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The Two-Million Dollar Question: Are Your Factories Compliant?

Corporate Social Responsibility applies to companies with shipments of export cargo and import cargo in international trade.

The Two-Million Dollar Question: Are Your Factories Compliant?

Over the course of the last several decades, social compliance was viewed as a voluntary, nice-to-have feature that saw a lot of lip service, but very little concrete action for many years. When the Rana Plaza disaster struck in Bangladesh in 2013, killing over 1,000 factory workers and injuring twice as many, the world sat up and took note. Corporate Social Responsibility (CSR) moved out from the periphery of consumers world-wide into the forefront, forcing global companies to take concrete actions to ensure compliance with both regulatory and voluntary guidelines.

For some, it seems, even the concrete actions taken in the wake of Rana Plaza were not enough. News broke in January 2018 that a global apparel brand (the company remained anonymous) is shelling out $2.3 million to cover factory remediation in Bangladesh, five years after the disaster. The judgment was reached through an arbitration process under the Bangladesh Accord for Fire and Building Safety, which is a legally binding agreement between global brands and trade unions that promotes safer work conditions in Bangladesh’s garment sector.

This new, costly judgment is sounding the alarm once again for the global trade industry to take social compliance seriously, or else.

Gain Visibility Through Audits
What should a global company do to mitigate risk and ensure their downstream suppliers are following all applicable safety and labor regulations? While communicating CSR policies and expectations downstream is of utmost importance, one of the best ways is by conducting frequent and thorough supplier social responsibility audits. Audits help paint a complete picture of what is happening at certain points in your supply chain. Equally important are the follow-up activities to ensure corrective action plans (CAPS) are completed.

Supplier inspections are a vital component to any global operation. Quality, safety, social responsibility standards, and regulatory practices must be enforced to protect brand integrity and reduce the risk of costly product recalls. CSR should become part of a company’s DNA, not an afterthought.

Auditing has also come a long way in the past few years. In the past, duplicative audits, with multiple companies conducting the same audits on overlapping factories, was a serious issue. It led to audit fatigue at the factory level, with often contradictory requirements leading to confusion during the audit. The advent of third-party and shared auditing has resolved many of these issues, with companies working together to resolve issues and mitigate risk without stepping on each other’s toes or exposing sensitive information.

Proactive companies will approach their auditing practices with a goal of increased transparency. It is also important to leverage technology systems that manage trading party and service provider data, and then leads to the building of collaborative relationships with suppliers.

The information provided through audits helps provide visibility and clarity so companies can be assured their global supply chains will continue to operate efficiently. Risk mitigation comes through identifying potential issues, such as workforce issues and instability. Auditing has moved into the new age, with strategies to help companies better understand their supply chains. But managing the data provided via auditing can’t be left in the 20th century, either.

Managing Audits with Technology
Cloud-based global trade management (GTM) technology allows companies to work with closely factories, vendors, and outside inspection teams to maintain strict adherence to CSR and other types of audits. An innovative technology solution provides benefits and features such as:

  • Communication with inspection teams and scheduling compliance inspections
  • Calendars for wide-level visibility and scheduling recurring audits
  • Monitoring and managing vendor and factory performance for on-time delivery, social compliance, environmental footprint, and regulatory compliance
  • Establishing audit processes and ensure audits are performed and compliance is reached
  • Analyzing risk by cross-matching current and future activity with non-compliant suppliers
  • Selecting suppliers that meet compliance standards using Key Performance Indicators established by the brand
  • Lockdown activity, like future orders, with non-compliant suppliers
  • Digitization of data that is shared regarding product, suppliers and orders

The role of social compliance continues to morph alongside the global trade landscape. Compliance professionals must not only adhere to corporate standards and government regulations but have also become responsible for creating and nurturing strong, ethical corporate cultures in order to insulate organizations from financial, legal and reputational risk.

Keeping on Top of the Supply Chain
Digital, collaborative technology solutions are the key to preserving the trust of valued consumers and alleviate risk from litigation. Technology-based solutions help companies increase supplier collaboration and visibility, support greater supplier accountability, and provide a conduit for broader, proactive supplier management activities. The best technology solutions offer the functionality to fulfill the end-to-end, develop-to-shelf needs of both retailers and suppliers.  It is equally important to realize that integration to external and third-party systems can push and pull information into a central repository to increase its value and preserve existing investments.

