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Blockchain Technology in Global Trade Management: Roadblocks

Since the introduction of Blockchain, many companies have gained confidence that it is possible to have faster and efficient workflow in cross-border trade, which can help in improving overall customer experience without compromising the safety of sensitive information.

Blockchain technology guarantees secure and standardized trade, even across borders, occurring instantaneously. Businesses have even started using digital smart contracts (a Blockchain-based contract that holds both parties accountable by only completing the terms of the agreement once both parties have fulfilled their end of the bargain) to eliminate third-party involvement in financial transactions to ease the audit process.

Sooner than later, this technology will enable organizations to abolish paper contracts, faster settlement of transactions, securing digital networks from cyber-attacks and helping them implement cost-effective solutions.

Quick Recap: What is Blockchain and how does it apply to GTM?

To recap from Part 1 in our series: Blockchain is an append-only distributed digital ledger that consists of a continuously growing chain of linked blocks, where each block contains a cryptographic hash of the previous block, a timestamp and batches of verified transactions. The blocks cannot be altered retroactively without the alteration of all subsequent blocks and the collusion of the network. Using blockchain technology driven by GTM applications, a GTM blockchain can reveal previously hidden information and enable users to make informed, automated decisions related to import and export compliance as it affects all areas of international supply chains, from sourcing, to deliveries, to financials.

Roadblocks Associated with Blockchain in GTM Technology

Global Trade Management (GTM) solutions help increase financial and supply chain efficiencies, improve customer satisfaction, reduce risk of noncompliance and better control costs. However, organizations are quickly realizing that they need better “Global Trade Visibility” and proof of product integrity as human error, fraud and trafficking become more frequent.

The first fundamental feature of GTM is rooted in the complexity of governmental, industry, and trade related rules and regulations. The sheer volume of information, its analysis, and calculations required to comply and compute optimal – or even just suitable – alternatives requires significant time and hardware resources. This makes the node prohibitively expensive and is detrimental to a blockchain of any type.

The second problem lies in the nature of the regulations. Regulations change often and dissemination of these changes can pollute traffic and overwhelm storage, especially the nodes that have an infrequent need for such information.

The third problem is caused by the frequency of mandated additions, deletions and modifications. Practically every change to regulations requires an alteration of the program code. Even the most rigorous testing of the code cannot guarantee the absence of errors, which, in turn, may seriously disrupt the whole operation of a blockchain.

Now that we have addressed the potential roadblocks of Blockchain in GTM technology, stay tuned for the next installment in our blog series where we discuss the conceptual design of GTM Blockchain.

Brokers and Forwarders: Here’s a Trend Worth Noting

by Wayne Slossberg

 

Currently, there are over 270 foreign trade zones (FTZs) in operation across the United States and its territories. And, the numbers are steadily climbing. Why? There are two primary answers. First, FTZs offer advantages when it comes to importing and exporting, especially

  • Deferred payment of duty and federal excise tax, with monies due only when goods leave the FTZ for consumption.
  • Exemption from state and local ad valorem taxes while products are within the FTZ.
  • Elimination of duty and excise tax on merchandise exported from the FTZ.
  • Ability to maintain goods within an FTZ indefinitely.
  • Freedom to select the most advantageous duty rate, that is, either the rate applicable when the goods entered the zone or the rate applicable on the finished goods leaving the FTZ.
  • Ability to place merchandise imported under bond within an FTZ to satisfy a legal requirement to export it.

Second, U.S. manufacturing is on an upswing thanks to the “Made in America” movement and the priorities of the Trump Administration. Companies want to take advantage of this new business environment, and FTZs present a viable means to decrease costs and be more competitive in both domestic and foreign markets.

The prospect of establishing an FTZ can be daunting for many importers. Often, they don’t have the bandwidth or an understanding of how to approach the process – or how to complete and submit an application to the Foreign Trade Zones Board. Clearly, the dynamics of the approval process aren’t necessarily difficult but can be somewhat challenging. And, of course, affordability is a concern for smaller importers that don’t want to take on the costs of acquiring a facility, staffing it and operating it.

