IBM’s global trade operations are massive in scale and scope. The company conducts business in 170 countries and moves about $25 billion worth of goods across borders. It ships about 2 billion pounds of goods per year globally (78,000 products with 2 million configurations) which translates into 500,000 customs declarations annually. IBM also conducts cross border consulting which can be subject to export regulations, including denied party screening, regulations focused on insuring that advanced technology does not fall into the wrong hands.
Overseeing trade compliance in North America is Sally Meier, Foreign Trade Compliance Manager for the Americas. Global trade is part of IBM’s Integrated Supply Chain organization, although two governance offices which report to Legal—the Import Compliance Office and the Export Regulations Office—provide essential checks and balances.
A key task for IBM is keeping up with new regulations, like the new Import Security Filing (ISF) regulations. ISF, also known as “10+2”, requires importers to submit 10 data elements, and ocean carriers 2 data elements, to U.S. Customs electronically no later than 24 hours prior to the loading of cargo onto a vessel destined to the U.S. These regulations went into effect on January 26, 2009, with a twelve month delayed compliance period to allow the industry to comply with the new requirements.
The trade press has written a lot about how complying with ISF will be difficult for many companies, and how many businesses will need to implement a Global Trade Management (GTM) solution or outsource global trade compliance to brokers and forwarders that have good systems in place.
So, it was a bit surprising when Sally didn’t seem fazed by IFS compliance. She is confident that within two months IBM will have successfully modified its internally-developed systems to facilitate complete automation. Further, IBM will have done it in a cost efficient manner that also takes a global approach to compliance. The global strategy recognizes that other nations will likely follow the U.S.’s lead and implement similar requirements, so IBM’s systems will be capable of providing this data in a timely manner to all customs organizations around the world!
According to Sally, while many companies shy away from internally-developed solutions, IBM, as a technology company, has a unique advantage in this department—“building these kinds of solutions is in our DNA.” The trade organization believes that even their legacy trade applications exceed the capabilities of best-of-breed GTM software.
IBM’s internally-developed solutions, which are used by all IBM trade people around the world, include:
- An Electronic Invoicing System: This system passes electronic invoices to brokers and carriers. It also gives IBM control and visibility and it is the key solution for “10+2” compliance. This system, along with many others in the IBM landscape, makes use of IBM’s middleware gateway that acts as the focal point for the exchange of all electronic data with IBM’s trading partners (brokers, carriers, vendors, etc.).
- A global classification database: IBM keeps this database up to date itself. While in the global process a broker may have a “one off” classification that needs to be done, IBM has workflows and processes to verify the classification before putting it in its database. Thus, even though IBM calls this a database, it is also an application. The application also has logic, particularly around parametric data, to help guide users to a correct classification.
- A Shipping Procedure Instructions application: A web based solution that contains the appropriate procedures, documentation, and labeling to ship anything to any nation in the world.
Sally made the point that in trade compliance, as opposed to operations, the focus is not the physical movement of goods; it is the accurate and timely movement of data. This is why “10 + 2” is not keeping her up at night. The IBM systems were developed from the beginning to support the transmission of this type of data. (For more on the role of data and 10+2, see “10+2: A Beacon of Hope for Software Vendors and Freight Forwarders”).
In the area of global logistics, IBM made news in December of last year when it announced that it had sold its internal global logistics operation to Geodis (see “Geodis and IBM: A New Strategy in Logistics Outsourcing?”). In turn, Geodis became IBM’s lead logistics provider. IBM’s internally-developed GTM solutions also offer new business opportunities. The company is exploring the possibility of commercializing this technology.