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About the Author

J. Anthony Hardenburgh
Vice President, Global Trade Content
Amber Road


J. Anthony Hardenburgh brings over 12 years of international trade experience to Amber Road where he manages a global team of international trade professionals who monitor and maintain the company’s vast amount of trade compliance content. Prior to joining Amber Road, Anthony served as Vice President of Global Trade Content for JPMorgan Chase Vastera. During his six years with the company he managed a global team of trade professionals responsible for supporting both its software and managed services operations. Previously, Anthony served as a Director for From2, a global trade management company located in Miami, FL. Prior to From2, Anthony served as an International Trade Specialist for the US Department of Commerce. As an International Trade Specialist he was responsible for counseling small to medium size exporters on exporting their goods and services. Anthony has a Bachelor in International Business from Virginia Polytechnic Institute & State University and an MBA from Marymount University.


For more information, please email solutions@amberroad.com or visit www.AmberRoad.com.


Supply Chain Comment

By J. Anthony Hardenburgh, Vice President, Global Trade Content, Amber Road

April 18, 2013



Best Practices for Using Trade Agreements to Lower Costs in Your Supply Network

 

Five Steps to Address Challenges and Lower Costs with an FTA Program


Hardenburgh Says:

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Armed with the right process and supporting technology, your company can achieve the next level of low cost country sourcing in your global operation.
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Manufacturers can spend 50 percent or more of revenue on purchasing parts. As a result, low cost sourcing has become an important business strategy to improve competitiveness. To achieve the next level of savings from a low-cost country sourcing strategy, leading companies are using free trade agreements (FTAs) to reduce landed costs through duty reduction.

Here are five steps to address these challenges and lower costs with an FTA program.


1. Implement a Supplier Management Program

A supplier management program is critical to gathering the information needed to claim preferential status under an FTA. Most FTAs require a certificate of origin, as well as a Trade Program certificate to prove a claim. To have an effective program, you’ll need to establish a communication channel with suppliers for obtaining the necessary information. Additionally, you’ll need to explain the reason why you are collecting this information and beta test the program with a subset of suppliers to identify program gaps prior to going live. Finally, all suppliers in the program will need to be trained on how it works.

2. Achieve Multi-sourcing Data Visibility

An effective supplier management program requires systems support to provide multi-sourcing data visibility. When sourcing from multiple suppliers there are often multiple countries of origin as well as multiple FTA opportunities, depending on the source country for the part.

Global trade management (GTM) solutions allow you to keep separate information for each part with each individual supplier. By using a GTM solution, you can construct this information from purchase orders and build a request without rekeying part information.

3. Automate the Supplier Solicitation Process

Your FTA supplier solicitation process should only target suppliers eligible to participate in a given FTA. A solution that automatically identifies and solicits the right suppliers for each FTA opportunity allows you to focus your requests to a particular preference program and streamlines the process. Your solution should have campaign management capabilities, which allows you to solicit hundreds of suppliers for a program in just a few minutes. With campaign management capabilities you can eliminate 90 percent or more of the effort required for solicitations and manage non-responsive suppliers. The solution should also provide dashboards and alerts and check and validate responses.

4. Automate the Qualification Process for Multiple FTAs

The final step is systematically qualifying bills of material (BOM) to determine product eligibility for a particular FTA. To support high volume environments, it is critical that rule of origin content – for each FTA in the portfolio – is integrated and maintained with a GTM solution that uses a qualification engine to analyze the BOM against rules of origin and available certificates to determine eligibility – without the need to classify or manage certificates for low-value component parts that do not affect calculations.


5: Add New FTAs by Building on Your Base Portfolio

Often, the only primary difference between FTAs is the rule of origin content. Thus, the BOM integration and supporting business data can be fully reused when determining eligibility for different FTAs. Rules of origin reference the same business data, such as qualification status (i.e. certificates), HS classifications and material cost, making the effort required to leverage multiple FTAs minimal.


Leading GTM solutions support multiple FTAs via a qualification engine that allows companies to repurpose information required for one FTA for use with another with minimal cost and effort. The GTM solution should be able to support new FTAs without requiring software upgrades, allowing you to start small and add FTAs as your market reach grows.

Conclusion

Capturing the full potential of trade agreements requires leading-edge technology and information services to identify the best sourcing strategies and synthesize the rules of origin. Armed with the right process and supporting technology, your company can achieve the next level of low cost country sourcing in your global operation.


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