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 Integrated Trade Compliance Strategy development describes another “best practice” employed by leading traders – that of constantly benchmarking performance against optimal objectives. “Best practice #3 has to do with KPIs or Key Performance Indicators. The premise for KPIs in business [...]
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 #3 has to do with KPIs or Key Performance Indicators. The premise for KPIs in business is that what can be measured can be managed. The companies that we surveyed had aligned their KPIs to desired outcomes and that makes perfect sense, doesn’t it?”
“The obvious outcomes they were working towards are the ones you might expect. They want to avoid penalties; they want to ensure that they know they’re paying the right amount of duty and not too much and not too little; they want to know how much duty they’re saving; and they want to know how much liability they’re avoiding.
“But there are also some less obvious and more commercial reasons why KPIs have been put in place. For example, one of the companies that we reference in our white paper is a large retailer with global operations. They actually link compliance to client satisfaction in terms of delivery times. They’re responsible to get their products into the hands of large retailers, especially in the U.S. within certain parameters. If they miss those particular timeframes there are penalties in place. The customs piece is a big part of that process and so if there are delays it will result in penalties from those clients that they won’t get paid for the full value of the contract.
“So KPIs become an important part of eliminating supply chain uncertainty, reduce surprises and they eliminate supply chain drama which is something I don’t think any of us want in a complex world where there are lots of variables to manage.”
My question is, has your company identified KPIs for trade-related activities that impact (or could impact) your financial performance?
Related: Successful Trade Compliance Depends on Benchmarking
An insightful new article in this month’s Canadian Lawyer magazine describes the evolving and sometimes contentious relationship between compliance and legal functions within many organizations today as they determine how best to deal with the various challenges presented by an increasingly complex and demanding regulatory environment when it comes to international trade. Obviously, there is [...]
An insightful new article in this month’s Canadian Lawyer magazine describes the evolving and sometimes contentious relationship between compliance and legal functions within many organizations today as they determine how best to deal with the various challenges presented by an increasingly complex and demanding regulatory environment when it comes to international trade.
Obviously, there is no “one size fits all” model of how the compliance function is best handled within an organization; much depends on a variety of factors such as size, available resources, corporate culture, and so on.
As noted by a retired RBC consultant quoted in the article, “There are all kinds of models for compliance and it’s a moving target.”
While that is certainly undeniable, there is also a growing awareness of the fact that compliance frequently involves an overlapping “convergence point” wherein the implications of compliance across different aspects of the business calls for a more holistic approach to not only ensure that senior management is fully apprised of all relevant compliance issues affecting the organization, but that effective risk mitigation protocols are being implemented as needed at all levels of the business.
Compliance and how it fits with the legal department in an organization is undergoing somewhat of a review in corporate circles these days. In part, it may be due to the increase in regulatory legislation and globally due to politics, but there are others. According to John Boscariol, leader with McCarthy Tétrault LLP’s international trade and investment law group, there is a laundry list of things that should encompass compliance and the legal department should be aware of them and make sure senior management knows they are being monitored. He refers to this as “compliance convergence.”
Boscariol says compliance requires senior management commitment to drive it and there should be structured tools to help back it up including a compliance manual and guidelines. It also means having an authoritative senior officer responsible for compliance. From there, you need training and education for employees, officers, board members, and business partners. A good compliance regime also includes internal audits, reviews, and investigations, covers voluntary disclosures, contract reviews, mergers and acquisition due diligence, and the screening of customers, suppliers, and all other business partners.
Boscariol says where the convergence point comes is really about knowing who you’re doing business with as supplier, customer, creditor, debtor, or what your product or technology service is used for and by whom. “It brings together issues like economic sanctions, export controls, anti-money laundering, anti-terrorism rules where you’re going to be doing the same things, compliance-wise, within your organization to protect it going forward,” he says.
Essentially synonymous with what we describe in this space as an “Integrated Trade Compliance Strategy,” Boscariol’s concept of “compliance convergence” likewise calls for a greater level of awareness about compliance issues between various aspects of the business and more efficient information-sharing that transcends isolated functional silos – a common problem highlighted in our first White Paper and subsequently explored in more depth here.
Compliance awareness and cooperation needs to be shifted from the tail end of goods movement to the front end… Writing in Industry Week Magazine earlier this month, Jason Childers, a director of product engineering at CDC Software, made a persuasive case for what we have termed an “Integrated Trade Compliance Strategy” in an article [...]
Compliance awareness and cooperation needs to be shifted from the tail end of goods movement to the front end…
Writing in Industry Week Magazine earlier this month, Jason Childers, a director of product engineering at CDC Software, made a persuasive case for what we have termed an “Integrated Trade Compliance Strategy” in an article entitled Compliance in a Complex Global Supply Chain World.
