In this digital age, companies are under pressure to modernise their international supply chains. Cutting costs, staying ahead of the competition and meeting increasing customer demands: these are the key challenges. What is the best strategy?
Shippers from all sectors seek lower supply chain costs, greater transparency and faster turnaround times through the use of automation. The field of customs management is an obvious starting point for digitalisation. Think of the many laws and regulations, the many standard processes and all the administrative tasks.
But while various disciplines and sectors are now reaping the benefits of digitisation, companies are still reluctant to digitise international trade processes. As the pressure to digitise rises and globalisation in trade increases again, many companies are struggling to formulate the right customs strategy.
This challenge is only increased by the huge dynamics in international trade - think of the escalating trade war between the United States and China and the ongoing uncertainty surrounding the Brexit.
But don't forget that international trade is inextricably linked to change. Today's leaders must realise that with the right digital approach, they can make money and create value- just when change in this area is greater than ever.
Customs processes in-house: self-filing
With today's supply chains covering the entire globe and the international market becoming increasingly competitive, the performance of our supply chains is increasingly dependent on efficiencyat national borders. Companies can no longer afford delays in customs processes throughout the entire journey, from procurement to distribution.
But as soon as goods cross borders, things get complicated. Different countries use different IT systems: for example, the UK uses CHIEF/CDS, Germany works with ATLAS and in Switzerland it's all about e-dec. And depending on the customer and supplier base, US and Chinese customs authorities with their IT systems, for example, also play an important role.
Many companies that file their own customs declarations (self-filing) still work with separate customs teams for each area. All those teams use different local standalone customs systems for each territory. This fragmentation leads to a lack of transparency, lack of uniform processes and standards, and ultimately inefficiencyand increased risks.
It is high time to harmonise these disparate customs processes, link relevant systems or simply implement onecentral customs system. This will streamline customs processes, provide the right foundation for future changes and provide the freedom to implement additional, value-added customs procedures, such as automatic product classification or licence management, if necessary.
Outsourcing customs management: engaging customs agents
When customs processes become complicated, many companies choose to collaborate with experts or to outsource all or part of them to customs agents. But the execution of these outsourced customs processes is often not so digital in practice.
Take an export shipment, for example. Usually, the exporting company sends its customs agent an email with instructions and the necessary documents such as a pro forma invoice. Most customs agents have a small army of administrative staff who manually enter the necessary data into their own system in order to make the correct declaration.
Once these goods are exported, the documents to be filed (such as export accompanying documents and clearance slips) are usually returned by email or sometimes even by courier. This is, of course, an inefficient, labour-intensive and error-prone process. A process that results in separate silos of data and paper documents, making it difficult to maintain an overview.
It is also a costly exercise, as manual data entry by agents is bound to be reflected in higher invoices. The cost of data transfer by email can cost 50 per cent more than when using an integrated solution. It may be clear: integrating agents with in-house IT systems helps companies streamline and accelerate their processes, while reducing transaction costs and errors.
Cut costs, speed up processes and minimise risks: integration through IT
The lack of integration between stakeholders in customs processes leads to inefficienciesin operations and unnecessary risks in the supply chain. Ideally, customs-related data should be available at any time in any location via a central platform.
Separate silosof data in different countries and branches - or owned by customs agents - need to be merged for this purpose. This requires an IT solution that seamlessly synchronises data in both directions. A solution, moreover, that offers standard interfaces, transparency and easy access by all partners involved.
Regulations surrounding international trade and customs processes change frequently and unexpectedly - think of the impact the Brexit may have. The advantage of an integrated customs platform is that it makes it easier to implement changes and strategy and processes and add new procedures.
One example is entering new markets or moving from self-filing (filing your own declarations) to customs agents. Or implementing new import tariffs or implementing new trade agreements for existing trade routes. Once all relevant customs processes, data and partners are integrated through one system, it generates additional value.