This “dilemma” has created a business opening – and new revenue streams – for medium to large brokers and forwarders and even 3PLs. Many are looking for additional services to offer clients, and FTZ management and operation fit the bill. In many instances, offering these services and transitioning to a 3PL model solidifies brokers’ and forwarders’ overall business relationship with importers and adds an element of business security to their customer base. If a company is using their FTZ services, then they are less likely to lose that firm to a competitor.

Familiarity with the nature of the business – and the availability of technology developed specifically for FTZs – allows brokers and forwarders to enter the 3PL space and manage or run FTZ operations for one or more importers. And, the transition is a relatively straightforward leap regardless of whether the FTZ is created for manufacturing or distribution purposes. The key requirement is being compliant with the strict rules CBP has instituted to govern FTZ operations, especially the tracking of inventory movement and the filing of scheduled reports on time. That’s where FTZ technology integrated with brokerage and forwarding solutions comes into play.

For QuestaWeb customers, addition of the FTZ solution to their broker and freight forwarder solutions is easy. For brokers and forwarders with other solutions, QuestaWeb’s FTZ solution can be integrated with virtually any other technology. Notably, QuestaWeb approaches the licensing of its FTZ technology in two different ways. Knowing that some firms will want to handle FTZ operations for multiple clients, we offer a system with a block of transactions that the 3PL can divide in any manner desired. 3PLs also can acquire standalone FTZ technology, especially for those customers that want the 3PL to manage its FTZ for them and integrate the FTZ solution with their ERP system. QuestaWeb can handle that integration or the 3PL can, as desired. Whatever business model brokers and forwarders select, QuestaWeb can accommodate.

Adopting the role of a 3PL enables brokers and forwarders to play a more strategic role in the supply chain. No longer are they merely handling individual shipments. They become supply chain managers able to offer recommendations to optimize processes, save money and address issues before they become challenges.

In an industry where the numbers of brokers, forwarders and even 3PLs are shrinking due to a marketplace highlighted by closures, sales and consolidations, it’s important to be aware of emerging trends and add versatility to your service offerings and revenue stream. Operating, managing and even offering consultation services regarding FTZs is a noteworthy movement for brokers and forwarders.

It All Starts With Your FTZ

 

by Wayne Slossberg 

We’ve all done it. You start a small home project like hanging a new picture in your living room. Once it’s up on the wall, the piece looks beautiful but it makes the painted wall look dirty and faded. You paint the wall, but it emphasizes the carpet wear. You replace the carpet but now the sofa looks dingy in comparison. By the time you’ve finished, the simple act of hanging a picture has resulted in a completely redecorated living room. It wasn’t something you anticipated, but the end result is a more beautiful interior space that you can enjoy with friends and family.

So it is with many companies that opt to create a foreign trade zone (FTZ) to help lower tariffs, duties and taxes. They obtain approval, select an FTZ technology vendor and set up an FTZ. After a while, the savings start to mount and everyone is more than pleased. However, this realization makes company officials aware that the importing/exporting operations conducted via the FTZ are just one small part of the overall trade it conducts. How about the distribution centers located on the West Coast? Or what about the importing/exporting another corporate division conducts globally on a daily basis? Are we leaving savings on the table? Are there opportunities to strengthen trade compliance elsewhere? Are there ways to improve other business processes, just like the FTZ technology helped the company do?

The original FTZ footprint is about to yield a larger footprint, trade management compliance on a more expansive scale. Think about all the opportunities for greater efficiency and economy that automating importing/exporting processes and managing by exception can hold. Think, too, about what global visibility will mean to your supply chain.

