More and more of today’s firms seek to focus on their business specialty and leave supply chain functions to logistics providers. As a result, the demand for logistics service providers that offer more than traditional services is growing. In some cases, third-party logistics (3PLs) providers operate or manage foreign trade zones (FTZs) for their business partners. In others, they offer warehousing and value-added services related to the production or procurement of goods. In still more, they coordinate all the logistics and transportation steps necessary to move goods from origin to end user efficiently and cost effectively.
Logistics providers need global trade management solutions they can rely on to manage all these new and diverse functions they are assuming for companies. Global trade management software is essential to automate and manage processes – inventory management, logistics, regulatory, financial – and enhance collaboration among supply chain partners, so goods can reach their destination in a timely, secure and cost-effective manner.
QuestaWeb offers logistics companies an integrated suite of global trade management (GTM) solutions specifically designed to meet their unique needs and requirements. Our global trade management software promotes product movement in the most secure, visible and compliant manner possible, while monitoring applicable laws and preferential programs and advising on anticipated costs in real time. Built-in flexibility enables QuestaWeb’s solutions for importing, exporting, foreign trade zone operation/management, brokering and forwarding to adapt to your business processes, rather than force you to adopt ours.
View Case Study 1
MD Logistics Manages Its Multi-User Foreign Trade Zone with QuestaWeb’s FTZQW
MD Logistics is a global provider of high-quality third-party logistics (3PL) services. Its primary vertical markets include life sciences and pharmaceuticals, retail and consumer goods, and transportation services. The firm is headquartered in Plainfield, Ind., 9 miles west of the Indianapolis International Airport. It also maintains distribution facilities in Reno, Nev.
MD Logistics sought to offer customers a new business line: foreign trade zone (FTZ) management services. Its vision was to convert multi-use warehouse space into separate FTZs and service multiple customers within the facility. The firm activated close to 400,000 square feet of FTZ space in 2011, with plans to activate an additional 200,000 square feet for pharmaceuticals and cold chain storage by the end of 2012.
MD Logistics needed FTZ software that could concurrently manage multiple customer accounts and maintain complete data segregation. The FTZ solution also had to accommodate complex integration requirements, seamlessly integrating with MD Logistics’ warehouse management system (WMS) and each customer’s ERP system. It had to offer ABI connectivity, electronically communicating with U.S. Customs and Border Protection (CBP). Last, the FTZ system had to be AES approved, allowing automatic generation and transmission of required documents to CBP.
“Most of all,” said John Sell, MD Logistics’ Vice President of Retail and Transportation Solutions, “My No. 1 requirement was compliance. The vendor’s system had to assure strict compliance and possess a reputation for accuracy and integrity. I enlisted three well-known vendors to do product demonstrations. In the end, QuestaWeb met all our requirements and was cost effective, too.”
MD Logistics opted to deploy QuestaWeb’s FTZQW in QuestaWeb’s cloud. It offers precise control of CBP-supervised inventory and proactive management of compliant inventory movements. The solution offers robust functionality combined with rich content, rule-based integration tools and electronic links to multiple regulatory government agencies. Its ABI connectivity allows electronic filing of import entries, electronic in-bonds, Permits to Transfer and more. Whether managing multiple clients in one FTZ or one importer maintaining several foreign trade sub-zones in different ports, QuestaWeb’s FTZQW offers a high degree of automation and has the capability to process large volumes of transactions with instant compliance verification and management by exception.
Sell, in commenting on the decision to select QuestaWeb, said, “Most FTZ software contemplates that the licensee will be the only user. QuestaWeb separates itself from other vendors by offering a solution containing the logic to service multiple customers concurrently or one customer with multiple sites. Its software is flexible and easy to integrate, accommodates high transaction volumes, maximizes automation and is affordable.”
The solution went live in February 2011. While the integration requirements were complex, QuestaWeb’s staff, working with MD Logistics, handled them all.
From MD Logistics’ perspective, it can offer customers FTZ management services that are automated to the fullest extent possible, draw from the latest data contained in the ERP/WMS solutions and assure compliance with CBP requirements because regulatory updates occur in real time. As a service provider, this peace of mind is vital to MD Logistics, as the firm expects to expand its customer base by three additional firms by year’s end.
