CE Supply Chain & Supplier Relationship Management Flashcards

What is third-party logistics (3PL) and how do U.S. exporters use 3PL providers?

Answer: Outsourcing logistics functions (warehousing, transportation, customs clearance, distribution) to a specialized provider to leverage their expertise and global network

3PL providers manage physical supply chain operations including freight booking, warehousing, customs brokerage, and last-mile delivery, allowing exporters to focus on their core business.

What is a bonded warehouse and how can U.S. exporters use it as a supply chain tool?

Answer: A CBP-approved facility where imported goods can be stored without paying duties until they are entered into U.S. commerce or re-exported, useful for managing cash flow and flexibility

Bonded warehouses allow importers to store goods duty-free while deciding on final disposition—they can re-export without paying duty, useful for merchandise distribution hubs.

What does 'lead time' mean in international supply chain management and why does it affect inventory strategy?

Answer: The total time from placing a purchase order with an international supplier to receiving the goods, which determines how far in advance orders must be placed and how much safety stock to hold

Longer international lead times (manufacturing + transit + customs clearance) require earlier ordering and larger safety stock buffers compared to domestic sourcing, increasing inventory costs.

What is 'reshoring' and what factors are driving U.S. companies to reshore manufacturing?

Answer: Returning previously offshored manufacturing back to the United States, driven by rising overseas labor costs, supply chain disruptions, tariffs, and national security concerns

Reshoring has accelerated due to COVID-19 supply chain disruptions, U.S.-China tariffs, rising Asian labor costs, government incentives (CHIPS Act, IRA), and the strategic desire to reduce geopolitical dependency.

What is the role of an export management company (EMC) and how does it differ from an export trading company (ETC)?

Answer: An EMC acts as the export department for a manufacturer, representing their goods abroad for a commission; an ETC takes title to goods and resells them in foreign markets on its own account

An EMC serves as an outsourced export department (agent/representative) without taking title to goods, while an ETC purchases goods outright and resells them internationally as a principal.

What is a memorandum of understanding (MOU) in international supplier development and what does it typically cover?

Answer: A non-binding preliminary agreement outlining the intentions, roles, and framework for a future business relationship between a U.S. exporter and a foreign supplier or distributor

An MOU sets out the parties' mutual intentions—scope of products, geographic territories, exclusivity, information sharing—before formal contracts are negotiated, building trust in early-stage relationships.