Retail Client International Logistics and Customs Ian Simmonds 12 - - PowerPoint PPT Presentation

ICS Global Services Limited 1

Retail Client International Logistics and Customs

• Ian Simmonds
• 12th April 2018

ICS Global Services Limited

Client

• International home improvement company

with retail stores in 10 countries.

• Combining and centralising global functions and local

Operating Companies.

• Centralising International Logistics and Customs activities.

ICS Global Services Limited

Strategy

1. AEO

• Use AEO to audit Operating Companies.
• Standardise processes and share ‘best practise’ across Operating Companies.
• Apply for AEO status for customs simplification (AEOC) and AEO status for security

and safety (AEOS). 2. Cost-Effective Logistics

• Map current logistics network for Operating Companies.
• Work with Sourcing teams to map the unified sourced ranges by supplier,

manufacturer and location.

• Design new logistics network to optimise shipping volumes for new unified sourced

ranges, demand planning, routes and combined Client shipping volumes.

• Develop solutions at origin, such as consolidation and pre-retail services (packaging).
• Remove redundancies.

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ICS Global Services Limited

Strategy

3. Shipping

• Review 2017 shipping activity
• Review 2018 - 2019 business requirements
• Estimate potential volumes 2018 - 2019
• Review market trends and rate movements
• Review Ocean Carrier Financials
• Negotiate the combined shipping volumes 2018 - 2019 for all Operating Companies.

4. BREXIT

• Do not yet have clear direction from government agencies.
• AEO for UK to avoid HM Customs clearance delays at UK ports.
• Direct or indirect shipping with possible use of ‘Triangulation’.
• Intrastat – New purchase tax arrangements for UK / EU import/export.

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ICS Global Services Limited

Complia Compliance nce Cha Challenges llenges

• Challenges come from centralising the purchasing processes for

both products and services.

• Both Customs and Tax authorities will view Client’s companies as ‘Related’.
• The arm’s length principle endorsed by the Organisation for Economic

Cooperation and Development will apply.

• Buying Offices overseas – Buying Agency Agreements or Transfer Pricing.
• Buying and selling products and services between Operating Companies -

Buying Agency Agreements or Transfer Pricing.

• Buying Agency Agreements and/or Transfer Pricing will need to be agreed

with both Customs and Tax authorities.

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ICS Global Services Limited

Top Level Project Plan

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ID Task Name Duration Start Finish Predecessors 1 ‘One’ Kingfisher - AEO 260 day s? Mon 30/04/18 Fri 26/04/19 2 Audit Operating Companies 131 days? Mon 30/04/18 Mon 29/10/18 3 Implement new process requirements 61 days? Mon 02/07/18 Mon 24/09/18 4 Apply for AEO status 130 days? Mon 29/10/18 Fri 26/04/19 3 5 6 7 Cost-Effective Logistics 240 day s? Mon 30/04/18 Fri 29/03/19 8 Map current logistics network 45 days? Mon 30/04/18 Fri 29/06/18 9 Unified sourced ranges 86 days? Mon 02/07/18 Mon 29/10/18 8 10 Design new logistics netw

• rk

108 days? Wed 31/10/18 Fri 29/03/19 9 11 Develop solutions at origin 174 days? Mon 04/06/18 Thu 31/01/19 12 13 14 One’ Kingfisher – Shipping 90 day s? Mon 30/04/18 Fri 31/08/18 15 Review 2017 shipping activity 45 days? Mon 30/04/18 Fri 29/06/18 16 Review 2018 - 2019 business requirements 21 days? Mon 11/06/18 Mon 09/07/18 17 Estimate potential volumes 2018 - 2019 1 day? Mon 30/07/18 Mon 30/07/18 16 18 Negotiate combined shipping volumes 2018/1 1 day? Fri 31/08/18 Fri 31/08/18 17 19 20 21 ‘One’ Kingfisher – BREXIT 260 day s? Mon 30/04/18 Fri 26/04/19 22 Audit Operating Companies 131 days? Mon 30/04/18 Mon 29/10/18 23 Apply for AEO status 130 days? Mon 29/10/18 Fri 26/04/19 24 Triangulation Study 61 days? Mon 04/06/18 Mon 27/08/18 F S S M T W T F S S M T W T F S S M T W T F S S M T W T F S S 11 Jun '18 18 Jun '18 25 Jun '18 02 Jul '18