Childers frames his discussion by describing 
the growing complexity of today’s rapidly changing trade environment from the perspective of the typical supply chain executive engaged in global activity and suggests that “the proliferation of international regulatory trade requirements” resulting from the growing plethora of bilateral and multilateral trade agreements between countries should be a key focus today – even for those not working directly in a customs or compliance role.
Why? Well, aside from the obvious pecuniary consequences of non-compliance, Childers maintains that it “can have major impact on a company’s operating performance, reverberating deeply into an organization as well as broadly across collaborative supply lines.” The wider aspects of compliance risk elements such as changing classifications and tariffs not only impact total cost, but also have the ability to determine whether or not global sourcing decisions make economic sense.
It is inevitable that every enterprise involved in global trade will be audited, either by U.S. or European officials. Compliance departments are under pressure to accommodate the growing demands that will be put on their resources and personnel. They need to begin to collaborate more closely with both the manufacturing and supply chain/logistics functions in their companies. It will be important to reach even deeper to work with product design and development. Trade regulation compliance has not been a central concern for many of these other areas. Establishing greater cooperation with and visibility into these departments should be a top priority of compliance risk management.
In order to be effective and efficient, compliance awareness and cooperation needs to be shifted from the tail end of goods movement to the front end where designers and product planners specify materials and components. It should be expanded to include manufacturing, purchasing and supply chain/logistics. It should embrace sales and order management where shipment commitments are made.
Childers urges all companies to implement programs that: 1) shift compliance activities as far forward in the process as possible; 2) view compliance as a collaborative managed service to multiple areas of the organization; and 3) constantly monitor non-compliance, measuring it against industry best-practice indicators in order to drive improvements.
These best practices are mirrored in our own findings that have been detailed on this blog and outlined in our most recent white paper.
Bob Cowie, Vice President Consulting of GHY International shares his insights on the implications of Duty Drawback and an Integrated Trade Compliance Strategy. He also shares some helpful tips. United States Customs and Border Protection estimates that 3 billion dollars per year of US import duties are eligible for drawback, of which 80% are not [...]
Bob Cowie, Vice President Consulting of GHY International shares his insights on the implications of Duty Drawback and an Integrated Trade Compliance Strategy. He also shares some helpful tips.
United States Customs and Border Protection estimates that 3 billion dollars per year of US import duties are eligible for drawback, of which 80% are not recovered. Although there are no published statistics available from Canada Border Services Agency, it can be reasonably assumed that the unrecovered amounts are also significant.
Up to 99% of all US Customs duties can be refunded on imported merchandise subsequently exported, or in some cases used to manufacture a new article for export. Duties paid up to 6 years ago may be refunded against exports over the past 3 years. Up to 100% of all Canadian Customs duties can be refunded on imported merchandise subsequently exported, or in some cases used to manufacture a new article for export. A claim for drawback must be filed within 4 years of the date the goods were released from Customs.
The growth of off-shore and near-shore sourcing has made it increasingly important for Canadian and United States firms to adopt strategies that factor into account opportunities to reduce or eliminate cost inputs through programs like Duty Drawback.
Alan Dewar, Vice President Canadian Operations shares his insights on the implications of Trade Agreements and an Integrated Trade Compliance Strategy. He also shares some helpful tips on how you can assess your existing trade agreement management program. For more videos subscribe to our Vimeo or YouTube channels.
Alan Dewar, Vice President Canadian Operations shares his insights on the implications of Trade Agreements and an Integrated Trade Compliance Strategy. He also shares some helpful tips on how you can assess your existing trade agreement management program.
For more videos subscribe to our Vimeo or YouTube channels.
Integrated Trade Compliance Strategies: Seven Best Practices of Leading Traders In the series of posts itemizing the “7 Best Practices of Integrated Trade Compliance” described in our most recent white paper we have attempted to briefly capture some of the ways leading traders are effectively responding to the various risks associated with rapid globalization, increasing [...]
Integrated Trade Compliance Strategies: Seven Best Practices of Leading Traders
In the series of posts itemizing the “7 Best Practices of Integrated Trade Compliance” described in our most recent white paper we have attempted to briefly capture some of the ways leading traders are effectively responding to the various risks associated with rapid globalization, increasing supply chain complexity, and intensifying international regulatory vigilance.
To help benchmark how your organization’s current practices stack up by comparison to those regarded as Best Practice Leaders in the field of trade compliance, consider the following questions:
• Is global trade compliance a corporate priority?
