A recent article in Industry Week on The Role of Content & Creativity in Global Trade Management by Adrian Gonzalez of ARC Advisory Group noted that compliance is only one component of a best-in-class global trade management solution: content and connectivity are also critical. According to Adrian, companies must have accurate and complete trade content for every country they operate in and trade with in order to successfully comply with trade regulations and prevent customs clearance delays because a GTM solution without a comprehensive and continuously updated trade content database is only marginally useful.
According to Adrian, trade content should include:
- denied parties
- embargoed countries
- harmonized system chapters and descriptions
- license codes, descriptions, & requirements
- document templates
- duty, value added tax, excise taxes, and seasonal taxes
When you think about it, Adrian is right. Without proper tax rates, you could pay the wrong duties and get hit with fines and penalties. Without harmonized tax system data and license codes, you could mis-categorize your shipments and have them seized. And, without denied party or embargoed country lists, you could risk criminal charges. You need content. And if your platform provider can’t provide it to you, you need to get it from third parties, just like you’re probably doing with your supplier data.
Plus, sourcing in a trade data silo can have serious and costly consequences. Purchasing managers must take into account duties and taxes in total landed cost calculations, as well as countries of origin. Are there currency exchange risks that need to be estimated? Additional transportation costs? Preferential trade agreements, or a lack thereof?
Sourcing professionals will not be able to get this data without connectivity, which is also of critical importance because a cross-border shipment typically involves the exchange of information with about 25 external parties, including custom agencies, freight forwarders, brokers, banks, regulatory agencies, transportation providers, and suppliers. Thus, it’s important to make sure that the solution you select integrates with key external systems and supports open standards for information exchange.