Identifying a Supplier: An international buyer, among other things to consider is where he or she is going to source his or her requirements. To many buyers especially who are starting this transaction, always suffer a lot of problems and some times they end into buying from unreliable suppliers. It is very important to put in mind that, identifying a supplier is a professional approach and the buyer is subjected to understanding various sources of information on different suppliers as to his or her requirements. ”An important part of the work of a buyer, whether the buyer is operating in the domestic market or international, is ‘sourcing’. In many developing economies, where buying firms are just beginning to explore the international market, the major difficulty is to locate potential suppliers in the global market. Fortunately the advent of global network is of information regarding not only the suppliers, but also, also almost any detail required regarding their products is accessible to buyers in most countries. ”
In the international buying perspective, a buyer can fetch information on different suppliers from different sources like; Internet, where a number of suppliers display their functions in their web sites. If this is not enough, other sources are the international trade fairs where a buyer can visit physically and collect information on different suppliers he likes. Embassies and Chamber of commerce are also reliable sources of information suppliers. Banks are another source of information about suppliers as they are connected to financing international trades and have experience in dealing with importations.
There are oversea directories, which are international publications with collection international trade news, therein are published different suppliers with their respective products. Another reliable sources are Oversea based companies which are multinational firms with manufacturing facilities all over the world. A buyer can get information on different suppliers with a branch manager of this type of firms in his or her country. A buyer is also advised to make direct contact with different friends or business colleagues especially those who have isited and worked with different suppliers in different place world widely. An example on this context is the Sabasaba (Mwl. Nyerere) International Trade Fair in Dar es Salaam Tanzania where by different suppliers every year exhibit their businesses. This makes easy to select international Suppliers. 2. 2. Specifications. Preparation of specifications when deciding to buy is very important issue to consider. A wise buyer some times spends a lot of money for preparing specifications to make sure that they are simple and not ambiguous in understanding of the supplier.
However specifications can be in terms of; brand name, end use, physical description, drawing, sample, catalog or code number, national or intentional standards and method of manufacture. Specifications save a number of purposes as; they communicate to professionals in what to buy, they also communicate to prospective suppliers what is required, with specification, tangible goods and services are provided and hence maintain warranty, maintenance and support.
For example, when one wants to buy a computer, he/she should have to specify, by Brand name, shape, Pentium (generation), capacity of RAM, Hard disk, Say; Toshiba, Desk top, Pentium 4,RAM capacity 64 Mb, 40GB HDD. 2. Mrope N. (2005) Understanding International Purchasing (pg. 22) 3. “The purchase specification form the heart of procurement whether or not the purchase order or contract will be performed to the satisfaction of the buying organization frequently is determined at the time the specification is selected or written. ” Categories of Specifications:
Source: Burt, Dobler and Starling (2003), World Class supply Management (pg. 239) 2. 3. Nature of Products. It is very important to determine the nature of products to be imported. The universe is composed of different climatic conditions, and some weather conditions can have an adverse reaction and effect on some products. When moving from one country to another the buyer must contemplate different conditions being; hot, cold, frost, rainfall, strong sunlight and cloudy weathers. Every product has its condition of nature for it to safely exist or being stored.
Other products or materials have special natures in such a way that they need special care, otherwise they can waste and deteriorate. 4“It is important in both carriage and storage that, areas are clearly designated (and kept separate from each other) for each kind of risk. Vehicles carrying such goods and buildings storing them should be clearly labeled with the nature of the risk to ease the problems of dealing with service incidents. The labeling of the material itself should be considered in particular where similar containers are used for different materials, gases or liquid to reduce the chance of error”
For example when one is importing vaccine, he/she should be aware that special temperature of say 00-40C is required to keep the vaccines viable. 2. 4. Remoteness of the Source/Supplier. An International buyer should consider the distance between him or her and the intended supplier, and determine the trade-offs, which can arise for his decision of buying from abroad and not from his home country. Suppliers in the international markets are always far and hence it is difficult to reach them in case of trade problems. 3. Burt N. et al (2003) World Class Supply Management 7th ed. (pg. 236) 4.
