Summary Understanding the legal and regulatory environment surrounding the importation of goods into protectionist countries is a tedious and time-consuming exercise. Much of the duty and tax implications are specific to nearly every individual commodity eligible for import. It is critical to take advantage of all services provided by a trade network, specifically customs’ brokerage, in order to smooth over the lack of transparency in the regulatory environment. A custom’s broker is well versed in legal jargon and can efficiently provide estimates for the cost implications of import license fees, custom’s fees, duties, and taxes. Documentation is the major source of bottlenecks in importation, and ensuring that all required documents are filled out accurately is vital to implementing a sustainable supply chain. Despite the fact that specific duty and tax rates are not readily available, many general restrictions were unveiled. St. Lucia is an extremely protectionist country, which only grants clearance to imported goods if the quantity produced on island is not sufficient to meet demand. A consultation with a custom’s broker with experience in the Caribbean, or extensive research and communication with on-island procurement contacts, can guarantee that these restrictions are known before a purchase order is even drafted. In regard to freight forwarding, there is only one shipping lane to St. Lucia, making transport by sea fairly homogenous in timing and price. The cost of shipping by air will vary depending on corporate partnerships with freight forwarders, and may require coordination with the food distributor for special packaging. Overall, developing a strong relationship with a trade network will be critical to the importation of the best product at lowest price, and ensuring adequate product is always on hand at The Landings St. Lucia. Research Document Regulatory/Economic Background
Population is about 140,000 Independence 1979 Land: 616 sq km : Castries, Cul-de-Sac, Vieux-Fort, Soufriere Bay Natural Harbor: Castries Agricultural island—tropical commodity crops Natural Resources: forests, sandy beaches, minerals (pumice), mineral springs, geothermal potential Use of land: arable land & permanent Crops = 30% Economy Tourism Main Source of foreign exchange Unemployment high Medium of exchange: East Caribbean Dollar Exchange Rate: $1 USD = $2.7169 ECD (as of 10/4/2010) Mains water: chlorinated- may cause mild abdominal upsets (bottled water advised for first few weeks of stay) Weather Patterns St. Lucia is on the Atlantic hurricane belt. Hurricane season runs from June to November High tourist season runs from Mid-December to Mid- April Tourism can peak outside of high season for various holidays (e.g. Thanksgiving) Products Imported: 2008 85% from Brazil 5-7% from US 3-5% other Caribbean Countries Islands of Opportunity Caribbean Region 3rd Largest Market for US Exports Caribbean Basin initiative—trade programs to facilitate economic development and export diversification Caribbean Community (CARICOM)- deep regional integration through harmonized tariffs and duty free trade Assistance Maria Elena Portorreal Senior Commercial Specialist Phone: 809-227-2121 ext. 225
13. What is your estimate for number of days for transport from Miami to St. Lucia “dock to door”? About 15 days There is only one steam ship line that services St. Lucia, timing will be the same across competitors 14. Do you deliver the products to the physical door? Or picked up at port? Both. Will want to find out how the island works, some trucking companies have a power over others in many instances and saving money will not necessarily save time. 15. Does CH Robinson provide its own brokerage system? Does this impose additional fees? Customs brokerage is a flat rate, all fees are based on transactions Volume pricing will be applied to freight forwarding tasks 16. Can you provide any additional resources for our general understanding of the regulatory environment related to importing F&B products to St. Lucia? FTA- look up their relationship with Caribbean nations US Customs and Border Control, to understand variation in policy even across ports within a developed nation As-Is Supply Chain Summary Though research into the current food and beverage supply chain for The Landings St. Lucia was a very long and arduous process, after much toil we gained a clear picture of the restraints in which the resort operates, in addition to some clarity into the resort’s own food and beverage supply chain. Research revealed that The Landings sources all of its goods on island, and does not utilize any of Vail Resort’s
3. What is the seasonality of the resorts? Peak: Thanksgiving, Christmas – Easter Deliveries daily during peak Pricing programs established in fall to lock in prices for winter Mud season: spring 4. What is your protocol for goods that are not up to code/health standards? File claim with U.S. Foods domestically St. Lucia: claim filed with freight forwarder CH Robinson offers insurance on goods Use air shipping more than ocean freight in distribution to St. Lucia 5. Have you experienced any distribution bottlenecks getting goods to the resorts? If so, how were they remedied? Chef determines the menu, and thus all products that need to be ordered. Need to first establish practices and controls with chef Create standards for foods that US Foods or other distributor can follow Monitor weather: path closures in Colorado, hurricanes in St. Lucia Increase storage Interview – Conference Call with Thomas DeLouise and Nick Hagel Date & Time: 10/26/10 10:00-11:00am Attendees: Ellen Hammock & Janaki Douillard Questions Answers 1. What does this project need to do for it to be successful in your eyes? The end result of this project is to create a roadmap that can be followed when implementing a food and beverage supply chain at a new resort. This data will include what products can be sourced on an island and which will need to be imported, as well as the regulation and taxation that is applicable on the island. 2. What has been/is your involvement with St. Lucia? St. Lucia is all about being politically correct and building relationships. You have to be conscientious of suppliers and buying local. The citizens are very nationalistic and have stringent protectionist practices. You have to make sure not to cross the wrong supplier or they will cut you off. Most of the products on the island are imported, but duties are levied on all imports. There is very little storage at the resort. We are currently considering leaving containers on site, but additional storage is not in operation today. Freight is the cheapest option for getting products to the island, costing $4000 a container. Tropical Shipping (I believe) is the current freight forwarder. Amijet is another option, but costs are based on weight resulting in much
