Enterprise Trade Compliance: Changing Trade Operations around the World
To prosper amid the realities of this new world, organizations cannot rely on old strategies; they need new business models.
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Editor’s Note: This is a guest feature written by Derek Gittoes, Vice President, Logistics Product Strategy, Oracle and Darcy Price, Director, Value Chain Applications, Oracle
We live in a world of incredible bounty and speed where any product can be delivered anywhere on earth. However, our world is also filled with challenges for business – where volatility, uncertainty, risk, and chaos are our daily companions. To prosper amid the realities of this new world, organizations cannot rely on old strategies; they need new business models.
Key trends within the global economy are mandating that companies fully integrate global trade management best practices within broader supply chain management strategies, rather than simply leaving it as a discrete event at the end of the order or procurement cycle.
To explain, many companies face a complicated and changing compliance environment. This is directly linked to the speed and configuration of the supply chain, particularly with the explosion of new markets, shorter service cycles and ship times, accelerating rates of globalization and outsourcing, and increasing product complexity and regulation.
Taking a deeper look at these trends, an Aberdeen report from November 2011 ranked the top three pressures driving companies to focus on global trade management:
Globalization – Growing global operations, including sales purchases and distribution networks, are increasing the complexity of supply chains and placing a renewed focus on the concept of global trade management and compliance.
Complexity – Alongside globalization, factors such as new and evolving security regulations for international trade are increasing complexity.
- Growing Risks – Associated with new trade regulations (e.g. cap and trade) and non-compliance with existing laws. As a result, enterprises are rallying to place GTM practices and policies under review and reevaluation, and are working to insure there is improved visibility within and beyond the enterprise.
As a result of these pressures, global trade processes are now critical to many different functional areas – from engineering and manufacturing to finance and legal – and span enterprise applications, such as enterprise resource planning, governance, risk and compliance and product lifecycle management. Optimization of those processes requires flexibility and visibility across all elements of the global enterprise that can only be achieved through an integrated approach.
Enterprise trade compliance frames the link between global trade management and the supply chain because it represents the process and data ecosystem that enable a broader, differentiated global trade management solution. Moreover, it is built on an understanding of the interdependencies and data flows that make up a company’s global supply chain as well as its compliance activities and strategies. In short, companies that don’t adopt an enterprise trade compliance strategy in the next five years will put their business at risk and struggle to compete.
When examining the need for global trade management capabilities, it is important to consider the powerful forces that are shaping global trade operations. First, globalization and instant communications demand greater operational flexibility. Second, the emergence of global supply chains has elevated the management of risk and compliance to a central concern. And finally, the speed of today’s business requires continuous innovation to keep from falling behind the global competition.
Increasing Global Trade Network Complexity: The Enterprise Must Be Automated To Scale
Six Criteria for Success
The good news is that managing the overall supply chain and enterprise trade compliance have a lot in common. Both share six critical areas that must be considered:
Optimization and reactivity
Execution and flexibility
- Visibility and measurement
For example, collaboration across product management, procurement and brokers is as critical to the compliance process as it is across the supply chain process. Trade compliance has always shared the same global footprint and much of the same transactional environment with the supply chain. But to develop a successful compliance program across the enterprise, trade automation must match the responsiveness required of the global supply chain. In other words, having a flexible trade program that can respond to regulatory or corporate policy changes as quickly as the supply chain responds to business changes is essential; without it, trade compliance becomes an immobilizer rather than a partner in supply chain success.
By adopting and enterprise-wide trade compliance approach, a company can increase revenues by enabling faster procurement and sales cycles, accelerating time to market and volume production, and improving service/delivery and customer satisfaction. It can also reduce costs by containing outsource spend and focusing resources, streamlining supply chain collaboration activities, reducing material, inventory and production costs, and lowering compliance risks and liabilities.
Seagate Optimizes Global Trade Management with Oracle
Seagate, a world leading manufacturer of hard disk drives, needed to optimize the management of its complex global trade operations. With thousands of transactions per day, including shipments to customers in nearly every country in the world, the company needed an automated and flexible platform that would allow it to optimize and streamline business processes related to internal and cross-border trade.
In addition to managing its complex trade management process, Seagate also needed a product that delivered the flexibility and functionality that it required to easily add new markets and additional lines of business with the growth of the company.
After an extensive review, Seagate chose Oracle Global Trade Management as it provided the flexibility and functionality the company required. Leveraging Oracle Global Trade Management as centralized trade data repository for all legal, regulatory and compliance related information, Seagate has been able to increase the flexibility of its global trade operations and avoid costly shipment delays by writing rules to screen transactions for local import and export requirements.
With one global dashboard that enables a centralized view and helpful alerts on global regulations and requirements, Seagate is able to eliminate silos created by its legacy system, increasing collaboration across its global team and supporting compliance with complex regulations.
By integrating with existing systems, including the Oracle E-Business Suite, Oracle Global Trade Management also enables Seagate to automate data transaction processes, reducing the risk of manual errors and streamlining reporting. In addition, the powerful search capabilities help Seagate further streamline processes by significantly reducing the time required to search for missing classification information.
“With customers in nearly every country in the world, we needed to be able to streamline complex trade management processes in order to ensure compliance with different global regulations and requirements,” said Michelle Scott-Horwitz, senior director of international trade administration, Seagate. “Oracle Global Trade Management allows us the flexibility and functionality to manage these multifaceted, global processes.”
“Oracle Global Trade Management provides a flexible and robust platform to manage complex global trade business processes, which is crucial to the success of our company,” said Pranab Sinha, vice president of IT, Seagate. “Replacing our previous system with Oracle Global Trade Management has allowed us to reduce risk and increase efficiencies, while maintaining our commitment to delivering the best possible service to our customers around the world.”
Managing Global Trade Compliance from a Central Office
Think these challenges will go away? Think again. With the number of trade agreements nearly tripling every decade and the exponential impact of that growth on trade transactions, the situation is only going to become more complex. And this isn’t something that is constrained to a limited number of multi-national organizations as in today’s global economy most U.S. based companies have regional operations that must contend with their own growing and increasingly complex set of regulations and requirements. To compound the complexity, escalating security concerns across the globe, as evidenced by the proliferation of non-U.S. export controls, is only making matters worse.
To address this complexity, there is growing interest in monitoring/managing global trade compliance from a central office. This supports corporate governance policies that require regional and divisional operations to establish a framework of control and guidance, while also helping organization navigate the complexities of corporate activities such as regionalizing supply chains or M&A activity.
Centralizing global trade compliance is only the first step though. To address the challenges presented by a complex and rapidly changing environment, global trade compliance needs to be fully integrated within an organizations supply chain management strategy. When that happens, organizations can change a set of disparate supply chain functions into an information-driven value chain that delivers operational and innovation excellence by optimizing and streamlining anywhere-to-anywhere business processes.
About the AuthorPatrick Burnson, Executive Editor Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]
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