To ensure complete visibility and collaboration, technology should facilitate internal sourcing and compliance teams to work with factories, vendors and outside inspection teams to maintain strict adherence to the numerous performance standards, and subsequently build stronger relationships with each link in the supply chain through the collaboration tools on the platform.

Armed with solid information about human trafficking and labor conditions in their supplier network, companies will find themselves better positioned to mitigate risk and avoid the negative press that accompanies breakdowns in social compliance.

Gary M. Barraco is director of global product marketing at Amber Road.

FTAs are allowing Europeans to generate more shipments of export cargo and import cargo in international trade.

Six Global Supply Chain Trends to Watch in 2018

Global trade continues to accelerate both in volumes and complexity, with the WTO’s most recent trade forecast revised to show improved growth in world merchandise trade volume. Just look at the numbers from Alibaba and their most recent Singles Day, where products were purchased from 192 countries. The number of tons shipped by ocean containers has multiplied many times over in recent years—almost 17 times—from 102 million tons in 1980, to 1,720 million tons in 2016.

After years of stagnation, trade has been soaring this year as an upturn across major global economies picks up momentum and raises hopes that retail is ready to improve. At the same time, the complexity of conducting global trade and complying effectively with myriad and growing regulatory and licensing requirements has exploded due to political unrest, numerous additions and trade agreement revisions, rising protectionist measures, the e-commerce explosion, and the sheer growth in types and numbers of products imported and exported around the world on a daily basis.

As we flip the calendar to 2018, companies with global supply chains should keep their eyes and ears open for these primary concerns. (These are listed in no order of precedence or severity.)

#1: Retail supply chains need flexibility in order not to break

We have seen the retail industry bear the brunt of a changing consumer dynamic for the past few years. But the shifts that overturned the industry in 2017 certainly showed during the holiday season. The place of ecommerce in shaping today’s retail landscape is no longer in dispute, if it ever was. The tidal wave of store closures that started in 2016 and crested in 2017 took down both old icons and newcomers alike. While part of this could be attributed to the global economic climate, a large portion of the impact came from e-commerce replacing traditional sales channels.

According to RetailNext Inc, the number of shoppers in US stores Thanksgiving and Black Friday fell four percent from last year, while Adobe Analytics reports online sales over $5.03 billion, a 16.9 percent increase over the prior year. This reflects a fundamental change in consumer buying, thus requiring supply chains to adapt by more closely managing the flow of goods for both online and brick-and-mortar fulfillment. The surging e-commerce sales channel has proven itself and is here to stay, and not just for the holiday rush. New concerns come along with it, though – ensuring delays don’t occur at the factory or during shipment, accurate cross-border documentation to streamline clearance, and stocking the shelves with the high-quality, innovative, and cost-competitive products that consumers want.

How well these online sales channels are managed and maintained as part of the global supply chain can make or break a company. As 2017 closes out and companies look towards 2018, capturing a larger share of the online global marketplace must be more than just a footnote for those looking to remain competitive. Extensive planning is needed to address the risks identified with expanding online sales; mitigating those risks requires finding the right technology solution to help your organization grow.

#2: Europe and Asia are churning out trade agreements, while the United States retains its staunch demeanor at the table

Amidst the unsettled backdrop of global protectionism that has overshadowed the advancement of trade policies in the Western Hemisphere, it is clear that the European Union has made bold strides in the “right” direction. The number of new free trade agreements enacted by the EU has been substantial in the past two years.

FTAs are helping European businesses compete more successfully and export more to countries and regions outside of the EU. They also give better access to raw materials and vital components from around the world. This increase in trade then grows the job market and economy, and gives consumers a wider choice of products at lower prices. It’s obvious the EU views FTAs as beneficial – the EU-South Korea FTA has immensely pushed two-way trade. The EU also enjoys increased trade benefits from FTAs with Japan, Vietnam, Singapore, a host of non-EU states in Europe, and states in Africa and Latin America. The EU-Canada FTA, which was ratified this year, has been provisionally applied. The newly proposed India-EU FTA has potential to create jobs in India while opening discussions between member nations on other topics like anti-terrorism strategies. Everyone trading with the EU should be ready to harvest the opportunities offered by these FTAs through increased trade, creating jobs and growth, and finding new business opportunities.

