Financial Implications Initial Sample Material Costs 100 VAT Payment Valueadded taxes VAT are normally required to be paid when importing into most countries at rates from 525 percent If the VAT is registered in the local country most often customers can recover this cost directly from their local government if the material is procured correctly Anixter who is registered in 52 countries can invoice locally with the VAT included allowing customers to easily document and recover this charge 25 Duty Payment In most countries duties on imported product must also be paid at the time of importation which are based on HS Harmonized System code or product classification and can be 030 percent or more of the value of the goods Anixters incountry logistics managers can accurately classify the product to minimize duty rates Depending on local government requirements Anixter can deliver the product DDU or DDP Delivery Duty Unpaid or Paid to the customer incountry or import the product clear customs and invoice the product to the customer in local currency In some cases duties can be avoided all together 30 Freight Costs Costs to transport from the manufacturer to the local country for foreignsourced product Freight costs are typically 1530 percent depending on weight dimensions delivery time and value Anixter can substantially reduce these costs by using its experience and preferred rates with global freight carriers and ability to consolidate shipments 30 Insurance Coverage for transit from sourcing point to delivery incountry which can range from 012 percent of the value of goods Anixter can use its global insurance policies to effectively manage this cost 2 Customs In most countries there are customs clearance costs for imported product that can range from 055 percent often partially fixed per shipment Through effective consolidation identification and importation volume Anixter can reduce these costs when importing the product 5 Local Import Documentation and Certification Many countries require special documentation written in the local language to import products for local compliance purposes or to receive preferential duty rates If not provided either the product cannot be imported at all or it can be imported at an extra cost of 530 percent Anixter can secure these documents from the local authorities or from the suppliers to make sure the goods can clear quickly and at a minimum cost Procuring materials that have not been properly imported can lead to legal penalties 30 Local Transportation After goods are imported or if they are procured from a local source local transportation must be arranged from the port of entry or the local supplier to the customers site This can range from 055 percent Anixter can arrange for this transportation with preferred local carriers to keep the costs contained 5 Local Billing and Sales Transaction Taxes Anixter can provide local invoicing including all local documents which must travel with the goods In some countries additional sales or transaction taxes must be paid when buying or selling locally These can range from 110 percent or more Anixter can pay and minimize these taxes by reducing the number of transactions 10 Currency This cost includes converting from one currency to another or managing the foreign currency risk associated with payments in one currency and collectionsinflows in another Anixter can reduce or eliminate these costs and can bill in either local currency or US depending on local foreign currency regulations which the customer can pay in the same currency as its cash inflows This will eliminate FX conversion costs 022 percent and potential foreign currency exchange losses which can be up to 25 percent or more in some cases 27 Cash Flow Management Anixter can provide an overall landed cost by paying many of the upfront importation clearance and transportation costs Anixter then will invoice the customer only when the product is delivered This provides important cash flow advantages allowing the customer to better match its inflow of cash from local or foreign borrowings or customer collections with its outflow to Anixter This can minimize finance costs in countries with interest rates as high as 2 percent per month 6 Managing Multiple Suppliers These costs can include the extra needed resources to maintain countless relationships in different regions of the world the inefficiencies of generating multiple processes on how to conduct business with each supplier and the associated transactional and operational costs estimated at 100 per purchase order Using multiple suppliers also prohibits the ability to leverage global spend 10 Potential total cost of materials could be as much as 280 Deploying material internationally is extremely complex with significant added costs if not done properly With a significant global presence and experience in supply chain management worldwide Anixter provides its customers with the needed expertise to identify best practices in global sourcing procurement bill of material management importation services deployment and transportation management Our goal is to minimize your total costs and offer services to help you effectively manage the process without delays Below are factors that need to be considered when procuring and managing material internationally