This “snowball effect” is most definitely a positive thing unless, of course, you did not contemplate expanding compliance beyond a single FTZ when you obtained your technology. It could resemble the home decorating scenario described earlier if your company selected a vendor that only offers an FTZ solution. You’ll need to acquire the technology in a piecemeal fashion, likely through a variety of vendors and potentially facing costly integration issues. Worse, the final result might not be the beautiful new living room. It could be a variety of systems that never really “talk to one another” in the proper way. Interoperability can be a huge challenge.

In our experience, many companies do just that. They start with an FTZ and the benefits experienced cause them to expand their vision and contemplate the possibilities across all their importing and exporting activities. Or, taking a severe hit for noncompliance from U.S. Customs and Border Protection (CBP) elsewhere in the organization might be the catalyst to expand compliance concerns beyond the FTZ and move from spreadsheets to global trade management technology.

That is why at the beginning of the FTZ technology sales cycle, we counsel prospects to be mindful of trade compliance beyond the FTZ, even though the focus today is establishing a CBP-compliant FTZ. We recommend that they select a vendor that offers a suite of global trade compliance solutions that can build on the initial FTZ solution. We know it is entirely possible – and very likely – they will want to introduce automated trade compliance to all their importing/exporting activities eventually.

In the QuestaWeb world, if you have the compliance database that lies at the heart of our FTZ solution, then this “next world of compliance” is open to you. You posses the database with all your products, vendors and more that lays the groundwork for global trade compliance activity elsewhere in your firm.

The number one thing: No matter where you start – FTZ, import/export or self-filing – always look for a provider that can satisfy that next step in your global trade management vision. If you do, it will be easier and less expensive and the final result will be even better than you imagined.

Telltale Signs It’s Time to Say Goodbye to Your Software Provider

by Dean Gionis

It happens to many companies. They start small but, before they know it, they have grown into a business or department of significant size. The question then becomes: Is their software provider and technology scaling with them or are they now inhibiting further growth? Part of the answer can be found by looking at four key areas:

  • Support
  • Technology
  • Impact on Your Profit and Loss (P&L) Statement
  • Agreement/Contract Terms

Remember: For a vendor relationship to work, there must be a good fit between both partners, and both parties must benefit.

As you review your vendor relationship in light of the areas below, consider the level of fit and the benefiting party.

Support

The logistics arena is a 24×7, dynamic environment where information must be available at all times. When you need support from your vendor, how is it acquired? Must you phone, search help files or fill out a web ticket? If you speak with a live person, does that individual possess industry knowledge or is he/she just following a canned script to answer your question? Is support handled by your vendor or is it outsourced to a third party? Have you essentially become self-supporting through your vendor’s use of web tickets or user manuals? If that is the case, think about how many hours a day/week/month you are focusing on technology rather than closing new clients and/or delivering services to existing ones.

Anything short of in-person communications with a skilled staff professional capable of diagnosing and correcting your issue means you are not exacting value from this vendor relationship.

Technology

The technology issue is more complex, and many factors must be considered. Is your vendor providing the integration resources you need to maximize efficiency or are you just living with what you have and adding more bodies? Is your vendor capable and experienced in interfacing with major ERP/WMS systems so that you can win new business or have new projects approved? How scalable is your vendor’s technology? What does it take – and how long – for you to expand your existing platform to accommodate additional users, clients, offices and so forth?

Let’s now consider technology in light of broker/forwarder operations and actual application software.

  • How quickly can you file a PGA entry?
  • How about a 200-line entry?
  • How long does it take to import hundreds or thousands of parts into your database?
  • What about shipment tracking? Can you automatically notify your clients of shipment status or must they speak with your staff to obtain this simple information?
  • How many different software systems do you use to run your business? Are they interoperable or must you reenter data multiple times in various systems?

These examples are but a few potential cash-burning inefficiencies that can erode revenue quickly.

Impact on Your P&L Statement

Your technology evaluation might reveal a lot of “busy work” being done relative to data entry. Inefficiency can translate into hundreds of thousands of dollars in lost revenue and severely impact your P&L as well as your business’ ongoing viability.

