Know Thy Partner: Beyond C-TPAT
The globalization of supply chains has caused a major shift in trade partnerships. Partners are changing more rapidly than in years past. Relationships tend to be more focused on who can supply products cheaper, faster, at better quality, and U.S. companies are looking worldwide for competitive parts’ sources.
With this new globally spread supply chain comes increased risks. Companies must be aware of both the partner and regions with which they are doing business. With more uncertainty and unpredictability, a focus on supporting growth and competitiveness, companies are increasingly realizing factors outside their direct control are having an impact on their supply chains.
Knowing your partners can help in maintaining a smooth flow of goods while ensuring safety and security. While initiatives such as Customs-Trade Partnership Against Terrorism (C-TPAT) are a starting point, companies need to look further to ensure greater seamlessness, security and success, through:
1. C-TPAT Certification: C-TPAT, launched in 2001, helps manage and monitor the movement of goods and reduce the possibilities of unknown elements accessing the shipper’s containers and shipments. Through C-TPAT, companies have access to the most accurate information on their supply chain’s security. C-TPAT requires examining all the possible ways a company moves goods, identifying countries and regions it is working with, and assessing the risk of each partner. It requires that manufacturers and partners demonstrate security criteria via written/electronic confirmation.
Though initially obtaining C-TPAT certification may require some investment, it can be a source of tremendous time and financial savings in the long run—from reducing the likelihood of audits and accompanying fines, and lowering scrutiny from the CBP, to reducing a company’s liability and speeding up the time to get goods.
2. Collaboration: Practices and tools that encourage real-time collaboration with partners allow companies to conduct business more efficiently. Robust web-based software platforms allow partners to access and provide accurate information and timely responses to questions not only on C-TPAT partner questionnaires but also on country of origin, qualification and certification of parts eligible for trade agreements. Companies can automate processing purchase orders, Customs invoices, and shipping information (container numbers, bills of lading, etc) in one system. Partners/shippers can also provide and even upload supporting information on part attributes to increase accuracy in classification and avoid under- or over-paying duties and fees.
3. Partnerships for Help: In this new global economy, companies need to maintain due diligence and research partners as much as possible. Knowing how vulnerable they are and the threats of the region are critical. Organizations should research as much information as is available online, send questionnaires to prospective partners and even perform on-site evaluations, when possible. Importers, assuming the risk of transactions and products, have the right to require a certain level of cooperation from partners in sharing information and collaborating online.
4. Better Internal Practices: Corporate responsibility is becoming increasingly important for organizations wanting to build and maintain their brands. Customers may not want to do business with a brand that is not responsible. Increasingly corporations are also analyzing and auditing their own practices and evaluating themselves as a partner and supplier.
Knowledge is the key to success when it comes to working with partners. Keeping a step ahead of the shift in global supply chain and partnership management can help create a smoother flow of goods and avoid unnecessary fines and duties. It can also strengthen partnerships and the bottom line.
Sri Ramadas, Director, Projects & Services for Netwin Solutions, has 20+ years of IT experience in business development, account management, project management and product implementation management. His company is online at www.gtkonnect.com. He can be reached at [email protected].