Reynold Martens, Executive VP, GHY International and author of the series of white papers on Integrated Trade Compliance Strategy development describes another “best practice” employed by leading traders – that of constantly benchmarking performance against optimal objectives. Best Practice #4 is that systems are in place to track performance that are built around the Key [...]
Reynold Martens, Executive VP, GHY International and author of the series of white papers on Integrated Trade Compliance Strategy development describes another “best practice” employed by leading traders – that of constantly benchmarking performance against optimal objectives.
Best Practice #4 is that systems are in place to track performance that are built around the Key Performance Indicators (KPIs) that I mentioned in Best Practice #3.
It’s one thing to know what you want to track, its another to actually track it. The firms that we surveyed had automated tools, databases, tracking software, and they were measuring variation diagnostics. As an objective for this they wanted to have a visible audit trail; green, yellow and red status bars, if you will, to know when they were within parameters or outside parameters, or on the verge of becoming either. Often they teamed up with third-parties to have the technology and systems in place. In other cases they had custom-designed ERP systems that worked specifically for their companies. And probably in the majority of cases I think some of the surveys we looked at to corroborate our findings showed that joint solutions – between the broker, carrier and forwarder –were more the norm than anything else.
An example of some of the things tracked would be the clearance cost, duty savings, free trade agreement analysis, delivery on time performance, and similar types of commercial measurements. On major multinational that we looked at and has become part of our white paper actually scrubbed all of their purchase orders in advance of sending them out to ensure that controlled goods and denied parties weren’t part of any of the transactions they were considering.
Our question to you: are systems in place and are the right people seeing the right information at the right time in your company?
Related:
• 7 Best Practices of Leading Traders
Reynold Martens, Executive VP, GHY International and author of the series of white papers on Trade Compliance Strategy development. Reynold describes the findings of leading traders that lead to identifying best practice #2. “Best Practice #2 has to do with the fact that a champion or a team is in place to own compliance. It’s [...]
Reynold Martens, Executive VP, GHY International and author of the series of white papers on Trade Compliance Strategy development. Reynold describes the findings of leading traders that lead to identifying best practice #2.
“Best Practice #2 has to do with the fact that a champion or a team is in place to own compliance. It’s based on a principle that’s very basic: what is owned is managed. If it’s diffused, responsibility is often increased to the enterprise and there’s more risk because the risk either unknown or spread over a whole number of different individuals or functional areas within the company.
“It’s what I talked about earlier about the silo model where there are separate worlds for imports and exports. Companies we surveyed have direct responsibility at a senior level for compliance going right up to senior levels including the corporate controller, the compliance manager, and in some cases, the company president.”
“The common theme is that they have a strategy in place for compliance; compliance intersections are identified, they’re mapped and ‘owners’ are appointed for them under a ‘quarterback’ who owns all the consequences and manages all the reporting structures for those that are involved in the trade processes.”
My question to you is: is trade compliance responsibility diffused in your company or is it centralized somewhere under a quarterback?
Reynold Martens, Executive VP, GHY International and author of the series of white papers on Integrated Trade Compliance Strategy development describes the foremost “best practice” shared by leading traders. “The first best practice is that corporate leadership has identified trade compliance as a priority. Leading firms actually build compliance in as part of their corporate [...]
Reynold Martens, Executive VP, GHY International and author of the series of white papers on Integrated Trade Compliance Strategy development describes the foremost “best practice” shared by leading traders.
“The first best practice is that corporate leadership has identified trade compliance as a priority. Leading firms actually build compliance in as part of their corporate doctrine. Why is that? Well, because the consequences of non-compliance are very significant and the upside of compliance is very positive.
Some studies indicate that up to 40 percent of companies do not have senior management that is aware of trade compliance and that is a bit perplexing. The ones that do make it a priority do make that decision for a number of different reasons.”
“Number one is brand and reputation. People want to do the right things for the right reasons and brand reputation in a global environment is more important than ever today.
Secondly, financial risk mitigation… Who wants to have a surprise and a penalty or something that comes across their desk or on their balance sheet that’s not expected and compromises their profitability?
Thirdly, operational excellence is becoming the norm in businsses today. Lean business systems, lean processes, and cost management are mantras that are being used in most businesses today. Compliance is a part of that.
Fourthly, profitability. Compliance has a way of helping companies stay profitable and avoid unprofitable losses which gives them an edge in the marketplace.
Finally, it’s legally required; it’s part of due diligence. You can’t not be compliant and expect to ‘get away with it.’ Again, it is the right thing to do for all the right reasons.”
So, where does trade compliance fit in your leadership’s hierarchy of corporate priorities?
The U.S.- South Korea Free Trade Agreement becomes effective on March 15th, 2012. Will your company be utilizing this or other Free Trade Agreements? Establishing a FTA program at your company can be very lucrative but can also carry certain costs and risks. The latest “hot topic” presentation from the trade compliance consulting firm BPE [...]
The U.S.- South Korea Free Trade Agreement becomes effective on March 15th, 2012. Will your company be utilizing this or other Free Trade Agreements? Establishing a FTA program at your company can be very lucrative but can also carry certain costs and risks.
The latest “hot topic” presentation from the trade compliance consulting firm BPE Global concisely addresses this issue and may help importers create an effective methodology for analyzing free trade opportunities.
You can watch the presentation online by clicking here.
Among the “Best Practices” included in the presentation are the following:
• Perform a cost-benefit analysis.
