Category Archives: Global Trade

TradeCard: Transaction Management for the Global Supply Chain Part I

In yesterday’s post on how it’s sourcing, procurement, and global trade management, we mentioned how a critical part of global trade is finance and document management. One company that facilitates this process is TradeCard, an end-to-end SaaS transaction management solution that connects over 4,000 buyer and supplier companies across the world with local support in over 50 countries. And while they aren’t the only company that facilitates this process, with notable competitors being Integration Point and their extensive suite of import, export, and supply chain compliance solutions and TradeBeam with their import, export, and visibility solutions, they are the first solution that I’ve seen that implements end-to-end transaction management from the PO to final settlement (including chargebacks) with support for financing, document management, 3rd party freight forwarders, and factory floor shipment packaging. Furthermore, their solution, which supports the physical, financial, and information flows from all parties, focusses on the alignment of the flows.

The financial flow is supported by way of a procure-to-pay solution that enables pre- and post- export financing solutions, payment protection, invoice discounting, settlement, and chargebacks. Through agreements and alliances with over 25 banks, insurers, and other third parties, the TradeCard platform allows a suppier to request financing as soon as the purchase order is received. Then, depending on the supplier’s credit rating and the amount of the request, the request will be forwarded to one or more financing partners who will offer financing at standard terms or the TradeCard credit line, where the TradeCard platform can automatically grant certain financing requests under standard terms on behalf of the partners in the financial network.

The time of the financing request is flexible. The supplier can request financing at any point from the receipt of the purchase order to the receipt of goods by the buyer, and might even be able to request financing beyond receipt of the goods by the buyer, depending on the buyer’s standard payment terms. In addition, the platform allows the supplier to offer invoice discounting on early payment by the buyer as soon as the invoice has been accepted. Finally, the platform allows for electronic payments, which completes the end-to-end financial lifecycle of the transaction.

The physical flow is supported by their collaboration solution, which allows buyers and suppliers to collaboratively share current demand data and collaborate on forecasts and production plans, the Factory Xpress solution that allows for the creation and execution of detailed packing plans, and the document management solution that allows for the creation and transmission of documents that are required by freight forwarders, customs agents (for import and export), and distribution centers.

The information flow is supported by their Procure-to-Pay, Collaboration, and Factory Xpress solutions as well as their TradeCard Advantage solution that allows for queries and reports across the platform and the transaction data that it contains. It’s also supported by their new Custom Objects Toolkit that allows TradeCard to quickly create custom extensions — that can take the form of integrations, reports, or global trade documents — for customers on an as-needed basis.

By integrating the three flows, TradeCard provides a single view into the global supply chain for buyers, suppliers, factories, and partners around the world, which can be integrated into the platform as needed. TradeCard can, and has, integrated multiple ERP, best-of-breed, and home-grown sourcing, procurement, and global trade solutions into its platform in support of its hundreds of global Fortune 3000 customers. Furthermore, over 150 service providers already inject services into the platform in the form of financing, payment protection, inspection, and logistics, which a customer can take advantage of day one.

Tomorrow’s post will dive into the physical supply chain flow and the solutions that TradeCard provides.

It’s Sourcing, Procurement, and Global Trade

A few years ago, I took the time to remind you that it’s Sourcing and Procurement because it appeared that some vendors wanted you to believe that it’s e-Sourcing or e-Procurement, or some fractured combination of both, because that’s what they have and they want all of your business.

As I said before, e-Procurement and e-Sourcing are not the same thing. From a supply management perspective, they’re two halves of a whole, one tactical and one strategic. And while they bring value alone, combined they bring much greater value. Sourcing leads into Procurement, usually off of a contract, but sometimes after e-Negotiation or decision optimization alone, and Procurement leads back into Sourcing, through the analysis step. Without Procurement, the organization wouldn’t have a large transaction database and extensive visibility into spend, and without Sourcing, there would be no strategically negotiated contracts to buy against, leaving procurement managers the freedom to spend willy nilly.

But when it comes to supply management, Sourcing and Procurement are still not the full picture. While they are the full picture from the viewpoint of the buyer / analyst in a mid-sized or larger supply management organization, they do not address the supply side, or the fact that goods need to come from a supplier, sometimes by way of a distributor, and end up in the buyer’s warehouses for shipment to stores and/or end consumers.

The goods have to be packed, shipped, exported, imported, and, sometimes, financed. And the settlement function has to take into account invoice discounting and chargebacks, at a minimum. This doesn’t sound too bad until you realize that the average international shipment requires twenty or more documents for export and import, especially when the US or the EU is involved. Ever since the introduction of 10+2 and new advance cargo declarations in the EU, it seems that documentation requirements have been compounding ever since.

And while this functionality does not necessarily have to be in the e-Sourcing or e-Procurement system, it is needed by any company doing international business and it should be easy for a company to push data out from the e-Sourcing/e-Procurement system into the appropriate Global Trade Management system and pull the necessary data back in for analysis.

Because, when you consider the average transaction in today’s global supply chain end to end, this is what you usually end up with.

