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About the Author

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


J. Anthony Hardenburgh brings over 18 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. Anthony also served as a director for From2, and as an International Trade Specialist for the US Department of Commerce, where he was responsible for counseling small to medium size exporters on exporting their goods and services.

Anthony has a bachelor's degree in international business from Virginia Polytechnic Institute & State University, and an MBA from Marymount University.


For more information, please visit www.amberroad.com


Supply Chain Comment

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

August 27, 2015



Achieving Global Supply Chain Success Using Preferential Trade Programs

Four Best Practices for Maximizing a Company's Revenue by Using a Preferential Trade Program


Hardenburgh Says:

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Utilizing these (preferential trade) programs can significantly reduce costs from customs duties, taxes and tariffs; improve global market competitiveness; and minimize bureaucratic regulations.
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According to an SCM World survey, 55 percent of respondents had an increase in international sales and 54 percent an increase in imports over the past 10 years, with one third selling into or sourcing from more than 100 countries. Forty percent imported more than half of their products and materials.

Minimizing duties, taxes and tariffs is one of the fastest and easiest ways to squeeze significant financial returns out of a company’s global supply chain. Yet most companies interviewed by SCM World “only became aware of the opportunity as a result of problems that emerged as their companies increased international sales and found new sources of supply.” The result is few companies use these tactics in making supply chain design decisions.

Any size importer or exporter can take advantage of a preferential trade program. However, many companies are unaware of how much money they could save by investing in their global trade operations and taking advantage of free trade zones, duty deferral, free trade agreements, and other preferential trade programs.

Utilizing these programs can significantly reduce costs from customs duties, taxes and tariffs; improve global market competitiveness; and minimize bureaucratic regulations. Further, standardized cross-border operations promotes a proactive approach to global supply chain operations, increases speed to market capabilities, enhances performance metrics and savings reports analysis, reduces manually intensive processes, and lowers supply chain risk. Reducing merchandise processing fees alone can save a company a substantial amount of money.

Below are four best practices for maximizing a company’s revenues by using a preferential trade program.

1. Assign accountability

Without a person or department in charge of determining and tracking duty, tariff and tax costs, a company may struggle with determining what these costs are and their impact on margins. Maximizing benefits from these programs also requires a process and system to compile the information and analyze it.

2. Simplify customs and cross-border operational processes

Often simplify is synonymous with standardize. In SCM World’s July Global Trade Management report, Tim Santo, executive global process leader for the customs shared services operation at GE, one of the world’s most diverse and profitable companies, highlighted how the company is leveraging its global scale to improve its market responsiveness, increase revenues and globally expand its business. It streamlined its cross-border operations by creating one single, global standard and process using a common architecture supported by technology and data. Having a single, complete data repository allows GE easily run reports and track its savings, spend and risk.

 


3. Factor duties and tariffs into your total landed cost analysis

Duties and tariffs can have a significant impact on cost. Similarly, taking advantage of a free trade agreement or other preferential trade program can shave millions off the bottom line. Haworth, a privately-owned furniture company, saved $1.2 million in duties and taxes by taking advantage of NAFTA. Automating the qualification process improved the company’s supplier solicitation response by 80 percent and saved the company $225,000 annually by eliminating outsourced work.

4. Invest in trade automation tools

Using automation can alleviate the burden of managing the duty qualification, monitoring and reporting process. In many cases, a company may need electronic integration with multiple government agencies and trading partners, including customs brokers, to take advantage of a program. Multiple internal systems can also impact operations efficiency and cost. With high volume operations it can be extremely difficult, if not impossible, to manage manually. The data needed for classifying goods, for example, is voluminous and frequently changes and must be pulled from country-specific lists. Software that has this information in a central repository with automatic updates can pull information from different systems, such as import/export and warehouse management systems, and use that data for Customs filing and inventory management.   


Final Thoughts


In conclusion, taking advantage of preferential trade programs such as duty deferral, free trade agreements and free trade zones has a direct, immediate effect on the bottom line. While it might not sound like much, a two percent savings can add a significant amount to the bottom line.


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