Building a Global Supply Chain for Your Small Business by Nicole Snow

By

Nicole Snow

Through the years, I’ve learned a lot about sourcing goods and materials from overseas. While it does take some finesse, I can tell it you that it’s well worth the effort.

I started my company because I love crafts and wanted to create an e-commerce site to sell imported, recycled hand-spun silk yarn from India. Today, Darn Good Yarn not only gives our customers access to fabulous products, but we also enable 600 women in Nepal and India to use their skills to support themselves and their families, as our suppliers.

Working with a global supply chain can give you the opportunity to offer unique products you may not be able to find domestically. It connects you with people on the other side of the world. And, in our case, it also enables us to make a positive impact on people’s lives while running a successful small business.

Here are my top tips for international sourcing:

1. Make sure the supplier can scale with your needs.

For me, it’s imperative to start by asking two critical questions upfront:

• What is your minimum order?
• What is your maximum output capacity?

Although I never recommend placing a big order the first time you work with new suppliers, you should know their highest estimated output. The last thing you want is to start offering a product, get huge orders, then discover that your supplier can’t deliver. I won’t take suppliers on unless they can meet my projected demand.

2. Negotiate terms upfront.

I always prefer to work with suppliers who are also small business owners, like me. While it’s important to build strong relationships with your suppliers, never forget that you’re making a business transaction. As the customer, you have to negotiate payment terms that are favorable to you. For example, I typically pay 50 percent upon placing the order and 50 percent on delivery.

I’ve found that if the supplier asks for the total payment up front, that’s a sign ...

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Export Plan Section 5 Part 7 Transportation and Documentation continued

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On the last post, we covered the documents needed for the movement of goods between inland points and the port at which the export will arrive/depart.

This post we will look at packaging, temporary export licenses and ATA carnets

Packaging

Goods shipped for export require substantially greater handling than domestic shipments. You must pack the goods to ensure that:

• Weight and measurements are kept to a minimum;
• Breakage is avoided;
• The container is theft proof; and
• Goods do not suffer from the stresses of ocean shipment, such as excess moisture.

In addition to proper packing, you should be aware that certain markings are necessary on goods transported internationally.

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Typical Required Markings:

• Country of origin: Some countries require that the country of origin be marked on the outside of the container, and may even have regulations as to how the mark of origin should appear.
• Labeling: Food and drugs often must carry ...

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Your Export Plan Section 5 Part 5 Transportation and Documentation

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Your Export Plan Section 5 Part 5 

Transportation and Documentation

continued

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Export Packing List,Certificate of Origin, Insurance and Inspection Tickets

Doing a quick check on myself, I realized that I left out the “export packing list” on my last post. It should have followed the Shippers Export Declaration. So we will start with that item then move onto the certificate of origin.

Export Packing List

 An export packing list is much more detailed and informative than a standard domestic packing list. It includes:

• Itemization of the contents of each individual package
• The type of package, such as a box, crate, drum or carton
• The individual net, legal, tare and gross weights and measurements for each package (in both U.S. and metric systems)
• The shipper’s and buyer’s references

The list is used by the shipper or forwarding agent to determine the total shipment weight and volume, and whether the correct cargo is

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Your Export Plan Section 5 Part 6

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Your Export Plan Section 5 Part 6

Transportation and Documentation

continued

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On this post we will cover the documents needed for the movement of goods  between inland points and the port at which the export will arrive/depart.

Documents Used during Inland Movement of Goods— At-A-Glance

• Shipper’s Instructions
• Inland Bill of Lading
• Delivery Instructions
• Dock Receipts
• Bill of Lading/Air Waybill

Shipper’s Instructions

As an exporter, you are responsible for providing your freight forwarder with the necessary information regarding your shipment. The more details you provide, the greater the chances your goods will move free of problems. Your freight forwarder can ...

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Transportation and Documentation

continued

Export License/ Shipper’s Export Declaration (SED)

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Export License

Export controls are based on the type of goods being shipped and their ultimate destination. While most exports do not require a license, it is your legal obligation to seek an official determination from the Bureau of Industry and Security (BIS).

• Technically, most exports are shipped under a “No License Required” (NLR) classification, which is a self-certification that a license is not required.
• Should your particular export be subject to export controls, a “validated” license must be obtained. In general, your export would require a “validated” license if export of the goods would threaten U.S. national security, affect certain foreign policies of the United States or create short supply in domestic markets.

To determine whether your product needs an export license, you must have the Export Commodities Classification Number (ECCN) for your product. An ECCN is assigned to products that require a license at their ultimate destination or if required due to the nature of the product itself–for example, if the product has dual use as a civic and military item

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If your freight forwarder cannot provide you with the ECCN, you may be able to obtain it from the manufacturer, producer or developer of your product if it has been exported before, and you are not the producer.

• The Bureau of Industry and Security at the U.S. Department of Commerce can also help you obtain an ECCN.
• Or, you can look up the number in the Code of Federal Regulations, 15 CFR Parts 730–774, online; it is also

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Your Export Plan :Transportation and Documentation continued

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Creating Your Export Plan Section 5 Part 3

Transportation and Documentation

continued

On the last post we looked at transporting your goods to your chosen destination and how the Freight Forwarder can make all of the necessary connections to make it all happen.

There are certain requirements that they have to meet before someone actually becomes a Freight Forwarder. They must obtain a FF number, insurance and a Surety Bond of 75 K. There are other candidates that you can use for your international needs, but be sure to check them out.

