The challenges include:

• Manufacturing Leadership. We are becoming more and more of a service economy.  As the country is fighting to exit the recession, companies are uncertain of their ability to access capital and invest in the US in this time of increasing regulation and taxes.  Simply put,  manufacturing capacity and jobs are being exported (but unfortunately don’t count towards the doubling objective).  So if you aren’t producing more how do you export more?
• The Rising Strength of the Dollar. The Euro bottomed with the banking crisis and has caused the dollar to appreciate.  While China has talked about slowly appreciating the renminbi, it is still promoting a steady flow of exports to world markets, and increasing competition for US Exports.
• The Political Sensitivity of Trade Agreements.  As the election year approaches, I can’t see Congress getting too aggressive on trade agreements.  Clearly from a State-level there are winners and losers when trade agreements like NAFTA are implemented.  Who is going to fire up the old job debate now when the economy is stuck in neutral and slowly rolling backwards?

Exports in the first four months of 2010 have increased by 17 % versus the same period in 2009. However today we learned that the real trade deficit increased in June from $46bn to $54bn.

Clearly we aren’t playing on a level field and struggle with trade barriers erected by countries around the world.   For example, a wine industry expert says, “The single most restrictive barrier to wine exports remains the high import tariffs of most of the major markets buying U.S. wine today.”

Read more about the barriers to increasing exports at the New York Times: Hurdles Deter Obama’s Pledge to Double Exports.

Thanks to Lauren for the inspiration for this post.

Benchmark Report: Export Compliance Management

This report profiles export compliance programs of large, small, & medium-sized enterprises in many industries to reveal challenges companies face in managing export compliance. Receive a copy of the Export Compliance Benchmark!

So What is the Cloud?
The cloud is an innovative offshoot of SaaS (and is sometimes called PaaS – platform as a Service). According to a recent Gartner forecast,* worldwide cloud computing services will generates revenues pegged at $68.3bn in 2010, representing an increase of 16.6% over the same period last year, with global cloud services revenue projected to reach $148.8bn in 2014. Increasingly, says Gartner, companies are adopting the cloud, and service companies – well-established, and start-ups both – are offering a range of cloud design and implementation solutions.

Intersted to learn more – check out The Cloud Industry Forum

The Cloud and GTM

Among global trade management stakeholders, manufacturers are the largest early adopters of cloud services to date, but high-tech industries are moving to cloud adoption as well, says Gartner.

Cloud computing offers a numer of capabilities for GTM:

• Integrate global suppliers and logistics providers with a shared network
• Plug into value-added services such as trade content from hundreds of countries
• Support new workflows and collaborative processes across the spectrum of imports and exports
• Use configurable software solutions to enable rapid implementation

This leads to several key benefits:

• Reduced operating costs of 20% and upwards
• Elimination of the need for capital investment to support expansion or to handle demand surges
• A cost effective solution for small-to-midsize companies to compete in IT functionality with larger competitors.

Many of these benefits are well understood from the On-Demand hoopla a few years ago, so what is exatly new about Cloud may not be so clear.

• For manufacturers facing unforeseen supply and demand anomalies and work stoppages, capacity and tooling decisions become critical
• For OEMs and retailers subject to short product lifecycles, market and economic uncertainty, rapidly changing technologies, product recalls, stock-outs. ever-escalating competition, and dramatic demand fall-off, the success or failure of a product and/or the company’s brand equity and market position can hang in the balance
• For LSPs as well as those above, customer bankruptcies, or blind-siding weather, political, or terrorist events resulting in major transportation disruptions can cost $millions in lost revenues and key customer accounts.

Even if you have an overall planning process in place with established long-term goals, short-term contingency plans tend to receive less considered thought. Rarely do they result in quick and decisive action when it is most needed. Below are some contingency measures you can take proactively to limit risk exposure and enable rapid and effective crisis management.

