September 2004 | Commentary | IT Matters

Reducing the Risks of Global Trade: Software is Not Enough

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In recent years, a growing number of American companies have expanded business operations to a global scale. This increased interest in global trade has created a huge demand for products and services aimed at assisting companies with their import/export operations.

Not surprisingly, many companies have turned to technology as a fast solution for gaining global trade expertise. Unfortunately, those relying solely on software are, more often than not, sorely disappointed with the results.

The fact is, technology can be an indispensable tool for global trade operations. But in order to reduce the risks and maximize the rewards associated with global trade, software is not enough.

Global trade technology—whether it is to help with supply chain management, transaction management, logistics, or other processes—must be installed, customized, managed, and updated.

Because the technology's effectiveness relies on the quality of the data being entered and interpreted, experts must ensure this information is detailed and accurate.

Risk management software, for instance, requires in-depth understanding of:

  • The materials used in the manufacture of the product.
  • How the product will be used.
  • How it will be marketed.
  • How customers view the product.

Companies must also program the software to include detailed information about their entire supply chain, including:

  • The country of origin and its current regulations.
  • The company that manufactured the goods.
  • This company's current standing with U.S. Customs.
  • How the goods will arrive.

Once a program is set up, the company must appoint someone to manage it. Laws and regulations are continually changing, and expertise is essential in order to correctly interpret these rules and assess warning flags.

Over the last few years, a new industry has emerged specifically to meet the growing demand for expert assistance with global trade operations. End-to-end global trade management service providers (e2e GTMs) can offer expertise related to the full spectrum of global trade processes.

As importers themselves, e2e GTMs typically employ the most sophisticated technology in their own global trading operations and share these tools with their clients.

This means that others can get all the benefits of up-to-date programs without purchasing, learning, upgrading, or managing the technology. The GTM's in-house trade experts enter and update all data, accurately maintain the systems, and interpret the information these systems provide.

Perhaps more importantly, an e2e GTM can identify and address many issues technology cannot even tackle. Because these partners have conducted international trading for years, they can help locate sourcing and manufacturing, suggest best practices to improve existing operations, and lend their clout and global reputation to assist in negotiations with worldwide trade partners.

GTMs Can Limit Risk

It is also important to note that because e2e GTMs are often importers, they have the global networks and localized operational knowledge required for conducting business on a global scale. By taking title to transactions, arranging to settle payments, and leveraging their international connections, GTMs can significantly simplify the processes and limit the risks their clients might otherwise face.

As companies expand onshore operations to a global scale, they must deal with increased complexities inherent in the global trade process. Technology certainly provides assistance, but it's critical to understand that technology is merely a tool—a tool that requires ongoing expertise to customize, update, interpret, and manage.

For some companies, developing internal expertise is the answer. For others, outsourcing some or all import operations to global trade experts is a faster, smarter solution. Either way, software is not enough. Expertise is essential. By making the right choice, opportunities for growth and success are as big as the world.

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