• Have a designated person requesting and managing the certificates.
• Document your process and procedures.
• Create a renewal process to manage the requests.
• Have a qualification process for your suppliers.
• Retain all certificates and correspondence with the producer/exporter.
• Have methods for quickly identifying changes in the tariff, supply chain or to costing.
U.S. Customs and Border Protection posted to its Web site recently its 2011 C-TPAT Costs & Savings Survey. CBP concludes from the review that C-TPAT “has become a vital part of supply chain security in the post-9/11 world” and that the program membership “continues to be a critical source of feedback and recommendations for improvement.” CBP [...]
U.S. Customs and Border Protection posted to its Web site recently its 2011 C-TPAT Costs & Savings Survey. CBP concludes from the review that C-TPAT “has become a vital part of supply chain security in the post-9/11 world” and that the program membership “continues to be a critical source of feedback and recommendations for improvement.”
CBP states that the “overarching theme” of this survey is that “the value of C-TPAT membership cannot be measured adequately in terms of dollars and cents.” On the one hand, there are indeed implementation costs and maintenance costs, which are offset by savings in only a minority of cases.
In addition, a “non-ignorable minority of respondents” said they have not seen the expected improvements in processes that impact their profitability, such as faster border crossings, front-of-the-line programs and less-frequent inspections. At the same time, CBP said, “it is clear that C-TPAT members take pride in their membership, see it as an industry best practice and value it for reasons that go beyond a purely monetary frame of reference.” These reasons include a best-practice approach to security issues that creates a business culture of more secure operations for all and constant improvements in security, the assurance that shipments will move predictably, reduced exposure to legal or financial risk, and the indirect benefits of efficiency and safety resulting from security activities that reveal equipment or personnel issues that do not directly impact security.
Other information revealed through this survey includes the following.
• Small numbers of importers and carriers reported their estimates of the costs of border delays in four different modes of transport. The median costs were $200 for land delays, $500 for air delays, $1,000 for rail delays and $1,500 for sea delays.
• CBP asked what percentage of contracts for supply chain relationships these days require bidders to be C-TPAT certified. Eight percent of respondents said all of them while 9% said none. About 40% of respondents put the figure between 1% and 45% and about 30% said it was between 50% and 99%.
• For the 75% of respondents who reported a dollar value for implementation costs related to C-TPAT membership, those costs ranged from $280 to $4 million, with a median of $17,370. For the 62% who reported a dollar value for maintenance costs, those costs ranged from $45 to $815,000, with a median of $9,000.
• For the 26% of respondents who reported a number of person-hours for time savings related to C-TPAT membership, those savings ranged from 25 to 48,000 person-hours annually with a median of 373. For the 24% who reported a dollar value for cost savings, those savings ranged from $50 to $52 million, with a median of $5,350.
• Asked to summarize the financial costs and savings related to C-TPAT membership as net positive, neutral or net negative, respondents fell about equally into each category.
Source: STR Trade Report
(Simon Ellis — IDC Manufacturing Insights) Supply Chain segmentation is not new, despite recent articles to the contrary, as manufacturing companies have explored ways to manage parts of the supply chain differently for the varied requirements of product lines or categories for decades. Yet, as was true for Sales & Operations Planning in 2010, seems [...]
(Simon Ellis — IDC Manufacturing Insights)
Supply Chain segmentation is not new, despite recent articles to the contrary, as manufacturing companies have explored ways to manage parts of the supply chain differently for the varied requirements of product lines or categories for decades. Yet, as was true for Sales & Operations Planning in 2010, seems true for supply chain segmentation in 2011 – new life is being breathed into an old concept.
There appear to be a few reasons, and most relate either directly or indirectly to the 2008-2009 global recession. As we move into 2011, the business landscape has changed. The demand side of the supply chain is far more volatile and unpredictable, with forecast accuracy becoming even more of a challenge than it has historically been, and the conversation is starting to move to topics like fast planning and responsiveness. The supply side of the supply chain is also experiencing some seismic shocks (one literal, others figurative) that are causing manufacturing companies to relook at their supply networks through the lens of risk management and lead-time assessment. Whether these changes, on both the demand and supply side of the supply chain, prove to be short or long lived, there is little question that fundamentally, the complexity level that supply chain organizations are asked to manage has increased significantly over the last few years.
Driven by complexity, and an increasingly diversified manufacturing industry (where many companies have a broad range of product categories, often crossing B-to-B/B-to-C lines), segmentation is a way to address complexity where and when it is necessary, but reject it where it is unnecessary. At its core, supply chain segmentations is quite simple, in that it is about designing supply chains at a product category or family level based on the unique needs of those product groupings.
Some examples of where segmentation lines might be drawn:
• Short versus long-lead time products, where the former hold some level of fashion element and the latter do not
• High versus low gross-margin products, where the former may obligate higher service levels (and a greater tolerance for returns) than the latter.
• High versus low innovation churn categories, where the former may require a more collaborative supply network than the latter that is characterized more as ‘set it and forget it’.
• SKU proliferation, particularly with ‘flavors and fragrances’ may drive higher levels of postponement for some product categories (consumer products) than others (chemicals).
• Global versus regional demand products, where the former will require global fulfillment capabilities and the latter will not.
These are just a few possible demarcation lines for segmentation, and as we observed above, companies have been taking this approach for decades; yet, the evolving business marketplace is putting new pressure on supply chains and segmentations is a useful concept to dust off.
What do you think?
Source: IDC Insights