Of course, in the US we are seeing little to no action on the trade agreement front. On January 23, 2017, President Donald Trump signed an executive order to renegotiate NAFTA. The fifth round of negotiations wrapped up in November and, although progress was made in various chapters, there is still a lot of work to be done. In his closing statement, Lighthizer indicated that the US, Mexico, and Canada “found mutual agreement on many important issues”. But reports aren’t as positive and show little movement in any direction. One thing remains clear throughout this entire process – Canada and Mexico are not willing to agree to the United States’ sunset provision that would require the three countries to re-affirm their commitment to NAFTA every five years. Companies that use NAFTA for duty-free trade should be watching the proceedings with caution, and making contingency plans in case the negotiations alter the regulations. Aside from NAFTA, the Trump Administration is still not showing any forward activity towards new bilateral trade agreements with other nations.

While they can mean a positive turn for global business, FTAs also come with challenges, including increased compliance demands and overall changes in trade regulations. Using a best-of-breed technology solution can help open up new markets for your company by simplifying the compliance and qualification processes. With new FTAs on the horizon, just passed, or re-structuring, global trade compliance becomes the key to the opportunities ahead.

#3: Britain’s exit from the EU is already causing disruption

The uncertainty over Britain’s departure from the EU has already impacted manufacturers, retailers and suppliers.  A November 2017 survey conducted by The Chartered Institute of Procurement & Supply (CIPS) revealed that 63 percent of the participating EU companies planned to move some of their supply chain out of the UK as a result of the decision to leave the single market and customs union. One in five UK businesses also report difficulty securing new contracts that extend into 2019.

The Guardian reports a slowdown in manufacturing growth amidst fears over trade shifts resulting from Brexit. The slower-than-expected progression of Brexit negotiations has put off business investments in current or new UK operations. Recent readings on economic growth showed investment by companies to be flat in the second quarter. Supply chain executives are voicing concerns about tariff and quota changes, hoping to keep trade open and flowing as it does today. For manufacturing to remain strong, the raw material imports from Asia need to remain duty and tariff free, as they are currently in the customs union. Costs could go up without the trade advantages, leading to higher export costs from the UK. And then there is Ireland, a major manufacturing hub that might not follow the rest of the UK into divorce. With so much to lose, they are already building out new markets, re-orienteering their supply chains, and considering new distribution channels.

At Amber Road, we are following Brexit developments as they unfold and considering the implications of what Brexit might mean for our customers. Though the next two years will be a period of considerable uncertainty, we will be continuously conducting impact assessments and ensuring our software runs smoothly for all our valued customers. With our large staff of in-house trade compliance specialists around the world, Amber Road will continue tracking changes regarding UK’s exit process, changes to the customs law, and shall notify our customers immediately through our Global Knowledge updates.

#4: China continues to dominate global manufacturing and trade

China’s position on the world stage as the leading manufacturing country is even more unyielding, despite President Trump’s attempt to stage a personal trade war with the nation. Overall trade has been growing despite the trade tensions: US imports from China rose 6.6 percent in September, though the US trade deficit has also been rising. The Trump Administration continues to add stress to the US relationship with China, even going as far as petitioning the WTO to reject China’s request to be treated as a “market economy.” This status could potentially lower trading partner tariffs and save China billions of dollars in exports.

But China isn’t crouching in the corner, rather the government is making huge strides in the other directions and broadening their footprint in other parts of the world. Late in November, Chinese leaders held meetings with 16 Eastern European countries, leaving behind a promise to invest $3 billion in the region to support manufacturing infrastructure. Even before the “16+1” summit, roughly $15 billion in investment by Chinese companies, backed by state banks, had been promised to the region since 2012, according to one estimate. Part of China’s “One Belt, One Road” policy, the funds will bolster commercial and political ties with more than 64 countries between Asia and Europe. For Europe’s poorer eastern countries, the promised investment could help to upgrade dilapidated railways, motorways and energy plants.

