GTM Best Practices

With the recent buzz around Importer Security Filing (aka Customs 10+2) many are wondering if the pain is worth the gain. Complying with this new regulation will undoubtedly increase costs in the short-term, but could also drive a re-engineering of the import supply chain that could cover this investment many times over.

Re-engineering a business process starts by mapping the existing flow. Importers need to map their supply chain and understand the exact process of order delivery, manufacture, container load, consolidation and clearance. And at each step, you need to understand the entities and systems involved as well as the known bottlenecks and points of failure. This is called the ‘As-Is’ process map and creates a baseline understanding of what works and what can be improved. With your Import As-Is process flow you should look for improvement opportunities in several key areas:

• Supplier Management. Do you know who your suppliers are? Have you screened those entities prior to placing an order to confirm they are not sanctioned in any way?
• Product Classification. When is classification performed? Are you sending HS details on Purchase Orders? What is the process of determining Country of Origin and is it appropriate?
• Terms of Sale. Based on Incoterms, the importer may have little or no influence over what happens at origin. For example with DDU (Delivered Duty Unpaid) or CIF (Cost Insurance & Freight), the supplier (seller) manages transportation and the forwarder relationship at origin. Should you re-evaluate commercial terms (eg. shift to FOB), to have more influence over origin operations?
• Collaboration. Do you have a way of integrating business partners (suppliers, forwarders, customs brokers) into your import process? Can you share and update information across this network? Do you have an ability to manage this process by exception?
• Decrease Complexity. It may make sense to consolidate business (and shipments) with fewer service providers in fewer places. This could simplify integration efforts and the measurement and management of the service provider to an SLA.

As a result of this effort, importers can start to map out the ‘Should Be’ import process. This is the fun part of re-engineering that allows you to design new policies, new business process flows and the technology needed to implement this optimal, future state.

GTM technology plays a key role in this future state with an automated approach that not only helps the importer comply with and generate an ISF, but also to effectively handle increasing import volumes by being amble to do more, with fewer resources:

• Structuring the process to classify goods
• Systematically screening the supply base
• Creating shipment documents and pick-up requests from assigned purchase orders
• Preparing the ISF and entry filing from the same information
• Using alerts to resolve compliance issues prior to filing an ISF
• Measuring the process and generating performance metrics

This is the time to define the ‘Could-Be’ plan by identifying the feasibility of the Should-Be vision with constraints that include cost (your budget), risk (can the new processes be automated) and time.

The good news is that GTM technology can mitigate the systems risk and provide a level of automation that allows an importer to effectively shift to a Direct Procurement model. Ultimately, the price of complying with heightened security regulations will cost more, but this new business model promises to generate a stream of benefits for the importer by:

• Having more visibility and control over what happens at Origin
• Monitoring ship windows and further optimizing inbound freight
• Eliminating mark-ups on freight and handling services by ‘going direct’
• Leveraging volumes to negotiate even lower freight rates§ Being able to manage inbound shipments to lower inventory with diversions and DC Bypass strategies
• Automating the production of origin documents to reduce export cycle times
• Transforming export transactions to further automate the entry process.

The gain is worth the pain; especially, if your business relies on sourcing from low-cost countries and values operational excellence.

Still unsure? Wait around and see what CBP will come up with in terms of the stick. While there might be a grace period negotiated for a few months, I am sure the government is going to find a way to pay for continued automation upgrades. One way or another, a business case for GTM can be made.