In this post we start out with the mode of transportation and documentation.

Mode of Transportation

In preparing your goods for international transport, you must first determine what mode of transport you will use.

• If shipping to Mexico and Canada, land transportation may be the preferred method. (Or, depending on what you are shipping, you might find that air service to these countries makes the most sense for your business.)
• Other methods of shipping internationally include sea and air transportation.

Maritime shipping is usually slower and less expensive than air freight. However, you must factor in the additional costs of sea freight, such as surface transportation to the dock. Another factor is the time value of money: payment may not be made until the ship reaches its destination—and ocean freight can take significantly longer than air freight.

Your international freight forwarder can assist in weighing the pros and cons of different modes of transportation. Once you have decided on the best option for transporting your goods, you must begin to compile the necessary documents.

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Creating Your Export Plan :Transportation and Documentation

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Creating Your Export Plan Section 5 Part 2

Transportation and Documentation

Role of the Freight Forwarder

Once you’ve pinpointed your target markets, you need to assess how you will get your product or service to your potential customers. There are many options for market entry strategies.

These include

• Licensing technology abroad
• Acquisitions of foreign companies through direct investment
• Strategic alliances
• Joint ventures
• Exporting (direct and indirect)

The benefits and risks associated with each method are contingent on many factors, including the type of product or service you produce, the need for product or service support, and the foreign economic, political, business and cultural environment you are seeking to penetrate. The best strategy will depend on your firm’s available resources and level of commitment, as well as the degree of risk you are willing to incur.

Small businesses most commonly select exporting as their strategy for market entry. Start-up costs and risks are limited, and exporting is less complex than some of the other market entry methods.  Exporting can be done directly or ...

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Creating Your Export Plan Section 5 Part 1

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Export Readiness:

Your New Marketing Plan: Summary, Timeline and Updates

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Section 5 Part 1

As you continue to revise and update your exporting plans, it is recommended that you keep your Marketing Plan updated too. In this way, you’ll always have a current version available to share with staff, bankers, investors, and others. Set your calendar to return to this workbook approximately every six months (or more frequently in the case of major changes to your plans).

In addition, you can use the following Timetable Worksheet as an ongoing barometer of where you stand with your exporting plans, what steps are completed/yet to accomplish, and where changes to your plans may be needed.

Timetable Steps  

Worksheet Export Planning Timetable

The following worksheet can aid you in tracking the accomplishment of your stated Short- and Long-Term Goals. Completing it entails the following four steps:

1. Identify key activities. Compile a list of tasks that are vital to the ...

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Your Export Plan Sec 4 Part 2 B

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Export Readiness:

Utilizing Technology for Successful Exporting

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Section 4 Part 2 B

Ecommerce Tools, Equipping Your Business With technology

Worksheet: Technology Tracker

Reminder: Some parts of the world are behind on technology Also, a customizable App that you can change out and send and receive unlimited SMS and push message may be a good communication tool.

Equipping Your Business with Technology

 At a minimum, your business should have an adequate telephone system and the ability to send and receive email. You should also have a website for global presence, and may wish to have faxing capabilities for transmitting international documents to those areas where an infrastructure of web-based technology is not as prevalent. There are some areas that do not even have faxing capabilities, in this case then it is the mail that you have to depend on..

Keep in mind that SBA’s loan program Export Express can help you with financing of equipment needed for building your export business, including the development/updating of an exporting website.

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Key Functionality to Consider:

Conference Calls Your phone system should support worldwide communications and the ability to conference with several parties at once. Communications can be more effective when you, your overseas customer and your overseas agent can be linked by a conference call. This can be through your actual phone equipment or through a call-in number and password. There are vendors to be found on the web through ...

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Equipping Your Business For Success | YouInc.com

How Does Technology Improve a Business? | Chron.com

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Your Export Plan Sec 4 Part 2 A

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Export Readiness:

Utilizing Technology for Successful Exporting

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Section 4 Part 1

Ecommerce Tools, Equipping Your Business With technology

Worksheet: Technology Tracker

Some of these tools will seem outdated to you, but you must remember there are parts of the world that modern technology has not yet found. For example, I have an established lawyer in Accra, Ghana that I use to handle my legal business responsibilities there. There are no fax machines or scanners for documents that need to be signed by me there. We have to use the mail, which sometimes takes two months. Once received, then I can scan and return by email and can be copied.

Most places of business will not ship items to Nigeria. It has to be shipped to me first and then I ship.  A shipment usually takes six weeks to get to my contacts. The theft problem has improved, but sometimes customs there will make a pickup very hard to get or sometimes even impossible. I never know what is going to happen.

My contact of almost five years in Nigeria, the first two shipments he stole. I finally made him understand that he could steal and make profit once, or trust me to do him right and he could make profit many times. We finally made progress.

Romania is a little bit better on the tools needed to run a business there, but some they cannot buy nor can they have it shipped by a company, but an individual can ship it to them. Again, expect a six week delivery time.

These are all small details that can make a difference on how smooth your operations may or may not be. There is much information here so it will be broke up into two parts. ~ MG

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E-Commerce Tools

Export-Focused Online Services

Trade leads from international companies seeking to buy or represent U.S. products are gathered by the United States and Foreign Commercial Service officers worldwide and are available at www.export.gov/tradeleads. SBA also offers information on managing and expanding your business, software for small businesses, and gateways to other online services.

The International Trade Data Network® (ITDN)

Provides access to export, import and other trade related information. ITDN is a non-profit data multiplier that provides the business community with the timely ...

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