SupplyChainBrain published an article yesterday, "Compliance is not just about avoiding risk, it is also about ROI" detailing the rise of the compliance department as a strategic operation rather than a means to avoid penalties.
Trade compliance is vital when operating globally. Failure to adhere to the many rules and regulations governing imports and exports could lead, at best, to costly supply chain delays and, at worst, to steep fines and even the loss of trading privileges.
Companies are now raising the profile of global trade compliance in their organizations to spend more time and effort on going beyond merely following the rules to automating the entire process, thereby streamlining their purchasing supply chains and increasing operational efficiency.
Although since the economic took a dive, companies are more focused on treading water in cash-strapped times. For companies with their heads above water, however, now is an opportune time to strategically align the compliance department.
“Among our large customers, many are establishing a compliant purchasing process,” notes Nathan Pieri, senior vice president at Management Dynamics, a global trade management company based in East Rutherford, N.J. “This starts with understanding all the compliance issues around products, then properly classifying products and extending this process to suppliers through a supplier portal. This enables compliance management from source all the way to destination.”
It makes sense for these compliance activities to come together, Pieri says, because there are many common data elements that can be shared. “There is a waterfall effect,” he says.
Another challenge is getting the executives on-board to approve the initiative when they simply don't understand the value of trade compliance.
“A disturbing 71 percent of all companies surveyed complain that internal stakeholders ... do not understand the impact of their actions on trade compliance or the risks associated with non-compliance,” [Aberdeen Global Trade Compliance Benchmark] reports.
What do the executives at your company think of trade compliance?
Is it still seen as a means to avoid risk, or are you creating a strategic advantage for the entire company?
