1.6 Key Terms, References, and Accessibility Descriptions

Key Terms

Adaptability: A willingness and capacity to reshape supply chains when necessary.

Agility: The supply chain’s relative capacity to act rapidly in response to dramatic changes in supply and demand.

Alignment: Creating consistency in the interests of all participants in a supply chain.

Best Value Supply Chains: Supply chains that focus on the total value added to the customer as opposed to individual outcomes, such as speed or cost.

Bill of Lading: The contract between the exporter and the carrier, authorizing the carrier to transport the goods to the buyer’s destination; acts as proof that the shipment was made and that the goods have been received.

Carrier/ Transportation Provider: The entity handling the physical transportation of the goods, such as UPS, FedEx, and DHL.

Certificate of Origin: Documentation that declares the country from which the product originates.

Commercial or Customs Invoice: The bill for the goods shipped from the exporter to the importer or buyer.

Competitive Advantage: Competitive Advantage defines how different and superior you are to your competitors. It is usually achieved in the form of Low Cost Leadership or Differentiation.

Competitors: Company’s rivals in the market

Cost: The price paid for supply chain inputs.

Customs Administration: A governmental agency that monitors imports and collects import duties on goods coming into the country.

Documentation: The official forms that must be presented to satisfy the import and export regulations of countries and for payment to be processed.

Economies: Countries

Entrepreneurs: Businessmen

Entrepreneurship: Activity of Setting up a business

Escrow: Documents in custody of bank and taking effect only when specified conditions are met.

Evolution: Development

Executives: Top Management of the Company

Export Declaration: Documentation that provides the contact information of both the exporter and the importer (i.e., buyer) as well as a full description, declared value, and destination of the products being shipped.

Exporter: A person or organization that sells products and services in foreign countries that are sourced from the home country.

Flexibility: A supply chain’s responsiveness to changes in customers’ needs.

Functional Specialization: Company’s expertise in different functions such as marketing and selling

Importer: A person or organization that sells products and services that are sourced from other countries.

Insurance Certificates: Documentation that shows the amount of insurance coverage on the goods and identifies the merchandise.

Internal Assessment Tool: Tools used to analyze company’s strengths

Letter of Credit: A legal document issued by a bank at the importer’s (or buyer’s) request in which the importer promises to pay a specified amount of money when the bank receives documents about the shipment.

License: Purchased permission to export goods from a country.

Merchandise: Products

Niche: Specialized segment of the market

Outsource: Purchasing from a foreign Supplier

Product Specialization: Company’s specialization in manufacturing a single product or a single product category

Quality: The relative reliability of supply chain activities.

Speed or Cycle Time: The time duration from initiation to completion of the production and distribution process.

Stakeholder: All the parties who participate in International Trade

Strategic Supply Chain Management: The use of supply chains as a means to create competitive advantages and enhance firm performance.

Supply Chain: A system of people, activities, information, and resources involved in creating a product and moving it to the customer.

Trade Secrets: A secret technique used by company to manufacture its products

Unique Capabilities: Core Competencies

Chapter References

A simple guide to value chain analysis: How to build more efficient sales processes [Blog]. (n.d.). Pipedrive. https://www.pipedrive.com/en/blog/value-chain-analysis

Alvarez, J. B., Baris, K. V., Crisostomo, Ma. C. R., de Vera, J. P., Gao, Y., Garay, K. V., Gonzales, P. B., Jabagat, C. J., Juani, A. S., Lumba, A. B., Mariasingham, M. J., Meng, B., Rahnema, L. C., Reyes, K. S., San Pedro, M. P., & Yang, C. (2021, November). Recent trends in global value chains. In Global Value Chain Development Report 2021: Beyond Production (pp. 1-42). World Trade Organization. https://www.wto.org/english/res_e/booksp_e/00_gvc_dev_report_2021_e.pdf. CC BY-NC 3.0 IGO.