• Do you have a champion who owns trade compliance across the enterprise?
• Have Key Performance Indicators been developed to measure trade compliance performance?
• Are automated systems in place to track trade compliance variables?
• Are cross-functional communication protocols in place for compliance priorities?
• Do corporate plans for growth and expansion include trade compliance factors?
• Are third-party service providers engaged as partners in achieving trade compliance?
If you answered “yes” to all of the above, that’s terrific and you should be congratulated for being a Best Practice Leader in this regard. You are, however, also the exception to the rule. Fact of the matter is that the majority of companies are still struggling with the issue of trade compliance and coming to terms with the difficult challenge of how best to integrate the concept into their routine management practices and achieve the benefits of doing so.
Follow this link to download the new GHY White Paper “Seven Best Practices of Leading Traders”.
Also in this series:
• 7 Best Practices of Leading Traders
• Corporate Leadership is Essential to Effective Trade Compliance
• Trade Compliance Needs to be Owned by a “Champion” or Team Within the Organization
• Successful Trade Compliance Depends on Benchmarking
• Automating Your Trade Compliance Success
• Effective Communications Protocols are Vital Aspects of Trade Compliance
• Integrate Trade Compliance Into Plans For Growth & Expansion Into New Markets
• Team up with Professional Service Providers for Compliance Success
• Putting Best Trade Compliance Practices Into Action
Integrated Trade Compliance Strategies: Seven Best Practices of Leading Traders In today’s globalized business environment, the trade compliance landscape is growing increasingly complex, as are the consequences of failing to comply. Unfortunately, it appears that a majority of organizations still regard the myriad of expanding regulations pertaining to international trade merely as an onerous burden [...]
Integrated Trade Compliance Strategies: Seven Best Practices of Leading Traders
In today’s globalized business environment, the trade compliance landscape is growing increasingly complex, as are the consequences of failing to comply. Unfortunately, it appears that a majority of organizations still regard the myriad of expanding regulations pertaining to international trade merely as an onerous burden of doing business.
However, an increasing number of best-in-class companies have come to the realization that a truly effective and integrated trade compliance strategy not only mitigates the numerous risks involved, but can actually be a value-added proposition that helps fast-track the seamless movement of their goods across borders, thereby providing them with a significant competitive supply chain advantage.
The objective of our “Seven Best Practices of Leading Traders” paper was to ascertain the similar operational features that exist between best-in-class companies, and to distill these common threads into a number of best practices.
Enterprises that stand out are those where corporate leadership empowers their trade compliance team to champion the cause as a critical issue across the entire organization, aligns performance with strategic business objectives and constantly measures the results, deploys automated tools capable of providing the maximum degree of accounting visibility, facilitates cross-functional interaction about trade compliance issues across both horizontal and vertical lines of communication, integrates trade compliance variables into their business plans, and encourages a dynamic transfer of relevant information between their service providers.
Follow this link to download the new GHY White Paper “Seven Best Practices of Leading Traders”.
Also in this series:
• 7 Best Practices of Leading Traders
• Corporate Leadership is Essential to Effective Trade Compliance
• Trade Compliance Needs to be Owned by a “Champion” or Team Within the Organization
• Successful Trade Compliance Depends on Benchmarking
• Automating Your Trade Compliance Success
• Effective Communications Protocols are Vital Aspects of Trade Compliance
• Integrate Trade Compliance Into Plans For Growth & Expansion Into New Markets
• Team up with Professional Service Providers for Compliance Success
• Best Practice Compliance: Benchmarking Questions
Integrated Trade Compliance Strategies: Seven Best Practices of Leading Traders Best Practice #7 Almost all companies outsource some degree of their customs activities to professional service providers. In fact, according to Supply Chain Consortium, 86 percent outsource functions such as automated entry filing with customs authorities. More complex compliance-related tasks such as documentation, duty computations, [...]
Integrated Trade Compliance Strategies: Seven Best Practices of Leading Traders
Best Practice #7
Almost all companies outsource some degree of their customs activities to professional service providers. In fact, according to Supply Chain Consortium, 86 percent outsource functions such as automated entry filing with customs authorities. More complex compliance-related tasks such as documentation, duty computations, audit management, and tariff classification are split quite evenly between utilizing in-house resources, outside service providers, or a combination of both.
Service providers engaged by traders with integrated compliance strategies work in collaboration with the enterprise in their areas of expertise. Their insight is shared with other service provider partners so there is continuity and consistency in the application of trade regulations, or to support commercial decisions that are made.
“Knowledge sharing between service providers in legal, customs, and financial areas is essential.”
