Global Trade in the Key of GTM
When orchestrating international shipments, global trade management solutions help trading partners sing the same tune.
In the quest to maintain a profitable global supply chain, technology is just as important as human know-how. At least, that's what supply chain consulting firm Tompkins International found in 2013, when it surveyed 80 companies for its Global Trade Management Report. Asked what they were doing to improve global shipping performance and reduce costs, 74 percent of respondents told Tompkins they were implementing technology solutions. That's the same percentage who said they were making sure their staffs were well-trained.
If your business stretches across borders, an abundance of global trade management (GTM) technology is available to help improve every aspect of your supply chain. But you need to choose the right solution to meet your needs. And once that solution is up and running, you have to make sure your investment provides full value.
Here's some expert advice on how to achieve those goals.
What is GTM Technology?
In some ways, GTM solutions are simply supply chain management tools with a worldwide reach. Like systems that focus on domestic commerce, GTM solutions help shippers optimize, automate, and monitor transactions with trading partners and service providers. Data from information systems used by a company, its vendors, logistics partners, and other providers flows through a central GTM platform. That data triggers transactions, and the system ensures each party receives the information it requires.
Depending on the features included in your suite, you might use GTM technology to transmit purchase orders, share information with vendors, book transportation, track shipments, and perform a host of other functions involved in procuring and moving goods.
"GTM solutions manage, measure, optimize, and automate the information that supports and surrounds cross-border moves," explains Ty Bordner, vice president, product management and solutions consulting at GTM technology vendor Amber Road, Rutherford, N.J.
Because global trade involves international borders, GTM solutions also address a whole other dimension: trade compliance. When you ship goods into or out of a country, GTM software helps meet your obligations toward the relevant government agencies. It can, for example, conduct denied party screenings, assign product classification codes, determine duty and tariff obligations, file customs documents, and transmit data required by agencies such as the U.S. Food and Drug Administration.
GTM systems also help companies profit from programs such as foreign trade agreements and foreign trade zones, and participate in security programs such as the Customs-Trade Partnership Against Terrorism.
Some solutions vendors specialize in specific aspects of global trade. For instance, Integration Point, based in Charlotte, N.C., focuses mainly on trade compliance. But as a byproduct of compliance, it helps users track order and shipment progress, and that visibility helps with more general logistics processes.
"It's important to monitor advance ship notices so you know when freight gets close to the border, understand the invoice process, and have the details about purchasing the goods," says Melissa Irmen, Integration Point's senior vice president of products and strategy. "GTM solutions facilitate those insights."
Some GTM solutions also help companies manage commercial invoices and other financial transactions that are common in international trade.
Like most supply chain management technology, GTM solutions save time, labor, and money by replacing manual functions with digital ones, and putting in place integrated processes for functions that used to occur in software silos.
"Taking out the human element is huge," notes Tim Thoma, international logistics and compliance manager at Northern Tool and Equipment in Burnsville, Minn. "You're not relying on workers to re-key information—it's just a straight feed from one system to another."
A retailer with more than 80 stores, plus catalog and e-commerce channels, Northern Tool uses GTM technology from Navegate, based in Eagan, Minn. Navegate's sister company, North Star World Trade Services, is Northern Tool's customs broker.
Automating foreign trade compliance can create tremendous savings, says Wayne Slossberg, senior vice president at QuestaWeb, a vendor of GTM technology based in Clark, N.J. For example, many companies use Microsoft Access or Excel to manage the Harmonized Tariff Schedule codes for their products. Each time the U.S. government changes that schedule, someone has to update the records.
The more compliance data a company manages, the more people it must hire to maintain that data. "The import and export departments can start to grow exponentially," Slossberg says.
GTM solutions monitor tariff schedules and other government requirements. When a change occurs, those systems update automatically, reducing the need for human labor.
GTM solutions may also spare companies large penalties by ensuring full compliance with government mandates. "But you don't want to implement a system just out of fear of being fined," Slossberg adds. The more significant savings arise from better communication, and the ability to take advantage of trade programs.
One benefit GTM solutions offer is consistency—they force all trading and service partners to use the same term to refer to the same product. "You need a single point of truth about each commodity," Irmen says.
If the company that exports a product gives it a different identification code than the carrier that transports the product, that could cause problems when the shipper files trade documents.
"One product might require an import license, while the other one doesn't, for example," says Ken Peters, director of global solutions at Integration Point. "Both partners need to work off the same sheet of music, so they don't run into discrepancies." GTM solutions ensure that everyone sings in tune.
In addition to helping companies execute day-to-day transactions, GTM solutions can reveal opportunities that strategists might otherwise miss. Those benefits arise thanks to the mass of data the system manages, including data from shippers and their partners, as well as information on trade regulations and agreements.
"GTM solutions provide a data repository and an analytics tool, which allows users to identify cost-savings opportunities they might otherwise miss," says Bordner.
For example, GTM solutions might help users weigh the pros and cons of procuring goods from different sources, based on transportation costs, applicable tariffs and duties, and available trade agreements.
"Dynamic analysis of true total landed costs can be difficult to do without GTM-type capabilities," says Don Anderson, vice president of transportation services at Tompkins.