Business Faculty from Ontario Colleges and eCampusOntario Program Managers. (2018, June 1). Fundamentals of Business: Canadian Edition. Open Library. https://ecampusontario.pressbooks.pub/businessfuncdn/chapter/opsmanagement/. CC BY-NC-SA 4.0.

Edwards, J. (2014). Mastering Strategic Management – 1st Canadian Edition: Evaluation and Execution. Victoria, B.C.: BC Campus. https://opentextbc.ca/strategicmanagement/chapter/value-chain/. CC BY 4.0.

Kennedy, R. (2020). Strategic Management. Blacksburg, VA: Virginia Tech Publishing. https://pressbooks.lib.vt.edu/strategicmanagement/chapter/4-5-value-chain/. CC BY-NC-SA 3.0.

Kessler, R.A. (2009, April 8). Q-Cells, China LDK Solar form joint venture for export push. Recharge. https://www.rechargenews.com/americas/q-cells-chinas-ldk-solar-form-joint-venture-for-export-push/1-1-861947

Nature and More. (n.d.). Farmers & growers. https://www.natureandmore.com/en/growers

Q Cells. (2019). Solar module manufacturing plant in Dalton, Georgia, USA [Photograph]. https://commons.wikimedia.org/wiki/File:Hanwha_Q_CELLS_Dalton_J_023.jpg

Voodoo Doughnut. (n.d.). Doughnuts. https://www.voodoodoughnut.com/doughnuts/

Walet, L. (2010, May 3). Sun shines through for clean tech outsourcing. Reuters. https://www.reuters.com/article/us-solar-contractors-analysis-idUSTRE6421KL20100503

World101. (2019, June 18). International trade explained | World101 [Video]. YouTube. https://www.youtube.com/watch?v=HfN8BnRJryQ

Image Descriptions

Figure 1.1: A photograph representing building of QCells.

Figure 1.2: The figure shows global value chain position of an economy. It begins with primary inputs on the left and ends with final consumers on the right. There is a reference economy point in between where final consumption happens. The area between primary inputs and final consumption is referred to as Backward GVC length and area between final consumption and final consumers is called forward GVC length. In the figure, forward GVC length is noticeably longer than the backward GVC length, such economy is said to be positioned relatively upstream in Global Value Chains. [Return to image].

Figure 1.3: The figure outlines primary activities in the bottom part and support activities on the top part. The primary activities are inbound logistics, operation outbound logistics, marketing and sales, and service. Secondary activities or the support activities are firm infrastructure, human resources management, and procurement. Both activities contribute towards profit margin on the right. [Return to image].

Figure 1.4: The figure illustrates how primary and support activities in the value chain can add value for doughnut shops. Primary activities are outlined on the left and secondary activities on the right explaining how doughnut shops buy commodity products (such as flour and grease) and transform them into delectable treats as Consumers are willing to pay much more for doughnuts than they would for flour and grease. [Return to image].

Alternative Text-Based Activities

Check Your Understanding: Global Value Chain Activity (Text-Based)

Question 1:

Global Value Chain is when an organization does the full range of activities including supply, production, marketing, sales, distribution, and support to the end consumer, across geographical locations to gain competitive advantage.

• True
• False

Feedback: True!

Question 2:

Drag and Drop the activities ( Inbound Logistics, Operations, Outbound Logistics, Marketing and Sales and Services, Infrastructure, Human Resource Management, Technological Development and Procurement) into correct category: Primary Activities or Secondary Activities.

[Return to activity].

Check Your Understanding: International/Global Trade Activity (Text-Based)

Question 1:

Who is an exporter?

• the person or entity sending or transporting the goods out of the country
• the person or entity buying or transporting goods from another country into the importer’s home country
• the entity handling the physical transportation of the goods
• administration offices from both the home country and the foreign country

Feedback: The exporter, who is the person or entity sending or transporting the goods out of the country

Question 2:

Who is an importer?

