New Articles

How to Tackle the Freight Invoice Management Obstacles

freight invoicing

How to Tackle the Freight Invoice Management Obstacles

A freight invoice is a detailed bill which includes information regarding the transportation of a company’s goods from one place to the other, along with the inclusion of the amount of charges, its weight, due dates, complete goods’ description, contact information, and names of both the receiver and the shipper, etc.

On the other hand, logistics is defined as the process of planning, implementing, and controlling the storage and movement of services and goods from the point of origin to the point of consumption within a supply chain, explains a top provider of Invoice Processing Services. The companies which deal with these processes become a part of the logistics industry and handle a few or all of the functions of supply chains as per the logistic requirements of the client.

Past Examples of Invoice Issues

-In recent times, an IT company was overbilled throughout 14 days by an amount of $935,578 owing to the incorrect weight applied by a parcel carrier.

-Auditing helped a national level entertainment retailer in saving around $35,000 from a wrong monthly invoice charge

-A worldwide renowned LED manufacturer had to pay $93,147 more due to incorrect billing currency, but the amount was recovered after the fault was discovered during the auditing process.

Top Freight Invoice Management Obstacles

Multiple Challenges

Managing invoices is extremely hard as a lot of challenges like reconciling contract terms with Bill Of Lading (BOL), invoices’ rating for correct rate selection, decisions about the acceptance of differences in charges, getting invoices resubmitted after making the carriers do corrections, etc. have to be dealt with extreme care. When these challenges are not addressed properly, they lead to errors, which further lead to overcharging, eventually adding to the overall Invoice Processing complexity.

Tedious Information Processing

The processing of information for the invoices is really tiring and tedious in nature. This is the reason employees who process the information for billing, weight, ledgers, data entry, and more commit multiple mistakes and make the final outcome inaccurate and hard to understand.

Bill Entry Issues

The very first concern which the logistics industry has to deal with during invoice management is the efficient functionality of the billing entry process which is defined below:

-Shortage of non-standardized processes and control due to operations which are not centralized for billing entry

-Multiple systems integration

-Due to missing BOL information, incomplete billable items are captured

-Multiple formats for BOL 

-Lost information regarding a customer or local-specific procedures for billing

Refund Management Issues

There are a lot of instances where the goods and services do not land safely at the doorstep of the receivers. In such cases, goods and services are returned back to the suppliers, which involves going through all the invoice processing steps again, which is extremely time-consuming for the owners of the logistics company.

Best Practices to Tackle Invoice Management Obstacles

Must-Include Invoice Listings

-Consignee and consignor names

-Shipment date

-Packages number

-Freight description

-Volume, weight, and measurement of freight

-Total outstanding charges

-Each carrier name engaging in transportation and movement route

-Shipment’s transfer point

-Issuer’s business address and remittance address

Freight Management Controls

It is important to incorporate internal controls which are powerful into the management structure of the freight. An authorization system, duty separations, and internal audits on a periodical basis are one of the most important tasks for managing risks like favoritism and fraud, which have the potential to bring down the overall profitability. 

The main objective is to make sure none of the employees have any chance for concealing and committing any illegal or unethical activity. For example, an employee who has been given the responsibility of getting the estimates should never be made the in charge of making the final freight invoice payment or selection.

Proficient Auditing System

According to a report by ReconLOgistics.com, wrong freight bills appear in about 5-6% of the entire invoices, which can raise the expenses of transportation to a great extent. With a proficient auditing system in place, along with a thorough recalculation and review can save you from overpaying due to inaccuracies in the freight bills. 

Apart from this, normal dealing procedures for lost shipment or damaged dealing, and timely claims reconciliation are an imperative part of a cost-saving management program for the freight.

Outsourcing Payment and Freight Audit

When it comes to finding the best solutions for streamlining the freight invoice management process, Outsource Invoice Processing remains a top favorite amongst the businesses due to its cost-cutting feature, along with the following benefits provided by it:

-Paper routing, filing, and handling elimination

-Centralized system for entire processing functions of the freight invoice

-Eliminating multiple systems and non-uniform processes

-Real-time insights into the invoices

-Latest technology use like artificial intelligence and automation

-Invoices’ long-term archival in the electronic form

-Carrier queries

-Increase cash flow to the maximum levels with timely invoice payments

-Receive correct and detailed accrual files and cost allocation straight into your system

-Gain visibility into operational metrics, invoice status, and payment information

Invoice Automation

Most of the industries have already incorporated the use of automation in a majority of their work processes, and have reaped great benefits in the following forms:

-Faster processing of invoices

-Elimination of costly human errors

-Invoice costs reduction by 80%

-Preventing payments duplicity and maximizing initial incentives for payments

-Enabling enhanced cash flow control and visibility

-Achieving 100% accuracy for invoice entry

Freight Software

Businesses who are trying to manage their freight invoices by themselves can ease their management workload with some of the top freight software mentioned below:

The Magaya Cargo System

This user-friendly software helps in eliminating duplicity of data entry, streamlining shipment workflows, generating Bill Of Lading, etc., along with a fully-integrated system for Invoice Accounting.

