As global supply chains grow more complex, and expenses rise, companies find themselves paying more attention to global trade management, says Hart. He works with clients to craft programs for duty minimization and avoidance. Free-trade agreements such as the proposed Trans-Pacific Partnership (TPP) promise significant reductions in duties for companies that make use of their provisions. But they also increase the need for organizations to engage fully in trade compliance.
By failing to take advantage of such programs, companies are leaving a significant amount of money on the table, Hart says. They might miss the opportunity for duty avoidance the first time that goods cross a border, then have to seek reimbursement through duty drawback programs. Or they might be ignorant of both opportunities.
Hart says companies need to make global trade management part of their entire supply-chain strategy. To make that effort a reality, they should be devising forward-looking models and multiple “what-if” scenarios, as they explore manufacturing in a new country or expanding their global range.
It’s vital that companies engage in a total landed-cost study that incorporates such elements as cycle time, duties, taxes and freight capability. Failure to do so could require later expensive changes in sourcing decisions, and prove detrimental to the overall business, says Hart.
He believes that companies today possess varying levels of awareness of their true landed cost. “Clients today will have a good handle on it in one or two locations,” he says, “but there will be blind areas.” For example, marketing teams might not be tied to the manufacturing side. As a result, companies are being forced to reclaim billions of dollars a year in duty drawback.
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