The Anatomy of Supply Chain Technology

An informational guide to the basic technology for today's supply chains


Fortunately, the point of ultimate responsibility is easily identifiable: importers or exporters (depending on the direction of trade). Why? They alone hold the burden of legal proof, and they alone hold the obligation to pay the financial price of missteps. Therefore, importers and exporters must analyze, manage, control and troubleshoot their global supply chains end-to-end. To do so effectively, they need appropriate tools, content and a knowledge base. It is here that an automated global trade management (GTM) system can provide the invaluable competitive advantage that can lead to their company's success.

One Size Doesn't Fit All

Not all GTMs fit all SCPs. Many factors affect the suitability of a particular GTM system for a specific SCP. Nevertheless, several features approach the realm of "must haves:"

1. A centralized database. The database serves as a data warehouse for all information provided by and distributed to SCPs. To establish efficient and reliable compliance procedures, importers and exporters must possess the ability to pre-classify products, pre-screen SCPs, determine supporting documentation requirements, store documents in-house and use built-in analytical capabilities.

2. Control over information. Security, integrity and availability are critical when it comes to supply chain information. Provisions must be made to prevent redundant data, and trading partners should only be able to access information relevant to their specific activities. The Internet provides a perfect vehicle for SCPs to enter information remotely while affording companies the ability to limit their access to the full range of warehoused data.

3. Complete automation. Companies deal with massive quantities of data; quantity can originate from both the number of transactions and the size of individual transactions. To handle volumes of data, there must be seamless connections between functional modules and integration with ERP systems. Perhaps most important of all, the GTM system must allow the importer or exporter to manage trade by exception; that is, a user action should only be required when an item falls outside the parameters they set within the system. GTM systems must be able to reconcile commercial invoices against purchase orders in terms of prices and quantities; automatically create letters of credit (LCs) and associated amendments; automatically verify LC or Open Account conditions and ensure regulation compliance before releasing payment or accepting goods; automatically screen against denied party lists; and verify license determinations, among other basic capabilities.

4. Approved links to government and regulatory agencies. Only a certified automated broker interface (ABI), which links the system electronically to U.S. Customs, or similar mechanism guarantees the input of reliable, up-to-date compliance content within the GTM system.

5. Rich compliance content. To perform complex compliance verifications, identify preferential treatment programs and prepare and submit required documentation in a timely manner, the GTM must possess the full range of timely compliance material.

Execution

The execution portion of the global supply chain is notoriously prone to mishaps. Coordinating multiple SCPs across diverse cultures and distant locales adds to the unpredictability and difficulty level. Key factors that contribute to execution problems are incompatible or outdated systems and the extent to which SCPs are allowed to control their own business processes.

One Point of Control

The more centralization importers and exporters can achieve the more control they can exercise. The best way to achieve centralization is via a functionally integrated, supply chain-wide system with the following essential features:

1. Diverse, integrated modules with rich functionality. Ideally, the GTM system should possess a separate module to perform each different function across the supply chain continuum from start to finish. These different modules should allow importers and exporters to not only source products and issue purchase orders but also manufacture, export, transport, import and distribute goods. At a minimum, financial, procurement, logistics, inventory, global visibility, exporting and importing modules are necessary.

2. Predefined integration points. Given the heterogeneous interfaces a GTM system must accommodate, flexibility is paramount. The system must possess multiple, predefined integration points in and out of the system to accommodate the many integration formats inherent in EDI/EDIFACT/XML and a host of other proprietary solutions.

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