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Strategic benefits of a global trade management software

system
A company that deploys a global trade management software system can
reduce the costs, risks and delays associated with manual compliance
and tracking efforts.
Few supply chain executives expect to see strategic benefits from compliance.
To them, compliance is purely a cost of doing business. These same supply
chain executives tend to view global trade management software systems as a
technology that enables their supply chains by automating export and import
compliance processes.

Export processes managed by global trade management software include:

screening against sanctioned party lists,

managing export licenses,

performing embargo checks,

sending electronic communications to customs,

maintaining export classification, and

driving outbound trade finance services such as letters of credit.

Import processes managed by global trade management software include:

managing classification codes,

producing import documents,

calculating landed costs,

managing open letters of credit, and

ensuring import controls.

A company that deploys a global trade management software system can


reduce the costs, risks and delays associated with manual compliance and
tracking efforts. In addition, the records generated by such a system can easily
pass the audit of a government or external agency.
Global trade management software systems deliver five advantages to
companies by increasing supply chain efficiency. These benefits include
streamlined screening of export orders; the elimination of order processing
delays; visibility into landed costs; the reduction of inbound delays; and the
streamlining of financial trade. Let's look at these advantages in more detail.
Advantage #1 -- streamlined screening of export orders: Organizations that do
not have a global trade management software system must manually screen
every sales order from an international customer to ensure that the customer
and associated parties are not on the sanctioned party lists published by
various government agencies.
Such organizations must also manually check the sales order for compliance
with export license requirements. When such manual screening is performed
in a high-volume sales environment, it delays the acknowledgement of the
sales order and the determination of the ship date to the customer. Such
delays can add days to a company's order-to-cash cycle time, affect cash flow
and impact revenue.
But consider the company that has a global trade management software
system fully integrated with its sales order management system. As soon as a
sales order is entered into the system, the system either instantly clears the
sales order for shipment or flags it for export compliance issues. This capability
eliminates bottlenecks from a manual compliance testing process and frees the
company to focus on manually evaluating only that small percentage of export
orders that are flagged for possible violations. The international customers of
such an organization enjoy fast turnaround on communication around commit
dates and experience fewer delays in order delivery.

Advantage #2 -- elimination of order processing delays: Once the export order


is ready to be shipped, the organization must still ensure that all required
export documentation is completed and that any filing, such as Shipper's
Export Declaration, is done correctly. Furthermore, last-minute surprises such
as additional license requirements can delay shipments.
Research shows that over 10% of sales orders to international customers get
delayed due to documentation or license requirement errors. Such delays hurt
customer loyalty and impact future revenue. The delays can also lead to
cancellation of outstanding orders. Such cancellations can be very expensive
in today's economic environment.
A global trade management software system ensures that all such activities
are done correctly and quickly, so that shipments can be delivered on time. In
addition, these systems ensure that any customers whose shipments will be
delayed due to export violations can be notified in a timely manner. Finally,
these systems also ensure that potential fines due to non-compliance are
avoided.
Advantage #3 -- visibility into landed costs: Organizations that lack a global
trade management software system must compute landed costs manually.
Since manually tracking and determining landed costs is a time-intensive and
error-prone process, most organizations lack clear visibility into actual landed
costs for a shipment.
As a result, actual costs do not always get factored into decisions on product
pricing, rebates and discounts. This means that an organization could be
losing money on a product it thinks is profitable.
Clear visibility into landed costs can also help a company design an
economically efficient supply chain by locating plants and assembly sites in
countries where landed cost is lower due to smaller import duties on
components. A global trade management software system provides clear

visibility into landed costs for a product and improves the organization's ability
to make business decisions.
Advantage #4 -- reduction of inbound delays: An import shipment that lacks
accurate paperwork can be significantly delayed at customs. If an organization
experiences such delays frequently, it is forced to either carry excess inventory
or incur more stock-outs. Delays in inbound shipments are particularly
expensive for companies in industries where product life cycles are extremely
short, such as high tech or fashion.
Advantage #5 -- streamlining financial trade: Letters of credit are critical to
doing business with an international customer. However, recent studies have
shown that up to 70% of all Letter of Credit documents submitted to the bank
for payment are rejected upon first presentation due to incorrectly issued
documentation. This leads to payment delays and additional fees.
With working capital so hard to raise in today's tight credit environment, any
delay in collecting cash from international shipments due to incorrect or
incomplete documentation against a letter of credit can be expensive. A global
trade management software system streamlines the process for collecting and
filing such documentation and ensures that the set of papers is correct and
complete every time.
About the author: Jessie Chimni is vice president of North America
Consulting Services for Bristlecone, a leading supply chain consulting firm.
Bristlecone brings expertise across the entire spectrum of supply chain,
including demand and supply planning, network collaboration, sourcing,
eProcurement, global trade management, spend analytics and supply chain
performance management.
This was first published in February 2009

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