Differences between DI – POE – Drop Shipments
DI – Direct Import
What is it? DI stands for Direct Import
This is when a KN customer sells to their end customer on FCA or FOB Asia TOS
KN’s role in this is to maintain privacy between the supplier to KN customer transaction and also with the
KN customer to the end customer transaction
Typical Process 1. KN’s customer receives a PO from their end customer and the KN customer issues a Sales Order against
Flow that PO
2. KN’s customer issues a PO to their supplier in Asia which will include some details about the Sales Order
to the end customer
3. Supplier produces product and books with KN origin
4. KN origin makes a booking with the end customer’s nominated Freight Forwarder
5. The nominated Freight Forwarder gives booking approval
6. If FCL, KN gives an SO release to the supplier w/ the container pickup information or if LCL, then provide
the CFS address for delivery
7. Supplier arranges delivery to CY or CFS
8. Supplier sends KN their proof of delivery (CFS Mates Receipt or a CY Gate In receipt) along with
Commercial Invoice and Packing List which shows the supplier name as seller and KN customer as
consignee
9. KN then provides that CI/PL to the KN customer
10. The KN customer creates a new CI/PL showing them as the seller and their end customer as consignee
11. KN passes the 2nd set of documents to the nominated freight forwarder
12. FCR process for FCA starts upon receipt at CFS:
a. Nominated freight forwarder then issues draft FCR to KN on behalf of the KN customer
b. KN customer may want to review draft FCR before KN moves forward to get original FCR
c. KN, Customer Entity or Supplier pays FCR charges and picks up original FCR
d. KN then issues FCR to the supplier if one is required for supplier to get paid by KN Customer
13. If FOB, KN monitors with nominated freight forwarder to confirm shipped on board vessel date when FOB
TOS.
14. FCR process for FOB begins after container is loaded on vessel:
a. Nominated freight forwarder then issues draft FCR to KN on behalf of the KN customer
b. KN customer may want to review draft FCR before KN moves forward to get original FCR
c. KN, Customer Entity or Supplier pays FCR charges and picks up original FCR
d. KN then issues FCR to the supplier
Complexity Document swap process- KN must ensure that supplier paperwork is never provided to freight forwarder
Areas or the end customer will know buying price information of the KN customer
FCR payment- If KN has to pay charges to a KN competitor, this has to first be reviewed/approved by
finance to ensure competitor is considered an approved vendor. If not an approved vendor, then
customer entity in Asia needs to pay or supplier would need to pay the charges.
Processes vary by KN customer and based on rule of their end customers
KN origins sometimes need to make orderline level ebookings in the nominated freight forwarder system
Is there a clear relationship between the KN Customer Sales Order and the PO to Supplier (VPO)
In general, there will be no direct communication between the supplier and the nominated freight
forwarder
Which KN American Greetings
Customers Whirlpool LatAm
have this? ACCO Brands
HNI
Royal Consumer
Differences between DI – POE – Drop Shipments
POE- Port of Entry
What is it? POE is Port of Entry.
This is when a KN customer sells to their end customer on CPT, CIP, DAT (old incoterm) or DAP TOS and
the named place is the US port of entry.
Typical Process 1. KN’s customer receives a PO from their end customer
Flow 2. KN’s customer issues a PO to their supplier in Asia
3. Supplier produces product and books with KN origin
4. KN origin makes a booking with the KN customer’s nominated Freight Forwarder or direct carrier contract
5. The nominated Freight Forwarder gives booking approval
6. If FCL, KN gives an SO release to the supplier w/ the container pickup information or if LCL, then provide
the KN CFS address for delivery
7. Supplier arranges delivery to CY or CFS
8. Supplier sends KN their proof of delivery along with Commercial Invoice and Packing List which shows the
supplier name as seller and KN customer as consignee
9. KN then provides that CI/PL to the KN customer so they can create their selling Commercial Invoice to
their end customer
10. The KN customer creates a new CI/PL showing them as the seller and their end customer as consignee
11. ISF process will be performed by the end customer as they are the importer of record. This can be
achieved several ways:
a. KN will prepare a manual ISF form and send to customs broker
b. KN will push EDI data to customs broker
c. KN’s Customer will prepare their selling commercial invoice early enough in the process to
provide to the customs broker to do ISF
12. This document swap process step can work different ways:
a. KN receives the final CI/PL from our customer and we pass the 2nd set of documents to the end
customer or their nominated customs broker
b. KN’s Customer sends the final CI/PL directly to their end customer or their nominated customs
broker
13. Rest of origin side process is standard for origin to ensure shipment departs origin port
14. KN Destination office may have responsibilities based on the particular POE program for:
a. Sending an arrival notice to customs broker
b. Handing over final selling documents to customs broker
c. Paying owed destination port or CFS fees for KN customer before the end customer takes
possession
Complexity Each end customer may have different requirements for notifications of pre-advices, arrival notices to
Areas customs brokers, etc.
Document swap process- KN must ensure that supplier paperwork is never provided to end customer’s
customs broker or the end customer as they will see buying price information of the KN customer
As the end customer is doing the customs entry, they are the importer of record and would have ISF
responsibility. KN may need to send EDI or a manual ISF document to the broker 3 days prior to sailing
Is there a clear relationship between the KN Customer Sales Order and the PO to Supplier (VPO)
There will never be direct communication between the supplier and the end customer
Which KN Hollander (former customer)
Customers Any others?
have this?
Differences between DI – POE – Drop Shipments
Drop Shipments
What is it? Drop shipments are when our customer sells to their customer on Delivered TOS
This is when a KN customer sells to their end customer on DAP, DPU or DDP TOS and the named place is
the customer Door location.
Typical Process In general, the drop shipment process is no different from a regular Purchase Order process as far as KN Origin
Flow side procedures go.
The main variations would be around destination side activity to assist with customs process or delivery process.
Complexity If customer wants Dynamic ETA Delivery estimates, all drop ship locations need to be known in order for
Areas KN to project the ETA Deliveries
If KN is acting on destination side as customs broker or delivery agent, we would need to know the
delivery rules for each customer location for appointments, drop/pull vs live unload, etc.
Which KN Most KN customers have a mix of these type of shipments along with traditional shipments going direct
Customers to own their DC’s
have this?