Consider the time and money you could save if your technology wasn’t letting you down. With maximum automation – and the right technology partner – your business could go up against the “big guys” and win. What would that do for the P&L?

Agreement Terms

There are many important components to your technology provider agreement including deliverables, responsibilities, confidentiality of data, term, costs, termination, etc. With a hosted or cloud-based software agreement, it is wise to negotiate a provision for early termination. If your provider is unable to keep up with compliance or can no longer support a critical capability, then you have the flexibility to make a change, if necessary.

• • •

After your evaluation is complete, communicate with your software provider and explain the issues as you see them. Give the provider a chance to fully understand your concerns and suggest a solution. If your provider doesn’t offer a remedy or seems indifferent, then it is definitely time to say goodbye.

Broker/Forwarders: Stop Burning Money

by Dean Gionis

Every hour of every day broker/forwarders burn money unnecessarily. How? By using multiple, non-integrated software applications to perform services on behalf of their customers.

It is not uncommon for a broker/forwarder firm to have three, four or even five different systems in use. For example, there might be one software application for customs brokerage, one for freight forwarding, one for accounting and perhaps others for exporting, filing AMS and tracking shipments.

While broker/forwarders may attempt to make these systems interoperable – get them to “talk” to each other – integration is often easier contemplated than accomplished. Integration in this environment is a custom project and expensive to undertake and maintain over time. Furthermore, both the quality and extent of the custom integration often become money-draining issues. Often, only a partial integration is possible, meaning that only bits of information can be carried over from one system to another – and only in a one-way manner. That is, one system may push data out to the next, but the reverse is typically not feasible.

Beyond the inability to perform day-to-day functions well, multiple applications strung together by a loose integration pose other unnecessary costs if an automation problem arises. What happens if a regulatory or version change occurs in one solution? Will it affect the others? Then there’s customer service. To whom do you look for customer service? How do you identify the specific application creating the issue? How many software companies will you need to pay before the problem is identified and corrected?

These are the more obvious sources of lost revenues and additional costs. Another clear loss is the staff time wasted when multiple systems are in use. Consider the expense of entering and updating duplicative information in each system, as well as the cost of inconsistent information or outright errors.

Here’s just one example. Every broker/forwarder application possesses a customer profile. And, every profile will request similar details such as name, address, tax ID, key staff, transaction parties (i.e., manufacturers, ship to, bill to, etc.) and commodity details or products. If you have five applications, staff must enter this data five separate times. And, what if employee A enters “Smith & Co.” but employee B inputs “Smith and Company, Inc.,” is it the same company? Or, if employee C elects to use the headquarters address while employee D enters the local branch office, how long will it take employees to research whether it is the same firm?

Then, ponder how often customers move, experience employee turnover or change transaction parties. Every time any one of these data elements changes, the broker/forwarder must update the profile in the customs clearance system (ABI), the freight forwarding system, the accounting system and potentially other systems depending on its suite of services.

Not convinced yet? Follow this illustrative example of the typical workflow of a broker/forwarder relying on multiple systems. To book a shipment, staff must first find the customer profile within the forwarding system. Once located, they must create the shipment documentation, typing in all of the required information. Next, the broker/forwarder must either print or transmit the information. Then, staff must transfer to the customs systems to create the customs entry. After finding the customer profile, all the data related to the shipment must be reentered and forms printed or transmitted. And so on.

Consolidated billing is cumbersome, too, due to the need for manual steps that use valuable staff time and effort. Billing profiles, like customer profiles, are unique to each system. So, for billing purposes, accounting would need to extract client service fees from each system, calculate them and manually consolidate them in a single statement.