MD Logistics’ FTZ customers benefited in five major ways:
Result 1: Minimized logistics costs, duties, fees and taxes
Product can move into the FTZ and remain under foreign goods status. Thus, duty payments can be deferred until the goods are actually consumed. So, the carrying cost of inventory goes way down.
Rather than doing a customs entry on every incoming shipment, FTZ status allows a firm to file a comprehensive entry once per week. In so doing, firms can minimize the amount of fees paid both from a customs brokerage and a merchandise processing fee (MPF) standpoint. In effect, it allows MPFs to be capped.
The fact that duty payments can be deferred eliminates the need for a duty drawback program. Since goods retain their foreign status, re-exporting them from the FTZ incurs no duty. This provision is helpful when, for example, a firm encounters a quality control issue with an incoming product. Because the issue is recognized while the product is in foreign good status, it can be re-exported for correction without paying duty on the product on its outward and inbound shipment.
Result 2: Assured compliance and reduced exposure to fines/penalties
Many CBP requirements govern FTZ operation. Those unfamiliar with the regulations can easily misinterpret them and/or inadvertently fail to comply with one, setting up the firm for fines and penalties. Allowing MD Logistics to serve as manager enables an expert to comply with the needed actions. Further, MD Logistics’ decision to employ QuestaWeb’s FTZ solution enhances compliance because it contains all the requirements and the timing for each required action. The system automatically generates email alerts and escalates reminders if a needed action is not taken.
Result 3: Automatic generation of documentation as well as mandatory, analytical and management reports
There are scheduled events that have to occur when administering an FTZ. On a daily basis, reports must be filed detailing items received into the FTZ on the previous day. On a weekly basis, reports must be filed on products consumed. The QuestaWeb system automatically generates these reports using data from the ERP/WMS, assuring the most accurate information is employed. Moreover, the QuestaWeb system can identify inconsistent data and alert officials of any exceptions.
Result 4: Improved on-time delivery
Using an FTZ allows a company to bring goods to market faster. The company does not require a Customs release to ship goods from the FTZ; those entries are made weekly and cover goods shipped the previous week. Thus, foreign goods could conceivably move into the FTZ, go to market and be purchased off the shelf before a single Customs entry is made.
Result 5: Increased efficiency and visibility of supply chain information
The big win is the supply chain efficiency that an FTZ delivers. When dealing with cold supply chain products, for example, it is important to mitigate their exposure to non-optimal temperatures. If a large consignment is sitting on the tarmac of an airport pending Customs release, the risk of product spoilage is real. If a firm has an FTZ, goods can move right away under optimal conditions, thereby maintaining their quality and integrity.
Felix Pekar, COO of QuestaWeb, says, “Operating an FTZ is a complex process, requiring much more than accepting, warehousing and shipping product. Many would have you believe that generating the E214 is the most challenging requirement involved. As MD Logistics can attest, being a 3PL and managing a multi-use FTZ compliantly involves much, much more. It is leading the 3PL industry by offering this new business model that confers significant savings, efficiencies and benefits to its customers. QuestaWeb is proud to be a partner in MD Logistics’ innovation, assisting our clients with one-of-a-kind software solutions that meet their unique needs.”
View Case Study 2
Serra International Automates Controlled-Goods Exporting with QuestaWeb’s TradeMasterQW
Serra International, Inc., headquartered in Jersey City, N.J., provides freight forwarding and Customhouse brokerage services. In addition to its headquarters facilities, Serra has offices in Springfield Gardens, N.Y., Los Angeles, Calif., and Miami, Fla. The firm also operates a container service, Serra Shipping, Inc.
Serra must keep abreast of diverse worldwide import/export laws on a country-by-country basis to move goods quickly and compliantly. The firm also must track every shipment from door to door to ensure timely delivery and to provide status information on demand.
Serra’s specialization in shipping export-controlled products added another level of complexity to its business processes. The firm had to classify products correctly, apply for export licenses and comply with stringent U.S. and foreign government documentation requirements. License tracking necessitated maintaining running totals of the value of goods exported to date, as each license is associated with a discrete annual dollar limit. Serra also needed to track against each license using multiple numbering schema because each supply chain member uses a different numbering system (e.g., contract number, purchase order number, U.S. DOD part number, foreign entity part number, etc.). The U.S. Government scrutinizes all export documents for completeness and correctness, and the penalties for noncompliance can be severe.
