by Beth Pride
QuestaWeb is thrilled to post a guest blog written by Beth Pride, president of BPE Global. Beth is an expert in global trade and logistics with 25+ years of operational experience. She assists her firm’s clients in developing global trade strategies and implementing a strong global trade posture.
I am often asked: What are the biggest barriers to global trade management (GTM) solution acquisition in most companies? In my experience, firms that haven’t invested in GTM technology cite two primary reasons. The first, predictably, is a lack of funding and/or internal resources. The second, and perhaps more important reason, is a lack of visibility or understanding of the potential return on investment (ROI) possible from GTM technology.
It goes without saying that GTM solution providers should clearly delineate the sources of ROI their products afford. However, in reality, lack of budget for technology is often the prevailing reason why importers and exporters do not have automated systems.
Most companies want a GTM system, but other IT projects always seem to take priority. And, the real world being what it is, most firms are not motivated to obtain GTM technology until a compliance or operational failure occurs. Then, when the resultant penalties or bottom-line hits occur, it suddenly becomes time – and a priority – to invest in a GTM solution. It is very common for supply chain activities to take a back seat to the needs of sales and marketing. While that attitude is changing, organizations that haven’t carved out a budget with money allocated to automate processes like import and export compliance are typically the ones that are cumbersome and fraught with inaccuracies.
Even though budget is a definite barrier to acquiring a GTM solution, there are things that global trade management practitioners can do to overcome this hindrance. They can measure operational costs today and then identify and quantify the ROI to be gained by implementing a GTM solution. That way, the technology request will have a strong rationale whereby the allocation of funds makes financial sense. Don’t just rely on the vendor’s ROI estimates. Consider engaging a financial analyst who understands these costs in their entirety. Identify the spend between internal headcount, external outsourcing of headcount and investment in systems. There should be an identified point at which hiring of an internal resource or investment in a GTM system is not only justified, but also a common-sense decision.
Some common ROI sources include increased duty avoidance, decreased taxes, reduced inventory carrying costs, reduced headcount (actually it’s better to position this ROI as “allowing headcount to work on higher-level strategic initiatives” instead of being cut), reduced cycle time and increased sales.
Check back for Part 2 in this series: “Getting the ‘Green Light’ to Acquire a Global Trade Management System.”