The inefficiency of multiple systems is shocking when actually held up to analysis. In contrast, a single system delivers many cost-saving benefits. It simplifies the broker/forwarder’s IT environment because there is one set of hardware and software and one service provider. Integration costs are lower because there is no need to pay a third party to develop custom interfaces between solutions. Component functionality is integrated by design. Support is less complicated, too, as there is one vendor to contact if an issue arises. And, of course, implementing one solution is less costly, easier and faster than the multiple implementations associated with a variety of systems.

One system means there is a single client profile, one billing record and so forth. And, any information entered into the system to create a shipment, for example, is preserved within the system and flows through to its other functionality. Following from the previous example, the solution will automatically populate the customs entry, minimizing errors. And, beyond maintaining a complete audit trail of every action taken, the solution preserves documents, generates reports, transmits documentation electronically and automatically creates a consolidated bill for all the services performed within a specified time period.

A single system delivers complete automation, which maximizes productivity and operational efficiency. Instead of losing time and money every hour of every day, broker/forwarders operate at peak efficiency and can use the time and savings to exploit new business opportunities, expand service offerings and more.

Broker/forwarders, it’s time to transform your operational environment with a single solution that maximizes savings and productivity. If you’re tired of burning money, talk to QuestaWeb today.

Northern Border Brokers and the Need for Speed

by Dean Gionis

For brokers, the northern border of the United States operates far differently than the eastern, western, southern and central regions of the nation. Such differences give rise to the terms “border brokers” and “inland brokers.” The latter group primarily handles ocean and air shipments, whereas truck-based shipments are the focus of the former. The immediacy of truck transport, coupled with the high volume of shipments coming across U.S. borders every day, provides the essence of the challenge that northern border brokers must address: They have far less time to react when it comes to clearing truck-borne goods coming into the United States from Canada.

As an example, ocean cargo coming from Italy could take two weeks, while shipments by sea from China could require a month. Such extended schedules allow ample time for information gathering and document generation. Northern border brokers, however, may only learn that goods need to be cleared within a few days or even hours of the truck approaching the U.S. border. Border brokers thus face entirely different workflows and requirements when it comes to U.S. Customs and Border Protection (CBP) – and everything must be addressed quickly, accurately and compliantly.

It goes without saying that a broker’s survival in this fast-paced environment depends on its ability to be responsive insofar as speed, accuracy and compliance are concerned. Otherwise, exporters will look to other customs house brokers that can handle the pressures of clearing goods along our nation’s northern border.

Business survival dictates the need for technology specifically developed to meet border brokers’ unique requirements. This raises the question: What technology features are well-suited to the workflow of border brokers?

  1. Web Native Is Essential. The need for speed is undeniable. And the Internet provides a fast, real-time ability to transmit information. In addition, a true web native system does not require any special software to be loaded in order to exchange data with a broker.
  2. Integration Is Vital. Integration allows Canadian exporters to enter information about the specific commodities in a shipment from their location and immediately transmit that data to the broker’s system for processing. For large, complex shipments, the portal also must possess the capability to upload data electronically (EDI).
  3. Automation Is Critical. Instantaneous data transmission fulfills only half of the broker’s needs. The technology must facilitate the creation of line items with automated compliance validations to assure that the entry will be cleared expeditiously. A platform with a product and transaction party database that is specific to the exporter is essential to completing the functionality needed to compete on the border.
  4. Real-Time Status Information Is Important. Exporters, like all supply chain partners, have a vested interest in knowing where their goods are at any given point in time. They want to meet or exceed commitments made to their customers, especially delivery times and dates. Thus, the web portal should be able to provide this visibility to the exporter.
  5. The System Must Generate Reports. Customers need information to be successful. Thus, the selected technology should possess the capability to produce reports in formats that address each customer’s unique needs. Plus, the system should be able to print copies of any forms submitted to CBP, at the customer’s request.