They are often responsible to a senior executive in the Finance and Administration function for accountability, as it is most likely to be the common denominator that connects the enterprise’s other components together horizontally and vertically. Importantly, the company’s legal firm needs to be engaged where client-lawyer privilege is appropriate, such as in the case of prior disclosures, “reason to believe” scenarios, and complex regulatory appeals.
At points there will be overlap between the service providers, especially in the case of audits that span duty, tax, and other government department scrutiny. But ideally the work done for the benefit of the client should be applied where appropriate to areas of cross over, or where collaboration is necessary.
Ideally, the advanced global trader would develop a “responsibility matrix” that identifies commercial activities with international compliance consequences, cross-referenced to the core service providers in the finance, legal, trade, and customs areas. The core rationale for creating such a tool is that no one service provider is an island – there are degrees of integration and separation that make it incumbent on the international trader to create synergies around, so that institutional knowledge is shared and leveraged effectively by external stakeholders.
Follow this link to download the new GHY White Paper “Seven Best Practices of Leading Traders”.
Also in this series:
• 7 Best Practices of Leading Traders
• Corporate Leadership is Essential to Effective Trade Compliance
• Trade Compliance Needs to be Owned by a “Champion” or Team Within the Organization
• Successful Trade Compliance Depends on Benchmarking
• Automating Your Trade Compliance Success
• Effective Communications Protocols are Vital Aspects of Trade Compliance
• Integrate Trade Compliance Into Plans For Growth & Expansion Into New Markets
• Putting Best Trade Compliance Practices Into Action
• Best Practice Compliance: Benchmarking Questions
Integrated Trade Compliance Strategies: Seven Best Practices of Leading Traders Best Practice #6 In an increasingly globalized trade environment, more companies than ever before are tapping into new export markets around the world. While this presents tremendous business opportunities, to compete effectively, companies need to be mindful of the various risks involved — chief amongst [...]
Integrated Trade Compliance Strategies: Seven Best Practices of Leading Traders
Best Practice #6
In an increasingly globalized trade environment, more companies than ever before are tapping into new export markets around the world. While this presents tremendous business opportunities, to compete effectively, companies need to be mindful of the various risks involved — chief amongst them, complying with frequently complex regulatory systems applicable to international transactions.
According to a recent report by Deloitte Financial Advisory Services on global investments,
for North American companies looking to expand in emerging markets,“compliance and integrity
risks appear to be rising sharply.” The report found that increased foreign activity significantly raised the stakes for corporate strategists and compliance officers.
More than ever, a cautious “look before you leap” approach should be at the top
of the agenda for globally active corporations, the report concluded.
“Companies seeking to expand global markets need to be mindful of the myriad of regulatory and trade compliance risks involved.”
Our best practice research with companies surveyed appears to validate that cautionary warning, indicating that when evaluating potential new markets, leading global traders and best-in-class companies are keenly aware of the need to thoroughly assess all of the legal requirements, security concerns, and supply chain implications involved. As a result, senior executives at these firms routinely incorporate trade compliance risks into their strategic planning process when exploring growth opportunities abroad.
To accentuate that point, one international chemical manufacturer we interviewed spoke about the importance of the firm’s reputation and brand as its most important asset, that must be protected when considering any new business development initiative or contract with suppliers or customers. Compliance integrity is viewed as a critical element of the brand’s equity, and mandated as a key point of emphasis by company ownership as a result.
Follow this link to download the new GHY White Paper “Seven Best Practices of Leading Traders”.
Also in this series:
• 7 Best Practices of Leading Traders
• Corporate Leadership is Essential to Effective Trade Compliance
• Trade Compliance Needs to be Owned by a “Champion” or Team Within the Organization
• Successful Trade Compliance Depends on Benchmarking
• Automating Your Trade Compliance Success
• Effective Communications Protocols are Vital Aspects of Trade Compliance
• Team up with Professional Service Providers for Compliance Success
• Putting Best Trade Compliance Practices Into Action
• Best Practice Compliance: Benchmarking Questions
Integrated Trade Compliance Strategies: Seven Best Practices of Leading Traders Best Practice #4 Effective communication is a perennial challenge within all organizations, but it assumes an even greater degree of difficulty when the issues involved are inherently complicated and both the legal framework and supply chain implications associated with them is constantly changing. Amongst respondents [...]
Integrated Trade Compliance Strategies: Seven Best Practices of Leading Traders
Best Practice #4
Effective communication is a perennial challenge within all organizations, but it assumes an even greater degree of difficulty when the issues involved are inherently complicated and both the legal framework and supply chain implications associated with them is constantly changing.
