July 2008 | Commentary | IT Matters

GTM Technology: Why Not?

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Global trade management (GTM) software simplifies trade compliance, provides visibility across the supply chain, and offers effective manufacturing cost sourcing. Yet the international supply chains of large companies are 50 percent automated at best, according to Aberdeen Group.

This statistic begs the question: Why aren't more companies investing in GTM software?

Some businesses develop their own systems internally instead of purchasing a GTM solution. But due to the development time involved, in-house systems can become outdated even before they are implemented. They turn into ongoing monetary drains with little chance of ever achieving even a modest ROI.

Multiple Choice

Why reinvent the wheel or stick with outdated systems? Every industry faces the same basic trade compliance issues regardless of product produced.

Specialized software developed by logistics experts can help companies navigate these complex, ever-changing regulations. In fact, these applications often have a direct, electronic link to U.S. Customs that keeps systems updated in real time.

Some companies require many software solutions to accomplish the tasks a single GTM application can handle. The CIO of a Fortune 500 firm recently told me that purchasing GTM technology eliminated the need for six of the seven separate systems his company currently uses to manage trade.

While additional systems might solve short-term needs, they fail to deliver the most critical benefit of GTM technology: comprehensive management data available within a single system in one format.

Getting to Go

Of course, many companies do recognize the benefits of GTM technology and pursue acquisition in earnest. Here, the due diligence process often creates the roadblock. On average, it can take 12 to 24 months to research available technology and choose a vendor. Over this period, the process can lose steam, especially in the budget approval phase.

IT staff and CIOs understand technology's value, but upper management individuals, especially financial decision makers, may not. They cite existing expenditures for brokers, freight forwarders, ERP systems allegedly containing import-export modules, and compliance personnel and question the need for additional technology.

Compelling functionality and ROI data will sway decision makers within enlightened firms. In others, the acquisition process simply dies a slow death.

Sometimes, companies do without GTM technology because they fear being first. Many businesses refuse to implement GTM software until other firms, particularly their competitors, use it successfully.

The Payoff

GTM is quickly becoming the last untapped area offering efficiencies that can increase revenue. Technology has already exploited most economies from production, warehousing, and distribution processes. Companies now must control trade practices, leverage preferential agreements, and eliminate weak links in their supply chain. GTM technology delivers the tools needed to tap these savings.

Companies that implement GTM solutions gain visibility across the supply chain. Milestone-monitoring features issue immediate alerts when problems occur and suggest corrective actions. Firms can source more effectively and calculate landed costs to within pennies.

And because GTM systems eliminate problems such as incorrect or incomplete documentation, they expedite product movement through Customs.

As a result, firms face fewer inspections, fines, chargebacks, and headaches. And, should there be a need to produce records, all the documentation exists within the GTM system.

Firms willing to reexamine their business processes may find GTM technology a worthwhile investment.

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