ICS Global Services Limited

Author uthorised ised Economic Economic Oper Operator tor (AEO) (AEO)

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ICS Global Services Limited

Use AEO To Audit Operating Companies

Supplier Factory Shipping Documents Buying Agent Ocean Freight Vendor DC, Warehouse, Store or End Customer Packing and Consolidation Trucking Customs Customs Shipping Documents Airfreight Trucking Vendor Management Export Clearance Packing Domestic Shipping International Shipping Import Clearance Delivery Rail Rail

Trade Compliance AEO Visibility Landed Cost

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ICS Global Services Limited

Why w hy was the sta as the status of tus of AEO AEO intr introduced?

• duced?
• The introduction of AEO status is the EU’s response to the need to secure

international supply chains and the introduction of Customs-Trade Partnership Against Terrorism (C-TPAT) in the USA and the development of the Safe framework of standards in the World Customs Organisation (WCO).

• Applied For C-TPAT in 2009 and I was granted C-TPAT Tier 2 status.
• In 2013 following revalidations held at U.S. distribution centres, manufacturers in

Asia and U.S. businesses, I was granted C-TPAT Tier 3 status, which is the highest security status for importing companies and only achieved by the top 3%

• f current C-TPAT companies. C-TPAT resulted in a major reduction of marine

insurance premiums and reduction in importing costs.

• Worked with two UK companies to enable AEO approval.

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ICS Global Services Limited

AEO Overview

The Client should apply for AEO status for customs simplification (AEOC) and AEO status for security and safety (AEOS).

• Security and safety (AEOS) - issued to any business that fulfils the criteria of customs

compliance, appropriate record keeping standards, financial solvency, and maintains appropriate security and safety standards.

• Customs simplifications (AEOC) - issued to any business that fulfils the criteria of customs

compliance, appropriate record keeping standards, financial solvency and practical standards of competence or professional qualifications directly related to the activity carried out.

• Process Mapping
• Supplier Manuals
• Import Manuals
• Export Manuals
• AEO Manuals

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ICS Global Services Limited

Appr ppropria

• priate

te le level el of

• f complianc

compliance

HMRC will examine the Client’s record of compliance with customs and tax requirements, including:

• Customs Duty
• Excise Duty
• VAT – Including Intrastat for businesses trading in goods with other member

states of the European Union.

• PAYE
• National Insurance
• Corporation Tax
• Application will be required in each country which maintains Customs

records.

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ICS Global Services Limited

Container Security

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ICS Global Services Limited

Cost-Effective Logistics

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ICS Global Services Limited

• Supplier Locations
• Consolidation Locations
• Ports
• Vessels

Logistics Network Mapping

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• Receiving

Logistics Network

• Supply Chains
• Shipping Routes
• Distribution
• Reverse Logistics

ICS Global Services Limited

Optimise Global Inbound Supply Chain

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Supplier Consolidation Warehouse Container Consolidation Export Customs Clearance at the Port Shipment by Air, Sea, Rail or Road Brokerage and Customs Clearance at the Port Container Yard Distribution Centre

1 2 3 4 5 6 7 8

ICS Global Services Limited

Consolidation

• Working in collaboration with Operating Companies, Factories, Suppliers, Buying Offices,

Sourcing Agents, Freight Container Stations and Shipping Lines to consolidate international cargo at source, which results in:-

• Reduction of shipping costs
• Better utilisation of container space
• Reduced inventory within the business
• Improved Customer Service
• Consolidation enables:-
• Quality control & inspection
• Call-off ordering.
• Value added logistic services within the sourcing country.
• Option for value added warehouse services, such as pick & pack and customised labelling.
• Pre-distribution / retail, such as blister packaging.
• Retail display builds.
• Specialised loading techniques to support innovative receiving and distribution processes at

destination.

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ICS Global Services Limited

Consolidation KPI’s

• Not to ship Less Than Container Loads (LCL) without approval.
• No 20ft Containers to be used without approval.
• 45ft, 40ft high Cube and 40ft containers to be used for cargo.
• Containers are to be filled to a minimum of 88% by volume.
• Containers are to be filled to 100% by weight.

