Digitization is the conversion of analog information (paper-based) into a digital format. In a business context, it goes further - Digitization is the automation of processes based on digital information formats. It is the replication of the real (physical) world in a digital format.The more granular and comprehensive the data captured in digital format the higher the fidelity and resolution of the picture presented through digitization. The greater the clarity and scope of the picture the better the quality and contextualization of information - which in turn improves the decision process and outcomes.Digitization began in the early 1970s with the advent of the computer. It accelerated through the 1990s and 2000s as PCs became accepted and commonplace in business and for personal use. However, digitization really became mainstream around 2009 when there were officially more "things" than people connected to the internet. The interaction of people and things on the internet increased in intensity around the same time with the creation of the "smartphone" and its ubiquitous adoption. Digitization is an essential cornerstone capability that enables Trade Compliance to deliver to its true potential. From the perspective of Trade Compliance, understanding digitization is particularly relevant because Trade Compliance is heavily dependent on lots of information and much of that information is still in analog format. By converting all that information into a dynamic virtual representation of the real world, Trade Compliance will be able to deliver its true potential. However, just being able to receive or send information digitally does not make for a digitized environment. What defines digitization is the synchronization of digital information with the work processes. The degree to which the information is synchronized with and integrated to the business processes defines the level of digitization.
The combination of "things and people" constantly connected to the internet radically changes the way we relate to our customers, suppliers, service providers, and internal associates. Digitization changed and continues to change, the way we see and interact with information. The smartphone ushered in the "app" which changed how we access and use information and this has carried over into a vast universe of new products. Shrewd investment in digitalization holds the promise to leapfrog an organization over its competitors, enabling unimagined value to customers while streamlining response times, cutting through complexity, and dramatically reducing the assets needed to carry out operations. (A Savvy Guide to the Digital Supply Chain - How to Evaluate and Leverage Technology to Build a Supply Chain for the Digital Age. Haslam College of Business, April 2018)The tools supporting digitization enables the presentation of information in ways not conceived of pre-2009. The ability to present digital information dynamically and graphically provides the user with interfaces that make information gathering and sharing a pleasant, exciting, or sometimes addictive experience. Today, we often see the world through a lens of digitized information. With the advent of Augmented Reality (AR) and Virtual Reality (VR), this trend of viewing the world through digitization will only increase in speed and intensity.But the presentation of information is only part of the digitization revolution. The real power comes from the process change that accompanies the digitization of information. It is the interweaving of the presentation of information with processes and workflow that make digitization an ever increasingly powerful and compelling capability. Analog information is mostly static. Analog information is paper-based. A best-case analog scenario is that information is maintained in "Word", spreadsheet, or PDF documents. Digitization is more than email or a scanned document. Digitized information is fluid and fungible. Digitized information is not bounded by the same physical constraints that are imposed on the analog world. In order to be truly digitized the information must be available on-demand with rules-based accessibility in support of dynamic decision making and work processes. Digitization is suddenly so important because the current technology supports the capturing of phenomenal amounts of raw data from an unlimited number of sources and the converting of that data into meaningful, contextual, and actionable information - quickly and at low cost.
Trade compliance should care about digitization because its activity is heavily dependent on vast amounts of data outside its control. Trade compliance is a highly procedural function with clearly defined responsibilities to both its organization and to government regulatory agencies. While the transactional activities of Trade Compliance - such as product classification (HS, Schedule B, ECCN, USML), Denied Party Screening, Country of Origin Determination, FTA qualification, and Risk assessment - are important, in and of themselves, these individual activities fail to deliver to their potential if they are not orchestrated and synchronized to support the comprehensive Trade Compliance business and regulatory objectives. The lack of digitization results in the Trade Compliance functions being less effective, less efficient, less responsive, and more costly than otherwise can be achieved. Trade Compliance is broadly and distinctively a laggard in adopting technology and digitizing its information and processes. By not adopting digitization the Trade Compliance function will continue to be seen as a necessary but undervalued and underappreciated activity in a global supply chain. The use of spreadsheets or siloed databases for Trade Compliance data management is a tell-tale sign that a company is a laggard in its handling of critical information. Why should Trade Compliance care? Because digitization enables:
Digitization is a fundamental building block in creating and delivering verifiable information and process improvement. Trade Compliance should care about digitization because the work output and effort is directly dependent on accurate and timely information and standardized processes. The ability for Trade Compliance to communicate and collaborate with internal stakeholders and external service providers effectively is directly dependent on the accuracy and accessibility of information.
Being able to share that communicate the Trade Compliance information when and where it is needed is critical to improving collaboration.ConclusionDigitization of Trade Compliance is more than automating single or multiple functional activities like HS classification, Denied Party Screening, FTA qualification, or License Management. Digitization of Trade Compliance requires a comprehensive makeover of the Trade Compliance activity from Master Data Management to Process Control to Workflow Design in support of all the specific functional activities and actual daily workWhile digitizing Trade Compliance might appear daunting, it really doesn't have to be. Most Trade Compliance activities are seen and managed as discrete functions. For example, HS classification is seen as a separate and different activity from ECCN/USML classification or PGA classification, which in turn is separate from license control. Most Trade Compliance solutions are built around these discrete activities, but in practice, all these activities are part of a holistic process. Digitizing Trade Compliance processes require a holistic perspective and a comprehensive and integrated work processes. In order to implement a digitized Trade Compliance program, it is necessary to reorient from a discrete to a holistic view of the Trade Compliance activities.This is the most significant challenge to digitizing Trade Compliance. The actual conversion to Trade Compliance digitization is surprisingly simple. At 3rdwave, our solution is designed with a comprehensive orientation to Trade Compliance processes supported by deep functional master data control and complete transactional data management. This holistic perspective in a comprehensive Trade Compliance solution totally supports and simplifies the transition from the traditional analog practice to a fully digitized Trade Compliance capability.
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