Increasingly strict retailer programs, combined with tightening government controls over imports and exports, are forcing companies to pay much closer attention to the issue of trade compliance, according to Bob Heaney, senior research analyst for supply chain management with Aberdeen Group.
The pain points of global traders are many, says Heaney. They include the challenges of supply-chain globalization, shifting trade-lane patterns, more stringent regulations on importers and exporters, new denied and restricted party lists, changes in cultural preferences and the threat of terrorism. All are resulting in much more complex supply chains, he says.
Up to now, most companies have lacked a system for global compliance. Only about 20 percent of those surveyed by Aberdeen have developed formal and active programs around trade, Heaney says. About a third have designated a "go-to" person within their organizations for managing that area. Many are still delegating responsibility for critical tasks to their customs brokers or suppliers. Yet when there's a violation of regulatory procedure, it's the underlying shipper who pays the price. Companies need to make sure that their contracts with suppliers and third parties specify who is responsible for compliance, and where the liabilities fall.
There's no one area where companies are tripping up the most. But Heaney says they need to be "very careful" about restricted and denied-party screening lists. "If your company is not actively screening against those, which change all the time, you can really get into some serious penalties, and maybe even have your license revoked," he says.
Aberdeen views global trade management, along with supply-chain visibility, as a "very hot area" for investment. Vendors are offering systems that provide ever-more granular levels of detail. They provide the ability to monitor a variety of events well beyond the actual cost of moving the product to market. Companies need technology that will help them to cope with huge amounts of data as it passes between multiple partners in the chain.
"Having a content provider with real-time connectivity to that data, as it flows from the source and into your company, is a critical piece [of the supply-chain puzzle]," Heaney says.