Amongst respondents to our informal survey, regular reporting on the value of trade compliance initiatives according to core performance standards was the most common means of communication between the compliance group and senior management. Aside from companies like Toshiba Canada where some of the compliance group reports directly to the president on a day-to-day basis, communication with top management by the compliance team at most companies is generally limited to issues of critical importance (e.g., infractions, penalty assessments, adverse regulatory change, etc.) or those considered to be of strategic value, for example, setting corporate guidelines and procedures for import/export activities).
“Communication and meeting protocols are in place to track current and emerging trade compliance issues.”
With regards to information sharing about emerging trade compliance issues across horizontal lines of communications within the organization, most companies surveyed accomplish this via email notifications in addition to regular cross-functional meetings. This collaborative approach seems to align with results of a recent global survey by the management consulting firm McKinsey & Co. in which regular cross-functional meetings were cited by respondents as the most common process for making supply chain decisions.
There is still much room for improvement in this area however. For example, more than a third of the aforementioned McKinsey study respondents said their operations teams never or rarely meet with sales and marketing to discuss supply chain tensions. Bridging these kinds of functional divides that thwart collaborative action remains a challenge for many companies in creating competitive supply chains capable of fulfilling the requirements of an integrated trade compliance strategy.
Follow this link to download the new GHY White Paper “Seven Best Practices of Leading Traders”.
Also in this series:
• 7 Best Practices of Leading Traders
• Corporate Leadership is Essential to Effective Trade Compliance
• Trade Compliance Needs to be Owned by a “Champion” or Team Within the Organization
• Successful Trade Compliance Depends on Benchmarking
• Automating Your Trade Compliance Success
• Integrate Trade Compliance Into Plans For Growth & Expansion Into New Markets
• Team up with Professional Service Providers for Compliance Success
• Putting Best Trade Compliance Practices Into Action
• Best Practice Compliance: Benchmarking Questions
Integrated Trade Compliance Strategies: Seven Best Practices of Leading Traders Best Practice #4 It should come as no surprise that compared to businesses still largely reliant on manual recordkeeping and paper-based systems, organizations that are effectively utilizing the latest generation of automated trade solutions are far more likely to be in compliance with all applicable [...]
Integrated Trade Compliance Strategies: Seven Best Practices of Leading Traders
Best Practice #4
It should come as no surprise that compared to businesses still largely reliant on manual recordkeeping and paper-based systems, organizations that are effectively utilizing the latest generation of automated trade solutions are far more likely to be in compliance with all applicable regulations, thereby avoiding costly government fines and penalties. With this in mind, automated tools, centralized electronic recordkeeping and, most critically, the visible audit trail they facilitate, are now generally recognized as being absolutely necessary elements of a best practice approach to trade compliance.
A variety of different software solutions are presently being used by companies to manage their trade compliance functions — internally, through a third-party, via a portal, or with a trading partner. Additionally, an increasing number of supply chain software providers are teaming up with global trade management service providers to develop joint solutions that integrate and automate import, export, and trade agreement activities with logistics applications designed to track shipments, provide landed-cost assessment, ensure accurate data management, avoid fines, and leverage trade agreements favourably.
“Systems have been put in place to track and measure trade compliance variables in supply chains and sales channels”
Of the various solutions available, nearly half of companies we surveyed still prefer to utilize the system capability provided by their ERP vendors for global trade compliance. Toshiba Canada, for example, recently integrated their import database into the company’s ERP program so that now whenever a purchase order is generated (domestic or international) it is first automatically “scrubbed” through a “compliance aware” product matrix in the database to identify potentially controlled goods for final review and approval by the export compliance department.
Regardless of the particular technology utilized, the compliance systems of best-in-class companies tend to share the following features: online access to trade-related content (e.g., HS classifications); import/export document generation capabilities; automated commodity screening (e.g., for denied, restricted, sanctioned goods before and at transaction); electronic document exchange with service providers; updates and validations to/from HS classifications and product matrix database; and compliance-to-cargo security programs such as C-TPAT.
Follow this link to download the new GHY White Paper “Seven Best Practices of Leading Traders”.
Also in this series:
• 7 Best Practices of Leading Traders
• Corporate Leadership is Essential to Effective Trade Compliance
• Trade Compliance Needs to be Owned by a “Champion” or Team Within the Organization
• Successful Trade Compliance Depends on Benchmarking
• Effective Communications Protocols are Vital
• Integrate Trade Compliance Into Plans For Growth & Expansion Into New Markets
• Team up with Professional Service Providers for Compliance Success
• Putting Best Trade Compliance Practices Into Action
• Best Practice Compliance: Benchmarking Questions
Integrated Trade Compliance Strategies: Seven Best Practices of Leading Traders Best Practice #3 The experience of companies we interviewed suggests that organizations with the most successfully integrated trade compliance programs have established goals and objective outcomes against which they routinely measure their performance. KPIs provide performance visibility that reduces surprises and eliminates supply chain “drama” [...]