1. Develop a Plan
Form a contingency team composed of key supply chain partners, (e.g., from the OEM, manufacture, logistics sides); and identify contingency scenarios:

• Re-examine sourcing partnerships and identify alternatives
• Model the impact of disruptions on your sourcing and inventory strategies
• Identify a core contingency inventory strategy – in what form and quantity across the entire procurement, manufacturing, and distribution network – to be fine-tuned as the need arises
• Develop a list of appropriate immediate and follow-up actions to achieve an optimal outcome for each contingency scenario, and, most important, appoint a point person to take charge of each contingency

2. Create Visibility
It is essential that all networks linking trading partners support end-to-end visibility and that all network partners participate in contingency strategies.  In this way you can monitor supplier performance in real-time and address any variances in your risk management system.

3. Build Flexibility
An agile supply chain can help mitigate risks.  Look at opportunities to alleviate current supply chain bottlenecks, model alternative transportation network configurations and look for alternative sources of supply.

4. Respond Decisively
Proactively link contingency plans and business objectives; and assure that contingency point people have previously obtained corporate authority and by-in for the rapid execution of contingency strategies.

5. Continuously Improve the Plan
Continuously optimize inventories against long-term business objectives as well as changing market conditions, supply constraints, customer bankruptcies, and other contingency scenarios.

As significant business, currency rates, fuel costs, and other changes occur, re-examine supply chain decisions from materials procurement, manufacturing, inventories, distribution, transportation, to constraints and costs.

1. Accommodate Multiple Fulfillment Models.
Visibility solutions need to be highly configurable to accommodate all of the various fulfillment models in operation across the enterprise. Domestic supply chains with three handoffs and a cycle time of less than a week are much different than an international supply chain that involves 12 – 15 handoffs and two border crossings. Supply chain visibility solutions that are flexible enough to accommodate multiple fulfillment models allow benefits to accrue across the enterprise and not within a specific product line or operational model.

2. Create an ‘Information Hub’. Visibility solutions not only extend processes outside the four walls, but must integrate and aggregate key information from within the four walls of the enterprise. The ‘Information Hub’ creates a one-stop-shop for key order, shipment, and inventory information from all internal ERP, TMS, WMS and other inventory planning systems. This expands the number of supply chain processes that can be managed by Visibility and ultimately improves productivity by eliminating ‘sneaker nets’ and re-keying of information..

3. Don’t Assume Data Quality.
Aberdeen Research recently conducted a survey and discovered that only 16% of Visibility implementations have data quality above 91%. The other 84% of companies surveyed must clearly be challenged by user adoption. To achieve the value from a visibility solution, users must have confidence that the information is both timely and accurate. State-of-the-art Data Quality Management is comprised of complex rule-based systems to cleanse and standardize information and analytical tools to monitor, troubleshoot and resolve data quality issues using Six Sigma principles.

4. Use a Proven On-boarding Process.
Data quality starts at the source and successful Visibility implementations often use an on-boarding service that is based on a careful assessment of information requirements and leverages existing integrations from an established network of transportation, logistics and brokers to certify new connections.

5. Postpone Inventory Allocation Decisions.
Many leading companies are using Visibility to track shipments to an SKU level. This allows them to treat the container as a ‘floating warehouse’ to implement inventory diversions through a transload facility or to and to postpone all inventory allocation decisions to just prior to Entry. Given long order-to-deliver cycles, this ability to manage in-transit inventory can reduce days inventory on hand and stock-outs.

6. Push Visibility Back to Origin
Many initial Visibility implementations are based on ‘where’s my stuff’ shipment tracking at a container level. Savvy companies, however, are expanding their Visibility systems by linking orders to shipments and managing in-transit inventory. New CBP regulations such as 10+2 create much more accountability for the importer and kicking off a new wave of investment to push visibility back to the origin. Many of the “10” data elements are related to the supplier, the seller and where goods were loaded – all information that can be collected from origin operations.

7. Finally Manage Trading Partners with Scorecards.
The by-product of operational Visibility is a rich repository of supply chain data that can be aggregated across the enterprise and with all trading partners year after year after year. Using leading Business Intelligence tools, scorecards to manage supplier compliance, or transportation booking performance can be easily developed. Since Visibility reduces tactical firefighting, the purchasing, logistics and customer service teams can redirect their efforts to continuously improve global operations.

