by Beth Pride
QuestaWeb is pleased to post the second in a series of guest blogs 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.
Most procurement decision are made in the C suite. By this I mean, the CEO, CIO, CFO, COO or some combination thereof gives the thumbs up or down on technology acquisitions.
Generally speaking, the C suite does not understand the value of global trade compliance to an organization. Let’s face it, most individuals in senior management don’t have a grasp on what trade compliance is much less why it is important. There aren’t any business schools that train leaders in trade compliance, so it’s up to trade compliance practitioners to provide those lessons, especially when the need for global trade management (GTM) technology is under consideration. It is up to trade practitioners to speak the language that resonates in the boardroom and gets leadership’s attention. Nothing is more effective – or carries more impact – than ROI.
Consider the following two scenarios: You walk into the IT project approval team meeting and say something like “We need a GTM solution because it’s against the law to sell our products to embargo countries.” In all likelihood, the team will deny approval saying “Just block those countries in the ERP system.” Alternatively, consider the impact of saying, “We need a GTM solution so we can accelerate our shipments and make our quarter-end numbers.” At a minimum, the team will want to hear more about how you can make that happen.
Companies can justify GTM solution acquisition in a variety of ways. Of course, there are the obvious approaches, which I have touched on in Part 1 of this series (“Making the Case for a Global Trade Management Technology Investment”). They involve return on investment (ROI) in the form of increased duty avoidance, decreased taxes, reduced inventory carrying costs, shorter cycle time, increased sales and utilizing staff for higher-level tasks.
However, I’ve seen quite a few examples that are not so straightforward or obvious. One company justified its GTM solution acquisition as something its lender required as part of the company’s effort to restructure debt. Another firm rationalized its GTM solution acquisition based on a pending acquisition – the company being acquired performed significantly more transactions than it did. Staff made the argument that they wouldn’t be able to scale to support the acquisition without automation. Still another organization, whose business dealt in highly controlled items, argued that they could decrease their sales cycle by automating their license application and management process.
The range of persuasive justifications is limitless and, as the preceding examples indicate, can be highly individualized to a particular company or more universal in nature. The common threads are savings in terms of time, money and human resources; efficiencies in meeting corporate goals; and cost avoidances, such as fines and penalties or the expenditures associated with a focused assessment conducted by Customs and Border Protection. Sometimes, the key to successfully justifying a GTM acquisition is tying the GTM project to another internal project that a company executive is championing. In one case, a CFO had embarked on a project to keep costs down. GTM ultimately became a cornerstone of that project because the firm could leverage wide-ranging duty avoidance opportunities with technology. These savings provided a great ROI stream for the overall project.
Getting the “green light” is often a matter of impacting the bottom line. Whether you opt for the standard rationales or go creative, speak the language that resonates with the C suite.
Check back for Part 3: “Your GTM Acquisition Is Approved: What’s Next?”