Burton J. A. (1980) Effective warehousing 2nd ed. (pg. 91) The greatest problem with distance is the prolonged lead-time, which can have adverse impact to the buyer’s business. The buyer should be ready and know that this is associated to direct and indirect costs, especially costs associated to transportation, and he or she has to calculate the burden as to the consequent risks. 5 ”This may have impact on several aspects of the buyer‘s business. For instance, a longer supply lead-time may adversely impact on a company’s ability to react quickly to changes in its customer demand volume or mix.
The issue about supply lead time could be strategically important and might result in company turning away from some other attractive aspects of purchasing abroad. ” From this point of view, it will be wiser if a buyer will be keen in his initial stages when selecting a supplier to make sure that nearer sources are selected to minimize costs as to transportation and other risks. For example; when required goods are available in Kenya, it is hence a cheaper source than buying from Dubai the same item, as it will be easier to cover costs of transportation when bringing goods to Tanzania than when they are sourced from Dubai. . 5. Different Currencies The issue of currency is another important factor to put in mind. Each country has its own currency, which is different to another country if we don’t consider the hard currencies like Euro, Pound and U. S. Dollar. A buyer is likely to face constraints in payments and exchange rates. Buyers are advised to visit Bureau de change shops, banks, Internet for relevant websites like: http://finance. yahoo. com where a buyer can change hard currencies to Tanzanian shillings. 6 “Currency is the most complicated factor’.
Exchange rates are dynamic indicators reflecting the ever-changing relationships between competing economies. They represent an area of significant risk and constant uncertainty. Frequently the decision to purchase from abroad can be taken regardless of the currency exchange factor. However, there are many instances where the exchange rate is the prime motivator in the decision to purchase abroad. The buyer in this case, must quantify the risk and take appropriate action to safeguard his position. Such circumstances require knowledge and skills. ” 2. 6. Communication/language problems.
Communication is another serious problem which may causes failure in purchasing abroad transactions. An international buyer is advised to be aware that; different countries have different cultures which influence communication in terms of languages. The buyer must know what to do in case of communication barriers. Translators or selection of negotiators can be helpful to give the meaning of bargaining and negotiation. It is also better to the buyer if he or she passes through different literatures of the concerned countries on their languages and communication skills for him to experience how her she can tackle the problem. “Language frequently poses a significant barrier to successful international business relations. Difference in culture, language, dialects or terminology may result in miscommunication and cause problems. Both parties they think they know what is the other party has said but may be missing” Silent or non-verbal languages can also be used and can give different meanings in different countries. For example; colours can have different meanings in different countries like; “black” is 5. David Farmer (1995) Purchasing Management Handbook (pg. 230) 6. David Farmer (1995) Purchasing Management Handbook (pg. 21) 7. Dobler D. N. et al (1990) Purchasing and Materials Management (pg. 221) associated to death in western countries, while “white” has the same meaning in Asia and “purple” in Latin America. “Inaction and silence” interprets negative sign to Americans. “Left” hand is “unclean” hand in Tanzania. “Distance” between people during conversation has different interpretation; Arabs and Latin Americas like to stand close to people that they are talking to while in United States of America; the customary distance for business discussion is 5 to 8 feet, and for personal discussion no less than 3 feet.
Also there is “body language”, (the way which people walk, touch and move, their bodies). For example joining of the index finger and thumb to form an O means “Okay” in the USA and Tanzania; “money” (bribe) in Japan, “I’ll Kill you” in Tunisia, and “the sale is worthless” in France. So with such examples the buyer has to be very careful! 2. 7. Legal regulations among countries Different country laws and regulations are always beyond control of buyers and it is a very important factor to consider.