A1 Tracker

This software meets the unique business demands of the present scenario, make the working of the logistics systems smooth, and bring the required value to your business.

Freightos

The online platform for global trade management and freight booking, along with providing logistics owners with digital sales tools.

Excalibur WMS

This is a software which is fully integrated for warehouse management, accounting system, and third-party logistics (3PL) service billing.

CargoWise One

A central software system platform for worldwide providers giving logistics services.

Managing the freight invoices is definitely challenging owing to the various complexities in the form of inaccuracies and irregularities in the data and work processes, respectively. These complexities can be brought down greatly with the use of automation, outsourcing, audit systems, etc., eventually streamlining the process of freight invoice management at large, along with saving time and money at the same time.

_________________________________________________________________

Gia Glad holds the position of Business Content Writer at Cogneesol – an outsourcing firm offering finance and accounting services along with other value-added services to the small and mid-sized businesses globally.

machine learning

How Machine Learning Is Transforming Supply Chain Management

Supply chain management is a complicated business. A lack of synchronization or one missing entity can interrupt the entire chain and result in millions in losses.

In a market environment where businesses are continually striving to cut costs, increase profits, and enhance customer experience, disruptive technologies like machine learning offer a window of opportunity. By exploiting the enormous amount of real-time data and leveraging the cloud power, it improves decision making, process automation, and optimization. It can create an entire machine intelligence-powered supply chain model. It also helps companies improve insights, mitigate risks, and enhance performance, all of which are crucial as the global supply chain war wages on.

Gartner recently announced that innovative technologies like blockchain and Artificial Intelligence (AI)/machine learning would significantly disrupt existing supply chain operating models. In addition to advanced analytics and Internet of Things (IoT), machine learning is considered one of the high-benefit technologies. This is because it allows dynamic shifts across industries and enables efficient processes that result in significant revenue gains or cost savings. 

So, it is no surprise then that, in another industry update, Gartner predicted that at least 50% of global companies would be using AI-related transformational technologies in supply chain operations by 2023.

There are three key ways in which these transformational technologies empower businesses:

Monitoring: By connecting equipment, products, and vehicles with IoT sensors, companies can monitor goods and operations in real time.

Analyzing: Advanced analytics convert data into actionable insights and help businesses understand the reason behind specific incidents and how they impact the business.

Acting: Valuable insights as a result of data crunching help businesses address planning challenges and automate processes to improve efficiency.

So, adopting machine learning in supply chains is critical for companies to stay competitive in the long run. However, what aspects of the supply chain will be impacted by machine learning? Let us find out.

A Myriad of Benefits to Supply Chains

If you get the algorithms right, the benefits of using machine learning are innumerable. The algorithms can predict supply trends based on human behavior, resulting in personalized customer service with lower inventories and better utilization of resources. We take a look at several such benefits of machine learning below.

Brings Real-Time Visibility Which Improves Customer Experience

According to a Statista survey, visibility is a significant organizational challenge for 21% of supply chain professionals. Visibility has been a buzzword in supply chain circles for more than a decade now and every technology so far has promised to improve visibility in some way. But, is machine learning contributing anything here? 

The combination of IoT, deep analytics, and real-time monitoring is improving supply chain visibility, helping businesses achieve delivery commitments and transforming the customer experience. By examining historical data from various sources, machine learning workflows discover complex interconnections between various processes along the value chain.

Amazon is a prime example as it is using machine learning to enhance its customer experience by gaining an understanding of how product recommendations influence customers’ store visits.

Cuts Costs and Reduces Response Times

As per Amazon’s regulatory filing in 2017, their shipping costs increased from $11.5 billion in 2015 to $21.7 billion in 2017. And, it’s not just Amazon. Many other players are struggling because of rising shipping costs. In fact, in one survey, more than 24% of supply chain professionals expressed that delivery costs are the biggest challenge for B2C companies.

By applying machine learning to handle demand-to-supply imbalances and trigger automated responses, businesses can improve the customer experience, while minimizing costs. Operational and administrative costs can also be reduced by integrating freight and warehousing processes and improving connectivity with logistics service providers.

Machine learning algorithms’ ability to analyze and self-learn from historic delivery records and real-time data helps managers and dispatchers optimize the route for each vehicle. This allows them to save costs, reduce driving time, and increase productivity. 