Sourcing – Spend Analysis (what needs to be sourced)
Sourcing – e-Negotiation (RFX, Auction – who will it be sourced from)
Sourcing – Decision Optimization (optional, to analyze the bids)
Sourcing – Contract Management (to store the awards)
Procurement – Requisition (for a Bill of Materials)
Procurement – Approval (for the requisition)
Procurement – Purchase Order (for the supplier)
Global Trade – Financing (can be pre or post invoice)
Global Trade – Packing (goods have to be properly packed and labelled)
Global Trade – Shipping (goods have to be shipped)
Freight Forwarder (if a third party handles the shipping)
Export Documentation (for the supplier’s home country)
Import Documentation (for the buyer’s home country)
Procurement – Good Receipt
Procurement – Invoice
Global Trade – Invoice Discounting (if the buyer pays early)
Procurement – Reconcilation
Procurement – Payment
Global Trade – Settlement (the purchase has to be settled in the source accounting system)
Global Trade – Chargebacks (chargebacks for penalties or returned goods have to be accounted for)
Procurement – Tax Reclamation
Sourcing – Spend Analysis (what needs to be sourced)

Don’t Go Gaga Over Global Trade Numbers

Global Trade may be growing, but it’s not growing as fast as the WTO wants you to believe. You have to take the long term view. Global Trade may have increased 13.5% last year, but this followed a year where it dropped 12.2%. Just like an elastic will snap back when released, it is only logical to expect that global trade would snap back to pre-recession levels once the world, and the US in particular (which alone controls 25% of Global GDP) started to work its way out of the recession. And that’s all it did … snap back. (If it was at 100$, and it dropped by 12.2%, then it was at 87.8$. If that increased by 13.5%, the net result would be 99.65$.)

With more and more companies trying to go global and join the outsourcing economy, and with more and more hi-tech manufacturing shifting overseas, it’s only logical to expect that global trade will continue slow, steady growth whether it makes sense or not, but we’re not going to see exponential expansion anytime soon. As a result, while Global Trade Management software (GTM) sales will pick up in the US where advance filing, denied party lists, and other requirements are making GTM almost impossible without software support, GTM software is not likely to see the same sort of increase in demand in other countries. (Security regulation is also increasing in Europe, but not at the rate it is in the US, at least for the moment.)

In other words, GTM is a solid investment for buyers and vendors alike, but don’t look for rapid growth predicted by the ARC Advisory Group, in this article on realizing global trade management potential, just yet.

5,500 Miles of Common Border …

… and heat treating a few million pallets is going to stop the spread of insects across the Canada – United States Border. Really? No wonder the CTA takes no position on the science behind the decision to eliminate the exemption that allows wood packaging materials (WPM) crossing the Canada-US border to bypass heat treating and marking requirements — because there is no science. Insects don’t respect borders. Heat treating a few million pallets is not going to stop the spread of insects across the border. Trust me.

As per this recent article in Canadian Manufacturing, all removal of the exemption will do is “disrupt border crossing” because it’s going to take quite a while to individually check Three Hundred and Twenty (320) Million pallets to find the millions that don’t meet the requirement. So while it’s not necessarily a bad idea, since an insect-laden pallet could accidentally find its way to a foreign country and introduce a foreign bug to the local ecosystem that could be harmful, like the CTA says, elimination of the exemption (and subsequent enforcement) shouldn’t begin until APHIS and CFIA, working with industry, are satisfied that there are enough WPM compliant pallets in circulation to meet the demands of Canada-US trade. Otherwise, we’ll have lineups at the border from Detroit to Toronto (which is about 244 miles), and that won’t help anyone.

“Trendspotting”

Editor’s Note: Today’s post is from Dick Locke, Sourcing Innovation’s resident expert on International Sourcing and Procurement. (His previous guest posts are still archived.)

the doctor requested that I look at Panjiva’s new product, Trendspotting, which they are advertising on their site and blog. It has some good points, but it also has many not-so-good points that will ultimately render it unusable for many purchasing people.

Let’s look at the three main features:

“Crack the HTS code.”

The world really does need an HTS-to-your language translator. I don’t think there’s one into English, and this definitely isn’t one. From their demo page, put in “computers” and see what happens. You won’t find anything. OK, that’s a trick because I know that the entire global customs community calls them “automatic data processing machines.” So, type that in the search box.

You get a list of potential HTS codes. Here the system shows its US-centricity. I’m in Mexico, the internet knows I’m in Mexico (when I go to Google.com I get their Mexican home page) but Panjiva gives me the special 10-digit US codes. That’s still helpful in the goal of finding the right countries if you are in North America. It’s not so helpful if you are somewhere else.

“Find countries”

Pick the first HTS code (8471.30.01.00) and click “Trends.” You get some really helpful data on laptop imports. You can see that the two primary sources are China and Malaysia. You can see their trends. This is really a handy sourcing tool. However you can get the same data free from the US International Trade Commission‘s web site. I’ve been advocating doing that for about 14 years in my seminars. The USITC site is less graphically pleasing and slightly harder to use, however. Panjiva did a good programming job.

“Find suppliers”

Here it really falls apart. You would expect to find Lenovo and Foxconn as suppliers of laptops. They’re not listed. However, you do find Autoliv China Inflator Company Ltd, who makes airbag inflators. What’s going on here?

It’s a data source problem. They list companies for one of two reasons. One is that a company shows up as a sea freight shipper of automatic data processing machines on a public data base. There’s no such data base for air shipments. Very few laptops travel by ocean.
I’ve been using this kind of data for more than a decade. It has two more big problems. First if the words “automatic data processing machines” (ADP machines) show up on import documentation, the exporter gets listed. That gets items that connect to, contain, or are parts of ADP machines. Second, many companies have set up legal entities in China that purchase for them. The Chinese entity (i.e. HP China) buys the goods, and ships them to HP US. HP would show up as both the exporter and importer and you would never find the name of the manufacturer.

Of course, your results could be different than mine. Try it on a product where you know what the countries are and where the suppliers are and see what happens. Maybe it will work better for you than for me.

Thanks, Dick.