Integrated Trade Compliance Strategies: Seven Best Practices of Leading Traders
Best Practice #3
The experience of companies we interviewed suggests that organizations with the most successfully integrated trade compliance programs have established goals and objective outcomes against which they routinely measure their performance.
KPIs provide performance visibility that reduces surprises and eliminates supply chain “drama”
For example, by setting firm targets and closely monitoring the flow of information between corresponding databases, window fashion manufacturer Hunter Douglas reduced the number of tariff discrepancies occurring at the time of release by 95 per cent over the past three years.
The most common trade compliance performance measures are still focused on bottom line metrics such as penalties assessed, duties saved (usually by means of free trade administration) or liabilities avoided. Monitoring the percentage of orders experiencing a Customs hold and tracking compliance infractions not resulting in penalties are other common performance measures used.
Some companies however are also looking to other factors when determining the value of compliance. For clothing manufacturer Nygard International, compliance translates into both customer satisfaction and cost savings. Understanding that retailers have a penalty system for late delivery and short shipment of merchandise, Nygard’s aim is to avoid supply chain delays resulting from avoidable incidents of non-compliance, thereby significantly reducing the amount that was formerly budgeted to account for these avoidable losses.
Whatever key performance indicators (“KPIs”) are employed to routinely measure and report on performance, respondents frequently stressed that a lack of surprises, “certainty”, and an “absence of drama” were also considered to be valuable outcomes of the compliance team’s efforts.
Follow this link to download the new GHY White Paper “Seven Best Practices of Leading Traders”.
Also in this series:
• 7 Best Practices of Leading Traders
• Corporate Leadership is Essential to Effective Trade Compliance
• Trade Compliance Needs to be Owned by a “Champion” or Team Within the Organization
• Automating Your Trade Compliance Success
• Effective Communications Protocols are Vital
• Integrate Trade Compliance Into Plans For Growth & Expansion Into New Markets
• Team up with Professional Service Providers for Compliance Success
• Putting Best Trade Compliance Practices Into Action
• Best Practice Compliance: Benchmarking Questions
Integrated Trade Compliance Strategies: Seven Best Practices of Leading Traders Best Practice #2 Our survey findings confirmed that the compliance role is still evolving in response to demands of an increasingly complex trade environment. At the most sophisticated level, a senior manager of a multi-national fortune 500 level firm we interviewed related her experience as [...]
Integrated Trade Compliance Strategies: Seven Best Practices of Leading Traders
Best Practice #2
Our survey findings confirmed that the compliance role is still evolving in response to demands of an increasingly complex trade environment.
At the most sophisticated level, a senior manager of a multi-national fortune 500 level firm we interviewed related her experience as part of a global compliance team spread throughout the world, that reports directly to the global corporate controller, who in turn is responsible to the corporate board of directors.
Bill Conroy of Tyler Search Consultants notes how a global trade compliance director once explained his role and how his team is perceived internally: “We are perceived quite well, and we have strong management support. Company personnel tend to look at the compliance program like taking a maintenance drug. They may not like the taste, they may not like the side effects, and occasionally they may even refuse to take it, but in the end, they know they will have big problems without it. Many express relief that they have a compliance team to deal with the government visits.”
While that traditional view of the compliance role being one of regulatory “cop on the beat” or supply chain security chief is still quite prevalent, there is an increasing trend amongst globally active traders towards recognizing that compliance can, and should be, a more expansive, value-added proposition. This attitude drives the change from merely regarding trade compliance as a burdensome obligation into a proactive and commercially important function. Linking compliance with business success in this way results in the two becoming a single core responsibility, and thus, a more commercially appreciated function within the organization.
Follow this link to download the new GHY White Paper “Seven Best Practices of Leading Traders”.
Also in this series:
• 7 Best Practices of Leading Traders
• Corporate Leadership is Essential to Effective Trade Compliance
• Successful Trade Compliance Depends on Benchmarking
• Automating Your Trade Compliance Success
• Effective Communications Protocols are Vital
• Integrate Trade Compliance Into Plans For Growth & Expansion Into New Markets
• Putting Best Trade Compliance Practices Into Action
• Best Practice Compliance: Benchmarking Questions
Integrated Trade Compliance Strategies: Seven Best Practices of Leading Traders In a world of increasingly complex international supply chains, trade compliance expectations placed on global importers and exporters have never been higher. Our previous white paper released in 2010 entitled The Case for an Integrated Trade Compliance Strategy, isolated silo-based organizational structures as a major impediment [...]