Machine learning can also be used to detect issues in the supply chain before they disrupt the business. Having an effective supply chain forecasting system means a business has the intelligence to respond to emerging threats. And, the faster a business can respond to problems, the more effective the response will be.

Streamlines Production Planning and Identifies Demand Patterns

When it comes to machine learning’s role in optimizing complex supply chains, production planning is just the tip of the iceberg.

Sophisticated algorithms are trained on existing production data in such a way that they start identifying future buying, customers’ ordering behavior, and possible areas of waste. This helps businesses tailor production and transport processes to actual demand as well as improve their relationships with specific customers.

For example, by anticipating and acting on the specific needs of your customers before they even arise, businesses can establish themselves as reputed brands capable of recognizing customer needs. 

There is so much volatility in global supply chains that it will be challenging to forecast demand accurately, without technologies like machine learning. However, reaping the full benefits of machine learning might take years. So, businesses should plan for the future and start taking advantage of the machine learning solutions available today.

Investing in machine learning and the related technologies today means increased profitability and more resources for your business tomorrow. Businesses that can use machine learning in their supply chains will have better plans, resulting in less “firefighting” and fewer inefficiencies.

 

Intermodal Expo

Intermodal Expo Brings the Best in Business and Expertise

September 15 marked the first day of this year’s IANA Intermodal Expo in Long Beach, California. This is no ordinary expo, however. While more than 125 exhibitors and 60 plus intermodal experts in attendance, this conference covers all bases for three days each year, leaving no unfinished business. It’s no wonder why some are referring to the paramount event as “all-encompassing” while addressing all tiers of business.

Whether you’re interested in learning about the latest and greatest in intermodal solutions or seeking the expertise from an industry expert on strategic planning, IANA’s Intermodal Expo undoubtedly provides a clear view of where the industry stands while navigating the current landscape.

Among leading companies in attendance discussing the latest and greatest topics, business strategies, trends, and solutions in intermodal and supply chain include Loadsmart, Armstrong & Associates, SeaIntelligence Consulting, Canadian National Railway (CN), United Parcel Service, BNSF Railway, and many more.

Technology and automation continue leading trends as more companies continue to report increasing demand for the capabilities, efficiencies, and opportunities enabled through innovation

“There’s always a force in this space right now that changes everything and one needs to be cognizant of that force,” explained Jeffrey Leppert, Senior Vice President, Capacity Solutions, Redwood Logistics during the “Growth Strategies for Non-Asset 3PLs session.

Maintaining an advantageous position against competitors in an evergreen business landscape can be tricky. Hunter Yaw, Vice President of Product Management and Business Development, at Loadsmart addressed this topic head-on, leaving all apprehensions aside.

“We focus on what systems our customers are currently using and we integrate a lot with major TMS systems. We could ask folks to come  to us one way or another but, the reality is… we’re much better off partnering with the existing players in the industry and teaming with them to add more value within the current system’s framework rather than try to reinvent the wheel across the board.”

As the final day quickly approaches, Intermodal Expo will resume at 8 a.m. sharp on Wednesday with the Intermodal Safety Committee Meeting followed by the Operations Committee Meeting.

Global Trade Magazine will continue participating throughout the remainder of the conference at booth 812 ready to discuss your business goals for growth and expansion. Come by and see us for the final day of Intermodal Expo 2019!

Accounts

How to Overcome the Struggle of Multiple Account Reconciliations

How does a company end up with dozens, or even hundreds of
bank accounts? It’s not an uncommon situation for a large
enterprise, especially in industries such as hospitality, construction, or healthcare, where there are multiple locations and business entities under one umbrella. Or, maybe the company has grown by acquiring other companies, as is common in high tech, and they centralize accounts payable but retain the separate bank accounts. According to the 2019 AFP Payments Fraud and Control Survey, 83% of companies with over a billion dollars in revenue have more than five payment accounts, and 46% have more than
25 accounts.

No matter what the reason, making payments from multiple bank
accounts creates a lot of complexity in AP. It makes cash management difficult, increases the risk of errors and fraud, and
creates an ongoing nightmare when it comes to reconciliation.
Fortunately, new payments automation technology can help
address the challenges of making payments from multiple
accounts.

Multiplying by Four

Most companies are contending with four different payment
workflows—check, card, ACH and wire, or five if you’re doing
international payments. Basically, you can multiply the number of bank accounts by four or five, and that’s how many processes you
have to manage.

But at least those processes are pretty standard. A check is a
check; a card is a card; NACHA sets the standard for an ACH file;
and a wire is a form fill on a bank portal. With payments
automation technology, you can wrap all of those workflows
together in a single dashboard. Payment is intelligently routed
from each account by the most advantageous means—you no
longer have to care what type of payment the vendor accepts. It’s
all taken care of for you.

