Turning Global Trade Compliance Into a Competitive Advantage

When you operate in more then 140 countries around the world, global trade compliance is bound to get complicated. But Tyco Fire & Security is turning that complexity into a competitive edge.


In 2001 Philbrook's team examined various solutions available to support global trade operations before finally settling on a hosted solution from a company called Open Harbor, which competes with such enablers as NextLinx, TradeBeam, Vastera and others in the international trade logistics space. Sensormatic had just begun its first implementation with Open Harbor when Tyco bought the company, although at the time Sensormatic was left largely as a standalone company, with Philbrook, by then director of logistics for Sensormatic, bearing responsibility for trade compliance for that business. Philbrook, assigned to her position as global trade compliance director, now sits in the supply chain area, but she has full-time compliance responsibility for Tyco Fire & Security.

Centralizing Global Trade Compliance

Currently Tyco Fire & Security has centralized global trade compliance in Philbrook's team with a full-time staff dedicated to protecting the company's import/export privileges around the world. Philbrook has a staff of nine people, including an import manager and export manager, both specialists in those areas, and a manager of systems and administration. She also has two staff members who operate a "hotline," available by e-mail and telephone, which anyone in Fire & Security can use to get information on trade compliance policies and procedures. "We printed plastic business cards and are distributing them through the entire business segment to let people know that we're here to help," says Philbrook. "The card has the hotline number on it, and on the back it has the ABCs of trade compliance. And the response has been wonderful. People want to do the right thing, it's just very confusing."

In addition to the hotline, the trade compliance team offers education at all levels throughout the business unit on trade compliance issues. All of the trade compliance group's documentation, manuals and training sessions are available online through the company's global intranet and are constantly updated to ensure that employees have the latest information available to them.

The trade compliance team also follows up on all the education with an internal audit called a documentary review process. "It's a good cop/bad cop kind of thing," Philbrook explains. "While we are here to provide training and support to the people, you need some teeth in your program to make sure that people are taking it seriously." The trade compliance team will randomly pull various transactions from around the globe and audit them to make sure that people are doing what they are supposed to be doing. If an issue pops up, the audit team fills out a form in detail for the head of the organization responsible for the execution, describing the error and providing documentation for retraining. Then they go back 30 days later and pull additional sample transactions to make sure they don't find repeated errors. If they do find errors, they kick it up to the next level, as well as to the legal department, to let them know there's an issue. And if they find a third issue, it goes to the head of Tyco Fire & Security and the segment's general counsel to ensure that everyone realizes the importance of the issues and the necessity for compliance.

Similar procedures apply for the segment's trading partners and suppliers. Tyco Fire & Security monitors its brokers, reports to them on their performance, and will meet with them to go over any issues, discuss any needed training and so on. In addition, the trade compliance team has prepared primers on commercial invoice requirements, country-of-origin determination and product marking, and then trained the procurement staff on the documents and required them to send that documentation to all their suppliers. Document reviews ensure compliance by suppliers and can trigger training. "For instance," says Philbrook, "if a supplier in the United States does not understand [the North American Free Trade Agreement (NAFTA)] and how products qualify for NAFTA, I would bring their staff in here and give them a full day's training on NAFTA because it would be to our benefit to do that."

Automated Screening

The Open Harbor solution has allowed Tyco Fire & Security to automate its procedures for screening each incoming order to determine whether the buyer, the buyer's country or any other party involved in the transaction is on a sanctions list; whether a license is required; or whether Tyco Fire & Security is otherwise prohibited from shipping that product to that customer. When an order comes into the company and the order-entry person inputs the order into the enterprise resource planning (ERP) system, the system sends, via extensible markup language (XML), the order details into the software solution.

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