By Wayne Slossberg
Organizing corporate global trade management (GTM) information is the single biggest challenge facing firms engaging in global trade. Too often, companies attempt to "manage" critical data by entering them within spreadsheet columns. While spreadsheets serve many valuable functions, they inherently lack internal controls. It is difficult to track who accessed them, who made changes, what changes they made and when. When spreadsheets are linked — as they often are — the cascading effect of one misstep can be enormous.
Most companies will give compliance personnel access to the corporate enterprise resource planning (ERP) system, allowing them to enter some product data and perhaps even the related Harmonized Tariff Schedule (HTS) codes used to determine tariff classifications for importing goods into the United States. However, ERP systems are limited in the trade functions they can perform, putting corporate compliance at risk.
For example, consider the case where a firm manufactures the same product in multiple countries concurrently. Different regulations apply to the same product in each locale, and different compliance documentation requirements exist. How do you manage that with a spreadsheet or an ERP system? If you get a binding ruling on a specific product, how do you attach that ruling to the product? If HTS codes change, how do you manage those revisions in an update?
On the vendor side, you might want to screen your manufacturers. You also may want to manage their C-TPAT certification. How do you do that? As concerns exporting, you must ensure that product is not being shipped to entities on denied party lists or is a restricted item that needs a license. How do you verify that? Neither spreadsheets nor ERPs are equipped to perform these tasks. Only GTM technology possesses the required functionality to perform the many diverse tasks compliance demands.
Then, too, there is the issue of sourcing. Given that the impetus for global trade will only continue to grow — and economic pressures increase to manufacture in locales that are cheaper — a key question will remain, "Where are you going to source?" GTM technology — especially with an Automated Broker Interface (ABI) connection (more on this below) — offers a quick way to gain a comprehensive global sourcing look without a lot of painstaking research. How do you identify all the countries offering special programs and compare them? Getting a fix on landed costs can be difficult and time consuming, because you must not only look at the comparative cost of freight using different freight forwarders and brokers, but also the breakdown of harbor fees in different ports within and across countries. GTM software can typically deliver comparative data quickly with minimal effort.
However, acquiring a GTM system often is beyond a firm's budget or simply not a priority item among its C-level executives. So is there an alternative strategy compliance staff can pursue? Yes. Implement a piece of technology, such as a compliance product database, that organizes trade information and delivers basic GTM functionality. However, be smart and select a product that provides a pathway for automating more advanced trade-related processes later on.
A product database will not only give you control over your products and vendors, but also facilitate efforts to control costs: landed costs, pricing and so on. Most important of all, you get a handle on the ever-changing customs rules and regulations and how they apply to your products and vendors. Achieving this control offers a huge business advantage to companies, as any firm that has ever undergone a focused assessment or had product held up or destroyed because of documentation issues can attest.