Exponentially More Convoluted

The big win though, is on the back end, when it comes time to true
up the payments leaving each account with the general ledger. The
dirty little secret, known only to accounts payable professionals, is
that there is no standard for a reconciliation file—or even a
requirement to send one.

Each bank and card provider can send it in a different format, with
different information, or not at all. That makes reconciling
payments data with the accounting or ERP system—or multiple
accounting or ERP systems—exponentially more convoluted. It’s no longer X number of payment types times Y number of bank
accounts. It’s a different procedure for almost every type of
payment and/or bank or payment provider.

That amount of complexity and manual work inevitably leads to a
higher error rate. And, it opens you up to more instances of fraud.
According to the AFP survey, 72% of organizations with $1 billion or more in revenues and more than 100 payment accounts
experienced attempted or actual payment fraud.

Since daily reconciliation is cited the top defense against fraud at
companies of all sizes, consistently receiving standardized, easy-to-
digest reconciliation reports would help mitigate the fraud risk
associated with multiple payment accounts.

Filling the Data Gaps

Now there’s an opportunity to partner with Fintech companies in
order to help with that transfer of data. Up until recently, the only
way to reconcile multiple accounts was by throwing a lot of people
at the problem, or by bringing in a shared services provider.
Fintech business payments providers are leveraging the cloud,
APIs and online supplier networks to fill the gaps in workflow
automation and data transfer that have been left by banks and
traditional financial services firms.

You can easily make payments—including international
payments—from multiple bank accounts, and push a standardized
reconciliation report back to each, all in one easy process. Some
payment platforms can even push card rebates back into the right
accounts.

This is all possible when your payment provider stores payment,
bank, and vendor data in one cloud platform, and can use
technology to automatically match all the data up, pour it into a
uniform report, and push it back out to the payee. That’s
impossible when you’re working directly with lots of different
banks and payment providers, because no one entity has visibility
into all of the data.

There are a lot of reasons why it makes sense for a company to
have multiple payment accounts, but nobody thinks much about
the pain it’s going to cause in accounts payable. It’s one of those
hidden back office problems banks and traditional financial service
providers have never been able to solve, so accounts payable
professionals have found a way to live with it. Nowadays though,
there are ways to live without it.

_______________________________________________

Mike Fortmann is the Vice President of Sales, Southwest Region at
Nvoicepay. He is an accomplished payment industry expert with more than five years experience in delivering scalable payment solutions.

TMS

Signs You’re Ready for a Transportation Management System and What to Look For in Finding the Right One

The transportation management system (TMS) market is growing globally, and for good reason. Common objectives like controlling costs, establishing internal efficiencies and managing capacity restrictions have established the need for technology that provides uninterrupted visibility across the supply chain and helps streamline operations.

In fact, in Gartner’s first Market Guide for Real-Time Visibility Providers, published November 2018, supply chain leaders surveyed for the report ranked visibility as the highest priority in the supply chain.

But it’s not simply a given.

Especially in today’s volatile global trade climate, having a TMS in place can ease the burden on transportation leaders to ensure goods get to their destination on time without crippling costs. The modern supply chain requires the flexibility and scalability provided by transportation management systems.

Knowing when a TMS is right for your business

A growing business means more robust transportation needs. Being equipped to manage the increased volume and complexity is crucial, especially as you onboard new customers, some of which likely have strict retail compliance policies that can result in fines and penalties for not following suit.

Greater complexity in your transportation needs also means the need for greater visibility. If you can’t confidently say you know where all of your shipments are at a given time, it’s time to consider a TMS. Implementing a TMS arms your business with visibility and provides the real-time information needed to also keep customers informed. That access to real time data and insight is not merely a nice to have, as it was in the past. With trade volatility on the rise, the ability to stay informed and to make quick pivots is imperative. Those who can accurately see the whole picture at the click of a button will surpass the competition as they rush to make less informed decisions.

In addition to business growth and the complexity that comes with it, a TMS is an especially crucial tool to have in place if your business is considering M&A activity. As shippers are suddenly faced with the myriad challenges that comes with integrating disparate systems, having a TMS in place serves as a binding source for systems and data.

I know I need a solution. What now?

TMS solutions have become more robust and powerful over time while also decreasing in price. This has made them more accessible to companies of all sizes, especially given the ability to get them up and running quickly thanks to cloud-based software.

A few questions to consider as you think about which kind of TMS to purchase are: What key pain points am I hoping to address? Do I want a standalone TMS solution or a TMS and a 3PL that can I partner with to manage my logistics needs? And how do I ensure disparate systems are cohesively integrated?

