For the Somerset furniture Company described in Case
Problem 10.1 in Chapter 10, determine the product lead time by developing a
time line from the initiation of a purchase order to product delivery. Discuss
the company’s possible transportation modes and channels in China and to and
within the United States, and the likelihood of potential Problems Identify and
discuss how international trade specialist(s), trade logistics companies, and/or
Internet exchanges might help Somerset reduce its product lead time and
variability.
Following is
the variable timeline for product lead time:
1. Develop purchase order: 12 to 25 days
2. Process purchase order overseas: 10 to
20 days
3. Manufacturing process: 60 days
4. Transport from plants to ports: 1 to 14
days*
5. Arrange for containers and paperwork: 5
to 10 days*
6. Wait for containers: 1 to 7 days*
7. Load containers: 3 to 6 days*
8. Security checks: 7 to 21 days*
9. Overseas shipment: 28 days
10. Clear customs and loading trucks: 7 to 14
days*
11. Transport to warehouse: 1 to 3 days*
12. Receive and warehouse: 1 to 30 days
Total lead time: 119 to 238 days
This case is
based on an actual company. The company contracted with an international trade
logistics (ITL) company to improve their overseas logistics, which combined
with their improved information technology capabilities, allowed them to
directly monitor and control overseas product movement. This reduced scheduling
variability.
Transportation
within China is primarily by truck, although rail is sometimes used. Poor
infrastructure means shipments can be delayed or damaged. Transportation to the
U.S. is by ship. Delays are primarily at the sending and receiving ports.
Transportation within the U.S. is predominantly by truck, although rail is
sometimes used. Shipments are sent directly to dealers, stores, and customers.
Few shipments are sent to Somerset directly.
*
Areas in which international
trade specialists trade logistic companies and Internet exchanges would be
helpful.