Integrated Trade Compliance Strategies: Seven Best Practices of Leading Traders
In a world of increasingly complex international supply chains, trade compliance expectations placed on global importers and exporters have never been higher. Our previous white paper released in 2010 entitled The Case for an Integrated Trade Compliance Strategy, isolated silo-based organizational structures as a major impediment to effectively managing the growing demands of global regulators on critical sales and sourcing activities.
As a remedy, we advocated the case for an integrated approach, premised around horizontal and vertical functional visibility of all compliance “intersections” that have upstream or downstream consequences, with shared responsibility across functional lines and levels, up to and including the board of directors.
For this white paper, GHY’s research team set out to gain greater insight into the business practices of enterprises deemed as being highly compliant and integrated in their approach to strategically managing their trade compliance obligations.
Participants in our survey included industry-leading companies spanning a cross section of diverse industries. One-on-one interviews were carried out with senior executives responsible for trade compliance to explore particular issues in more detail, and the 7 best practices of the group were abstracted and synthesized into this white paper.
What we discovered in this survey is that while leading organizations wrestle with “the compliance issue” in different ways best suited to their own strategic architecture and operational capacities, nonetheless there are common traits and best-in-class business practices shared by companies that are working towards successful implementation of an integrated trade compliance strategy.
Best Practice #1
Of the seven “best practices” that we identified, foremost is the need for corporate leadership in this area, and a team willing to actively champion trade compliance as a critical issue across the entire organization.
Best performers all recognize that key performance indicators are essential to the success of any compliance program — “What gets measured gets done” as the old maxim goes. These KPIs are most usually focused on bottom line metrics, but there is also a move amongst some toward measuring other benefits of compliance such as customer satisfaction.
Automated tools, centralized electronic recordkeeping, and a visible audit trail are generally recognized as essential elements of a best practices approach to trade compliance. Effective information sharing about trade compliance issues across horizontal and vertical lines of communication within the organization is another critically important best practice shared by leading companies.
Finally, the degree to which companies integrate trade compliance factors into their business development plans and engage with professional service providers to help them achieve their strategic objectives, are both significant determinants of success. Successful implementation of an integrated trade compliance strategy involves a constant and dynamic knowledge transfer between all the parties who provide service in the legal, financial, trade, customs, and logistics areas under the client’s direction.
In a nutshell, rapid globalization, supply chain complexity, and intensifying regulatory vigilance translates into escalating trade compliance risk for internationally active corporations and their leadership teams at both the Director and Executive levels.
Follow this link to download the new GHY White Paper “Seven Best Practices of Leading Traders”.
Also in this series:
• 7 Best Practices of Leading Traders
• Trade Compliance Needs to be Owned by a “Champion” or Team Within the Organization
• Successful Trade Compliance Depends on Benchmarking
• Automating Your Trade Compliance Success
• Effective Communications Protocols are Vital
• Integrate Trade Compliance Into Plans For Growth & Expansion Into New Markets
• Team up with Professional Service Providers for Compliance Success
• Putting Best Trade Compliance Practices Into Action
Integrated Trade Compliance Strategies: Seven Best Practices of Leading Traders This past week GHY International released its second white paper in the Integrated Trade Compliance Strategies series. This paper authored by Reynold Martens, Executive Vice President of GHY International and President, GHY USA, Inc. Reynold was the author of the original White Paper titled: A [...]
Integrated Trade Compliance Strategies: Seven Best Practices of Leading Traders
This past week GHY International released its second white paper in the Integrated Trade Compliance Strategies series. This paper authored by Reynold Martens, Executive Vice President of GHY International and President, GHY USA, Inc. Reynold was the author of the original White Paper titled: A Case for an Integrated Trade Compliance Strategy.
This white paper builds upon the previous one by highlighting 7 best practices of leading traders. The data collection was a result of operational understanding, interviews with traders (Clients and non clients), and survey information collected earlier in 2011.
The result is a white paper that takes the foundation that was established in the first white paper that an Integrated Trade Compliance Strategy model is the correct one to use, now builds on the elements that result in getting the construct of that strategy right the first time.
While each organizational structure and culture are unique, these 7 best practices of leading traders and common threads that run between all of them.
Follow this link to download the new GHY White Paper “Seven Best Practices of Leading Traders”.