Businesses will commonly implement a TMS to increase supply chain visibility and operational efficiency, integrate disparate and/or legacy systems, optimize costs and have access to detailed analytics and reporting. To achieve these goals, you’ll want a solution that includes the following:

-End-to-end automation and dynamic collaboration so you can seamlessly manage your entire supply network, across all modes;

-Detailed shipment visibility providing insight around pricing and load management to ensure your shipments are delivered on time and on budget;

-Actionable business intelligence and analytics that can provide the immediate insight needed to make better shipping decisions;

-A healthy carrier network of local, regional, and national multimodal carriers to provide services on a shipment-by-shipment basis or dedicated lane opportunities. If you opt for a managed TMS, your provider can help you pinpoint more efficient routes, cost reductions and opportunities to explore new markets versus needing to do that work internally.

As transportation management technology has advanced in recent years, the price of transportation management systems has dropped, offering businesses of all sizes the opportunity to take advantage of the myriad benefits. From providing an unprecedented level of visibility to compelling opportunities for cost savings and increasing operational efficiency, the decision to adopt a TMS in today’s uncertain global trade environment should be an easy one.

Ross Spanier is senior vice president of operations at GlobalTranz, a leading technology and third-party logistics solutions company providing award-winning Transportation Management System (TMS) products to shippers, logistics service providers and carriers.

FinTech

FinTech: 5 Automation Trends That Are Impacting the Industry Right Now

The FinTech industry is rapidly moving toward automation as a source of efficiency. The move to specific tools and software programs increases speed and accuracy of processes. It also keeps employers on their toes as they need to quickly evolve and learn. Many of these programs previously required specialized training and adaptability.
Automation helps with repetitive procedures and simplifies complicated tasks. It increases accuracy and safety measures, while minimizing human error. Expectations indicate that the FinTech industry will extend its tech integration significantly over the next four years.
Here are 5 automation trends that are impacting the Fintech industry right now:

1. Human Resources Management: This used to be one of the least automated components, but now software like Workday and 15Five are building platforms to assist workflow with related systems that support employee management. Finance companies increasingly recognize that their people are the most valuable resource and need to be managed more thoughtfully as well as efficiently.

2. Mobile: Finance companies now consider mobile oriented tech as part of the core work-flow. The industry relies heavily on its ability to get work done efficiently. FinTech continues to utilize software which speeds up communication and productivity. Mobile used to be considered a security risk by the financial industry. Now it is considered a way to enhance productivity as well as provide more flexible workflow for employees.

3. Customer Support: More automation is taking over customer service. This support has advanced tremendously with certain software programs that include internal systems to support customers. Software systems such as Fresh Desk and Zen Desk are cutting down on the head count needed for customer service departments in some companies. But more importantly these new systems are improving the customer experience and the lives of the people working in those departments.

4. Billing/Invoicing: Payments systems like Stripe, invoicing and billing systems like Freshbooks, and more advanced ERP systems Netsuite are examples of programs that continue to reinvent the way FinTech is automating business functions. Although many companies are still at least partially stuck in the past of creating manual invoices and payments, these automated systems are increasingly taking over. Both the customer and the vendor win with greater automation in this area. Vendors cut costs and get paid faster. Customers benefit from this greater efficiency of vendors with lower prices or higher value delivered for their purchases.

5. Accounting: Xendoo, Zoho, Quicken online and other systems automate are automating the accounting, bookkeeping, and tax filing functions of businesses. Traditional accounting software, and human bookkeepers and accountants, still have an important role to play in this area, but the accounting business is rapidly changing as well due to technology. The number of people involved with these activities is likely to shrink dramatically as automation takes over more of these functions. Ultimately businesses and their customers will benefit from this via lower operating costs that allow for better value to be delivered rather than spent on administrative functions like accounting.

It is crucial for companies of all sizes to be knowledgeable about this trend and keep their business updated as automation continues to reinvent Fintech industry jobs. You have to be able to adapt quickly to these changes. Our previous ideas and habits of doing business are changing, and we have to keep up with those changes or be left behind by competitors who will adapt more quickly

Automation is impacting Fintech employees in a variety of complex ways so it’s critical for employees to have a greater understanding of and training on different software systems to ensure they keep up with the automation and benefit from it rather than viewing it as a potential threat to their jobs. There is no way to stop technology. All of us need to work hard to stay on the right side of its inevitable progress.

auto purchases

Auto Purchases Reveal New Consumer Trends

Same-day shipping, orders at the click of a button, e-commerce, automation, are all elements that strive to meet the ever-demanding market of consumers with Amazon standards, speed, and accuracy. While many millennials learn to adapt to this consumer culture, Gen Z understands it as a common standard.

Global Trade Magazine had the opportunity to take an inside look at how Gen Z is transforming auto purchases in an exclusive Q&A with Grant Feek, co-founder and CEO of TRED.