Serra also faced several operational challenges. Previous attempts to migrate to new operational software had failed. Moreover, staff could only access the system on-site, which created problems when the need to work from a remote location arose. Manually tracking shipment status information created the biggest problem of all: Data were not real-time, because staff had to await receipt of documentation and key that information into the system. Worse still, clients could only obtain status updates by calling Serra staff, which meant personnel were continually fielding client requests and doing research that took them away from more productive pursuits. Clients in other time zones faced even greater difficulty in obtaining timely information. From a competitive stance, not being able to offer a track-and-trace service via the Internet was a major disadvantage.
Vincent DiPilato, Serra CIO and Compliance Officer, commented, “Serra had to find a way to do more with less. We needed an integrated automated system that could accommodate our unique business needs across all operating locations, automate processes and allow remote access for staff and customers alike.”
Serra International turned to QuestaWeb’s TradeMasterQW to obtain the web-based, fully integrated management solution it needed. The firm selected the Import Freight ForwarderQW, Export Freight ForwarderQW and Customs House BrokersQW modules.
DiPilato says, “TradeMasterQW is the most advanced software application available for importing and exporting. It alone possesses a native SQL database, and it is the only web-based system capable of handling every aspect of our business—importing, exporting, Customs brokerage, freight forwarding, accounting and warehousing. Other vendors claim to be web based or ‘do it all,’ but they hide behind portals and interface with other older systems. QuestaWeb’s web-native software applications are fully integrated modules that meet all our business needs.”
The solution went live in December 2007 and, according to DiPilato, TradeMasterQW satisfied virtually all the firm’s operational needs out of the box. Because the software is installed on Serra’s server behind its firewall, all office locations came online quickly and securely. Staff immediately gained the ability to work remotely from any location with Internet access. TradeMasterQW automated labor-intensive tasks, automatically pre-classifying products, pre-screening supply chain participants, determining supporting documentation requirements, populating forms, storing documents and issuing alerts if key information is missing. Moreover, QuestaWeb’s status as an ABI-certified vendor receiving real-time updates directly from U.S. Customs eliminates this staff task and assures Serra that it possesses the latest information available. DiPilato projects that through automation each staff member can process at least three extra shipments per day. “Over the course of one week, the extra work one person can accomplish covers our system maintenance costs for an entire month,” he says. “When you multiply that by each staff member, the savings are significant and make us more competitive.”
TradeMaster’sQW Track-and-Trace engine gave Serra’s clients around the world immediate access to the most current shipment status information over the Internet. As DiPilato put it, “Now our customers can access our database. If we get an electronic notice that Customs has released a shipment or if we issue an order to pick up a shipment, the customer can log onto ‘SerraTrac’ 24 hours a day, 7 days a week and view the most current information we possess. The impact on staff workload has been dramatic, reaping more savings and placing Serra on a footing equal to bigger competitors.”
If these results were not remarkable enough, DiPilato credits TradeMasterQW with improving the firm’s cash flow: “We now can e-mail invoices to clients within the system or make them available on the web. U.S. customers receive invoices three days earlier; for overseas firms it can be a week or more. Such availability eliminates the excuse of not receiving an invoice.”
The flexibility inherent in TradeMasterQW allowed system modifications to meet the highly specialized requirements associated with Serra’s specialty area: shipping controlled materials to foreign governments, military organizations, aerospace firms and others. Screening can be complex, especially when new items, firms or countries are involved. “I estimate we save 15 to 30 minutes per shipment with TradeMaster’s automated screening capability,” says DiPilato.
TradeMasterQW also gives Serra the ability to comply with strict U.S. Department of State regulatory requirements, as well as customer contract requirements. TradeMasterQW easily accommodated input and tracking of multiple numbering schema and automated the process of maintaining a running tally of products shipped under every export license—a process complicated by the multiple numbering systems.
Felix Pekar, Chief Operating Officer, QuestaWeb, says, “Accommodating clients’ special global trade management needs is what QuestaWeb does best. We developed TradeMaster’sQW web-based software from the ground up with the kind of flexibility necessary to be responsive to changing requirements. What we did for Serra International is a perfect example. Better still, every modification made on behalf of one customer brings enhanced functionality that benefits all our customers. Consistent with our business model, we make these features immediately available to all customers at no additional cost.”