Global Trade Management (GTM) solutions, as defined in an ARC Advisory Group market study, streamline and automate processes related to customs and regulatory compliance and trade financing. This simple, yet comprehensive sentence describes a complex challenge global shippers face every day. Getting goods to a foreign destination is not a simple game, yet some supply chain organizations are able to “win” this game, day in and day out, despite having a myriad of processes cobbled together due to limited staffing and budget resources. And as you would expect, organizations that take a more a systematic approach and utilize GTM / supply chain solutions also succeed at this game.
So, if most organizations are “getting the job done” when it comes to global trade management, where is the opportunity for improvement? Getting the job done is fine, but getting on top of your game requires the merging of “International Execution + Technology = Game Changer.”
GTM solutions are bi-directional–imports and exports–and both require a comprehensive solution that includes both execution and technology. Importing, however, poses a larger challenge for US companies as they continue to source globally and have to comply with ever-changing security and customs regulations. Solution flexibility is a crucial consideration for companies as they continuously analyze the off-shoring / near-shoring equation, and they must also take into account the growing compliance requirements (and their resulting complexity) as foreign nations look to manage sustainability and the economic issues impacting their countries.
Research shows that companies can achieve cost and productivity benefits by investing in technology to manage the complexity of global trade processes. But in considering a game-changing GTM solution, the key is to look at your international shipping activity. Will sourcing in foreign countries continue to grow imports? As companies look to emerging markets for future growth, will this contribute to more exports? If so, added complexity will take place in both imports and exports for the organization.
Most people would agree that managing freight transportation costs is a critical factor in global trade management, but that is often because these costs are clearly visible and measurable. Most organizations can easily state how much they spend on freight costs (by carrier, origin country, etc.), but how many know how much they pay in duties, entry fees, or penalties in a given period? For a given order? Who even has responsibility for capturing and reporting such information in the organization? Logistics? Procurement? Finance? Customs Compliance?
Total GTM costs within an organization vary considerably. A recent publication survey noted that the average global shipping expenditure for companies with $100 million to over $1 billion in sales was 18 percent. While the focus on annual RFP negotiations to attain the “best” transportation rates is understandable, a better focus would be to improve GTM processes. The complexity and volume of shipments will continue to increase. (The US Customs and Border Protection expects import product value to triple by 2015).
The complexity of the global playing field requires an integrated GTM technology solution to mirror TMS execution, not just in being timely, but also in gaining more visibility to all the data points that impact the movement of a shipment. This integrated process design merges transportation management systems (TMS) with GTM solution functionality to create a single source of truth, breaking down the silos of information on which to act. This single source of truth being composed of all the data from EDI execution status; product description compliance; and applying country-specific preferential trade agreements and contract management.
An integrated GTM process consists of automating critical applications for rates, routes and carriers while optimizing both the international and domestic segments of a shipment, something that eludes many organizations today. The inclusion of freight auditing, invoicing, logistics execution and contract management functions provides additional value to the solution design. In addition, the seamless flow between internal and external partners in the supply chain is a fantastic win by giving invested partners, through visibility dashboards, their unique information in support of the process. Each member then contributes their value to bring success to the overall team.
The game changer will be having a complete picture, through the merging of GTM information with transactional information, such as EDI status information, to monitor and control the exceptions that impact the global supply chain. By breaking down the GTM paper-based processing barriers of “tariffs, rules and regs,” and teaming up with transportation optimization in a systematic process, supply chain organizations will have the ability to hit one “out of the box ballpark.”
Gene Nusekabel is Worldwide Industry Lead – Wholesale Distribution at IBM by way of the Sterling Commerce acquisition where he was the Transportation & Logistics Industry Marketing Manager. Gene has 30+ years of industry experience in transportation and logistics with consumer products, manufacturing and retail companies. He is a member of CSCMP and a board member for the local CSCMP Columbus Roundtable.