Why are consumers, particularly Gen Z consumers, moving away from the traditional auto purchase approach?

“Firstly, our data suggests that gen z consumers are very interested in owning and driving vehicles. Many prognosticators conflate the pending adoption of automotive technologies, such as autonomous drive, with a pending decline in car ownership rates – we don’t see the latter trend in our data.”

“Secondly, our data suggests that gen z consumers are more likely to purchase and sell vehicles in non traditional ways – we suspect that this trend has less to do with gen z’s overt aversion to buying a car traditionally, and more to do with the facts that gen z is (1) more comfortable using computers / trusting online marketplace technology and (2) less engrained in the pre-existing traditional vehicle purchase / sale process. In the same way, gen z’ers are more likely to have groceries delivered, rent clothing, hold cryptocurrency, etc.”

What is it about a dealership consumers are trying to avoid?

“Our data suggests that the #1 complaint with the traditional dealership buying experience, for all consumers (not just gen z), is that it takes too long. We also hear a lot of complaints about pricing.”

What negative associations are seen with Gen Z consumers and new car purchases?

“I don’t think that gen z sees negative connotations associated with car buying so much as gen z has more progressive consumer expectations. It’s important to keep in mind that these kids grew up with iPads in their laps and Amazon Prime at their fingertips. They’re conditioned for internet research and purchase convenience from birth.”

In what ways will the industry have to change to capture the attention of Gen Z consumers?

“Today the technology exists to allow consumer counter parties to deal directly with one another, without the middleman, while still enjoying the vehicle assurances and payment conveniences that they would get at the dealership. We think that’s the future of used car buying and selling for gen z in the US, as well as for everyone everywhere.”

What are the unique needs Gen Z brings to the auto industry? Are they realistic? Will they eventually phase out? 

“In the used car space, gen z buyers expect price transparency, vehicle history information, vehicle inspection information, the option to test drive, payment options, vehicle service and GAP options, and transaction assurance. Gen z buyers and sellers expect the very best of value. We don’t think these trends will phase out. We think the next generation will be even more “demanding” than is gen z.”

In what ways are peer-to-peer car marketplaces changing the game?  

“Peer to peer car marketplaces change the game because they put thousands of dollars per transaction back in the pockets of consumers – you can see Tred’s real time savings data here. In this way, we believe that peer to peer marketplaces will change how many high ticket products are transacted in the coming years: cars, motorcycles, RVs, yachts, boats, bicycles, homes, etc.”

blockchain

BLOCKCHAIN COULD REPLACE MOUNDS OF PAPER AT THE BORDER

This is the third in a three-part series by Christine McDaniel for TradeVistas on how blockchain technologies will play an increasing role in international trade.

What’s Even Better Than No Tariffs?

Smoother and faster customs procedures could boost global trade volumes and economic output even more than if governments were to eliminate the remaining tariffs throughout the world – up to six times according to an estimate by the World Bank.

Blockchain is a promising technology that, if widely adopted by shippers and customs agencies, could reduce the current mounds of paperwork and costs associated with import and export licenses, cargo and shipping documents, and customs declarations.

Below the Snazzy Surface of Trade Policy

Trade agreements work when the people who want to buy and sell across borders can use them. Engaging in international trade transactions requires diving into the rules and regulations of international customs processes. Businesses either have someone in-house to handle this or they hire companies whose business it is to manage these processes.

Moving goods through the customs process means preparing the relevant paperwork for import or export at each step in the process. The paperwork at each step must be confirmed and verified, sometimes separately by different people. These procedures — in rich and poor countries alike — can be complex, opaque and laden with inefficiencies that raise costs and cause delays at best. At worst, less automated processes can leave the door open to corruption and security breaches.

paperwork in shipping

Trade policymakers have increasingly focused on simplifying and modernizing customs procedures — a policy approach commonly known as “trade facilitation.” Nearly all modern free trade agreements have a trade facilitation chapter and the World Trade Organization has an entire Trade Facilitation Agreement devoted to eliminating red tape at national borders to streamline the global movement of goods.

Too Much Paperwork

The international shipping industry carries 90 percent of the world’s trade in goods but is surprisingly dependent on paper documentation. In a New York Times article, Danish shipping company Maersk commented that tracking containers is straightforward. It’s the “mountains of paperwork that go with each container” that slow down the process.

A shipping container can spend significant time just waiting for someone to cross the t’s and dot the i’s on the paperwork. Delays pose real costs to traders and represent a deadweight loss of resources that could have been spent elsewhere in a more productive manner. The cost of handling documentation is so high that it can be even more expensive than the cost of transporting the actual shipping containers.