That ability to run what-if scenarios might help gain buy-in from top management when a supply chain team wants to implement a GTM solution. That was the case for a QuestaWeb customer when its team demonstrated how to analyze the cost of sourcing seasonal products from different parts of the world.
"The C-level saw the benefits of having one system to manage all the supply chain data," Slossberg says.
At Northern Tool, the GTM system also provides a better way to analyze vendor performance. "It helps us identify vendors who are more cognizant of our delivery dates," Thoma says.
That knowledge is useful when the company decides to undertake a major merchandising overhaul.
Who Benefits Most?
Although many kinds of companies might benefit from GTM solutions, the case is more compelling for large firms with complex international operations.
"Companies moving 100 shipments annually might not save too much by using a GTM solution," says Bordner. "But if they move 10,000 or 50,000 shipments annually, the software has a bigger payback potential." The value increases when more countries are involved in the supply chain, he adds.
Smaller companies can get by without GTM software —possibly by using tracking software provided by freight forwarders. But larger companies, or companies with multiple factories, need the visibility an integrated solution provides. "Annual revenue of $50 million to $100 million is the threshold where a GTM solution becomes more important," says Joe Pelletier, president of Navegate.
Smaller companies might not need a full GTM suite. But certain modules—such as tariff classification—can be worthwhile for shippers with simple global operations. "Even small companies want to ensure the data they're using internally is what brokers are using for their filings," Irmen says. "They want visibility into their ultimate entries, and the ability to assess compliance."
Before your company starts shopping for a GTM solution, establish a few basic facts. First, define your business and technology strategy. "Decide, strategically, what you want to do in-house, from the process and flow-of-goods perspective, and from an IT perspective," says Anderson.
GTM Keeps Time with Complexity
Source: Tompkins Supply Chain Consortium.
Another essential preliminary step is to calculate what it currently costs to not have a GTM solution. "That relates to the return on investment, to your budget, and to understanding your needs," Slossberg says.
For Bordner, the key question is the same as for any large piece of enterprise software. "It's all about requirements, and what you want to accomplish," he says.
For example, if you want to enter new markets, you might concentrate heavily on export capabilities. "But if your requirement is to focus on the bottom line, you would concentrate on imports—trade agreements, duty management, and duty deferral and recovery," explains Bordner.
Once you determine how you will use GTM technology to support company strategies, define all the functions you require in a system. "This step involves working with your sales, marketing, procurement and supply management staff to develop those requirements," says Anderson. "Then assign priorities; separate the must-haves from the nice-to-haves."
One way to create a list of necessary functions is to define how you're currently controlling your trade data. List all the foreign trade agreements, duty deferral programs, and other programs you participate in now, and those you hope to use in the future. Also, identify the products and volume you export and import, and the origin and destination countries.
When it is time to evaluate specific vendors and products, analysts at firms such as Gartner can help. "Many consulting organizations operate global trade management practices and understand how to build an evaluation based on your requirements," Bordner notes.
Slossberg recommends drawing up and sending a list of your top 10 criteria to potential vendors. Invite the most promising companies to walk you through their software.
Next, issue a request for proposals, evaluate the submissions, and bring in the top two candidates to go through their systems with business users and your technology team. "At that point, it boils down to who you're most comfortable with," he says.
One important feature to look for in a GTM solution is flexibility. The technology needs to be able to adapt to the individual user's supply chain.
"Many companies will provide this type of service, but it's rigid," Thoma says. "If you want anything different, they might nickel and dime you."
Navegate has created reports for Northern Tool based on the information the company needs to extract from its trade data. The system also lets users export data to a spreadsheet and manipulate it as needed.
Another question to explore is whether your trading partners are already established on a GTM provider's platform. "Try to find the system that many of your partners are already familiar with and using, or could easily interface with and use," says Anderson.
Include brokers, forwarders, and carriers in this assessment. "Look at the company's service partner pool, then determine how many of those are already within the solution provider's existing network," Anderson says.
In addition, keep your future needs in mind when choosing a GTM solution. "You may start small, and pick some low-hanging fruit, such as denied party screening or a classification model," says Peters. But later, you might also need help with export management, free trade agreements, or other functions.
"Find a provider that will be able to grow with you, and that already has that type of footprint," he adds.
Making the Most of the Tools
Once you've chosen and implemented a GTM solution, you still need to ensure the new system provides as many benefits as possible. Training is crucial, and that means more than a basic tutorial on system functions in the beginning. After three to six months, have the vendor return to observe how employees are using the system, then offer advanced training.
Not only should companies teach primary users how to make the most of the system, but they should conduct a broader educational campaign. There are bound to be other employees who could put the system to good use if they understood its power.
For example, companies with GTM solutions often overlook their ability to perform strategic analysis. "If you use these tools to thoroughly investigate the flow of goods, costs, and cycle times, and do a better job of analytics, the system will be much more valuable than if you're just cranking out transactions and moving goods," says Anderson.
To gain full value from a GTM solution, periodically re-evaluate how you're using the technology. For example, you might start sourcing materials from a new country without letting the people in charge of government compliance know about the change. "Automated tools catch those scenarios, ensure the compliance team is kept in the loop, and make sure you're taking advantage of all the opportunities," says Irmen.
Companies that choose GTM solutions with care are likely to gain new benefits, and discover new opportunities. And that's music to their ears.