When it comes to such difficulties a buyer is advised to use intermediaries who are aware of the regulations and legal policies, which are applicable in that particular country. Employing intermediaries adds cost of logistical transactions in transferring goods from one country to another. It can be also helpful if buyer can pass different literature review on that particular country or counties he is intending to pass his cargo in order for him to be in a position of understanding what is legally required for trading that particular product. “Legal requirement pertaining to business differ greatly between countries. This is another area of risk completely beyond the control of a buyer. Not only are laws developing all the time within countries but there are now many parts of the world where trade is conducted under collective laws. ” For example; it is unlawful to deal with pork and pig products in Arabic countries (Islamic countries), like wise it is illegal to import abusive drugs in Tanzania. When the buyer is aware of the real legal situation of his exporting country he can do well the trading of his goods. . 8. Documentations There are a number of documentations, which a buyer has to fulfill when deciding to import goods from outside. Some documents are done in the exporting country while others are done after the arrival of the cargo in the buyer’s country. 9 “Documents are used in giving instructions to carriers and any other person who have anything to do with either the goods in transit or with the method of carriage. Information transfer or communication is of utmost importance transportation. ” Important documentations to consider are; Certificate of origin. This specifies the quantity and value of the goods, together with their place of manufacture. It must be completed by the supplier and authenticated by a Chamber of commerce or similar authorizing organization in the supplier’s country. • Letter of credit. This is a document issued by the buyer’s bank to the seller assuring the latter that payment will be effected after the sale or buy contract has been made. • Bill of Lading. This is a basic document in the purchase of transport services.
It serves as a transaction receipt by documenting commodities and quantities shipped. 8. Dobler D. N. et al (1990) Purchasing and Materials Management (pg. 221) 9 Ngeze, A. P. (2005) Logistics Management Notes (Manual) SAUT, not published • Freight bill. This represents a carrier’s method of charging transportation services performed. • Carnet. This is a document giving particulars of goods that are containerized. The carnet indicates that the goods have been sealed at the origin and will not be opened until when they reach final destination. • Cargo manifest.
This is a document that is prepared by the carrier after all bills of lading have been processed. The cargo manifest summarizes the cargo aboard the ship, listed by port of loading and destination. • Sales contract. This is a contract document between a buyer and a seller; it describes the commodities, prices, payment terms, transportation arrangements, insurance etc. International business practices offer a set of standard contracts to avoid ambiguity and wrong interpretation, considering the diversity that exists in individual country laws, custom and usage.
These standard contracts are known as International commercial terms, (INCOTERMS) • Packing note/list. This document is used both in international and local trade. The supplier prepares the description of the goods and how they are packed as to the number of packages and their quantities contained in each package. • Exchange permit and Import license. These are documents, which are always associated. Government departments, Chamber of commerce, or industry generally issues them, which authorize import of a specific commodity.
They are a mean of regulating the flow of commodity imports and funds associated with them. • Pre-shipment Inspection certificate. This is a certificate issued by organizations, which undertake pre-shipment inspection such as COTECNA and SGS, after they have examined the goods for quality, quantity exported and that prices proposed and market price be compared. Goods are examined at the place of manufacture or assembly prior to dispatch to ensure that they comply with the description found in the export sales contract, Bill of lading or export invoice. • Commercial invoice.
This is the basic document required by the buyer. It is issued by a seller containing description of the goods, stating price and terms exactly as specified in the credit, packing details as well as shipping marks. This document is the claim for payment for the goods under contract. It forms the basis of the transaction between the seller and the buyer. • Certificate of insurance. This is a document stating the policy of insured value of the goods, the risk to be covered, and the need for an extension to the policy in case of delay at any stage of transit. . 9. Mode of transportation. Transport is the mother of goods importation processes. Goods purchased from abroad are by any means being transferred to the buyer’s country. Therefore it is important to select a reasonable mode of transport regarding the nature of the goods and the expected usage of the products, which will be influenced by speed, frequency, reliability, and cost of that particular mode. By understanding characteristics of different transport modes, a buyer can be in a position knowing the advantages and disadvantages of each mode. 0 “Whether transported goods are to be transshipped, resold or used in production, their movement must be monitored from the point of embarkation to delivery on company’s receiving dock. 10 Lawrence W. Tuller (1994) Exporting, Importing and Beyond (pg 268) Some of the receiving organization must be responsible for this monitoring from start to finish. More often than not, purchasing and receiving personnel who are inexperienced in importing expect gods to flow naturally from the shipper to their door on schedule.
