Manufacturers and distributors that rely on sourcing raw materials or goods have significant compliance obligations. Global trade and supply chains run on documentation and paperwork.
A report from Deloitte found that many companies face challenges in developing their global trade management programs. The most pressing issue was lack of staff with import compliance.
Many compliance departments are understaffed and underfunded. This creates the risk of a regulatory violation that may result in fines, penalties and liabilities.
Some companies have been reluctant to invest in compliance. Unless they have previously been subject to penalties, they may believe that the risk of government intervention is low. It can be difficult to persuade stakeholders that they need to address a problem that has not yet arisen.
However, the real value of digitizing import management is not the avoidance of risk. Automating imports offers a true competitive advantage that reduces costs and increases profitability.
The Challenges of Importing Foreign-Sourced Goods
A number of challenges are associated with importing goods. These include:
- Ensuring timely deliveries
- Determining optimal inventory levels
- Proper classification of goods
- Accurately calculating duties
- Managing free trade agreement compliance
- Admissibility factors such as anti-dumping and countervailing duties (AD/CVD), and special tariffs
- Documentation, recordkeeping and retaining receipts post-entry
- Trading partner screening
- License and permit requirements
- Incomplete or missing data
Documentation requirements are burdensome and can lead to customs delays. McKinsey found that a single shipment can require as many as 50 documents that need to be shared with up to 30 parties. As the Importer of Record (IOR), ultimate responsibility lies with you, even if errors occur with brokers.
The Benefits of Automating Import Management
A strategic approach involves bringing many import management operations in-house, supported by software solutions.
Lower broker fees: Importers can reduce broker costs by managing classifications and duty admissibility themselves. Furthermore, digital connectivity to customs and brokers, streamlines the entry process.
Simplified recordkeeping: Electronic records expedites document retrieval for customs or auditing purposes. Although brokers may handle some aspects, maintaining your own copies of these receipts is important. The IOR must retain these records for specific periods, which can differ from country to country. Penalties for missing documents can potentially reach up to $10,000 per violation.
Duties reductions: Importers can significantly reduce duty obligations by automatically qualifying their goods under a free trade agreement (FTA). FTA compliance is time-consuming when done manually. However, software solutions can perform eligibility checks in near real-time to boost efficiency.
Admissibility alerts: By digitizing import management, enterprises will get advance notice of an admissibility requirement or flags. These could include AD/CVD, requirements from Partnering Government Agencies, special tariffs and so forth. These alerts ensure you can meet all requirements before your shipment arrives.
Shipment visibility: Digitizing import management offers shipment visibility to trading partners, including suppliers, brokers and customers. This allows for real-time tracking of incoming shipments and information sharing. Consequently, your ecosystem of trading partners can:
- Address issues as they arise
- Share accurate information
- Confirm delivery dates
- Improve customer service
How QAD Can Help
QAD has helped a number of companies automate import management and gain significant benefits.
A leading manufacturer of electronics sought QAD’s assistance to digitize import processes. The company needed to gain insights into duty rates for multiple countries and simplify the classification process.
Another customer, a global leader in life sciences, wanted to automate import processes. This company wanted to avoid significant increases in headcount, broker fees and operational risks. QAD provided solutions for auto-consumption of invoices, identification of missing classifications, and communication with brokers.
Managing imports involves a delicate dance of compliance, operational efficiency and strategic decision-making. Companies need the right tools to grapple with staffing constraints, regulatory intricacies, and the ongoing challenge of staying ahead of the competition.
To find out more about QAD Global Trade and Transportation Execution capabilities, please visit our website.