Beginning in 2014, Maersk began tracking specific goods such as avocados and cut flowers to determine the true weight of compliance costs and intermediation. The company discovered that a single container moving from Africa to Europe required nearly 200 communications and the verification and approval of more than 30 organizations involved in customs, tax and health-related matters. Maersk’s office in Kenya has storage rooms filled from floor to ceiling with paper records dating back to 2014.

single container paperwork v2

Lost Opportunities

Inefficiencies in customs processes create chain reactions, extending the costs and inefficiencies throughout the transportation industry and all the way to the consumer. In just one example, as many as 1,500 trucks might be lined up on a given day on both sides of the critical border crossing between Bangladesh and India. Many trucks wait up to five days before crossing. Examples like this are not hard to find in developing countries.

Delays for perishable items are painfully costly for traders, but also for consumers. Economist Lan Liu and economist and horticultural scientist Chengyan Yue examinedlettuce and apple imports in 183 countries. They determined that reducing delays from two days to one would increase lettuce imports in those countries by around 35 percent, or an additional 504,714 tons of lettuce, increasing in world consumer welfare by $2.1 billion. The same improvement would increase apple imports by 15 percent, enabling shipment of an additional 731,937 tons and increasing consumer welfare by around $1.1 billion.

Complexity Makes Corruption Easier

Fraud constitutes a major threat to the customs process. Fraudulent behavior can involve the forgery of bills of lading and other export documentation such as certifications of origin. A fraudulent shipper could claim “lost” goods, underreport the cargo, and steal the difference. Or a shipper could misrepresent the amount or quality of shipped goods and pay less than the required amount for their imports.

Fraud can be perpetrated by a shipper, by the receiver of goods, a customs official, or an interloping third party. The greater the complexity of customs procedures and the more discretion granted to customs officials, the more likely corruption will be present at the border, creating both risk and costs for companies working to avoid corruption.

Indeed, corruption acts as a “hidden tariff” for companies and reduces legitimate customs revenue for governments. The World Customs Organization estimates the loss of revenue caused by customs-related corruption to be at least $2 billion.

Blockchain Makes Corruption Harder

Blockchain is a digital distributed ledger that is secure by design. Each transaction in the shipping process is uploaded to the chain if (and only if) it is agreed upon by the other users. It is nearly impossible to make a fraudulent claim or edit past transactions without the approval of the other users in the network.

Blockchain could discourage corruption by simplifying procedures and reducing the number of government offices and officials involved in each transaction. Each transaction can also be audited in real time, allowing users to see exactly when and where disputes arise and exactly what the discrepancies are.

This level of transparency enables participants in the network to hold each other accountable for mistakes or purposeful deception. Though blockchain does not prevent false information from being entered into the system, it does reduce opportunities for the original information to be corrupted by intermediaries involved in the shipping process. Rather than parties relying on the good faith of shippers and customs agents, blockchain greater assurance of the integrity of each transactional record.

Blockchain technology in customs and border-crossing procedures could also be used to prevent circumvention and transshipment—that is, when shippers send goods to a neighboring country before the destination country in an attempt to avoid tariffs on goods from the real country of origin. The importer ends up liable for duties and penalties. (For example, some exporters from China are now sending finished products through Vietnam to avoid new U.S. tariffs on goods from China.)

All In on Blockchain?

The use of blockchain in customs processing is still nascent. An advisory group for U.S. Customs and Border Protection is broadly exploring the role of emerging technologies like blockchain.

IBM and Maersk have partnered to demonstrate how blockchain can simplify shipping. Their plan would allow all parties involved in a container’s shipment to observe and track the container from inception to endpoint. For example, after a customs agent verifies the contents of a container, they can immediately upload information to the blockchain with a unique digital fingerprint that visible to all other users. The ease of access to information throughout the blockchain system reduces time-consuming correspondence among the parties.

For all this to work, customs agencies, shippers and suppliers will have to cooperate to integrate blockchain technology along the supply chain and across borders. By reducing time and cost, blockchain could be a boon to the majority of honest global shippers. By providing greater accuracy and transparency, blockchain would be a bust for dishonest brokers who manipulate the current inefficiencies in customs procedures to commit fraud or gain from corruption.

ChristineMcDaniel

Christine McDaniel a former senior economist with the White House Council of Economic Advisers and deputy assistant Treasury secretary for economic policy, is a senior research fellow with the Mercatus Center at George Mason University.

 

This article originally appeared on TradeVistas.org. Republished with permission.

Resilinc: AI to Support Weather Risk Assessment & Mitigation for Suppliers

Leading provider of supply chain visibility, Resilinc, identified a major oversight in terms of weather-related risk assessment and preparation within the supply chain. The company released surprising statistics revealing how unprepared supply chain suppliers are during potentially disruptive events such as hurricanes and weather-related catastrophes, sparking the deployment of an AI and data sciences-based hurricane-preparedness solution to better prepare supply chain resilience.

