STREAMLINE YOUR SUPPLY CHAIN
When it comes to software designed to streamline supply chains, there’s old global trade management, and then there’s the new.
The old school global trade management (GTM) systems automate processes that begin when shipments are ready to go, moving them from Point A to Point B in a timely manner at the lowest possible cost.
The new GTM software is much more comprehensive. It allows shippers to stay up to date with the ever-growing array of country-specific import and export regulations and to collaborate with their trading partners to ensure complete, accurate information and documentation for shipments. More than that, the new GTM automates processes way upstream—even at the product design and component sourcing stages—facilitating compliance with various product regulations and allowing companies to qualify for the benefits of free-trade agreements.
These comprehensive, end-to-end solutions, more than their predecessors, endeavor to streamline shippers’ supply chains with up-to-date content and process automation.
“The impact of the new GTM approach can be felt in all phases of execution,” according a recent research report from Aberdeen. “Product, supplier, sourcing, production and order data are combined with shipment and trade content to form a complete integrated solution.”
“GTM streamlines the supply chain but it also does two other important things,” says Wayne Slossberg, senior vice president of QuestaWeb Inc., a provider of web based GTM solutions. “It keeps companies compliant for the movement of their goods and it lets them speak to logistics providers electronically and in a more productive and efficient manner.”
“Global sourcing from product and material design and development, supplier selection and cost analyses are becoming important to GTM,” adds Gary Barraco, director of Product Marketing at Amber Road.
Compliance itself is also a multi-faceted process. “The first thing you want to do is to make sure that your vendor or customer is not on a bad-guys list,” notes Slossberg.
Then there is the question of product classification to ensure the correct documentation, tariffs, duties and taxes are applied. “You need a central place to manage all these things,” says Slossberg. “In our system, that comes from a centralized compliance database. The repository includes product specifications and pricing so that if Customs and Border Protection asks why a product was classified in a certain way, you have all the information you need to keep your company compliant when doing business worldwide.”
Customs organizations around the world are increasingly implementing single-window systems for all required export and import documentation. The Automated Commercial Environment (ACE) is the single-window initiative in the United States. While single window greatly simplifies the filing of required trade paperwork, complexity still abounds.
“The single windows go by country,” says Jos Nuijten, vice president for Network Integration Strategy at Descartes. “ACE makes things simpler for importing into the U.S. but in the Europe Union they still have 28 single windows,” one for each member state.
One feature of the Descartes GTM is that it provides a single window to all the single windows out there internationally. “Shippers enter information in a Descartes portal or send it electronically to a Descartes environment and we take the responsibility to send it to the U.S. single window or elsewhere,” says Nuijten. “We provide a window in front of all the single windows.”
Although many governments ask for similar kinds of information, each decides the format the data should be in. The Descartes system converts shipper data to the proper format before sending it along.
Then there are the nuances of doing business in different countries. To export to Israel, for example, you need to provide the government with certified copies of your incorporation certificate and to renew that filing every three years. Poland has a similar requirement, but it must be refreshed every year. Also, you won’t be able to figure out how to export to Poland unless you’re proficient in Polish because information is not available in any other language.
Free-trade agreements make it less expensive to ship products among the parties to the accord, but not necessarily simpler. “Many shippers are unable to take advantage of them due to the complexity of regulations and reporting,” the Aberdeen report notes. “Trade planning is a solution that automates these processes by looking at the variables and orchestrating how the trade should be established from a design point of view.”
QuestaWeb’s system includes an FTA engine that is driven by the Harmonized Tariff Code and allows storage of manufactures’ affidavits and other documentation relevant to qualifying for FTAs. Amber Road has a module that helps exporters manage foreign trade zones and free-trade agreements.
Farthest upstream, the new GTM helps mange product data. “Documentation required at the order and shipment level is often product-based,” the Aberdeen report states. “Preferred trade agreement qualification is a factor that should be considered for all products sourced internationally, as it can unearth unseen opportunities or advantages. Decisions made at the design and sourcing level often directly affect where and how a part can be sourced.”
“Where you source your raw materials can have an impact on whether you qualify for an FTA,” says Barraco. “It’s very important to build products in a way to qualify for free trade.”
The Amber Road GTM interfaces with development and design systems to access documents like bills of materials so it can analyze whether the product qualifies for preferential treatment. “It’s not a design tool,” Barraco notes, “but it facilitates the commercialization of products through the design and development processes.”
Similarly, quality management is also part of global sourcing, to ensure that products meet the safety regulations of various countries. Amber Road prompts shippers to get their products tested when necessary and provides a database of certified third-party testing organizations near production locations.
Global trade is a complex process that is only getting more so. Governments will soon be requiring multi-party security filings, dipping into information held by shippers, forwarders and carriers to create complete shipment security profiles. In many cases—especially in the air cargo industry—a shipment identifying number that would allow systems to correlate data from different filers is absent.
GTM providers are currently working with governments and stakeholders on these problems. They have to if they are to continue to claim that they provide an end-to-end approach to global trade management. n
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