China is also doing more to grow its burgeoning middle class by cutting import tariffs on consumer products, including fashion apparel. The strategy cuts import duties on 187 products by about 45-50 percent, making imports from Europe and other nations accessible to Chinese buyers.

Despite these leaps forward, conducting international trade in China can be difficult and complex. China’s General and Processing Trade regulatory challenges can vary by region and are challenging to navigate. While the central government provides a framework for importers and exporters to conduct business, challenges result when regional and local governments implement various controls. Regulations can change instantly, extending lead times and increasing variability within a company’s supply chain. Companies should look to leverage a web-based on-demand solution that is deployed rapidly and cost-effectively.  It provides timely regulatory updates to ensure uninterrupted import and export operations as China makes frequent regulatory changes to support economic growth.

#5: Keeping goods moving is tougher than it looks, and pricier

In a recent interview, Kevin Holian, vice president of global operations at New Balance Inc., said, “Logistics is a little bit like plumbing in your house. As long as it’s working well…you don’t tend to worry about it or care about it. But the moment that stops working properly, it escalates to probably become perhaps the most important issue in your home and certainly in your business.”  Keeping goods moving (particularly to fill the new retail e-supply chain) is full of uncertainty and variability. Regardless of the mode – ocean, air, small parcel, ground or even rail—most logisticians are spending their time managing the exceptions. And what most need is the agility to be able to react to the obstacles in the way.

The shipping capacity crunch is not a new topic, but the end of 2017 is shaping up to reveal an unprecedented crunch, reports Chris Brady of Logistics Viewpoints. An active hurricane season, the forthcoming implementation deadline for electronic logging devices (ELD) and record-shattering projections for the holiday shipping season reflect some of the top factors affecting the current state shipping capacity crunch. Moreover, the driver shortage is worsening in tandem. To successfully mitigate the potential setbacks from shipping capacity crunch, your organization needs to understand more about its current and projected driving forces.

The overly-active 2017 hurricane season in the US damaged both freight containers and trucks. In Houston, the trucking industry is barely back to life months after the water has receded. We are already seeing higher-than-normal annual increases in shipping rates, much of it blamed on the exacting home delivery promises made by e-commerce marketplaces and demanded by consumers. UPS announced plans to raise ground and air rates approximately 4.9 percent beginning December 24, and FedEx announced a similar general rate increase to take effect in January.  J.B. Hunt Transportation Services has advised clients rates could rise more than 10 percent within the next two months alone. With higher rates comes tighter capacity as more carriers and shippers attempt to consolidate freight and eliminate deadhead. In addition, if the capacity crunch comes to a head, carriers may raise rates again, an increase most shippers aren’t prepared for.

Shippers’ expectations are also increasing, triggering carriers and brokers to implement more sophisticated technology tools for shipment visibility and tracking. Every additional feature adds cost to the bottom line, but advances the industry by establishing new standards. GTM tools that provide the most current, detailed to the SKU level, and last mile tracking, take on an important role in the future of shipment visibility.

#6: CXOs are challenged to be in the present, but look to the future

In the face of ongoing market turmoil, digital disruption, and other forms of business turbulence, one of the top qualities among first-rate leaders is competence to build a resilient organization. Great leaders understand that the importance of cost, quality, speed, and innovation can’t be understated. No matter how fast a product moves from concept to consumer, if the cost is too high, the quality is lacking, or if it’s not truly innovative, the bottom line will suffer. In order to truly increase speed without compromising on other equally-important factors, a company must become both more efficient and more agile. While there are a few different methods to accomplish this, digitization is the only answer worth exploring.

There are five major factors which influence supply chain operations – cost, risk, speed, innovation, and agility. It is easier to comprehend how innovation, cost, risk and speed impact the bottom line. But where is the balance between these? With more speed and less risk, once I achieve the right balance, will this give my supply chain a competitive advantage for a profitable, smooth sailing supply chain? It’s the job of senior management to balance out their specific functional areas.