QuestaWeb understands the unique challenges that U.S. border brokers face, especially the need for speed in clearing goods shipped by Canadian exporters. Its latest product offering – Exportal – possesses all the needed technology features and requires no special software to run. It is a lean system that delivers the following benefits:

  1. Web-native technology that facilitates the instantaneous transfer of critical shipment information via the Internet. As soon as the exporter enters information via Exportal’s secure web portal, which is password protected, the broker can access it.
  2. Built-in intelligence that automatically populates the entry documentation, minimizing manual data entry that can slow the process and create errors. Exportal can upload spreadsheets of information, too, anticipating that the volume and complexity of some shipments precludes other input methods.
  3. Integration with the broker’s QuestaWeb technology allows full access to the exporter’s product database and customer list.
  4. Visibility via the web portal lets brokers know the precise status of the entry at any point in time.
  5. Automated report generation – and the capability to duplicate forms submitted to CBP – easily.
  6. Enhanced competitiveness. In fact, absent such technology, being competitive on the borders will be difficult.

Location is not just the mantra of realtors. Location is a criterion that literally changes the business landscape of brokers operating along our nation’s northern border. Technology is the answer, and QuestaWeb’s Exportal is the best solution.

Trade Agreements and Purchasing Decisions

by Damon Baca

Individuals who are outsourcing material and sourcing goods don’t always consider existing trade agreements in their decision making. For instance, I always hear that China is 14% cheaper than Vietnam based on labor rates. However, the United States has a Free Trade Agreement (FTA) with Vietnam through the Generalized System of Preferences (GSP)  that can make goods duty free. So, is China really the cheaper option?

The point is: Purchasers and sourcing professionals are leaving money on the table every time they fail to consider the benefits trade agreements confer in their decisioning. Absent consideration of the possible economic benefits available, actual true costs are not known or factored into the equation.

The key question is, Why? Quite frankly, there are two explanations. First, these professionals are not trained to contemplate harmonized codes and duty rates in their determinations, much less the impact of trade agreements. Second, qualifying goods under trade agreements can be a complicated and time-consuming process. Thus, many companies simply choose to ignore their existence, unaware of just how much money it is costing them.

It is time to shake things up and take the money off the table and put it into importers’ and exporters’ pockets.

Background

The United States has 14 free trade agreements (FTAs) in effect with 20 countries ranging from Australia to Singapore. These U.S. FTAs not only facilitate cross-border trade but also contribute to greater economic growth, productivity and jobs for the involved countries. They also level the playing field for U.S. exporters who face any number of barriers to selling their goods in overseas markets, not the least of which is paying higher tariffs than other countries do. Conversely, more importation of foreign goods translates to more competitive pricing on items that American citizens desire.

Part of the reason why the United States faces barriers to exporting is that other countries have negotiated trade agreements as well. The World Trade Organization estimates there are 420 trade agreements in effect. Although not all provide for free trade, they do eliminate barriers and make conditions more conducive to trade. For ease of discussion, FTA will be used in the rest of this blog to refer to all trade agreements.

Changing Mindsets

To achieve greater savings, we must first teach our purchasing and sourcing professionals to look at harmonized codes and tariffs. They impact the bottom-line cost of goods greatly and need to be considered. We must change the mindset whereby purchasing acquires items based solely on materials costs and labor rates and then passes the buck onto to the import/export department to manage these other costs.

We also need to train our purchasing department to look to FTAs as sources of cost savings. That will require purchasing to identify the FTAs that might bear on the situation. To see whether the goods in question might qualify under a specific FTA, three factors must be considered:

  1. Where does the product ship from? For example, if you have an American product made in China and going to Canada, it does not qualify under NAFTA because the product did not originate in the United States.
  2. Is there a tariff shift? Beyond having products originating in and shipped from a country covered by the FTA, to take advantage of an FTA there must be a significant tariff shift. Say, for example, you have raw materials, such as parts of a computer, coming into the United States from countries all over the world. If you bring them in normally, you pay duties and taxes on them. If you then assemble these parts into a computer, a tariff shift occurred. That is, they came into the United States under the harmonized codes for a hard drive, keyboard, RAM, processor, etc., but when exported the harmonized code was for a computer. Without a tariff shift, it is merely a pass-through and you cannot qualify under the FTA.
  3. What is the regional content value? This last qualifier is the most difficult one. This value varies depending on the FTA and the country. Usually, 51 percent of the value needs to be created within the country that you are exporting from, that is, the nation where the tariff shift happens. Let’s say you bring in a cellphone from China and then all you do is add a cord and ship it out. It will not qualify under the FTA because there is not enough regional content value.