This never happens. The importing process is so complex that relying on shipper, carriers or other outside the organization to complete the transaction invariably leads to lost or damaged goods, or at best, late deliveries. The responsibility of monitoring and controlling the movement of imported goods must rest solely with the management of the importing company. ” The buyer should therefore be aware of what mode to be selected among; Air transport, Water transport, Rail transport, Road transport and Inter-modal transportation.
The mode of transport will have a direct or indirect impact on; perishable goods, correction of inventory levels, stock turnover and risk avoidance on expensive items like diamond and gold. For example; Road transport is faster than water and rail transports respectively but it is the roughest mode, hence unfavorable for fragile items, so water transport although it is fixed but it is the smoothest mode that it can be used instead. Air transport is the most expensive one but it is reliable for transporting expensive items like diamond to avoid unnecessary risks.
Rail transport although it is fixed and slower than road but it can ship heavier and bulky cargos compared to road transport. 2. 10. Payment terms and conditions. Payments can be made in different ways only that the money reaches the seller in his local or foreign currency. An International buyer can make cash payments although this term of payment can attract other problems. Paying to the seller’s account, as contracted by both parties has been recommended and it is a reasonable way whereby a buyer can pay the supplier. Electronic (computer) transfer of money by using Visa cards, Credit cards and e- cards is a modern method of payment.
A cheque, Banker’s draft, International money transfer and Express International money can make payment on Open account. The Telegraphic transfer is another method of payment, which is used by buyers although it is very expensive. With this method the buyer’s bank cables, telephones or telexes the exporter’s bank instructing them to pay the seller the agreed amount. Other methods of payment are by Documentary letter of credit and bill of exchange. Most buyers have found it favorable to pay after receiving and making inspection of the goods. But however most sellers would prefer advance payments to be made prior to commencing work.
One example of an international organization undertaking money transfer to overseas countries is the Western union, which sends money electronically. It has branches almost to all regional Postal banks in Tanzania. 2. 11. Import and excise duties. The buyer must know that he is responsible to pay import duties (custom duties) being in value of the goods (Ad valorem) or by unit of measurement of that particular good (Specific) import taxes when the goods arrive to the port of importation in the country. An excise duty is another taxes levied on specific products, both imported and domestic.
They are termed as replacement for import duties. Import duty payments can be made in two ways: • Through a licensed Customs Broker (usually by check or bank draft made out to the broker, or separate checks to Customs authority and the broker). • Or directly via check or bank draft to Customs authority. Some imported items are exempted from tax and the buyer should check with local Custom authority or the TRA to confirm the issue. 11“Import duty and import taxes are far and away one of the most confusing subjects for importers to master.
Import duty refers to the tax an importer must pay to government in order to bring foreign products into the commerce of the country. Import duty can be calculated in a variety of ways, but most import duties are figured as a percentage of the declared value of the commodity. Import duty differs from product to product and is dependent on the commodity being imported, its declared value, its country of origin, and other factors like anti-dumping legislation and quota controls. Import duty values can be as low as zero or as high as 100% (or more) of the product’s declared value. ”
For example when importing goods to Tanzania, it has been agreed (by TRA – Customs Department, 2000) that 100% of the imports should be under the CIF term, this means, together with other reasons is to enable the Customs department collect import duties from the buyer (importer). There are other types of duties such as: • Countervailing duty, which is an additional import duty levied by the Government against foreign countries who subsidize the import of products into the country at the expense of domestic producers. Countervailing import duty is designed to discourage this practice. Anti-dumping duty, this is similar to countervailing duty, anti-dumping duty is levied against products imported into the country below their market value. Typically this is done to drive domestic producers out of business and control market share. 2. 12. Trade intermediaries Buyers are always unable to visit their suppliers physically due to distance in between them. However it is possible to a buyer to buy, transport and receive delivered materials without coming into contact with the supplier. The buyer therefore must select an Intermediary who is going to do the procurement activities on his or her behalf.
