Each of these examples requires re-thinking and re-engineering current business processes. The scope of these projects extends beyond the responsibility and authority of the trade compliance department as cross-functional participation is required of the procurement, logistics and information technology departments at a minimum. Some projects will also involve third parties. Executive leadership should take notice. Lack of understanding and funding today may lead to dire consequences tomorrow.
The proposed 10+2 regulations state: "If the principal fails to comply with the proposed Importer Security Filing requirements, the principal and surety (jointly and severally) would pay liquidated damages equal to the value of the merchandise involved in the default". If you have a $250,000 shipment that is in violation of the new regulations, you could be fined $250,000. Furthermore, the prospect of "scrambling" for data at the last minute will slow your supply chain, squander already limited resources and erode profits from your bottom line.
However, 10+2 can be a hidden opportunity for strategic-thinking companies. Optimizing currently inefficient business processes to meet the 10+2 requirements in the most direct, effective manner possible can improve supply chain performance, and potentially deliver a positive return on investment.
More effective management and visibility of additional trade data can:
- Improve supply chain planning
- Improve supply chain speed
- Reduce inventory requirements
- Improve visibility and controls of international transactions
- Create competitive advantage
One supply chain study ("Time as a Trade Barrier," David Hummels, Purdue University, July 2001) has estimated the cost of each additional day "in transit" is equal to half of one percent of the value of goods. Improving supply chain speed by just one day would be worth $500,000 per year for a company importing $100 million annually.
I strongly advise executives of companies importing into the United States to study the impact the newly released Importer Security Filing Proposal may bring to their companies. Best-in-class companies are funding cross-functional teams to develop a strategic enterprise-wide solution, using 10+2 as a catalyst to optimize currently inefficient processes, and creating competitive advantage in the process. Once you know the terrain, and have a good map of the road, you too can be traveling safely and efficiently down the new 10+2 highway.
About the Author: Matt Gersper, founder and president of Global Data Mining, LLC, has more than 20 years of experience optimizing processes and helping customers turn unorganized data into information managers and executives need to improve performance. He founded a practice for re-engineering and automating business processes for a worldwide leader in recovery auditing. Matt is an enthusiastic contributor to the global trade industry as an author and frequent speaker at industry conferences and events. He can be reached at firstname.lastname@example.org.