Choosing the door before the season

The comparison Aynsley should have made

Go back to the three quotations in lesson 1 and add one column. Not what the preference is worth, which is the same everywhere, but whether the factory can prove it. Landed cost is the price with freight and insurance added, and with duty added when duty is paid.

On the quotations, Hasbani landed USD 0.10 a piece cheaper than Valdecillo, comfortably in the middle of the three. On the outcome it landed USD 1.03 a piece dearer than Valdecillo, the most expensive of the three. Across the Jordan order that is USD 37,080.00.

Nothing in that reversal was unknowable in April. Every fact behind it already existed. Sabtah's yarn suppliers. The issue note that records count and quality only. The dyehouse practice that Ardsleigh's own quality team had been praising in writing for three seasons. The information was in the building. It was simply not on the form.

Course 26.1 covers the wider question of where to place an order: capacity, lead time, minimums, risk, the whole comparison. This lesson adds one input to it, and that input is not the duty. It is whether the duty can actually be collected.

The seven questions

This is the deliverable of the course, and it fits on a page. Ask it of a factory you are qualifying. Ask it too of a factory you have used for ten years, because ten years of quiet is evidence of nothing.

1. Which arrangement do you expect these goods to enter under, and where in it is the rule for our chapter written? A factory that cannot name the instrument has never read the rule.
2. Where is the fabric formed, and which document says so? Not who supplies it. Where it is made, and on what paper.
3. Where is the yarn spun, and will your mill state that in writing, for each delivery? This is the load-bearing question, and it is almost never on a vendor form.
4. Does your mill keep originating and non-originating yarn apart through the store and the dyehouse, or does it mix them? Either answer is acceptable. Only no answer is not.
5. If it mixes, is an inventory-management method available under this arrangement, has it been chosen, and when did it start? A method chosen after the goods are made is worth nothing, so the date is the answer.
6. Which of your records ties a yarn purchase to a roll, a roll to a cut, and a cut to a shipment? Ask to see one, for a real order, today.
7. Who signs your origin declaration, against what, and how long are the supporting records kept? A signature with no file behind it is the shape of every failure in this course.

Seven questions, one afternoon. A factory that answers all seven well has told you something no price comparison can: that its claim will survive being tested.

Advance certainty, where it is available

Where you cannot reach a confident answer, you are usually not required to guess. Most customs administrations, including this one, will give a binding ruling in advance. A binding ruling is a written decision the administration commits to, given before the goods are imported, on a written application describing the goods and how they are made. Origin is one of the questions it can settle. It takes time, it costs a fraction of a refusal, and it turns the largest uncertainty in a sourcing decision into a document.

It is worth most in exactly the situation this course has described: a chain that probably qualifies, on a rule nobody in either company has read to the end. The expensive question could have been answered in advance, cheaply, and nobody asked it.

The risk that cannot be priced, and saying so

Everything so far has been a cost you can put a number on. This last one is not, and pretending otherwise would be the worst advice in the course.

Ombaya's claim is the cheapest and the cleanest of the three, and it rests on a unilateral programme. That is a law of the importing country, passed by one legislature. The same legislature can amend it, narrow it, or let it lapse, without Kenya's agreement and without anybody breaking anything. A reciprocal agreement is a treaty between governments and is harder to change. A unilateral programme is a policy.

You can price provability, because provability is a fact about a factory. You cannot price a policy. Any number you attach to the chance of a programme changing is invented, so do not invent one. Say plainly what the exposure is. If that door narrows, the goods do not stop being made. They simply start costing USD 1.13 a piece more, and the sourcing plan that assumed otherwise has a hole in it the size of the programme.

The honest answer to a risk you cannot price is not a probability. It is a shape. Ardsleigh's season runs through three origins and two different kinds of instrument, so no single change in the law takes the whole programme with it. That is not a hedge somebody calculated. It is the reason to have more than one door in the first place, and it is why this course was never about one country.

Where this course stops

Three boundaries, so you know where to go next.

• The duty base and the code. What the duty is charged on, and how a garment is classified, is course 12.2. Under a yarn-forward rule the two are not independent. The annex row is often written against a heading, so the classification decides which rule applies.
• The European side. Course 26.3 covers preferential access to the European Union. That is a different family of instruments, with a different documentary tradition. Almost nothing in this course transfers word for word. The shape does.
• The other demand on the same records. Course 12.6 covers traceability for forced-labour enforcement. It asks a different question of the same tier-two documents. A factory building an origin file is most of the way to building that one, and it is worth doing both at once.

What you should be able to do now

Put the seven questions on your vendor qualification form, and ask them of the supplier you are least worried about. That is the one whose answer will surprise you, because a long quiet relationship is the condition under which nobody has ever checked.