Intermediaries are service providers with expertise in customs clearance, export and import documentation, and cargo movement from the place of shipment to the destination. 12 “The freight forwarders may act as on behalf of exporters and importers. In the case of importers, the class of services that the buyer is most concerned with, is clearance of goods trough customs. The forwarder is able to advice his client on all matters relating to importation, and to arrange transportation from the point of sale to the point of delivery in the importer’s country, if required. ”
There are two types of intermediaries in international trade namely; Freight forwarders whose role is forwarding the freight locally or internationally The other one is Customhouse broker which is the freight forwarder counterpart in import of shipment, it is licensed to do tasks similar to that of the freight forwarder, but for importers. Customhouse brokers have a role of clearing importer’s shipment through customs. The buyer can get information on freight forwarding in Tanzania from Central Freight Bureau (TCFB) with the following address: 11 http://import_duty. com Import duty 2 Mrope Noel (2005) Understanding International Purchasing (pg. 81) Tanzania Central Freight Bureau PPF House 6th Floor, Samora/Morogoro Road P. O. Box 3093 Dar es Salaam Tel: 255-22-2114174, Fax: 255-22-2116697, E-mail: [email protected] com 2. 13. INCOTERMS. INCOTERMS are International commercial terms, which were prepared by chamber of commerce with a contractual role on between a buyer and a seller. A buyer should know or select the best contract INCOTERM for his international purchases. With the selection of an appropriate INCOTERM the buyer will know different obligations born to him and those born to the seller.
However INCOTERMS will help in solving disputes, which can happen during freight, carriage risks and other costs, which can originate during importation process. 13 “The role of INCOTERMS is to give the businessmen set of international rules for the interpretation of the more commonly used terms in foreign trade contracts. Such a range of terms enables businessmen to decide which is the most suitable for their needs knowing that the interpretation of such terms will not vary from individual country to individual country” INCOTERMS are fully explained in the ICC booklet; ‘ICC Incoterms 2000’ and they are briefly explained as follows: A.
Commonly used Incoterms: 1. Free on Board (FOB): The seller must deliver goods on board and provide an export license and pay export taxes. The buyer must contract for carriage, pay freight, and pay insurance premium. 2. Cost and Freight (CFR): The seller must contract for carriage, pay freight to named destination, deliver goods on board and provide buyer with clean on board bill of lading an invoice, obtain export license and pay export taxes. The buyer must accept delivery of goods after documents are tendered to him and pay insurance premium. 3.
Cost Insurance and Freight (CIF): The seller must do same as CFR plus arrangement for insurance of goods, pay insurance premium and provide buyer with insurance policy. The buyer must accept delivery of goods on shipment after documents are attached. B. Other Incoterms: 4. Ex Work (EXW): The seller must deliver goods at his factory premises. The buyer must make all arrangements, at his own risk, take goods to his /her destination. 5. Free Carrier at a named place. (FCA): The seller must provide export license and evidence of delivery of goods to the carrier.
The buyer must contract for the carriage, pay freight, nominate carrier and pay insurance premium. 6. Free Alongside ship (FAS): The seller must deliver goods alongside ship, and provide and alongside’ receipt. The buyer must contract for carriage, pay freight, obtain export license, pay any export taxes, and insurance premium. 7. Freight/Carriage Paid to (CPT): The seller must contract for carriage, pay freight to named destination, deliver goods to carrier, obtain export license and pay export taxes, provide buyer with invoice and transport documents.
The buyer must after tendering the documents, accept delivery of goods when they are delivered to first carrier, arrange and pay insurance premium. 13 Mrope Noel (2005) Understanding International Purchasing (pg. 48) 8. Freight Carriage and Insurance paid to (CIP); The seller must do same as CPT plus arrangement of insurance for goods and pay premium, provide Buyer with insurance policy. The buyer must accept delivery of goods after documents are tendered to him. 9. Delivered Ex-Ship (DES): The seller must deliver goods on board at destination; provide buyer with documents for delivery of goods.
The buyer must pay discharge costs, import duties, and import license. 10. Delivered Ex- Quay- duty paid, (DEQ): The seller must make goods available on the quay at destination, provide buyer with documents to enable him/’her take delivery, obtain license and pay import duties/taxes, unloading costs and insurance. The buyer must take delivery of goods from the quay. 11. Delivered At Frontier (DAF): The seller must deliver goods to frontier but before the customs boarder, provide buyer with documents to take delivery. The Buyer must pay for on-carriage, obtain import license, and pay import duties. 2. Delivery Duty Unpaid (DDU): The seller must obtain Import license, arrange and pay insurance, provide documents to buyer to take delivery. The buyer must take delivery of the goods at named destination and pay import duties. 13. Delivered Duty Paid (DDP): The seller must obtain import license and pay import duties, arrange and pay insurance, provide documents to the buyer to take delivery. The buyer must take delivery of goods at named destination. For example, the commonly used Incoterms it Tanzania are FOB and CIF. 2. 14.