  • Chief Operating Officers need to minimize operational costs, automate and improve productivity. To do this, they need to remove manual processes and improve visibility.
  • Sourcing and product development leaders need to deliver innovative and competitive products to increase revenue and reduce time to market. This is best achieved by collaborating early in the product lifecycle with suppliers who can provide input to the design specs.
  • Chief Risk Officers have to mitigate risk by ensuring suppliers, products and shipments are in compliance with multi-national regulations at a minimal cost. As regulations around cross-border transactions continue to increase, compliance costs continue to spiral upwards.

In the past year, we’ve seen the focus move away from concerns over cost and ever-cheaper supply countries, and refocus instead on digitalization, speed-to-market, emerging innovation in supply chains and what companies can do to remain competitive in a rapidly evolving marketplace.

The 2018 Strategy

Against this backdrop, how do you and your colleagues address the challenges in 2018? What are the top priorities and how do you tackle them? Today, every business is a digital business and the impact of digital strategies on supply chain management are of particular importance. For businesses around the globe, 2018 will be shaped by the success rate of digital transformation efforts.

Many companies have realized that going digital is the only solution to break traditional supply management chains and move boldly into the future. Digital technology will create a significant improvement in business outcomes, as long as businesses reinvent their supply chain strategies while concurrently reimagining their supply chains in the digital sphere.

According to a McKinsey report, only about 40 percent of businesses were digitized in 2016. New industry dynamics are driving supply chains to new levels, with digital transformations occurring across manufacturing sectors and into supply chains at every level.

While it will take time for companies to become “fully digitized,” many sectors have passed the halfway point in their transformations. The New Year offers opportunities to continue making changes. More than ever before, now is the time to digitize or die.

Gary M. Barraco is Director of Global Product Marketing at Amber Road.

Supply chain visibility can help with disruptions in shipments of export cargo and import cargo in international trade.

Handling the Supply Chain Butterfly Effect

Experiencing supply chain disruptions these days is like watching the butterfly effect at Mach speed. One delicate wing flap in any part of the process and the whole supply chain erupts into chaos across the globe.

This year alone, supply chains were riddled with unexpected disruptions. In January, analysts predicted big trade upticks but the forecasts fell short because global trade has been hit with multiple, unforeseen interruptions, sending importers and exporters scrambling to stay on course.

Disruptions are a given in global trade and they come in many forms. According to Aberdeen Group’s October 2016 report, damages, late shipments, and quality issues are the three most prevalent. Yet these are just the tip of the iceberg. Crossborder shipments add another level of complexity with potential failure points being customs entry requirement screenings, port congestion, and labor strikes.

While there are typical disruptions, supply chain leaders must have a backup plan in place for completely unplanned or unforeseen events. Even though they don’t know when or where a disruption might happen, supply chain leaders must always be thinking one step ahead. Here are two disruptions that we experienced this year.

Hanjin Meltdown

The recent crisis surrounding Hanjin best exemplifies an unforeseen event. When the bankruptcy hit the ocean shipping giant, a combined $14 billion in goods were held on Hanjin vessels at various locations around the world. With shipments held at bay and no certainty of potential release dates, the only hope a company had was damage control.

Visibility into which customer orders and products were floating in the legal limbo allowed importers to advise waiting customers of the status of their orders. Without detailed, granular data which includes manufacturer and product level information, corrective action was all but impossible.

In the case of Hanjin, online visibility into in-transit shipment status was enough information to get companies moving in the right direction for recovery. This is where retailers might want to get controls in place for their incoming supply chain at the global trade level.

The Retail Squeeze

It is commonly understood in retail that little investment is made in supply chain execution capabilities and more largely in product lifecycle management solutions. Not for a lack of need or want, but in order to keep overall costs lower through less technology investment. Consequently, many global apparel companies operate with a limited view of their inbound supply chains.

As a result of disruptions and the subsequent financial losses, the time has come for retailers to take ownership and control of their supply chains. The key to preventing issues from turning into crises is visibility of the upstream supply chain. This visibility allows supply chain leaders to alter the outcome of a rare event. With on-going monitoring, adjusting, course correction, and random heroics, they can keep a plan on track.

Lack of visibility into supplier quality and manufacturing processes is a serious point of weakness for any company. As cited in the Aberdeen report, best-in-class companies are more that two times as likely to have this in place.

