The big picture on compliance

Why should companies care so much about trade compliance issues? Because these issues cut straight to the heart of a commercial organization, says Greg Johnson, VP of marketing for GT Nexus, a provider of global logistics technology.

“How do you manage the flow of goods across borders?” he asks. “How do you make sure your shipments arrive on time to your customers? How do you decrease variability in your supply chain so you’re not stacking it with inventory?”

Technology can help answer some of these questions, points out Mahipal Lunia, director of solutions for Open Harbor Inc., which provides global trade management solutions. “If you are connected to a whole network of trade partners, each of whom touches a shipment and can impact the overall performance of your supply chain, what happens if a shipment milestone is missed? If a document is not delivered or is incomplete, it will hold up a shipment. That has downstream repercussions throughout the supply chain.”

“You have to know the financial impact of managing — or not managing — trade compliance and logistics in tandem,” advises Johnson. “The only way you can do that is to know the value of the product moving, and the impact of duties and fees, transportation costs (air vs. ocean) and so on. If you know these things, you can calculate your per-diem costs to hold inventory for an extra day. You can calculate the costs over the course of a quarter, so you can see in very specific systematic ways what the supply chain disconnects and gaps are costing you. That’s the beginning of gaining better control.”

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