There's a shift under way in the compliance arena. For years, importing goods compliantly captured most of our attention. Now, however, the U.S. economic recovery hinges on our nation's ability to sell more domestic goods in foreign markets. Achieving export compliance is gaining new importance - and rightfully so.
Export compliance grows in complexity daily. Shifting political landscapes equate to sudden changes to denied party listings (DPLs). Growing numbers of regulatory agencies translate to more regulations overseeing exports (goods, technology and even intellectual property) to assure products don't fall into the wrong hands. Each new requirement challenges export departments. They must be aware of the myriad requirements and generate the necessary documentation quickly and accurately. Managing exports is no simple matter today.
Most large enterprises are addressing the export process much like they did import requirements. They are automating, often spending fortunes to design customized systems and integrate them with back-office solutions. The remaining two groups - small and mid- to large-sized firms - are responding by acquiring content, such as DPLs and multi-country Harmonized Tariff Schedules (HTS), and downloading that information into spreadsheets. For small companies with limited product lines, managing and classifying products and performing denied party screenings using spreadsheets may suffice. But for mid- to large-sized firms, spreadsheets are inadequate. Operational considerations dictate a more sophisticated response.
Consider some of the day-to-day export-related tasks staff members perform. First, there is screening orders against DPLs. Screening may need to be performed multiple times, not just at the time of order receipt. If there is a hit, the order needs to be put on hold while staff members investigate whether it's a viable hit. Many may want to manage Export Control Classification Numbers to corresponding HTS numbers. License determinations may need to be performed, and foreign trade agreement requirements must be managed. Tariff codes must be verified as being current. Then there is the task of completing and assembling all the export documents. Manually generating documentation can be a labor-intensive process. Filing via AESDirect, while more convenient than before, still absorbs significant personnel time. At any point in time, bottlenecks can occur. Each delay costs money, regardless of why it occurs.
Then there is the need to maintain audit trails. In the event of a U.S. Customs and Border Patrol (CBP) audit, companies must be able to document screening processes and produce the records supporting each shipment exported. Filing documents and maintaining those files in a retrievable way are resource-intensive processes.
In my opinion, the emphasis firms currently place on content acquisition is understandable and justifiable. However, managing the operational processes of exporting is equally, if not more, important. I like to draw the analogy of a car and gasoline. Content is like fuel that can be bought anywhere; operational processes represent the car. Fuel powers the car, but fuel alone doesn't offer a mode of transportation. Operational processes, fueled by content, provide the ultimate vehicle for moving from noncompliance to compliance in exporting activities.
So what is a company to do? There are comprehensive automated tools available for exporters just like those importers use. Depending on which solution a company selects and the acquisition mode (license, SaaS), economies are available. One note of caution is in order: While some content providers may offer tools to manage specific aspects of the export process, task-specific applications can be disjointed. Each one comes with a separate acquisition cost, and many SaaS models entail transaction fees, which can accumulate quickly.
It is preferable - and more efficient and cost effective - to have one homogeneous, automated system to manage the entire export process. Firms can acquire a solution and still retain their current content provider, or they can opt to use the solution's content. Regardless, affordable solutions exist in the marketplace, with acceptable ROI schedules. Be on the lookout for solutions that offer
• Strong product and vendor database: An all-in-one database is the single most important feature, as it comprises the "brains" of the system, maintaining all the information critical to export compliance in one comprehensive repository.
• AES certification: This designation means that the vendor's solution is approved to transmit and receive data through a direct electronic interface with CBP. It translates to more timely, complete and accurate data fueling the database. It also authorizes direct electronic filing of export documentation, eliminating the need for personnel to enter information on AESDirect.
• Automated denied party screening functionality: The more functions a solution automates, the better. Automation lessens the need for human intervention and creates the proper audit trails.
• Automated escalation feature: The system should manage by exception, that is, only anomalies should require human intervention. The solution should be designed to automatically notify the designated official by email and escalate the matter to the next higher authority, when necessary.
• Comprehensive audit trails: A firm's ability to demonstrate that it followed all the rules by performing screenings, investigating "hits," and so forth is critical.
• Automated document generation: Beyond saving personnel time and costs, such functionality eliminates potential errors and assures consistent, automatically indexed documentation.
• Document warehouse functionality: The ability to automatically maintain complete documentation in an easily retrievable manner is imperative. Having this feature allows a firm to get CBP approval to maintain electronic records, eliminating paper and associated file room costs.
Content is undeniably important. However, the time has come to consider the day-to-day operations that must be performed to achieve export compliance. Doing so will lead to the realization that spreadsheets do little to address the considerable operational challenges associated with compliant exporting and corporate productivity. Automated tools exist to manage the entire export process from screening to generating documentation to retaining records to creating audit trails. It is time to buy the car, not just the fuel.
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