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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

October 29, 2015



How to Take Advantage of the TPP

Some Considerations to Take Into Account When Implementing the Trans-Pacific Partnership


Hardenburgh Says:

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...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.
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Global companies should plan now on how to take advantage of the recently signed Trans-Pacific Partnership (TPP).

Signed by President Barack Obama, October 4th, the historic 12- is the largest regional free trade agreement (FTA) in history and potentially a huge benefit to companies with international suppliers and customers.

The countries of the TPP account for 40 percent of the world’s gross domestic product. As such, the agreement could significantly reduce landed costs, create price advantages for international sales, improve access to foreign markets and drive down the cost of purchasing raw materials across multiple global markets. From an import perspective, this can mean less expensive procurement options across several countries. From a manufacturer’s standpoint, it allows for leaner manufacturing options, resulting in lower production costs.

Any size importer or exporter can take advantage of TPP and most companies are taking advantage of global trade opportunities today as 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.

In fact, a survey of over 300 respondents across different industry verticals and revenue size found that nearly 80 percent used FTAs. Forty-two percent of respondents operated in more than 20 countries worldwide.

The companies surveyed saw significant benefits to their bottom line by using FTAs. Fifty percent of the surveyed companies with 10 or more FTAs saved over $10 million annually with their FTA portfolio. Forty-one percent of respondents reported that, on average, they could reduce duties by more than $500,000 per trade agreement, while 27 percent said that their savings opportunity was more than $1 million per trade agreement.

However, many companies aren’t taking full advantage of FTAs or getting the most out of their FTAs due to the complexity of managing these programs. Surveyed companies that did not plan to expand their use of FTAs said the effort and cost of implementing an FTA program was too large.

Companies with complex global operations, such as multiple suppliers, international markets, or large numbers of products or products should consider global trade management (GTM) processes and technology to streamline and automate the processes related to customs and regulatory compliance and global logistics.

Below are some considerations to take into account when implementing TPP.

 

1. Invest in compliance and training

Effectively taking advantage of the TPP requires ensuring the entire team is aware of the company’s goals and has the tools to achieve them, while monitoring key performance indicators established as part of the process. Education is the key to providing employees the tools needed to address the ways utilizing the TPP may open new markets or reduce procurement costs. Best-in-class companies offer an ongoing approach to training that is tied to employee’s performance and annual evaluations. A blended approach to training may include webinars, public courses and onsite training programs tailored to a company’s specific needs.

2.  Look for ways to simplify customs and cross-border operational processes

Often simplify is synonymous with standardize. 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.

3.  Consider investing 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.  Moreover, by using automation companies can improve their FTA coverage for eligible products between 20 and 50 percent and reduce duties to between two to three percent, with additional duty savings achieved by improving FTA coverage.

4.  Look for repeatable processes across FTAs

A big benefit of creating an automated FTA process is that it can be used as a base for rapidly supporting other trade agreements. And with over 300 FTAs enacted worldwide, often the only primary difference between FTAs is the rule of origin content. Bill of material information and supporting business data can be fully reused, and that data can be easily accessed and used if available in a database. Repurposing data for other FTAs allows companies to extend the qualification process across a number of FTAs, not just TPP, with a declining margin cost per agreement.


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, even a two percent savings can add a significant amount to the bottom line.

 


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