If you would like to read the original white paper: A Case for An Integrated Trade Compliance Strategy you can view it on Slideshare from this link.
Also in this series:
• Corporate Leadership is Essential to Effective Trade Compliance
• Trade Compliance Needs to be Owned by a “Champion” or Team Within the Organization
• Successful Trade Compliance Depends on Benchmarking
• Automating Your Trade Compliance Success
• Effective Communications Protocols are Vital
• Integrate Trade Compliance Into Plans For Growth & Expansion Into New Markets
• Team up with Professional Service Providers for Compliance Success
• Putting Best Trade Compliance Practices Into Action
• Best Practice Compliance: Benchmarking Questions
In May 2011 KPMG released a report based upon a survey and interviews they performed in the UK specifically about how has the complexity of the supply chain changed and what does that mean. The results are not unique to the UK, the themes and messages echoed in this report appear to be common across [...]
In May 2011 KPMG released a report based upon a survey and interviews they performed in the UK specifically about how has the complexity of the supply chain changed and what does that mean.
The results are not unique to the UK, the themes and messages echoed in this report appear to be common across all regions and territories globally.
It is interesting that the report does reinforce the messages and concepts we have continued to share with you from our first white paper, A Case for An Integrated Trade Compliance Strategy.
Quote from Reports Conclusion
“There is no doubt that global supply chains are in a state of flux. Massive change and upheaval, increased risk and new sustainability considerations have coalesced to push supply chain high onto the corporate boardroom agenda.This survey and related analysis clearly demonstrates that those organizations with mature supply chain approaches are inherently better suited to meet and respond to these complexities and challenges.”
Some of the findings from this report that reinforce the concepts introduced in an Integrated Trade Compliance Strategy can be summarized as follows:
- Underlying all of this data, however, three main themes seemed to resonate across the country:
- The drive for more efficient and interconnected supply chains has exposed network operations to unexpected risks;
- Many supply chains are incapable of keeping up with the pace of change underway in the business world; and Sustainability measures will force changes in operating models that will bring additional complexity to the supply chain.
You can access this report on the KPMG website
http://www.kpmg.com/Ca/en/IssuesAndInsights/ArticlesPublications/Pages/SupplyChainComplexityManagingConstantChange.aspx
Recently I read some great pieces about doing business in China. While we don’t have any experience operating in China, I thought the articles gave a really good understanding of the environment and some of the risks and opportunities. As this the second piece we have posted on this topic of doing business in another [...]
Recently I read some great pieces about doing business in China. While we don’t have any experience operating in China, I thought the articles gave a really good understanding of the environment and some of the risks and opportunities. As this the second piece we have posted on this topic of doing business in another country, let us know what you think about this type of post and what countries you would want to hear about next. As we come across good information that builds upon this theme, we will continue to share with them with you.
Many thanks to the folks at Business Without Borders (HSBC Bank) for creating this content.
The first guide is a multi Country Guide from Pricewaterhouse Coopers (PwC) on doing business in China. The table of contents provides you some insight to the topics covered in this country guide:
Canada’s new Conservative government has trade on their mind as demonstrated by this visualization
The map graphic was created just 4 weeks ago indicating the status of Canada’s trade agreements with the world. It is already sadly out of date as additional future agreements have been announced. Some of the potentially future trade agreements include: Korea, Japan, Ukraine, and the rest of the EU not already covered by an exiting trade agreement.
Now that Prime Minister Stephen Harper has a majority government, he is working to expand Canada’s opportunity in a global marketplace with the creation of these trade agreements.
Risky Business: The Problem with Silo’s Back in October 2010 we introduced the foundational elements of why an Integrated Trade Compliance Strategy makes sense in todays global supply chain world. You can find the original piece titled; The Problems with Silo’s. In that original article we shared some insights as to why a silo based business may consider the [...]
Risky Business: The Problem with Silo’s
Back in October 2010 we introduced the foundational elements of why an Integrated Trade Compliance Strategy makes sense in todays global supply chain world. You can find the original piece titled; The Problems with Silo’s.
In that original article we shared some insights as to why a silo based business may consider the adoption of an Integrated Trade Compliance Strategy. To refresh your memory here was that original list we shared.
Some of the issues that arise in evaluating a silo based organization include;
- Compliance outsourced or compartmentalized
- Import and export functions internally are often “silos”
- Trade related financials have limited corporate visibility
- Regulatory interventions force executive focus
- End result is clear audit trails and accountability
- Integrated cross-functional approach reduces exposure
- End game: reduce risks & maximize opportunities
- Are international traders adapting to new trade reality?
- Cost of reacting is more than a taking a proactive stance
