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Global Supply Chain

Is Trade Compliance Simplicity Achievable? (Hint: It is, and here's how!)

Ned Blinick

Chief Product Officer

Too often we hear from the trade compliance professionals that they are constantly challenged by their job. They are often understaffed (overworked) and are constantly dealing with complexity stemming from basic work like screening contacts and companies, classifying products for regulatory agencies, communicating internally with stakeholders and externally with freight forwarders and customs brokers, gathering information for reports, auditing entries, preparing documents, and the list goes on. Trade compliance professionals take their work very seriously and want to do a really good job. But given the nature of their work they would say that their specific job is anything but simple.

So the question is - "Is simplicity achievable in Trade Compliance".

As you would suspect, I believe it is. However, before accepting my belief, let's look at why Trade Compliance is so difficult and complex in its current state at most companies that have a trade compliance group. For companies that don't have a designated trade compliance group or individual they are probably outsourcing all the work so they might not have the stress - but they probably have other issues that they are not even aware of.Trade compliance is challenging because:

  1. Data is not centralized: We often hear is that information is all over the place and often hard to get. This lack of a centralized information source requires the user to use multiple systems to get information they need or validate information they have received. These systems can be internal enterprise type system or external supplier and service provider systems. This lack of centralized data "sucks" time and increases the level of stress because too often it is impossible to get the information when it is needed and sometimes it's not available at all.
  2. Presentation of information is poor: Too often information is not available in an electronic format (EDI or XML) or even simple spreadsheet (.csv) format. On the flip side the trade compliance system (if there is one) is not able to accept information that is available electronically. In either case it means manual intervention (time consuming and error prone) and the information is not stored centrally (challenge 1) and not easily accessible. This leads to challenge three.
  3. Processes are mostly manual: There is little or no system support to identify and flag information that is incorrect or inconsistent with the source information. Examples include: products may arrive at the port of entry without proper description or classification; samples may arrive without purchase orders from accounts that are not on the system; quantities declared on the ASN may not agree with what is ordered or received; the value for duty or other elements of the customs entry or PGA filing may be incorrect. This is not an exhaustive list, but you get the point. The inability to be able to validate information and make changes as and when necessary requires more manual oversight and management, dealing with problems frequently and repeatedly, and a lot of time spent on non-value added activities. Most importantly, the inability to properly validate or audit means greater compliance risk to the company and potentially increased costs or fines.
  4. Reporting is really difficult: Getting the right information together to prepare trade compliance related reports is really difficult and extremely time consuming. If the information is not centralized it needs to be gathered and put into spreadsheets so that it can be reported upon. In addition to the time element, there is the risk of inconsistency in reporting due to the unstructured nature of spreadsheets. The level of frustration and interest focused around reporting is really quite remarkable.

The complexity of trade compliance is not so much the specific tasks that have to be done. The task requirements are pretty well documented and there is software that supports specific trade compliance task (i.e. DPS, HTS Classifications, License Determination, FTA COO determination, etc.). The root of trade compliance complexity lies in the volume of information that is necessary to support trade compliance, the ability to access it easily, and use it productively. Trade compliance is complex because the area lacks an over-arching capability to aggregate the information and manage it in an accessible, meaningful, and useful way.

How do you make Trade Compliance simple?

Here are 4 (+1) simple steps:

  1. Recognize that there are solutions that connect all the dots in the Trade Compliance universe. They are platforms that enable information to be aggregated and centralized and enhanced to support the requirements and processes of your Trade Compliance team. The platform needs to link content solutions such as Denied Party Screening, HTS/Schedule, FTA determination, License determination, etc. as well as transactional information from suppliers, customers and service providers. It is not the ease of accomplishing any one task that creates simplicity for the Trade Compliance professional, it is the connection and data flow between the various point solutions and enterprise systems.
  2. Be able to articulate the requirements and processes you have today and how you would like the future to look like. Your wish-list should encompass current requirements and future wants so that you can find the solution that can flex and grow with you. Part of this requirements definition is to understand the value that a solution should deliver so you can properly evaluate the solution. You might not have the ability or bandwidth to do this on your own and need help. If so, you should contact me or another solutions provider who will help walk you through this activity.
  3. Find a solution provider that will listen, guide and support you through the transition period and service you throughout the duration of your relationship. This means finding a solution provider that understands that your business processes are unique and can configure their solution to your needs, both from a validation and process perspective.
  4. Make sure your boss and other stakeholders in the company understand how simplified trade compliance processes insure that they get the information they need to support and streamline their work. This might seem daunting but we have worked with people who have been able to do just this and been rewarded.

Here a BONUS one:

  1. Make sure that you are never (read: NEVER!!!) locked in to any long term contracts (greater than 1 year). There is no good reason that any company or person should be locked in to a solution provider for an extended period of time, and it is not in your organization's best interest. Find a great solution provider that needs to earn your loyalty each and every day.

Getting to trade compliance simplicity isn't difficult or necessarily expensive. With today's technology, trade compliance software is available to simplify process and deliver incredible capability across the spectrum of trade compliance needs. The benefits of trade compliance simplicity are really quite exceptional and worth pursuing. However, it does take a little effort and a strong commitment.Ned Blinick is Chief Product Officer of 3rdwave.co. He has been involved in global trade for too many decades and he loves making the global supply chain simpler for everyone. If you would like to engage with Ned he would really enjoy the opportunity of communicating with you or your boss. He can be reached at (416) 510 8800 ext 234 or at eblinick@3rdwave.co