19 Oct How a Licensed Customs Broker Can Help Minimize Global Supply Chain Risks
Savvy enterprises navigate the complexities of international trade while minimizing global supply chain risks. Success in global trade requires a reliable supply chain: ingredients, materials, or components reliably sourced; products manufactured with consistent quality; sales properly transacted; and shipments correctly brokered. However, each of these links in the chain is subject to numerous trade rules and regulations, where failure to comply can result in significant fines, penalties, or sanctions.
Recipe for Minimizing Global Supply Chain Risks
If you are about to initiate a global trade program and want to minimize (and ideally eliminate) global supply chain risks associated with regulatory compliance, you need to:
- Know which global trade regulations pertain to the product(s) you are shipping;
- Interpret regulations to know where, how, and when they apply to your supply chain; and
- Translate regulations into tasks and workflows that ensure you are compliant.
Regulatory compliance requires business experience, a robust enterprise resource planning (ERP) solution with global trade functionality , and an implementation team knowledgeable in global trade processes and regulations to get your solution off the ground.
You already possess fundamental supply chain experience, though you’ll likely enhance it by hiring professionals with global trade experience or seeking additional training for existing staff. Extending your SAP ERP system with the addition of global trade services functionality requires implementation consultants who focus on the Global Trade Services (GTS) module. As for knowledge of global trade processes and regulations, you’d be well-advised to work with an ERP vendor who includes a licensed customs broker (LCB) on their implementation team.
A Licensed Customs Broker Complements Business and Implementation Skills
A customs broker is licensed by passing the US Customs Broker License exam and undergoing an extensive CBP background investigation. The expertise stemming from that test and subsequent relevant experience complements the skills of your supply chain professionals and ERP implementation consultants. An LCB (Licensed Customs Broker) understands the intricacies of entry requirements and procedures, classification and valuation, fines and penalties, and associated rates, duty, taxes, and fees and applies this knowledge to ensure your trade processes comply with relevant regulations.
Know which regulations are relevant to your global supply chain
Trade regulations are numerous and complex. In a consulting role, a licensed customs broker will take time to learn about your supply chain and identify which regulations (such as CBP, FDA, BAFA, AWV, and ITAR and EAR) are applicable to your specific products and markets. By identifying only the relevant regulations, an LCB reduces implementation time of your global trade initiative.
Global trade is not just about compliance—there are also free trade preferential treatment programs that shippers may benefit from. Many programs offer reduced duties as well. An LCB will advise you of those programs—they’ll point out which parts of specific trade programs simplify trade processes and save you money, which parts are currently subject to added scrutiny by government agencies, and how to cautiously proceed when the future of programs like NAFTA seem uncertain. An LCB is always looking for ways to maximize opportunity while minimizing risk.
Interpret and know where, how, and when to apply regulations
Once relevant regulations are identified, an LCB interprets the regulations in light of your global trade activities to determine where, when, and how they apply across your supply chain. What responsibilities do procurement, finance, sales, or distribution have for trade compliance? Who is responsible for product classification and valuation? When is a license required prior to shipment? How can we better predict landed cost?
As part of the process, the LCB will also identify any gaps such as personnel to be trained or hired or procedures that need to be enhanced or developed. A licensed customs broker works to address all possible areas of risk and ensure that all critical personnel in your global supply chain understand their responsibilities and the importance of consistent execution.
Translate regulations into tasks and workflows
Based upon a detailed understanding of your global supply chain and identification of the applicable regulations, the LCB works directly with the GTS implementation team to translate regulations into the actual ERP system tasks and workflows. These provide real-time compliance checks and control and may include:
- Product classification to determine if the item has a specific Export Control Classification Number (ECCN) and requires an export license
- Sanctioned party list screenings
- Automatic duty, tax, or fee calculations
- Streamlining importer security filing (ISF) via connection to the CBP or filing via the brokers Automated Broker Interface (ABI) or Broker Enablement
- Integration with customs systems to expedite export filing, such as ACE, ATLAS, etc.
Translating regulations into automated processes enabled by SAP-GTS removes the risk inherent in manual processes by ensuring critical import and export activities are consistently executed in compliance with relevant global trade regulations. Only a GTS team that includes an LCB can provide this level of detailed, expert guidance in translating regulations into actions.
Licensed Customs Broker Expertise Minimizes Global Supply Chain Risk
Whether you’re just beginning your global trade initiative or realize your current import/export activities need improvement, you’ll benefit from the expertise of an LCB on your ERP implementation team. At Aurum Terra, licensed customs brokers are a key element of our quality implementation services. With their experience surrounding global supply chains, knowledge of relevant regulations, and understanding of ERP global trade functionality, LCBs as part of your expert implementation team will guide you towards minimizing global supply chain risks.