DCH logistics planning for La Cafetiere
What are the advantages of having a bonded Warehouse and how can it help in doing international business?
A Bonded Warehousing can be defined as storage, manipulation, or further manufacturing of dutiable goods in a building or other secured area without the payment of duty on it. Advantage: Goods can stay in a bonded warehouse for an unlimited period of time, and no import duties and VAT will have to be paid until the moment they are actually imported into free circulation in the EU, e. g. o be transported to a customer. - You get the possible suspension of certain trade policy measure (license, ID, ... ) - You get a significant cash advantage, because the fees and charges are payable only when goods are released for consumption, - Your competitiveness is increased in the case of re-export to third countries, since tariffs have not affected the cost.
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Customs duties and VAT at import are only paid in the country of destination, and double payment is avoided -Goods kept in bonded warehouse are used as collateral security for bank loan. Goods kept in bonded warehouse are safe and are free from the fear of being stolen or damaged. All those advantages are useful to do international business What are the common logistics issues faced by multinational companies? Common logistic issues that multinational companies often have to cope with :
- Late delivery
- Bad or poor infrastructure in some countries: to receive the goods, road, hardboard…
- Environmental/political issues in the host country, Regional trade agreements
- Legal : trade regulation & standars Trade protection mechanisms, Tariffs , Quotas, Voluntary export restriction, Local content requirements, Health/environmental regulations, Government procurement policies
- Customs procedures and regulations as well as cross-border points infrastructure and operations
- Quality management is often done in the origin country which lead to high transport cost
- Cultural difference
- Lack of business network when developing on a new market
- Currency risks What benefits can La Cafetiere get from DCH Logistics?
DCH know how to deal with Chinese market, have experience with international trade; lot of modern warehouses and infrastructures, distribution center and bonded warehouses.. Offering also packaging services In Xinhui LC together with an array of follow up arrangements, including quality control, warehousing, inventory, shipment transportation and sales responses. Kuk was trying to come up with an attractive solution for La Cafetipre’s late delivery problems. In addition he wanted to explain the benefits of a solution involving DCH Logistics.
La Cafetiere can get benefits from DCH Logistics because one the one hand the Chinese market is growing very quickly and on the other hand, this market correspond perfectly to the strategy of La Cafetiere who wants to propose new products, adapted to this new market. Moreover, nowadays, China is a cross trade place where all countries come in order to do business. It’s today a central point for the manufacturing and the trading thanks to the work and the financial power of this country.
Basically, what a 3PL can bring to a company is the opportunity to focus on their core competency, in oder to achieve better quality, time management, and reduce the Total cost of ownership of their product. Here DCH logistics offer to la cafetiere to take care of the implementation of facilities on the Asian market in order to reduce their delivery time, especially when it comes to reverse logistics since quality management is operated in UK. Then DCH also offer La cafetiere a storage solution with the bonded warehousing hat will allow la cafetiere to saves up on inventory/ storage cost/ facilities implementation. Overall we can say that DCH is bringing La cafetiere opportunities to develop their market in Asia, allowing them to continue to produce high end goods, and to develop in a new area, without experiencing the “starting up” problem that are link to new implementation such as:
- Warehouse implementation
- Reverse logistics problem
- Tax on manufacture goods
- Business network Reputation in the new country
What should DCH Logistics do to develop its business further? DCH is a 3PL, which means that the network they build in a particular area is their main assets, aside from their experience and reputation, that is their “Trust insurance” for company that want to implement in the area “mastered” by the 3PL. Here DCH is really well integrated in the Asian business network, and have developed their infrastructure in strategic area.
They offer bonded warehousing for their client, business network and facilities:
- Distribution center
- Packaging services
- Stock management and facilities.
These are the 3 main option DCH are offering, if they want to develop their business, there is a lot of services they can bring up to their future client. Increase their range of solution.
- Logistics of Transport: Invest and develop a software that is able to esign best route for transport in the area they are operating, which will be sold as a “Solution for transport” to the companies they are working with. In the same idea, they can decide to invest in Transport assets such as truck, or cross docking platform, which will allow them to offered the total transport logistics to a company that is willing to develop its business in the particular area, or just a part of the transport, since they will have fragmented the chain of transport into different level of solution.
- Reverse logistics: Build an infrastructure that cope with international standard of quality, that offer the reverse logistics solution such as:
- Fluctuating product (return from clients, reparation)
- Eco-Treatment of unusable product (recycling)
- Partnership with other manufacturer to resell part of the product that are re-usable.
- Platform of quality management dedicated to the partner for installing their quality management service in order to reduce transport cost and delivery time. B. Implement their business in a different area.
Such as Europe, since they can work with la cafetiere they will be allowed to gather information about the way European are working and can bring up a case study of “Is working with European is worth it? ” United State, since it’s the core business area of the world, and also because entrepreneurship is extremely developed in this particular area, starting up company often need to outsource a part of their logistics, since they need to focus on their core competency in order to gain market share.
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