ISQA 479

1. ISQA 479 Warehouse Locations International Issues

2. Vale Brasil

3. VALE BRASIL Flag SINGAPOREDWT 400,000 tonnesSpeed (knots) 14.8Draught (m) 23.00 (75.46 ft)Depth Moulded (m) 30.40 (99.74 ft)Breadth (m) 65.00 (213.25 ft)Length 362.00 (1,187.66 ft) (LO)Engine MAN-B&W 7S80ME-C8Power 27,162 (Kw) For Distribution of Iron Ore to China

4. Distribution Strategies • Customer Locations • Supplier Locations • Numbers of DCs • DC Locations • Inventory Strategy • What to Stock • How Much • At Which Locations • Transportation Strategies

5. Warehouse Locations • 1 Warehouse: Henderson KY 2.28803 • 2: Ashland KY; Bakersfield CA 1.48487 • 3: Allentown PA; McKenzie TN; Bakersfield CA 1.29378 • 4: Lancaster PA; Meridian MS; Chicago IL; Bakersfield CA 1.20316 • 5: Summit NJ; Dallas TX; Macon GA; Chicago IL; Bakersfield CA 1.13264 • 6: Summit NJ; Dallas TX; Macon GA; Pasadena, CA; Chicago IL; Tacoma WA 1.08236 • Yellow: Days in Transit Green: Miles

6. Warehouse Locations • 7: Summit; Chicago; Tacoma; Gainesville; Dallas; Lakeland, FL; Pasadena 1.07216 • 8: 7 Plus Denver CO 1.05200 • 9: Summit; Chicago; Alhambra CA; Gainesville; Dallas; Tacoma; Lakeland; Denver, Oakland CA 1.04187 • 10: Newark NJ; Rockford IL; Alhambra CA; Mansfield OH; Gainesville GA; Palestine TX; Tacoma WA; Lakeland FL; Denver CO; Oakland CA 1.04173

7. Containerized Container Acquisition Inland Wharfage and Handling Loading Transit Wharfage and Handling Inland Final Delivery Bulk Ship Charter Inland Transport Bulk Loading Facility Stow and Trim Transit Bulk Unloading Terminal Inland Transport Final Delivery International Transport Issues

8. International Issues • Documentation • Certificates of Origin • Export Permits and Documentation • Inspection Certificates • Import Documents • Duties and Tariffs • Health/Pest Inspections and Certificates • Others

9. International Issues • Payment • Up Front • On Account • Letters of Credit • Irrevocable • Confirmed • Standby

10. Goals of Supply Chain Management • Quality • Time • Reliability • Flexibility • Cost

11. Supply Chain Risks • Social and Religious Conflict • Terrorism • Natural Resource Dependency • Natural Resource Depletion • Supply Chain Uncertainty • External vs Internal Risks

12. Transaction Risk

13. Correct Transaction Cost Total trans. cost Cos t s Logistical cost Material cost Admin cost Transaction origin Transaction conclusion Time

14. Typical Measured Costs • Material Cost • Service Cost • Administrative Cost • PO Cost • Receiving • Accounts Payable • Freight

15. Back Orders Late Deliveries Defective Material Costs Costs of Rejected Goods Prod’n Stop Costs Project Delay Costs Air Freight Cost of Warranty Failures Extra Inventory Cost Services Incorrectly Performed Invoice Errors Highly Variable Lead Times Freight Damage Costs Typically Not Measured

16. Time delay Invoice errors Cost overrun Freight damage Cos t s Total trans. cost Raw material delays Specification questions from supplier Transaction origin Time Expected transaction Actual conclusion

17. Who Pays?

18. Additional Supply and Logistics Risks • Origin Risk Analysis • Natural Disasters • Labor Issues • Political Issues • Logistics Risk • Capacity • In-transit Loss or Damage • Labor Issues • Clearance Delays • Infrastructure Constraints

19. Additional Supply and Logistics Risks • Inventory Risk • Loss or Damage • Obsolescence • Shrinkage • Technology Risk • Bad Selection Process • Lack of Training • Late Adoptor

20. Functional Issues Engineering Late Sr Mgmt Approval Poor Specifications Specifications Late Rush Orders Poor Forecasting and Planning Policy Issues Cheapest Supplier No Standardization No Supplier Visits Outsourcing Lean FOB Destination ERP Selection Internal Risks

21. Supplier Risks Late Shipment Quality Financial Failure Costs Logistical Risks Late Shipment Freight Damage Capacity Issues Infrastructure Costs Global Risks Global Economy Currency Fluctuation Political Instability Natural Disasters Raw Material Availability National Risks Inflation Retirements External Risks

22. Infrastructure Risks • Infrastructure Deteriorating Faster than Repair • Congestion at All Levels • Difficulty Locating Logistical Capacity • Increased Lead Times • Increased Inventories • Increased Costs • Increased Supply Chain Uncertainty and Risk • Losing Ground to Other Countries

23. Risk Management • Identify Risk • Assess Probability • Devise Strategies • Proactive • Reactive • How to Eliminate High Probability/Low Cost Events

24. Avoiding Extra Cost Risk • Good Specifications and Statements of Work • Quality Control and Monitoring • Rule of 10 • Expediting • On Time Delivery • Logistics Management • Freight Damage • Correct Delivery • Holding Suppliers Accountable

25. Impacts of Supplier Failures • Air Freight Study • 50% is from Supplier Failures • Construction Project Study • From 16 to 23 Percent of ENTIRE Project Costs Attributed to Quality Failures • Increasing Focus on Supplier Accountability

26. Risk Management • Global Supply Chains Increase Risk • Continuity (Risk) Planning • Suppliers’ Plans • Carriers • Geographic Dispersion of Suppliers • Emergency Inventory

27. Risk Management • Good Forecasting • Intense Market Study • Careful Supplier Selection • Superior Supplier and Carrier Communication • Problem Prevention Plans • Comparison to Disaster Planning

28. Risk Management • Disaster Planning • Natural Disasters • Supplier Failures • Financial • Labor Interruptions • Supply Chain Risks • Security • Conformance • Supplier Environmental and Social Responsibility

29. Supply Chain Risks?

30. Combating Supply Chain Risk