In a flash.

PositionEastman Kodak

With additional reporting by Cassia Schittini in Sao Paulo.

Kodak saves time and money with a distribution center in "Brazil."

COMPACT DISKS ARE NOT COMplicated products to ship. But somewhere along the route from Guadalajara to Buenos Aires, Eastman Kodak's plastic disks and other products were getting slowed down, so much so that in at least one case a "just-in-time" delivery took 60 days.

That's pretty bad, especially when both the shipper and the customer waiting for the product are subsidiaries of the same company, Kodak. David Movsky, a worldwide transportation manager at the firm's headquarters in Rochester, New York says the company finally decided it had to move its inventory closer to the customer. Solution: set up a warehouse near Sao Paulo.

Movsky knows his geography. He knows that Sao Paulo is a long, long way from Buenos Aires, but Kodak's Brazilian warehouse is not really in Brazil. The company took advantage of a never-before-used special customs program in Brazil that saves the company transit time as well as tax costs for exports throughout Latin America. That was four years ago, now Kodak is moving about US$120 million annually through its Customs Distribution Depot (or DAD, as it is known by its Brazilian acronym)-the only one of its kind in Brazil. In short, the depot allows the company to move product through Brazil without the hassle of customs.

The kicker is that Kodak workers can enter the warehouse, open and repack containers according to each market's needs. If Peru, for example, does not need an entire container of film, the company can fill the rest of the container with other items, such as throwaway cameras, compact disks, etc. Plants throughout the region send product to the warehouse to keep its shelves stocked.

Custom warehouse. By setting up the Sao Paulo facility, Kodak nailed a few major concerns. For starters, the company's products do not pay Brazilian import taxes nor do they go through the country's full import saga. Instead, they go straight to a special customs warehouse. In that way, Kodak can import and re-export goods to and from its storage facility, without officially entering the country.

When the distribution center first started, of course, many of Kodak's affiliates in other countries didn't believe that Brazil had the ability to do the job. After all this was the same customs service that "lost" a Ferrari in a bonded warehouse a few years ago. Many also questioned the country's costly...

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