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ICS Global Services Limited

Cargo Management

• Purchase Order Management
• Consolidation of demand planning and POs across Client’s operating companies.
• Supplier Compliance
• Standardisation across all Client’s operating companies – Supplier Manual
• Shipping Schedules and Documentation
• Optimisation of trucks / container fills, route planning and compliance.
• Consolidation and Pre-Retail Services

▪ Consolidate multiple Operating Company orders into full container loads. Retail services, such as blister packaging by brand.

• Supply Chain Control
• End-to-end supply chain visibility of shipments, containers, trucks, orders and items at

SKU level.

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ICS Global Services Limited

Other Logistics Actions

• Supplier Freight Unbundling.
• Leverage your size with supply chain partners to provide the most cost effective

Shipping, Distribution and Brokerage Services, which improves margins.

• Reduce lead-times and reduce inventory
• Provide Customer Service Improvements
• Bonded Warehouses globally to meet business requirements
• Duty Management
• Potential duty refunds
• Financial Control of all import duty and import tax payments

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ICS Global Services Limited

Shipping

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ICS Global Services Limited

Shipping Shipping Ra Rate B te Benc enchmar hmarking king

21 Drewry Benchmarking Like-for-like weekly and monthly calculated average “buy rates”. Based on averages of representative rates paid by freight forwarders to ocean carriers. Shanghai Spot Market Rates - Shanghai Shipping Exchange (SSE) International container liner freight rates are regulated by the market, according to the liner

• perators operating costs and shipping market supply and demand, as well as international

conventions or industry practices.

ICS Global Services Limited

Spot Rate Example

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$0 $500 $1,000 $1,500 $2,000 $2,500 Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13 Week 14 Week 15 Week 16 Week 17 Week 18 Week 19 Week 20 Week 21 Week 22 Week 23 Week 24 Week 25 Week 26 Week 27 Week 28 Week 29 Week 30 Week 31 Week 32 Week 33 Week 34 Week 35 Week 36 Week 37 Week 38 Week 39 Week 40 Week 41 Week 42 Week 43 Week 44 Week 45 Week 46 Week 47 Week 48 Week 49 Week 50 Week 51 Week 52 Drewry Rate Negoiated Rate Agreed Spot Rate

ICS Global Services Limited

Global Supply and Demand

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Estimated

5.6% 9.2% 7.9% 6.0% 5.7% 6.3% 8.5% 1.5% 3.0% 4.7% 0.7%

• 1.1%
• 9.1%

15.3% 6.2% 2.7% 2.8% 5.0% 1.4% 3.1% 3.3% 3.9% 3.9% 3.9%

• 15%
• 10%
• 5%

0% 5% 10% 15% 20% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Supply Demand

ICS Global Services Limited

Carrier Financials

Q3 2016

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Maersk Line CMA CGM Hapag Lloyd ZIM Evergreen Yang Ming Wan Hai Hanjin Hyundai APL OOCL COSCON NYK MOL K Line

• 35.00%
• 30.00%
• 25.00%
• 20.00%
• 15.00%
• 10.00%
• 5.00%

0.00% 5.00% 10.00% 1,000 2,000 3,000 4,000 5,000 6,000 EBIT Margin Revenue

ICS Global Services Limited

Brexit

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ICS Global Services Limited

Triangulation

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Commercial Invoice Direct Shipment of Product Operating Company Supplier Factory Transfer Pricing Invoice or Buying Agency Invoice Supplier Payment Operating Company Payment

Client

ICS Global Services Limited

Brexit and AEO

• Eventually HM Revenue and Customs (HMRC) will start to focus

controls on supply chains that do not include AEOs and are deemed to be less secure.

• In some cases the right to ‘fast-track’ your shipments through some

customs and safety and security procedures.

• Consignments may be fast tracked through customs controls.

Holding an AEO security and safety authorisation does not mean that your consignments will be exempt from examination for prohibited or restricted goods or on behalf of other government

• agencies. However if it is selected for examination, it will receive

priority over non AEOs.

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