The conceit in the Information Age is that business travels at the speed of - well, as quickly as information does, internet-fast. While millions of transactions of every description, from order placement to payment, are instantaneously zapped around the country 24/7 every day, the pace of business across international borders often is quite a bit slower. Certainly, that's the case with the accompanying documentation if not the actual movement of the goods. A lot has to happen to get a shipment from Boston to Bakersfield, but Barcelona to Baton Rouge presents different challenges, and paperwork.
In a purely domestic setting, few things beyond money, timing or the ability to perform prevent you from doing business with just about anyone. Those also are important on the international front, but government rules and regulations add a layer of difficulty to things. For instance, can you export to a given customer; even so, are you prohibited from sending certain items to that partner? In a static world, those answers would always be the same. But today's solution is irrelevant all to soon in a world that's always in flux.
With global trade, there are other considerations as well.
It's in the nature of business to make as many sales as possible. But as potential trading partners proliferate (not to mention the number of SKUs and middlemen involved) the process grows ever more complicated. And complexity breeds its own challenges: sluggish supply chains, inefficiency, and possibly, lost opportunities.
The inability to quickly share freight data impedes supply-chain efficiency.
It goes without saying that lists of so-called "denied parties" -those groups or individuals that government doesn't want to see in possession of certain items or technologies - have grown since the tragic events of last September. Further, heightened security has caused attendant delays throughout the supply chain. At seaports, security concerns focus on containers and their contents; at airports, the FAA can require carriers to hold cargo up to 72 hours before shipment so agents can "sweep" warehouses and cargo holds.
These security issues have generated a great deal more documentation. Additionally, documents referencing cross-border transactions often need to be in multiple languages.
Finally, what international shipment would be complete without its own dizzying sets of duties, taxes and other government fees? In fact, no cross-border shipment is complete without rigid compliance with all of these requirements, and the data to prove it.
Clearly, no successful business can juggle these ever-changing data sets manually. Best practice in international trade logistics mandates automation of global trade management so business transaction data can be moved quickly. But the reality often fails to match up with the technological capability.
In the age of information, the only thing slower than a slow boat from China is the paperwork for the shipment. So says Larry Antonucci, president of Freightek, whose eFocus portal enables importers, freight intermediaries and other providers to track shipments and data through the supply chain.
The path of goods shipped often is quicker and more direct than that of the relevant documentation, he says. "Freight can't move without the data," he says. "Whether it's the forwarder compiling the documents or the consolidator sending it here, once the broker here receives the paperwork, he has to do all the data entry if it's not an automated process," says Antonucci. Teams of people can key in the information manually, but errors likely to result will cause Customs to reject the shipment. "Freight is going to sit there until it's cleared Customs."
Global Trade Growth
Obstacles to efficient data sharing have to be dealt with, observers say, because massive growth in international trade is expected to continue. Notwithstanding bumps in trade flows associated with 9/11, global volumes should grow in value to about $9tr by 2005, the World Trade Organization says in its annual report. As trade grows more complex, Antonucci notes, operationally things become less efficient. Consequently, ITL best practice requires that an adequate technological basis underpins players in the international arena.
Among the players in the ITL software and managed services space are Arzoon, ClearCross, Freightek, NextLinx, Open Harbor, Precision Software, Qiva, Vastera, and Xporta. Their approaches aren't always the same and their offerings often vary, but each vendor is focused on managing or addressing international trade functions in some key way. Each is aware that while superior products, service and pricing levels are indispensable, they alone won't guarantee a successful global trade strategy. Whether installed or hosted, the right trade-management technology initiative is called for, even in these IT budget-busting times.
The primary functionality of Arzoon, a self-styled Logistics Resource management provider, is in its Arzoon LIFE solution. The platform is designed to provide transportation management inventory visibility, carrier sourcing, shipment scheduling, contract negotiation with carriers and track and trace. Its benefit in ITL terms is trade compliance content and automation solutions, which Arzoon assumed when it acquired vendor From2 in early 2001.