6. What are the costs associated with getting the products through customs, transportation, shipping etc? Duties, container charges, de-stuffing charges, transportation. 7. How often are orders placed? We formalized ordering systems that factors sales, lead time etc. 8. Where is Brydens headquartered? Where are your distribution centers located? Bois D’Orange in the north of the island 9. How is safety and quality of products ensured? We have standards 10. Do you have a sales report breakdown by volume for each product category for The Landing at St. Lucia? If so please provide a soft copy as well as a product price list. Unwilling to send Interview - Eustace Chinie Vitalis Date & Time: 11/17/10 2:00pm Attendees: Ellen Hammock & Mileta Gebre-Michael Questions Answers 1. Can you give us some background on your experience with Sandals? Agricultural Economist Link between agricultural sector and tourism Imported goods can be produced locally; substituted or produced on island Reduce import bill Payment to farmers major issue; require timely payment Reliability and consistency of goods issue in Caribbean 2. What type of foods can be produced more cheaply on island? Create production schedule for items that can be grown on island Fruits: melons, pineapples Vegetables: romaine lettuce, tomatoes, cabbage (red and green), squashes Saved $1 million in the first year producing the above goods on island Created demand for local produce Longer shelf life Fresher
team members to work where they were strong even if it wasn’t always within the boundaries of our original work breakdown structure. As far as understanding the specific functions of a supply chain, we had a lot to learn. Only one of our four team members had any prior exposure to supply chain management. We broke down a supply chain into the elements we saw critical to success, and realized that the current processes at The Landings St. Lucia were missing a few critical steps necessary for a seamless supply chain. We ascertained that information sharing between the island and home office needed to be employed so that accurate forecasting methods could better analyze the demand of the resort across seasons. Forecasting is the first step in understanding the needs around which to design a supply chain. We also realized that importation into developing, protectionist countries is a very complex process and the advisory counsel of customs brokers would be critical, especially in the early implementation of a supply chain that involves importation. The beauty of this course is that learning arose from first-hand experience. We did need to read a fair amount in order to fully develop our research, and our writing skills were put to use in the compilation of documents. We were even tested, but not through multiple-choice questions. Instead, our commitment and work ethic was tested every week by the fact that let down was never an option and there was always a new hurdle to overcome and information to obtain or analyze.
Work to be Complete during next Period Task Start End Resource Assigned Execution: Research Interview Supply Chain Contacts Wed. Sept. 29 Tues. Oct. 5 Ellen Research Regulatory Environment Wed. Sept. 29 Mon. Oct. 16 Amanda Interview Legal/Regulatory Contacts Wed. Sept. 29 Tues. Oct. 5 Amanda Research Best Practices Wed. Sept. 29 Sat. Oct. 16 Mileta Interview Best Practices Contacts Wed. Sept. 29 Tues. Oct. 5 Mileta
Work to be Complete during next Period Task Start End Resource Assigned Execution: Research Full Write Up of Current SC Sun Oct. 17 Fri Oct. 22 Ellen Hammock Create Current SC Flow Charts Sun Oct. 17 Fri Oct. 22 Ellen Hammock Full Write Up of Legal/Reg Enviro. Sun Oct. 17 Fri Oct. 22 Amanda Buss Highlight Potential Bottlenecks Sun Oct. 17 Fri Oct. 22 Amanda Buss Document Areas of Improvement Sun Oct. 17 Fri Oct. 22 Amanda Buss Document Similarities & Differences Sun Oct. 17 Fri Oct. 22 Mileta Gebre-Michael Document deciding factors Sun Oct. 17 Fri Oct. 22 Mileta Gebre-Michael
Full Write Up of Current SC Sun Oct. 17 Fri Oct. 22 Ellen Hammock Full Write Up of Legal/Reg Enviro. Sun Oct. 17 Fri Oct. 22 Amanda Buss Highlight Potential Bottlenecks Sun Oct. 17 Fri Oct. 22 Amanda Buss Document Areas of Improvement Sun Oct. 17 Fri Oct. 22 Amanda Buss Document Similarities & Differences Sun Oct. 17 Fri Oct. 22 Mileta Gebre-Michael Document deciding factors Sun Oct. 17 Fri Oct. 22 Mileta Gebre-Michael Execution: Analysis Cost-Benefit Analysis Sat. Oct. 23 Fri. Oct. 29 Ellen Hammock Execution: Recommendation Develop Diagrams for TO-BE (and Roadmap) Sat. Oct. 30 Fri. Nov. 5 Amanda and Ellen Full Write Up on Recommendations Sat. Oct. 30 Fri. Nov. 5 Undetermined Work to be Complete during next Period Task Start End Resource Assigned Execution: Draft Presentation Develop PowerPoint Sat. Nov. 6 Fri. Nov. 12 Janaki Douillard Closing Confirm work is done to requirements Mon. Nov. 29 Thurs. Dec. 2 Team Gain Formal acceptance of project Fri. Dec. 3 Sat. Dec. 4 Team Complete formal performance reporting Fri. Dec. 3 Mon. Dec. 6 Team Update lessons learned knowledge base Fri. Dec. 3 Mon. Dec. 6 Amanda Buss