Among the statistics revealed in the Resilinc supply chain database, 35 percent have poor logistics recovery, 27 percent of supplier sites lack business continuity procedures, and 37 percent have no backup power.

Unfortunately, it comes as a surprise to many supply chain managers that a large proportion of their suppliers are woefully unprepared to withstand major disruptive events like hurricanes,” said Sumit Vakil, Resilinc CTO. “This lack of transparency is especially true in the sub-tiers of a supply chain.

More than seven years of supply chain and hurricane data in conjunction with the company’s expertise was combined to create a customized, automated solution for avoiding and assessing the risk at hand in the face of hurricane-related disasters and weather-related disruptions.

The company outlined the following core capabilities of the solution to include: multi-tier supply chain mapping down to the product and part-level, supplier surveys and site readiness assessment, dashboard incorporating AI and recommendations, and ongoing monitoring throughout hurricane season featuring real time supplier impact confirmation during live events.

Taking it a step further, Resilinc’s solution will evaluate customer key metrics, supplier site vulnerabilities, regional hurricane risks, revenue risks, and more.

“Based on data, heuristics, history and other factors, Resilinc will come back with very specific recommendations, such as ‘move inventory from that site,’ or ‘evaluate your safety stock for that part,’ to provide clients specific targeted recommendations to mitigation action and protect revenue,” said Resilinc Senior Director Jon Bovit.

Source: Resilinc

new tech

How To Introduce Employees To New Tech

New technology solutions can have a positive impact, not just your how you work, but on your office culture. Sometimes new platforms that drastically change your regular processes can intimidate and alienate workers who are used to working in traditional systems and procedures.

It’s normal for workers to at first be apprehensive to big changes when they’ve grown used to the way things have been done for years. That’s why it’s important to see things from their point of view and understand that change is tough.

Help Them See The Value

When introducing new tech solutions to your colleagues, it’s important to make them understand why you’re implementing it and what it will do for the business. Explain not just how it will benefit the business in general, but how it will benefit their specific roles and what the impact will be.

If it’s a tool that’s meant to streamline a certain process, be sure to impress on them that the time saved will allow them to focus on more and grow their roles. If it’s a solution that’s meant to free up more resources, discuss with them how they now direct that saved budget and labor to more productive things. If they can see the value it will bring to them as an individual, you can make them excited to learn more about it and look forward to its implementation.

Document management solutions represent a big shift in how businesses interact with their documents, especially if you’re transitioning from a mostly paper-driven structure. However, it’s a technology that vastly improves business processes by introducing tools like automation and intelligent organization.

Make a Plan and Keep Them In The Loop

Many big tech solutions require time for implementation and onboarding. It rarely happens overnight, so having a roadmap for implementation is essential to make sure it all goes smoothly. More importantly, staying transparent with your employees on this roadmap is helpful in easing them into the new system. Letting them know what they can expect during the implementation period can give them ease and let them know that they have time to get used to the transition rather than just diving in.

Give Them Time

New technology always has a learning curve, and this is especially true for those who aren’t used to working with it as part of their job. While some are quick learners and early adopters, there is an equal number of those who have more of a struggle learning how things work. They won’t get it overnight, so it’s important to be patient and encouraging. A transitional period where they’re still allowed to get their job done the old way while learning the new way is encouraged if possible. As long as they’re willing to learn and not resistant, it’s worth it to let them grow at their own pace, all while providing the necessary support such as additional training and mentoring.

Incentivize

If some employees are more resistant than others to adopt new platforms, it doesn’t hurt to throw out some incentives to encourage them to embrace the change. Having perks such as free lunch with training will make those employees a little more enthusiastic about attending those meetings.

Get creative with tying small rewards to the use of the new tech solution as well as implying bigger forms of recognition for demonstrating proficiency and enthusiasm for the new system. Letting them know that the skills learned from training will reflect across their entire career and showcase their adaptability.

Listen to Them

Taking in feedback is an important part of any business decision, not listening to your employee’s opinions and concerns about adopting a new tech solution. Encouraging an environment where your colleagues can discuss freely their experience with the current processes and how introducing a new factor that will impact those processes will help inform how you build out your implementation roadmap and how you go about training. Being open to their ideas of how to transition and addressing their concerns will make them feel part of the process and not feel like it’s being forced upon them.

Jesse Wood is the CEO of eFileCabinet, a best-of-breed advanced document management system that improves the lives of people, small to enterprise-level businesses, and their clients. Wood has 20 years of leadership experience innovating custom technical solutions for a wide range of business applications.