Political and Sociocultural issues. An international buyer is suggested to be aware that political issues and relationships among countries is another point of interest. Countries with indifferent political relationship could have opposite interests on trade affairs. There might be no crossing of borders from one country to another, which could be due to incidences of war or economic constraints. This is like wise to the cases of culture, beliefs, norms and social ethics among countries, which can have a great impact on trade especially during negotiations.
Under shared beliefs, for example Islam, Christianity, and Buddhism have different interests on some issues. For example; the prohibition of pork products and alcoholic beverages in Middle East. So, when negotiating with suppliers in other countries, an international Buyer should be aware of these aspects for the best outcomes to be achieved. 3. 0 OBSERVATIONS. It has been observed that Manual procurement system where the purchasing personnel do all procedures in the procurement cycle physically is still applicable in our environment although electronic procurement system is now replacing it.
It has been observed that this new system is very helpful as it saves time, cost and it increases productivity although it is expensive and in some places unavailability of electricity, as power is a constraint. But however, where it can be applicable both methods can be utilized while we are at a transition of phasing out the older system. With both systems, it is very important to observe the important factors that are to be borne in mind and which have a very big impact on the International procurement perspective as a whole.
The following case study gives a real situation that was observed from one of international buyers in Mwanza City. The case is detailed as follows: A Case Study of Royal Auto-parts Ltd. Royal Auto Parts Ltd is a privately owned company located in Mwanza City. The company deals with importing and selling at whole sales and retail automotive spare parts; mining tools e. g. Safety gears, boots, sampling equipments, like trays and sampling bags. The company also imports motor vehicles and motorcycles after receiving orders from different customers. Mr.
Omar Nofli is the Director of the company who is long experienced in buying goods from abroad. He personally travels to different countries where he does purchasing of the goods direct from various suppliers. Visited countries are; Kenya, India, United Arab Emirates (Dubai), China and Japan. From UAE, he imports filters, suspension parts, engine spare parts, and safety glasses (wind screens). From Japan he purchases motor vehicles – (where by electronic procurement is used) and from China he imports motorcycles. Before he was used to importation activities, he began by identifying and selecting suppliers.
This was done by physically visiting suppliers in their countries, using Internet (websites), contacting business counterparts and he once sent his wife to visit trade fair in Turkey to see different products and identify prices for the company business. Specifications for customer requirements are obtained by visiting customers and collect details and descriptions on the required items. He also uses Electronic catalog which is a computer program containing various descriptions of different specifications of tools and other items.
He has also Manuals that show different types of motor vehicles and motorcycles and their spare parts. The nature of products, the company deals with, are Metal, glass and plastic products. He is always aware of how to transport the items by considering their natures. Due to remoteness of suppliers, Mr. Nofli always complains of long lead-time; for instance, shipping a cargo from Japan to Dar es Salaam port in Tanzania it takes about 4-6 weeks, From Dubai (UAE) it takes 4 weeks, likewise it is 4 weeks from China to Dar es Salaam. This causes indirect costs as it ecessitates keeping high levels of inventories and some customers leave the place and go to buy from other shops when their requirements are delayed. When he is on his safaris abroad Mr Nofli meets different currencies and he is required to keep on exchanging money whenever he enters different countries. Before he leaves Tanzania he has to exchange Tanzania Shs to U. S Dollars. When he reaches different countries he has to exchange the US dollars to specific currencies, for example, when he is in Dubai (UAE); the currency is Durham, in China the currency is Bati and when he is paying for cargos from Japan the currency is Yen.
