Global trade is experiencing unprecedented levels of uncertainty, disagreement and confusion, resulting in renegotiations of trade agreements and tariff increments. The prospect of future disruptions in the supply chain brings diverse risks to the operation of businesses, especially to inventory management. 

The approaching Brexit deadline raises the imminent question how businesses can effectively continue to finance and distribute their inventory within the European continent. 

While the renegotiation of the U.K.-EU relationship will most likely take several years, European distributors have to assess their current inventory management to mitigate future disruptions. 

There is no doubt that the political landscape will continue to change, and this goes hand-in-hand with a growing trade volume due to the growing e-commerce market. In order to serve the European Market effectively, managing the availability and allocation of inventory becomes vital to reduce overall costs, improve cash flows, and bring more agility to supply chain operations.

When bringing inventory into Europe, customs warehouses harness the ability to defer duty payments until products are imported to EU member states or exported to countries bordering the European Union. An adequate management of the inventory is required to ensure a positive cash flow and a timely delivery of the inventory to the market.

Identifying potential duty savings through free-trade agreements and preferential duty rates is the first step before importing goods into the Europe Union. While many customs warehouse operators are still utilizing the FIFO method, duty reductions are realized when products with a preferential treatment receive priority over products sourced from suppliers with a non-preferential treatment. In a landscape with trade wars and changing tariffs, it is vital to allocate inventory resulting in the most duty savings before importing the goods into Europe.

The next step is to digitize and automate the reporting of the inventory moving into and out of the European Union. The customs authorities expect accurate tracking of bonded and non-bonded inventory. Bonded inventory must be reported each time it is released from a customs warehouse. Due to the increase in trade volumes, a growing number of traders are utilizing aggregated month-end declarations to lower the costs of the customs processes. Many customs authorities within Europe are looking for ways to make these types of declarations more accessible for trusted traders.

Lastly, the orchestration of trade flows is critical to ensure that the business can adapt to changes in trade regulations or business strategy by redefining inventory, distribution and reporting processes. It is imperative to reduce inefficiencies that might exist in cross-border transactions through proactive management of the various trade flows and prior identification of necessary compliance data and activities.

The Outlook

To cope with supply chain disruption, it is key for businesses to react quickly to changes and maintain the lowest cost of delivery to the end markets. Adopting the appropriate technology offers unique advantages to manage future challenges in the delivery of your inventory. 

Customs warehousing and European customs filing programs enable businesses to define or reconfigure their supply chains based on changes to the business or alignments with requirements of the various government authorities. 

Kjell Bornkamp is a product manager for Amber Road.