Trade Compliance

Getting to Trade Compliance Excellence

Organizationally, excellence is a constantly moving target that requires consistent commitment and dedication to improvement by everyone throughout the organization.

Ned Blinick

Co-Founder, 3rdwave

To be excellent means understanding what “excellence” means in its context. Organizationally, excellence is a constantly moving target that requires consistent commitment and dedication to improvement by everyone throughout the organization. At a personal level, excellence requires a commitment to improving the way you work and the outcomes from your effort. Getting to excellence implies constantly striving against the status quo (see Trade Compliance Best Practice - great insight).

Excellence is measured by 6 elements:

  1. Desire
  2. Leadership
  3. Talent
  4. Time
  5. Effort
  6. Tools

It is virtually impossible to achieve excellence without at least 4 of these basic elements. If you are one of the very few people that are exceptionally talented in a specific field, with desire and the right tools you might achieve excellence. However, as Malcolm Gladwell wrote in his book Outliers, “an extraordinarily consistent answer in an incredible number of fields … you need to have practiced, to have apprenticed, for 10,000 hours before you get good.” To which he added anecdotally: ” … natural ability requires a huge investment of time in order to be made manifest.”The same can be said for an organization. In order to achieve excellence, and get to great, the organization must have the leadership, desire, talent, and effort from its people and provide the time and tools to support them. Without these 6 elements, the organization cannot achieve real excellence. The same can be said for the operational and staff functions in the organization. Organizational excellence takes a team and commitment.

6 Key Elements for Trade Compliance Excellence

  1. Desire – Desire is that intangible that you can’t define but you know it when you see it. Organizationally, it is the combination of passion and the drive to succeed that is infused in the functional team and all its members. It manifests itself in wanting to do the best…always. It is about constant improvement and stretching corporately or personally to achieve better.
  2. Leadership – The vision resides in leaders. Leadership is at times formal and rests in the head of the team or it expresses itself informally through individuals within the team at different stages. Leadership creates an environment where Desire thrives. It fosters a “Yes I Can” attitude and provides the support when things don’t go quite as planned. When it doesn’t exist everyone knows it and things generally muddle along. Trade compliance leadership manifests itself in individuals that have the desire to work across functional areas and management layers within the organization to spread the value proposition that trade compliance can deliver from an operational, risk mitigation, and financial perspective. (What is the Value of Trade Compliance?)
  3. Talent – Without talent, excellence is elusive. Like leadership, talent rests with the individual. Organizations that aspire to excellence look to hire and cultivate talent. From a Trade Compliance perspective, talent might have 3 letters after the name – LCB – but it is definitely not a requirement. Trade compliance requires the willingness to learn what is necessary to ensure compliance and apply it effectively and efficiently. This means understanding how trade compliance affects its relationship with Customs, Census, and other government agencies, internal stakeholders and external service providers and suppliers, and implementing solutions and actions that materially improve the organization.
  4. Time – Whether you agree totally with Malcolm Gladwell or not about the number of hours it takes to be really proficient at the task, what is clear is that it takes time, and business cycles, to understand the job and be knowledgeable enough to make or suggest improvements on the continuous journey to excellence.
  5. Effort – Excellence is a moving target and it requires tremendous effort. Improvement involves consistent physical, emotional, and intellectual effort to move beyond a current state to the next level.
  6. Tools – In today’s environment having the desire, leadership, and talent will only get you so far on the road to excellence. Without the right tools for the job, excellence is totally compromised. I say totally compromised because it is virtually impossible to be efficient at the job required if the right tools are not applied to support the effort. Like a professional athlete, their equipment is an integral part of their reaching their full potential. It is no different in Trade Compliance. Without the right tools to support individuals in their effort to reach their full potential at their job, the results will be sub-optimal for the organization.

Why companies fail to achieve Trade Compliance Excellence

From conversations with 100’s of Trade Compliance people, there are 2 obvious reasons why companies fail to achieve Trade Compliance excellence. They are:

  1. Lack of leadership
  2. Inadequate tools

From the perspective of trade compliance, the failure of leadership exhibits itself in the failure to convince management to recognize the untapped potential and value that trade compliance can bring to the organization. A major part of the problem lies with the inability of trade compliance professionals to adequately make the case to the right people in the organization as to the real value trade compliance delivers or the risks that it might otherwise mitigate. Most trade compliance professionals we talk to are very involved and committed to their work. They want to do a good – make that an excellent – job but are stymied by under-appreciation from management. This is where the desire, leadership, and effort from the trade compliance team is essential.Tools are the second area where trade compliance is generally deficient and this severely handicaps the organization in achieving overall trade compliance excellence. Lack of the right tools is derivative to the lack of understanding and investment in the automation tools that deliver the value of trade compliance. Trade compliance automation tools enable the trade compliance team to increase organization excellence by:

  • Delivering visibility to the organization as to the status of imported goods.
  • Greater conformance to the regulatory requirements.
  • Demonstrating regulatory and process conformance to customs and PGAs reducing time to delivery.
  • Ensuring greater efficiency in the practice of trade compliance.
  • Supporting other internal stakeholders in the development of product and the execution of shipments.
  • Reducing import costs related to Customs and PGA entries, FTAs, Duty drawbacks, etc.

Addressing these issues allows the organization to achieve trade compliance excellence. The simple reality is – the cost of getting to excellence is not the problem. Understanding the value of trade compliance and being able to express it effectively is the problem.ConclusionExcellence is a goal. It is a never-ending journey. In the context of trade compliance, the attainment of excellence is particularly challenging because of the general lack of support that it receives from upper levels of management. It is too often a very low priority department with limited understanding within the organization.The major challenge for trade compliance on the journey to excellence is to get the recognition from with the organization’s management that trade compliance is a vital cog in ensuring that the supply chain is effective, efficient, and compliant. It is to get the recognition that trade compliance is important beyond its perceived boundaries.The three critical ingredients that trade compliance initially needs on the journey to excellence is the desire to achieve trade compliance excellence in practice, the vision and leadership to convince management and organizational peers of the extended value to the organization, and the focused and consistent effort to convince management.