For retail, solving quality and manufacturing issues before a product is made and shipped is a lot cheaper than trying to fix it after the fact. Forward thinking companies recognize the value in working with suppliers and solving issues at the source before they become problems that are prohibitively expensive to resolve.

Visibility: The Best Time is Now

Aberdeen reports that the most effective companies leverage all the tools to establish a complete visibility profile for their inbound supply chain. It provides them the time and speed to react to an unforeseen disruption, and becomes a competitive advantage.

Disruptions happen at all levels in a supply chain, yet best-in-class companies are more likely to have the inbound supply chain visibility to combat them. Compared to their competition, they excel at every level of engagement with suppliers, partners, and logistics providers including international suppliers and shipments.

Visibility pays off in the form of on-time shipments and lower costs, as reflected in their performance metrics. The Hanjin situation and retail squeeze on supply chain execution improvements are examples of how visibility can be the difference between an issue and a disaster. Visibility doesn’t solve every problem, but it does enable your organization to know sooner and act now.

Gary Barraco is director for global product marketing at Amber Road. Download the full Aberdeen report Supply Chain Visibility: Know Sooner, Act Now for free.

 

Ecommece retailers require export control systems for their shipments of export cargo and import cargo in international trade.

Even Ecommerce Giants Lack Export Control Processes

Amazon.com has dominated the ecommerce industry since its humble beginnings in 1995 as an online reseller of books. In its first two months in business, it received orders from customers in all 50 U.S. states and 45 countries with sales up to $20,000 per week. Today, the company offers over 183 million products with newer endeavors like music, groceries, and apparel serving more than 224 million customers.

Amazon has an estimated to 65 million U.S. Prime members, more than double what it had two years ago and the product offerings have grown well beyond just books. In 2017, the marketplace’s apparel sales are expected to top Macy’s as the biggest U.S. clothing seller. Then there’s the latest announcement in October about plans to build convenience stores and curbside pickup locations for prepared foods.

Incredible growth like this doesn’t come without its ups and downs. In 2014, 37 percent of Amazon’s sales came from international markets but rather than go up, this number has declined in recent years. This has left investors wondering what the market share will be in the future. Amazon admits it’s improperly equipped for crossborder transactions and is diligently working to fix those issues. But the same problems plaguing many ecommerce retailers have worsened, keeping these companies falling short of their capabilities.

To prepare for the impending growth through ecommerce channels, retailers must understand their customers’ demand for convenience and remove any obstacles from cross-border commerce. At a recent conference, I was approached by a major footwear manufacturer expressing concerns about B2B shipments into South America because they lack a robust process for import regulation compliance. The obstacles include an ever-changing global trade environment, varying country tariffs, and the accurate classification of products. It’s imperative to maintain timely access to global trade information, master product classification, and comprehensively calculate landed costs at the time of order entry to address these challenges.

As ecommerce continues to boom, shipping to customers in more countries complicates the export compliance challenges and increases regulatory risk. Many exporters will struggle to effectively determine license requirements, perform export compliance checks, and generate international trade documents.

Manually conducting a search for license requirements, especially those of foreign governments and agencies, can be time consuming. But just as Amazon experienced, running afoul of export regulations can result in significant fines, criminal penalties and potential loss of export privileges.

For the fourth time in as many months, U.S. aviation safety regulators have proposed a fine on Amazon.com Inc. for allegedly shipping hazardous materials by aircraft. According to the Federal Aviation Administration, in August 2015, FedEx workers at a sorting facility in Cary, Illinois, discovered a leaking package that held two 14-ounce bottles of a flammable, ethanol-based hair tonic. The FAA alleges that the shipment wasn’t packaged or marked properly to show it contained hazardous material and shipping papers didn’t provide required details, including emergency response information.

Early this year, regulators in the U.K. charged Amazon with similar violations including an attempt to ship lithium–ion batteries on passenger aircraft that are barred from carrying the batteries.

Automation and trade content is required to ensure compliance. Once identified, exporters have the responsibility to generate and transmit forms to their freight forwarders, customers, and appropriate government authorities, and retain audit history. Whether a global enterprise-sized company or SMB, there are export management solutions that can help.