The implications of 9/11 formed the backdrop to the announcement by ClearCross and Oracle of an alliance leveraging their products. "The availability of embedded connectivity to ClearCross's [Export Compliance Solution] module with the Oracle E-Business suite to provide global export control screening could not have come at a more important time for our customers and country's Homeland Security," Don Klaiss, Oracle's senior vice president for manufacturing and supply-chain applications, said in announcing the partnership.
Users of the Oracle 11i suite can easily tap its enhanced trade functionality to deal with regulatory constraints and barriers to cross-border commerce.
Share the Data
However important and timely, information is of little use if it's "siloed" in an organization. Best practice indicates data must be shared interdepartmentally and with authorized, outside partners. A white paper from Open Harbor notes that where ITL software is used, often it is with stand-alone client-server systems that don't allow communication between divisions or with supply-chain partners. "The key to supply-chain efficiency is to have a single global trade solution that can be leveraged by one's entire supply chain - from manufacturer to shipper, from internal compliance experts to outsource customs brokers, and so on."
Visibility, virtually holy writ in supply-chain orthodoxy, is insufficient if users can't take action on the information. Best practice, says Open Harbor, is a solution with exception-based alerts that permits updating the information and then communicating that to all trading partners.
The internet, of course, is the backbone of that kind of collaborative data access and sharing. Qiva's iQ-Export module, for example, is designed for the net. Part of Qiva's Global Logistics Performance suite, the module is supported with documentation, reporting and alerts.
Internet technology allows you to "globalize" your enterprise systems that by themselves are not "inherently global," according to a NextLinx position piece. Best practice says that information that changes on a daily basis, such as trade rules and regulations, should be embedded into a company's ERP-generated workflow. While the enterprise software does the heavy lifting, the developer sees its product, NextLinx Web Services, as supporting the business process with real-time international trade information.
In a nutshell, an ERP adapter connects the enterprise software via the internet with the NextLinx hosted "content engine." In effect, the ERP system requests trade and/or compliance information relevant to an event, such as a sales order. The data transfer may determine when that order is executed, or if it's placed on hold.
Vastera has grown well beyond its beginnings in international trade information and compliance software to providing trade management consulting and managed services as well. Nevertheless, its TradeSphere solutions suite is a mainstay. The modular approach allows users to automate export compliance, reconcile import orders, verify status of in-transit shipments, manage international logistics information, classify goods, make sourcing decisions, and assess duties and other fees. The collaborative platform enables data sharing among the authorized members of one's "global trade community." TradePrism.com, TradeSphere's global trade exchange, allows users to screen for denied or restricted parties and to calculate landed costs.
The Virginia company and IBM recently entered into an alliance that will allow the latter to use TradeSphere in its U.S. and Canadian operations. For its part, in sales to new customers, Vastera will lead with IBM technology.
TRA/X, Precision Software's integrated global logistics system, is equally modular in design. It's also platform-independent and can interface with all major ERP systems. In addition to customs, export and transport documentation, denied-party screening and landed-cost calculation, TRA/X functionality handles management of letters of credit, hazardous goods classifications and packing considerations.
As its name suggests, the Global Strategic Sourcing application from Xporta is a tool enabling supplier selection. But its ability to figure landed costs and to provide trade compliance data also factored in Ingersoll-Rand's decision to partner with Xporta. Tony Bozzuto, director of global logistics at Ingersoll-Rand, a giant with a hugely diverse product portfolio, acknowledged that the application's global trade information was attractive because it would let sourcing managers run "what-if" scenarios in minutes.
Traditional ITL software promotion stressed the optimized flow of international goods, landed-cost calculators, and fine reduction or avoidance. All still true. Today, when every business is touched in some way by globalization, best practice virtually requires automating the trade data management. As Antonucci says, "When even minor delays can spell the difference between a market success and utter failure, the inability to share reliable logistical and freight management information represents a serious impediment to supply-chain effectiveness."
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