The Role of Trading Partner Integration in Achieving Compliance with Government Mandates

Learn how a business process network ties in to the success of government mandate compliance and the 10 steps your company should take to accelerate business results.


Learn how a business process network ties in to the success of government mandate compliance and the 10 steps your company should take to accelerate business results.

Corporations previously challenged to meet global requirements placed on them by customers and competitors now are experiencing additional demands in the form of government mandates. Participation of multi-national corporations in global markets, with the concurrent customs, tax and security issues, as well as an increasing trend toward regulation for environmental and investor protection, have been the catalyst for a significant number of recent regulations. The facilitation of global trade and some necessary standardization also are driving new data management requirements in an effort to facilitate efficiencies for all parties.

The milieu of regulations and new government mandates are rapidly generating new requirements around the globe. The following examples are illustrations and fall into three primary categories: financial and securities, eco-compliance, and customs/logistics shipment and data requirements.

Category 1: Financial and Securities Mandates
An example of this type of regulatory mandate is the often-discussed Sarbanes Oxley Act. This regulation in its very purest form demands that publicly traded corporations report, in a timely manner, actual or pending events that are expected to materially impact company valuation.

Category 2: Eco-Compliance
Eco-compliance mandates include the Restriction of Hazardous Substances (RoHS) and Waste Electrical and Electronics Equipment (WEEE) requirements that vary by country and region, and are being enforced to the greatest extent by the European Union (EU). In these cases, declaration of the composition of materials and the resulting responsibility for disposal and pre-payment of disposal taxes are required before goods may be sold in a regulated region.

Category 3: Customs/Logistics Shipment and Data Requirements
These requirements are wide ranging and can be targeted to accelerate the advanced or simultaneous customs clearance process (sometimes called single window) or may be more fiscally oriented, concerning the declaration, calculation or payment of value-added tax (VAT) incurred upon entry into a country or region. The World Customs Organization has developed a data model being adopted by individual port authorities at varying rates and with various modifications. Ports typically are competing for business and are seeking cost effective standardization in an effort to lure shippers, logistics service providers and transportation companies.

Note that the requirements to meet terrorism concerns also may be part of controls in Category 3, which has escalated the urgency around automation and efficiency of global logistics. An example is the required declaration of goods a minimum of 24 hours before entering a port.

All three categories of government mandates share three primary business requirements that drive compliance efforts:

1. Visibility and Collaboration — Global value chains and the sheer numbers of trading partners intensify the need for B2B visibility and collaboration. Companies must extend and automate business processes across the extended enterprise to include all external trading partners. For instance, the RoHS and WEEE mandates mentioned above require companies to gather information on materials composition not only from their suppliers, but their suppliers' suppliers and beyond. This necessitates an unprecedented level of visibility into supply chain operations and collaboration with suppliers to collect this information.

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