Determining the regional content value can be a challenge, especially if the product is complex. You need a full bill of materials. If it is an engineered product, you must know where each individual component originated and its value versus the value of the final product. Calculations such as these – and the complexity involved – are major reasons why companies step away from FTAs.

Luckily, QuestaWeb’s technology automates the FTA qualification process, making it both simple and fast. Our FTA decision engine is available both as a standalone technology via our TradeGearQW product line and as functionality within our integrated global trade management solutions. It allows you to input the bill of materials and determine whether it qualifies under any of more than 300 FTAs. And, our technology takes into consideration all the rules, regulations and origins in place and automatically calculates regional content value.

Best of all, our technology, by including far more than just the 14 U.S. FTAs, broadens your savings perspective and opens your eyes to worldwide opportunities that can be leveraged. The same decision engine will determine if goods qualify under any FTA, even if the transaction does not involve importing or exporting from the United States at all, moving your firm to a true global supply chain and allowing savings on every single international transaction for which you qualify.

Free trade agreement decisioning is just one more way QuestaWeb is making a difference in our customers’ supply chains.

 

 

Keeping to Your GTM Implementation Budget

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by Beth Pride

This is the last in a series of guest blogs written for QuestaWeb 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.

Everyone has heard stories where a company received an implementation quote from its technology vendor, however, the project work quickly exceeded the quoted amount and costs continued to mount. No company wants to experience such a situation, yet is there anything a company can do to prevent “cost creep” from happening?

Yes, there are several pieces of advice to keep in mind. One of the most important involves content. The phrase “garbage in, garbage out” could not be truer when it comes to automating a company’s trade compliance processes.

In preparation for automation – or even if already automated but transitioning to different technology – it is important to have a clear understanding of where data elements reside. Key knowledge areas include: What is the system of record for each data element? Who owns those data elements? Who has access to change or update them? And, at what point in the overall timeline are they created and modified?

There is no point in sugar-coating this point, so I’ll just put it out there: Content management is a massive, labor-intensive undertaking. Yet, it is a key success factor in a firm’s evolution toward automation. If you don’t have clean content, you’re going to end up paying more than you expected to get it clean.

In fact, many companies seek to implement an outsourced solution without considering the changes required internally to make that implementation successful. For example, the customer master set-up process often needs to be evaluated, as this data feeds into the screening and licensing part of the GTM solution. However, it rarely is. Customer master records are often messy and inconsistent because no data governance practices are in place when setting up new customer accounts in the ERP system. Names and addresses are input in an inconsistent manner and, when transitioning to new GTM technology, they often pass this messy data on to their solutions provider. As a result, names may be found in address fields, countries may be inputted with two-digit ISO country codes, abbreviated or spelled out. Often, there are thousands of such records that must be reviewed and corrected before pushing the data across to the GTM solution or the GTM system will not be able to do what it was designed to do.

Another example is requirements definition. Too often companies don’t know what they really need in their GTM system. Here, the implementation takes on a life of its own as the GTM solution provider tries to work with the firm to get to the bottom of things. I cannot overstate the importance of convening a trade compliance team (see Part 3) that thoroughly defines the system requirements prior to engaging the GTM solutions vendor.

