January 12, 2007 — As we settle into the New Year, many of us have made resolutions as we strive for continued growth and improvement. At this time of self-reflection, why not take a look at your business operations as well?
Below is a self evaluation quiz that touches upon several key supply chain issues that are sometimes overlooked. Created by the global supply chain experts at JPMorgan Chase Vastera, the quiz is designed to help you gain greater insight into some of the strengths and potential weaknesses of your current supply chain operations.
Upon finishing the quiz, if you find that you have responded with more "no" than "yes" answers, 2007 may be the time to transform these gaps into opportunities for improved supply chain management and greater profitability.
1. Design of your Global Supply Chain Network should align with your customers' requirements and expectations. The customer needs to drive the design of the supply chain, as any misalignment with customer expectations can result in lost sales, unhappy customers and product delivery failures. A well-designed and successfully implemented supply chain is a competitive weapon that can result in increased sales, reduced time to market and increased cash flow.
- Does your supply chain management team regularly review customer expectations (service levels) for all sales channels?
- Are customer service levels understood, and is the supply chain designed to meet them?
- Are corrective and preventive actions timely when customer service level failures occur?
2. Supply Chain exception management processes should drive action.
- Is information about the goods in the major trade lanes made available to supply chain operations?
- Are processes in place that allow alternative actions to be undertaken based upon the information provided?
- Have key supply chain information and data collection points been identified?
3. Sourcing decisions should consider the impact on customer service and profit — not just unit cost or landed cost.
- Are global sourcing and landed cost tools used to assist in sourcing decisions?
- Are these tools or models comprehensive and include all the cost and risk elements?
- Do you model a range of possible costs through the lifecycle of the product? Or just calculate based on the "perfect order" in an assumed steady state?
4. A single function should be responsible for establishing the value of imported goods and must reconcile financial input from all sources of supply.
- Are the processes and procedures for valuation determination and declaration documented and integrated into company operations?
- Is there a process in place for ensuring that required additions to transaction value are captured and reported (assists, proceeds of subsequent sales, royalties, license fees, selling commissions)?
- Are packaging and transportation values considered and correctly included or withheld from transaction value?
- Is product valuation regularly audited?
5. Harmonized tariff schedule (HTS) classification processes for imports should include an audit trail of information used in determining the HTS and metrics to monitor accuracy.
- Are the processes and procedures for the company's product classification documented and integrated into company operations?
- Is the classification information and rationales maintained in a database or matrix and provided to the broker?
- Are classifications tested and audited on a regular basis?
- Has your company addressed the new HTS reclassification requirements?
6. C-Level executives must actively support trade compliance and empower their supply chain executives.
- Is there a documented company trade policy from the CEO?
- Are there documented compliance programs processes and procedures?
- Is there employee compliance awareness training that includes executives?
- Are there defect metrics on key compliance and trade processes?
7. Trade compliance processes must be integrated with supply chain processes.
- Are there documented processes and procedures that define each function's responsibilities in trade?
- Are trade metrics part of normal operational performance reviews?
- Is there employee compliance awareness training and defined roles and responsibilities?
- Are regular internal audits conducted?
8. Unique data that facilitate trade should be accurately created once, stored in a central location and used over and over again.
- Are trade data created and stored in a centralized location?
- Are trade data easy to access? (This includes classification, country of origin, certificates of origin, historical transactions, government inquiries and responses.)
- Are NAFTA certificates of origin easy to locate?
9. Export determination, the process of determining the appropriate government authorization for your transaction, must be performed on all export shipments.
- Do you make proper export determinations at the individual transaction level?
- Do you screen all of your customers, suppliers, distributors, forwarders, brokers, bankers, etc., against the various "bad guy" export lists at time an order is placed and again prior to shipment?
- Do you perform export determination for each hand-carry, temporary export, release of technology, etc., that is outside the normal revenue shipment stream?
About the Author: www.vastera.com