There is clearly a large market opportunity associated with global ecommerce. Companies must address several challenges to make strides and grow through this channel. Retailers, consumer products companies, 3PLs, ecommerce marketplaces, and others need to create a comprehensive plan which includes partnering with a solution provider experienced in global trade regulations and practices.

Gary M. Barraco is director, global product marketing at Amber Road.

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Assess your supply chain of shipments of export cargo and import cargo in international trade.

Would You Release Your Global Supply Chain’s Health Record on Dr. Oz?

The current presidential election has been notable for many firsts, including the two-week long melee between the candidates about who is in the best physical shape to lead our nation. Unfortunately, most people don’t like going to the doctor, and many postpone the appointment for regular checkups until something is bothering them enough to look into. But seeing the doctor for an annual checkup is a smart approach for assessing personal health and proactively avoiding any potential, catastrophic health issues.

Likewise, multinational manufacturers, distributors, and retailers should regularly assess the health of global supply chain and trade activities that rely on a complex network of trading partners and service providers to ensure products are cost-effectively sourced, produced, and delivered on time to meet customer expectations. On the surface, these critical business operations may appear to be operating just fine. However, health risks might be escalating in ways that can only be caught during a regular assessment or checkup. In the case of global supply chains, these health risks can manifest as supplier social compliance issues, customs shipment delays, inaccurate landed cost calculations, regulatory lapses and a myriad of other problems.

Like your family doctor, supply chain practitioners have to examine any changes that occur within their global operations with a holistic viewpoint. There are numerous examples where small changes in one area of the supply chain can have significant and unintended consequences in another. One memorable story is a global organization that changed its product packaging with the goal of maximizing transportation capacity and reducing costs. The company failed to account, however, for the fact that many of its shipments were delivered to small ports in Africa that were not equipped to offload the newly packaged products. This resulted in a tremendous expense to the company and caused it to scrap the innovative packaging.

A healthy awareness and understanding of current supply chain technology are imperative to assuring the ongoing fitness of your global supply chain. This can be tricky with a globally-distributed, complex web of supply chain networks. This scenario typically leads to suppliers, customers, carriers, and other trading partners utilizing varied and disparate communication standards, software products, data formats and integration methodologies.

To identify many of the challenges and assess the health of your supply chain, answer these eleven questions:

1. Are compliance checks for export activity performed at the transaction level?

2. Are sourcing analyses performed to determine the best compliant sources of supply, including what-if studies?

3. Does your organization leverage free/preferential trade agreements and have the ability to integrate new ones, like TTIP?

4. Does your supply chain have visibility across all import and export activities at the order level?

5. Is the production and verification of import/export documentation automated and efficient?

6. Do you include duty and tax implications when calculating landed cost scenarios to optimize decision-making?

7. Can you ensure import/export compliance across supply chain operations, including associated trading partners?

8. Can you effortlessly manage the flow of goods in and out of manufacturing hub countries, like China?

9. Do you comply with international trade regulations and do your processes quickly adapt to new government trade regulations?

10. Do critical customs delays rarely happen when working with cross-border suppliers?

11. Can you easily determine HS numbers, with corresponding ECN and import/export license requirements, where applicable?

If you answered zero to three questions with a no, count yourself lucky that your global supply chain and trade operations are comprehensive and that there is no need to schedule a doctor’s visit.

If you responded no to between four and six questions, then you should consider an assessment for progressing your global supply chain processes to maximize performance and avoid any regulatory fines.

However, if you responded no to seven to eleven questions, you should recognize your global supply chain and trade operation is at risk and now is the time to schedule a complete physical for the health of your company.

Optimal global supply chain health, similar to your own physical health, can best be assessed by your supply chain practitioners and specialized organizations with the expertise to ask the right questions, accurately interpret the results, and recommend the right corrective actions. Waiting too long between checkups can result in costly and complex complications that hinder an organization’s ability to meet customer expectations around the globe. Be sure and schedule checkups on a regular basis to maximize global supply chain performance, reduce trade compliance risks and improve speed to market.

Gary M. Barraco is director, global product marketing at Amber Road.