Bill of Material Qualification
| Bill of Material Qualification Issues and Challenges | |||||||||||||||||||||||
| Exporters are responsible for providing complete and accurate origin information to their customers for compliance purposes and free trade agreement (FTA) eligibility. For those exporters that manufacture finished goods, this can be particularly complex, since raw materials may come from numerous suppliers worldwide.
The rules of origin of each FTA determine preferential treatment eligibility, so each product must be analyzed for its conformance to those rules. To perform the analysis, it is necessary to break down a product into parts or ingredients - more commonly known as a bill of materials (BOM). The BOM gives a complete and hierarchical listing of any raw materials, sub-assemblies, components, or ingredients and the quantities and costs used in the product. |
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| Challenges include: | |||||||||||||||||||||||
| ▪ | Entering complex BOMs that may contain thousands of components into a qualification system | ||||||||||||||||||||||
| ▪ | Understanding and applying the complex rules of origin to BOM line items for each FTA of interest | ||||||||||||||||||||||
| ▪ | Determining whether the product qualifies for duty preference using several evaluation methods per FTA and HS | ||||||||||||||||||||||
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How Amber Road Can Help Amber Road's Trade Agreement Management solution helps exporters automate the analysis of BOMs. It does this by applying the relevant rules of origin and automatically assessing tariff shift, wholly obtained checks, several variations of regional value content, cumulation logic, and de minimis. Amber Road analyzes each line item of the BOM to determine whether the product satisfies the rule criteria. The outcome is a summary qualification report for the finished good, and a detailed account of how each component fared against the rule. The results are then posted to the Global Product Master where trade agreements can be managed centrally. The qualification system is scalable and supports multiple trade agreements. A content plugin for each target FTA contains the claim details, documents and rules of origin for each target agreement. These rules are constantly updated and maintained in our Global Knowledge® database. Once the framework is in place, additional plugins can be added seamlessly. Qualification results are tied back into the product record for a complete, centralized view of each item. |
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