GTM Software: Read This Before You Buy
Q: How can a logistics operation contribute to a company’s overall profit margin in a meaningful way?
Mabry: Recent research studies confirm transportation and handling fees, insurance, duties, and taxes make up more than 40 percent of an imported item’s cost. Additional costs often hidden within operating accounts can include quote administration, sourcing, and quality assurance activities.
While effective purchasing practices leveraging low-cost country sourcing drive direct-cost benefits, financial visibility into the extended supply chain can further maximize profits, keep a better handle on liabilities, and ensure compliance with an ever-changing regulatory environment.
Import trade activities typically span numerous stakeholders including procurement, global supply chain/logistics, import operations, trade compliance, and finance, as well as external trading partners. Adding to the complexity, each group can have independent operational systems and processes with limited collaboration—think e-mail, spreadsheet, and facsimile.
The lack of information transparency across the extended supply chain represents a key obstacle to a company’s ability to measure, analyze, and benchmark global trade performance for improvement.
Implementing technology-enabled global trade management (GTM) increases annual profit by approximately 10 percent, notes a 2009 Stanford University study. While this level of benefit is certainly attractive, several areas require attention as an organization pursues GTM technology.
First, the organization must agree on the purpose of the global trade management system. Will it support quote-to-order, cost forecasting, supplier compliance, quality assurance, analysis, reporting, and benchmarking?
Second, the company needs to reach agreement on the specific trade variables to use and processes to facilitate. Request to quote and quote acceptance, landed cost management, product quality inspections, and approve-to-ship activities all come to mind, but there are certainly many more opportunities with untapped intrinsic value.
Third, the organization should implement a robust information system to capture and measure all trade variables according to its GTM model and objectives. The GTM system must support the efficient collection of necessary information by the company’s internal groups, as well as all external trading and logistics partners. Particular emphasis should be placed on the GTM system’s ability to be easily configured according to standard industry practices and unique company characteristics.
Fourth, the GTM system must present information in an easy-to-use, user-friendly way, allowing analysis and benchmarking by relevant business area including item number, order, and shipment, while providing measurement of actual versus forecasted performance and costs.
Technology-enabled global trade management offers significant rewards for organizations looking to improve supply chain efficiency and, ultimately, improve profitability in a meaningful way.