He does the exchanging practice at airports and black markets. Mr. Nofli experiences communication problem in terms of language. For example, in China they speak Chinese and he always hires a translator who is paid per day. The translator also advises him on different suppliers. When in Dubai he has to go using an address or the location of the supplier (being instructed by his business counterparts) or he can get information from Hotel staffs or others suppliers. There are different legal regulations he meets in his trips.
For example, he must have a VISA when entering different countries. When going to UAE he has to fax a copy of his passport, then he receives a copy of his VISA from the relevant authority in UAE, this copy of visa is shown when he arrives there then he is allowed to stay. They are very strict on the expiry of the visa in Dubai than in other places. When going to China he obtains visa at the Chinese Embassy in Dar es Salaam or at any country before he crosses the border to China. It is legally prohibited and it is a criminal offence to spate around saliva in Dubai.
Weekly resting days in Dubai (UAE) are Thursdays and Fridays, different to China where they rest on Saturdays and Sundays. There are different documents Mr. Nofli is supposed to have when he is in his transaction such as a visa, Quotation list to supplier, Bill of lading provided by supplier before the cargo, Supplier invoices, Cargo manifest, Packing list and Quality certificate (Inspection certificate) Mr. Nofli as an International buyer uses different modes of transport to ship his cargo from overseas to Dar es Salaam and Mombassa ports in Tanzania and Kenya respectively.
Water transport is used from China, Japan and Dubai to Dar es Salaam or Mombassa ports respectively. Air transport is used from Gwanzuu China to Nairobi Kenya or Mwanza Tanzania. Road transport and intermodal transport are used when transporting cargos from Dar es Salaam to Mwanza or from Mombassa to Sirari then to Mwanza. Payments to purchased goods are done on cash when suppliers are visited physically. Mr Nofli is not happy with this term of payment because it is very risky as one is not well secured with his money.
When purchasing from Japan he has to use International money transfer (like Western Union). He also uses Banker’s draft. There are duties Mr Nofli pays when importing his goods, such as; Import duty, VAT, excise duty to some goods where by 20% of the value of the cargo is charged. He also pays Port charges. Because Mr. Nofli visits suppliers physically, he doesn’t involve intermediaries in his procurement functions. When importing from Japan by electronic procurement system, suppliers act as intermediaries who work for him on all the procedures from buying to delivery of the cargo to Dar es Salaam port.
A contract he uses among International commercial terms is Cost Insurance and Freight (CIF). Where by the seller arranges for freight of goods, pay insurance premium and provide buyer with insurance policy. The buyer accepts delivery of goods on shipment after documents are attached then he pays some other necessary charges like Import duty, VAT and excise duty if required. 4. 0. CONCLUSION It can therefore be concluded that, buying from abroad is not an easy task and it is risky. A buyer has to sit down and outline the mentioned factors.
By considering these contexts, it is easy to decide whether to buy from out side or to seek for other alternatives inside the country. A blind entry into an International procurement business has costed many buyers, and as a result some of them fail even to clear their shipped cargos from the customs. This situation has caused losses to both the nation and the concerned individuals themselves. On the other hand, for those buyers who have been observant enough have found the transaction very benefiting as they enjoy the niche of purchasing from overseas.
Through this they have maximized their productivity and profitability.
5. 0. BIBLIOGRAPHY AND REFERENCES 1. Burt N. D. et al (2003), World class Supply Management – The Key to Supply Chain Management 7th ed. Tata McGraw Hill Publishing Company Ltd- New Delhi. 2. Burton J. A. (1980) Effective Warehousing 2nd ed. McDonald and Evans. London. 3. Dobler W. D. et al. (1990) Purchasing and Material s Management (Text ;cases) 5th ed. McGraw-Hill International editions, Singapore 4. Internet search: http://finance. yahoo. com ttp://import_duty. com 5. Lawrence W. Tuller (1994) Exporting, Importing and Beyond. Adams Media Corporation, Holbrook – Massachusetts. 6. Mrope N. (2005) Understanding International Purchasing,Mzumbe Bookshop Project Morogoro – Tanzania. 7. Ngeze A. P. (2005) Logistic Management Notes – Manual, SAUT (Not published) ———————– Specification Development Method and material Performance Function and Fit Brand names Samples Market grade Qualified products Design specifications Engineer drawings Commercial standards