• the person or entity sending or transporting the goods out of the country
• the person or entity buying or transporting goods from another country into the importer’s home country
• the entity handling the physical transportation of the goods
• administration offices from both the home country and the foreign country

Feedback: The importer, who is the person or entity buying or transporting goods from another country into the importer’s home country

Question 3:

Who is a carrier?

• the person or entity sending or transporting the goods out of the country
• the person or entity buying or transporting goods from another country into the importer’s home country
• the entity handling the physical transportation of the goods
• administration offices from both the home country and the foreign country

Feedback: The carrier, which is the entity handling the physical transportation of the goods

Question 4:

Custom Offices are:

• the person or entity sending or transporting the goods out of the country
• the person or entity buying or transporting goods from another country into the importer’s home country
• the entity handling the physical transportation of the goods
• administration offices from both the home country and the foreign country

Feedback: The customs-administration offices from both the home country and the foreign country

Question 5:

Intermediaries, such as freight forwarders and export management companies (EMC), provide companies with expert services so that the firms don’t have to build those capabilities in-house.

• True
• False

Feedback: True! Freight forwarders specialize in identifying the best shipping methods, understanding trade regulations, and arranging to have exported goods clear customs. EMCs handle the necessary documentation, find buyers for the export, and take title of the goods for direct export.

Question 6:

Drop the documents (Bill of Lading, Export Declaration, Letter of Credit, Insurance Certificates, Certificate of Origin and Commercial/Customs Invoice) and their purpose/definition:

1. The contract between the exporter and the carrier
2. The document used by customs office to verify and control the export
3. The legal document in which the importer promises to pay a specified amount of money to the exporter when the bank receives proper documentation about the shipment.
4. The document that shows amount of coverage on the goods and identify the merchandise.
5. The document that declares the country from which the product originates.
6. The bill for the goods shipped from the exporter to the importer or buyer.

Feedback: These are the correct combinations:

1. Bill of lading: the contract between the exporter and the carrier
2. Export Declaration: which the customs office uses to verify and control the export
3. Letter of credit: which is the legal document in which the importer promises to pay a specified amount of money to the exporter when the bank receives proper documentation about the shipment.
4. Insurance Certificates: show the amount of coverage on the goods and identify the merchandise.
5. Certificate of Origin: declares the country from which the product originates.
6. Commercial/ Custom invoice: the bill for the goods shipped from the exporter to the importer or buyer.

Overall Activity Feedback

Exporter is the seller whereas importer is the buyer. Carriers are the transportation parties which are responsible to carry goods from origin to destination. Whenever goods leave their originating country and reach destination country, they encounter custom officials which check and verify the goods and different documents and allow them entry into the country. [Return to activity].

Check Your Understanding: Supply Chain and Value Chain Activity (Text-based)

Question 1:

Value chain is broader concept than Supply Chain.

• True
• False

Feedback: A supply chain is a broader concept than a value chain; the latter refers to activities within one firm, while the former captures the entire process of creating and distributing a product, often across several firms.

Question 2:

From the following, which component is NOT required for creating best value supply chains.

• Strategic Supply Chain Management
• Agility
• Acceptability
• Alignment

Feedback: Creating best value supply chains requires four components: Strategic Supply Chain Management, Agility, Adaptability and Alignment.

Question 3:

The value chain provides a useful tool for managers to examine systematically where value may be added to their organizations.

• True
• False

Feedback: The value chain provides a useful tool for managers to examine systematically where value may be added to their organizations. This tool is useful in that it examines key elements in the production of a good or service, as well as areas in which value may be added in support of those primary activities.

Question 4:

Best value supply chains strive to excel along four measures. Which are those:

• Speed, Quality, Profit and Quantity
• Cost, Quality, Speed and Superiority
• Quality, Quantity, Customers and Profit
• Speed, Quality, Cost and Flexibility

Feedback: Best value supply chains strive to excel along four measures. These are: Speed, Quality, Cost and Flexibility. [Return to activity].