. The total import value increased at an average annual rate of +1.6% from 2008 to 2018; the trend pattern remained consistent, with somewhat noticeable fluctuations being recorded throughout the analyzed period. The pace of growth was the most pronounced in 2011 when imports increased by 15% y-o-y. In that year, packaging materials imports attained their peak of $2.3B. From 2012 to 2018, the growth of packaging materials imports remained at a lower figure.

Imports by Country

The U.S. (422K tonnes), Sweden (309K tonnes) and Taiwan, Chinese (168K tonnes) were the main suppliers of packaging materials imports to China, together comprising 39% of total imports. These countries were followed by Indonesia, Russia, Australia, Japan, Brazil, Finland, Canada, South Korea and New Zealand, which together accounted for a further 37%.

From 2008 to 2018, the most notable rate of growth in terms of imports, amongst the main suppliers, was attained by Canada, while the other leaders experienced more modest paces of growth.

In value terms, the largest packaging materials suppliers to China were the U.S. ($390M), Sweden ($293M) and Japan ($146M), together accounting for 37% of total imports. Taiwan, Chinese, Russia, Australia, Indonesia, Brazil, Finland, South Korea, Canada and New Zealand lagged somewhat behind, together comprising a further 33%.

In terms of the main suppliers, Canada experienced the highest rates of growth with regard to imports, over the last decade, while the other leaders experienced more modest paces of growth.

Import Prices by Country

The average packaging materials import price stood at $982 per tonne in 2018, remaining relatively unchanged against the previous year. Over the last decade, it increased at an average annual rate of +1.1%. The growth pace was the most rapid in 2010 an increase of 15% year-to-year. The import price peaked at $1,120 per tonne in 2014; however, from 2015 to 2018, import prices stood at a somewhat lower figure.

There were significant differences in the average prices amongst the major supplying countries. In 2018, the country with the highest price was Japan ($1,286 per tonne), while the price for Indonesia ($630 per tonne) was amongst the lowest.

From 2008 to 2018, the most notable rate of growth in terms of prices was attained by Australia, while the prices for the other major suppliers experieznced more modest paces of growth.

Source: IndexBox AI Platform