There are a host of other factors companies should consider relative to the cost of implementing a GTM solution. Remember, the task of preparing to automate compliance activities will likely become a full-time job for a staff person who already has a full-time job with other responsibilities. It is important to anticipate this eventuality and plan for it. Otherwise, both sets of responsibilities will suffer.

Companies intending to implement a GTM solution also must be thoughtful when scheduling the implementation. Plan ahead and select a time frame that does not overlap with other peak work periods, such as quarter-end and year-end. The inability to be available to the vendor due to competing demands is a common contributor to cost overruns. And, be sure to designate backup leaders for essential team roles in case of personnel turnover. Delays created by personnel changes also will result in increased implementation costs.

Remember, too, that GTM solutions provide a great deal of functionality. Many companies don’t realize that they will need multiple phases to complete their GTM implementation and fully leverage all the capability the purchased system offers. In other words, firms often implement only a fraction of the functionality their system offers. It’s common, for example, for global corporations to implement restricted party screening only for its business unit in the United States, rather than across all its business units worldwide. Implementing a truly global GTM solution is a long-term process, but far too often, the process is initiated and never fully rolled out. It takes development of a business-wide, global strategy and committed resources to utilize every function available from a GTM solution.

Your GTM Acquisition Is Approved: What’s Next?

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by Beth Pride

 

QuestaWeb is pleased to post the next 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.

You’ve made a compelling case for global trade management (GTM) technology, presented it in terms that resonate in the C suite and received a green light to purchase a GTM solution. So, what’s next? The better question is, “What’s not next?”

Too many people go straight to the GTM vendors and request pricing information. That’s a big no-no. It’s important to plan how certain processes will be automated and contemplate all the potential scenarios that might result from such changes before acquiring technology. It is vital to convene a trade compliance group comprised of key stakeholders who will use the solution and have them develop a project plan that contemplates all aspects of automation.

Of course, a key milestone within the project plan will be developing and distributing the Request for Proposal (RFP). But before you can create the RFP, the trade compliance group must systematically gather and define your requirements for the software.

The group’s decisions will go well beyond basic choices on whether to send the information in an Excel spreadsheet, Access database or Adobe PDF or create a link to a more sophisticated GTM tool. The trade compliance group must consider when to send information, how changes to information will be communicated, what response or confirmation times need to be implemented for business partners that receive the data and many other elements.

For this reason, it’s helpful to include business partners in the trade compliance group. Then, the group can hold a series of process design meetings where the group walks through each existing scenario (and reasonable potential scenarios) to ensure that the process design has contemplated all potential steps, including contingencies should automated systems go down.

Once this detailed information is defined, it becomes a cornerstone of the RFP. The RFP should list the functional requirements for the software as well. In addition, the RFP should include a section providing information that will help vendors develop accurate quotes for the solution and the implementation process.

For example, the RFP needs to communicate the number of users for each module. It should provide the number of transactions (such as orders, entries and shipments), part numbers, Harmonized Tariff System (HTS) number/Export Commodity Control Number (ECCN) classifications, Exporter Identification Numbers (EINs) and Importer of Record (IOR) numbers, as applicable. If documents are required, the RFP must list the languages needed and for which countries. Vendors also will need a list of importing and exporting countries for content purposes. If you are considering restricted party screening, you’ll want to provide the number of vendors, customers and employees likely to be screened on a recurring basis. You also should include all the systems that will need to integrate with the GTM software. This list might include systems other than just your ERP, such as a customer relationship management tool, document and reporting software and/or proprietary databases, not to mention any connectivity you want to have with transportation, warehousing or logistics management systems.

A full appreciation of what you hope to achieve with automating trade compliance – and all possible contingencies – will help you identify the correct GTM solution for your firm and a vendor that appreciates your well-defined processes and objectives. Convening a trade compliance group is an essential prerequisite to RFP development and technology procurement.

Check back for Part 4: “Keeping to Your GTM Implementation Budget.”

Getting the “Green Light” for a GTM System Acquisition

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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?”

 

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