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Automation - the glue for Best-in-Class Global Trade Management

Ned Blinick

May 26, 2016

“Teamwork is the ability to work together toward a common vision. The ability to direct individual accomplishments toward organizational objectives. It is the fuel that allows common people to attain uncommon results.”

– Andrew Carnegie

Automation provides the ability to reduce repetitive manual activity, gather and organize data into meaningful and contextualized information, support seamless collaboration among colleagues, team members and associates, and focus the organization on its overarching objectives. In other words, automation is the foundational tool that enables corporate teamwork and the ability of the organization to optimize its common vision. The degree to which automation is incorporated into the organization's DNA is reflected in the level of success in achieving the overarching objectives

Global trade management (GTM) is comprised of 3 distinct but highly dependent functions in a company’s global supply chain. This is true whether a company is a large multinational or a small importer: Global Logistics, Regulatory Compliance, and Trade Finance. The challenge in executing GTM is that these functional areas often have competing objectives, different reporting structures, and don’t easily share meaningful information. In aggregate, they limit the ability of the organization to achieve the results that GTM promises.Best-in-class global organizations understand the importance and value of GTM as part of an overall corporate supply chain strategy and are constantly working towards and investing in their personnel and systems to improve their capabilities in the import and export environments. However, most companies ignore the benefits of GTM. So the question is why? From my perspective the answer comes down to 2 basic issues.

1. Global trade is not a strategic priority.

Global trade is not a strategic priority - We have talked to many companies where it is evident that buying or selling internationally represents minimal activity. In these instances GTM doesn’t offer opportunity to deliver significant value when compared to their domestic manufacturing and supply chain operations. It is clear that in these organizations the investment in GTM solutions will not occur...any time soon

2. Corporate ignorance or lack of understanding.

Lack of understanding or corporate ignorance. Companies where global trade is an important component of the organization’s raw material, finished product, or sales mix, are missing opportunity if GTM is not well supported. The vast majority of companies lack a comprehensive understanding of the value of GTM in spite of the empirical evidence of the benefits that best-in-class GTM delivers. From our extensive conversations with the operators in logistics and trade compliance the value proposition is clear. However, to most senior managers the discussion on GTM or its value is “moot” because of their lack of understanding of the benefits. Those organizations that minimize their investment in GTM automation are suboptimizing their import and export processes, increasing their regulatory and financial risk, increasing product and operating cost, and reducing their competitive position in an increasingly competitive environment. When companies are focused on cost mitigation (a nice way of saying cost cutting) and not looking at their import/export processes through a GTM lense they are missing a great opportunity, GTM’s value is that the savings directly accrue to the bottom line. It is not sexy but it is really valuable. What is apparent when we talk to operators that have to execute global trade functions. is that management rarely makes the investment in support tools that will enable the organization to achieve significant GTM benefit. The reason is that top management does not appreciate the extensive and cross-functional reach of GTM and the “below the line value” that GTM offers. What makes this particularly frustrating is that today there are powerful automated GTM solutions to support the global logistics operators, trade compliance specialists and financial teams on a singular platform and deliver incredible value and cost reductions. These systems can be acquired with virtually no risk (of implementation or ongoing usage) and at a very affordable cost.GTM provides opportunity to drive real net value through vastly improved global supply chain operations and dramatically lower cost of inventory. The benefits of GTM have been extensively documented by university studies and research consulting firms. Among the benefits that GTM deliver are:

  1. Global logistics cost reductions through improved shipment visibility and performance measurement and reporting.
  2. Extended inventory control.
  3. GTM provides the ability to better manage the entire purchase-to-receipt supply chain by providing increased visibility into the supplier product positioning and availability thereby reducing lead time and total inbound fulfillment time.
  4. GTM provides total product inbound life-cycle visibility turning in-transit inventory into actionable inventory fulfillment stock thereby lowering safety stock requirements.
  5. Lower inventory cost GTM’s ability to lower inventory across the entire global supply chain (see 2 above) has a profound effect on total landed cost of inventory, inventory safety stock levels, cost of capital related to inventory, and related warehouse management and other costs.
  6. Trade Compliance Risk mitigation.
  7. GTM brings together trade compliance operations with trade compliance content in a simplified platform insuring control over the information being submitted to customs (CBP) and other government agencies (PGAs).
  8. GTM is a platform that aggregates, audits and validates information from internal operations and external partners supporting very high levels of trade compliance, logistics and financial transparency and collaboration
  9. Global trade process automation.
  10. GTM solutions automate the labor intense activities of international trade and trade compliance (import/export documentation, product classification management, FTA qualification, and license determination and control) - freeing up precious staff resources.
  11. GTM automation allows for extensive audit, validation and reconciliation processes between operations, trade compliance and finance in a manner that is simplified and streamlined.
  12. GTM automation delivers total supply chain visibility of product throughout the purchase-to-receipt or sell-to-cash process.
  13. GTM allows for cross-functional and inter-company collaboration about things “global supply chain”. Automation allows for aggregated information to be shared in a truly on-demand environment in near real-time.

Automated Global Trade Management is designed to deliver organizations with an incredible capability to manage, influence and even control events in their global supply chains. Without automated GTM, organizations are sub-optimizing their global supply chain execution and clearly missing out on opportunities to really improve their organizational results.