ISQA 479

Warehouse Locations

International Issues

Vale Brasil

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

Distribution StrategiesCustomer LocationsSupplier LocationsNumbers of DCsDC Locations Inventory Strategy

What to Stock How Much At Which Locations

Transportation Strategies

Warehouse Locations

1 Warehouse: Henderson KY 2.28 803 2: Ashland KY; Bakersfield CA 1.48 487 3: Allentown PA; McKenzie TN; Bakersfield

CA 1.29 378 4: Lancaster PA; Meridian MS; Chicago IL;

Bakersfield CA 1.20 316 5: Summit NJ; Dallas TX; Macon GA;

Chicago IL; Bakersfield CA 1.13 264 6: Summit NJ; Dallas TX; Macon GA;

Pasadena, CA; Chicago IL; Tacoma WA 1.08 236

Yellow: Days in Transit Green: Miles

Warehouse Locations 7: Summit; Chicago; Tacoma; Gainesville;

Dallas; Lakeland, FL; Pasadena 1.07 216 8: 7 Plus Denver CO 1.05 200 9: Summit; Chicago; Alhambra CA;

Gainesville; Dallas; Tacoma; Lakeland; Denver, Oakland CA 1.04 187

10: Newark NJ; Rockford IL; Alhambra CA; Mansfield OH; Gainesville GA; Palestine TX; Tacoma WA; Lakeland FL; Denver CO; Oakland CA 1.04 173

International Transport Issues 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 IssuesDocumentation

Certificates of Origin Export Permits and Documentation Inspection Certificates Import Documents Duties and Tariffs Health/Pest Inspections and Certificates Others

International IssuesPayment

Up Front On Account Letters of Credit

Irrevocable Confirmed Standby

Goals of Supply Chain Management

QualityTimeReliabilityFlexibilityCost

Supply Chain RisksSocial and Religious ConflictTerrorismNatural Resource DependencyNatural Resource Depletion

Supply Chain Uncertainty

External vs Internal Risks

Transaction Risk

Cos t s

Correct Transaction Cost

Time

Total trans. cost

Admin cost

Material cost

Logistical cost

Transaction origin

Transaction conclusion

Typical Measured CostsMaterial CostService CostAdministrative Cost

PO Cost Receiving Accounts Payable

Freight

Costs Typically Not Measured

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

Cos t s

Time

Total trans. cost

Transaction origin

Actual conclusion

Expected transaction

Cost overrun

Time delay

Specifica

tion

questions f

rom

supplier

Raw materia

l

delays

Freight damage

Invoice

errors

Who Pays?

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

Additional Supply and Logistics Risks

Inventory Risk Loss or Damage Obsolescence Shrinkage

Technology Risk Bad Selection Process Lack of Training Late Adoptor

Internal Risks 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

External Risks 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

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

Risk Management Identify RiskAssess ProbabilityDevise Strategies

Proactive Reactive

How to Eliminate High Probability/Low Cost Events

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

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

Risk ManagementGlobal Supply Chains Increase RiskContinuity (Risk) Planning

Suppliers’ Plans Carriers Geographic Dispersion of Suppliers Emergency Inventory

Risk Management

Good Forecasting Intense Market StudyCareful Supplier SelectionSuperior Supplier and Carrier

CommunicationProblem Prevention Plans

Comparison to Disaster Planning

Risk Management Disaster Planning

Natural Disasters Supplier Failures

Financial Labor Interruptions

Supply Chain Risks Security Conformance Supplier Environmental and Social Responsibility

Supply Chain Risks?

Combating Supply Chain Risk