January 2004 | Case Studies | I.T. Toolkit

TradeBeam: Cracking the Global Code

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TradeBeam takes a well-rounded approach to international trade.

When you manage global trade, you need a universal perspective. That's the thinking behind the TradeBeam Global Trade Management Suite, a series of import and export applications for doing business with customers around the world.

"You don't just look at the physical movement," says Duncan Jackson, vice president of marketing and business development at TradeBeam in San Mateo, Calif. To manage international trade as profitably as possible, "you have to look at the cycle of the order itself. So we cover what's classed at the order-to-cash and the procure-to-pay cycles on both the supply and distribution sides for global transactions."

Global trading systems need to handle more functions than they used to because international trade has grown so complex, says Graham Napier, TradeBeam's CEO. U.S. manufacturers, for example, used to buy components overseas and assemble their products here. "Now," he says, "you buy a component off shore, you do sub-assembly off shore and then you bring in the unit."

TradeBeam's founders saw a growing need to provide communication among partners in multiple countries, and to manage more dynamic trading networks, he says.

Another problem developed, Napier says, because when companies strive to shorten transportation time, they sometimes ignore the costs. For example, they might meet their month-end goals by using premium transportation services to speed goods from factories to distribution centers.

"There was increasingly a need to move beyond physical optimization to genuine financial optimization," he says.

Improving Trade Activity

TradeBeam distinguishes itself from competitors by offering more than the ability to track orders and shipments, Jackson says. The system aims to improve all three kinds of activity that make up a trade: the order, the shipment, and the financial settlement.

Its order management module helps process the order, arrange for insurance and make certain that the shipment complies with government regulations, including Customs requirements. The shipping module helps arrange for transportation, create trade documents, track the shipment, clear Customs and confirm the delivery. The settlement module covers invoice processing, letters of credit, reconciliation and payment.

One of TradeBeam's major goals is to improve customers' global trade cash flows by 12 days. "Broadly speaking, we try to shrink three or four days out of each of those steps—the order, the shipment and the settlement," Jackson says.

For instance, TradeBeam cuts the time required to process letters of credit. In the past, a New York-based firm importing goods from Shanghai would have needed two days just to ship the required documents to Asia by express courier, Napier says. With TradeBeam, a company official can approve and transmit the letter of credit electronically, in seconds.

"There are a lot of little things that add up—one or two days each—where the various parties that go through the trade cycle can connect in a more streamlined way."

One company that uses TradeBeam to streamline its global trade activities is The Neiman Marcus Group Inc. (NMG). The Dallas-based firm serves the higher end of the retail market with 35 Neiman Marcus stores across the United States, two Bergdorf Goodman stores in New York City, and the Neiman Marcus, Chef's Catalog, and Horchow catalogs and web sites.

NMG wanted a fully integrated information system that would allow it to track and trace merchandise it ordered from overseas suppliers. It also wanted to use data in the system to assign classification codes to products long before they had to pass through U.S. Customs.

"We realized that the benefits of pre-classification are basically trending down the number of days it takes to get merchandise to our distribution centers," says David Wortman, director of international operations at NMG. Although NMG's accuracy rates were already high, company officials also wanted to make sure they always assigned the correct Harmonized Tariff System (HTS) codes.

Had to Haves

The system NMG implemented had to be easy for the company's overseas business partners to use, Wortman says. It had to offer interfaces to legacy systems, such as NMG's Enterprise Resource Planning (ERP) system. It also needed to provide a product library to store all the information connected with a product, such as its HTS classification, purchase order numbers, and style details.

NMG first implemented a global trade system in 2002, from San Francisco-based Qiva. That company closed its doors last year, and TradeBeam purchased some of its assets. NMG had already implemented several Qiva modules but was waiting to get others up and running. Although the retail group did not have to transfer its business to TradeBeam, company officials chose to work with the new vendor, and they remain happy with that decision.

"We were very impressed with the management structure, all the way up to the senior level," says Wortman, who cites TradeBeam's expertise in logistics as well as information technology. Officials at NMG were also impressed with TradeBeam's plans to enhance and expand the system, he says.

"The transition to TradeBeam was seamless," says Jimmy Howell, vice president of transportation and logistics at the NMG Marcus Group. "We did not miss a beat as far as continuing the development and making sure that we were both moving forward."

NMG currently uses TradeBeam to maintain the product catalog, receive updates on the status of its orders, and pre-classify incoming merchandise. One major enhancement TradeBeam is developing will extract data from a supplier's Advance Shipment Notification (ASN) to create a U.S. Customs Form 7501, which is used to collect duties and other fees. The system will forward this electronic document to NMG's customs broker, ensuring that the shipment is ready to clear customs before it leaves the country of origin.

Flagging Merchandise

Eventually, the TradeBeam system will also flag merchandise that is regulated by government agencies other than Customs.

For example, NMG imports many items that incorporate animal products such as furs, feathers, skins, and bone. All these are regulated by the U.S. Fish and Wildlife Service. A shipment that includes even one of these products must wait while the importer files the necessary documents. Sometimes shippers, and even their vendors, don't realize that an item such as a shirt with mother-of-pearl buttons requires special treatment, Howell says.

TradeBeam can automatically identify and separate items that need to be processed through Fish and Wildlife or other agencies. "We can flow the non-Fish and Wildlife merchandise, get it cleared and moving, and file a separate entry for the Fish and Wildlife and only delay that one day," says Howell.

Along with clearing shipments faster, TradeBeam's pre-classification functions will help NMG avoid unnecessary labor and expense. Once the system has assigned a code to a product, it will automatically attach the same code every time the company brings that item into the United States.

"We buy products across division lines and we bring the same product into different ports," Howell says. "There is no point in classifying it more than one time or filing multiple entries when we don't have to."

Classifying an item just once also averts the chance that different brokers in different ports will assign different codes to the same product, sometimes prompting NMG to pay more duty than it needs to. Brokers who don't work with a system such as TradeBeam have perhaps five or six hours to research a product classification, often working with invoices printed in French or Italian. "We need to help them all we can, and that's going to have a huge payoff for us," Howell says.

Making Agents More Productive

TradeBeam will also make third-party buying agents in Europe and Asia more productive. Those agents used to receive purchase order details from NMG through a variety of means, key the data into their own information systems, and use it to monitor the progress of orders.

Now, that data flows from NMG's ERP system, through TradeBeam, directly into the agents' systems. "It will improve their ability to productively support the business of following up with those suppliers," Wortman says.

TradeBeam provides several ways for customers to exchange data with suppliers, forwarders, and other trading partners. Partners with sophisticated information systems can integrate with TradeBeam, using EDI or XML to transmit data. If a partner can't manage this type of integration, or if the volume of transactions with that partner doesn't justify the implementation cost, TradeBeam offers communications via e-mail, fax, or a web interface.

As NMG and TradeBeam add new capabilities to the retailer's global trade solution, Wortman remains pleased with the partnership. "The management people and the support people we have worked with at TradeBeam are second to none," he says. "The project coordination, beginning from systems design and laying out the specs, to customizing the specs for our business, to the management of the process that TradeBeam has been involved in, has been sterling."

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