Monday, September 29, 2008

Global Trade Compliance Priorities - An IT analysis - Part 1


I recently read Aberdeen's research titled Global Trade Compliance Priorities in 2008. I found the research interesting and it left me with questions in some areas.

Here's my analysis:

Page 7 - Best in class companies have 4.6% of international orders executed with Trade Compliance errors. Whoa! What errors? Since when did Trade Compliance departments admit errors publicly :). 4.6% seems way too high. I would like to know if the errors were caused due to human oversight or application/system malfunction.

Page 8 - Best in Class PACE (Pressures, Actions, Capabilities and use of technology) framework
The framework mentions that 26% of best in class companies have in house developed software for imports and 31% for exports. I'm wondering who provides the master data for these software. Is it an external vendor. What is the size of the IT team that maintains the software. I would be glad to sign up if they have a spot :0) as it sounds like a position with a lot of job security :0).
The best in class companies leverage trade compliance software from an ERP company or third party GTM solution provider. I don't quiet understand the difference between an ERP company and a thirs party GTM solution provider. I wondering if only the big guys such as Oracle and SAP are considered ERP companies? To me anyone who provides ERP software that can be implemented in house is an ERP company.

The advantages of a best in class company are quantified as:
a) annual trade compliance costs (include software, labor, fines etc..) is 0.5% less than the industry average
b) government fines are 1.8% less than industry average
Finally, we have some numbers to prove that trade compliance isn't a necessary evil and when a good trade compliance program is implemented with proper backing form IT it does lead to costs savings and lower fines. I would think the lower the fines the less likely the loss of export privileges etc..

(more to follow in my next post :))


Greg Lloyd said...

you should educate yourself on the difference between ERP companies and Best of Breed 3rd party companies... ERP companies get the most attention as they have the most money and the larger number of customers, but often their solutions lack depth and real direction as they tend to focus on broad strokes versus focused speciality. In the world of global trade software, speciality and realtime knowledge of what is going on in the marketplace is as yet not the domain of ERP providers, although their marketing people will say otherwise.

GTM and TMS applications are merging for sure, but what impact do you think the current credit crunch will have on Global Trade and outsourcing?