8. Track Landed Costs Along the Chain.
Aberdeen reports that companies that implement visibility are twice as likely to reduce total landed costs over the past two years. Many companies use Visibility to track product, freight and insurance costs as well as integrate trade compliance information such as duties, tax, VAT and other governmental charges. By seeing how costs build and monitoring variances to budget, companies can focus efforts to target cost overruns

9. Use Triggers to Automate Handoffs.
Visibility solutions today are evolving from monitoring tools to execution systems. Leading companies are using ‘triggers’ based on supply chain events to plan warehouse receipts, to schedule a pickup, or to alert that the free-time will expire on a container. These triggers create tremendous value by compressing cycle time or helping to reduce the costs associated with demurrage and detention fines

10. Become Your Own 4PL.
Visibility is now considered to be a critical and strategic information asset. Leading companies are implementing the infrastructure and deploying new value-added services to their business units and ‘plugging in’ logistics provider partners; in short, they are becoming their own 4PL. The advantage of this model is that all trading partners integrate to one standard and are managed at both a tactical and strategic level. In this way the central logistics team controls all information assets and the delivery of value-add services to their constituents. Perhaps “I am here from Corporate and ready to help” can take on a totally new meaning in your business.

• Exemption of duty payment upon re-export of goods
• Relief from inverted tariffs where raw materials with high duty rates can be transformed to an end product with a low duty rate
• Use of consolidated weekly entries to reduce merchandise processing fees (MPFs)
• Deferral of duty on any inventory stored within an FTZ

For many companies these benefits can justify the investment in a Foreign-Trade Zone in the first year of operation.

If your company is considering utilizing a free trade agreement such as NAFTA, or wants to maximize the savings from a free trade agreement, read our Trade Agreement Best Practices Benchmark.

Implementing and maintaining compliance with a free trade agreement is a complex and technical process. Make sure your company takes full advantage of the trade agreement savings by benchmarking your process against 300 respondents across many different industry verticals and revenue size.

Receive the Trade Agreement Best Practices Benchmark Study Now!

Since 9/11, the U.S. government has become increasingly concerned with foreign nationals on student visas gaining access through research grants to sensitive information and technology. Because of increased scrutiny, one incentive is the cost of non-compliance. Penalties range from 5 to 10 years imprisonment and fines of $250,000 to $1,000,000. Additional costs include loss of contracts, grants, employees and other collaborative efforts. Some of the recent violations include:

• Professor convicted for allowing unauthorized foreign citizens access to restricted technology in violation of the Arms Export Control Act
• University fined for financial dealings with Iran and Cuba
• Universities cited for failure to obtain licenses for access by foreign nationals to military technology
• University involved in unauthorized export of biological materials

Knowledge is power. University of Tennessee faced its second count of export violation this year because its professors were unknowing violating export laws. Read more about this case from this Denied Party Screening blog.

Good to share with Management to help them understand key process and technological enablers.  Enjoy!

“What we’re starting to see,” says [Karl Manrodt, Associate Professor at Georgia Southern], “is senior management … trying to understand what those metrics are and should be.” The desire to monitor one’s own performance, so prevalent in school, never really goes away. At the same time, “it’s important for us to communicate what’s critical … to customers and suppliers. Let’s manage to that.”

Unfortunately many supply chain teams struggle to access data in multiple sources and formats and do not have access to the latest business intelligence tools. Implementing a Performance Management solution that integrates with your supply chain visibility and trade compliance processes can give companies the insight to make better-informed strategic decisions and improve supply chain performance.

Look for a Performance Management solution that offers several important capabilities:

• A portal to schedule reports, alert users when new reports are available and to distribute polished deliverable documents.
• A dashboard to provide a consolidated view of key performance indicators and reports along with extensive personalization options.
• A complete set of  standard reports to manage key metrics such as cycle time, trading partner performance, landed cost, and data quality.
• An ability for users also have the ability to create their own customized reports.
• A web-based reporting tool to perform ad-hoc queries and multi-dimensional analyses with the ability to drill to operational details.
• Easily customize reports by dragging and dropping data, inserting calculations, and adding graphs.

For more details on the study, please read this article on SupplyChainBrain (includes a link to a video interview).