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Leaving money on the tableThe same study called out cloud technology and advancedanalytics as an emerging opportunity for value and efficiency.Approximately 50% of CPOs reported using analytics for costoptimization and process improvement.9fully utilizing all of the FTAs available to them, despitethe fact that nearly all respondents reported favorableresults. Globally, just 8% of respondents failed to reportany savings in import duties through the use of FTAs.23And they’re right on the money. GTM technology offers a hostof opportunities to increase cost competitiveness via processautomation, supply chain digitization, and duty savings. Butthese savings are often left on the table.Not participating in FTAs, or cherry-picking just one FTA,means that you are losing out. Plain and simple.As a key opportunity for savings, free trade agreements (FTAs)are underutilized across the board. In a survey by ThomsonReuters and KPMG International, only 23% of companies areThat waste is even more significant when you considera recent study that found a correlation between highFTA utilization and better performance — specifically,the ability to export more goods without increasingemployment costs.18In 2017, nearly 40% of USgoods exports went to FTApartner countries.8 However,many companies choose not toparticipate because they strugglewith identifying opportunities toqualify goods under FTA-specificrules of origin. The good news isthat GTM technology can greatlysimplify that process.How FTAs are utilized globally1871%report that full FTAutilization paysfor itself41%full FTA utilization isreported in the US,compared toIndia’s 19%36%of companiesare utilizing justone or two FTAs25%of companiesutilize no FTAs16

Challenge #3: Risky business and the supply chainThe next challenge is risk management.Supply chain risk management is becoming a top priority in procurement asorganizations lose millions because of supply chain disruption, non-compliancefines, and incidents that cause damage to the organizational brand and reputation.In one study, the Business Continuity Institute found that 33% of firms respondedthat their executive leadership exhibited a high level of commitment to managingsupply chain risk and increasing supply chain resiliency.6Defining risk in the tradecompliance worldRisk is the potential for non-compliance withcustoms laws. The root of the problem is oftenimproper or missing processes. For example, ifyour company lacks the proper procedures tocorrectly claim preferential treatment under anFTA, the penalties for false claims can be wellover a quarter of a million dollars.17

Risky business and personal liabilityWe can illustrate the importance of risk management with two court cases.In 2014, the US Court of Appeals agreed with a previous US Court of International Trade (CIT) case, acknowledging that individuals could beheld personally liable for attempting to introduce or enter goods through fraudulent or negligent documents or other information. The originalCIT case, US v. Trek Leather Inc. and Harish Shadadpuri, perfectly illustrates the top concerns for risk mitigation.25Facing finesCausing supply chain delaysMr. Shadadpuri had a history offailing to declare assists at timeof importation. CBP took theposition that this was particularlyegregious and asked the court formaximum penalties of more than 2 million.Naturally the case does not evaluatehow the ruling affected Trek LeatherInc.’s imports or exports. But we knowwhat issue suddenly became theirtop priority: how to declare assistscorrectly. That requires new processesto ensure that manufacturing and otherdepartments provide the information thatthe compliance department needs. Thatdoesn’t happen overnight — but delaysdo.Damaging thecompany reputationThe court found Mr. Shadadpurijointly and severely liable forgross negligence, along with hiscompany. You can imagine howthis affected his personal andcorporate reputation at large.18

Challenge #4: Operational inefficiencyand the burden of low-value tasksWe briefly covered the cost burden of customsinteraction, but there’s another burden oncompanies today. Companies around the worldare looking for productivity improvements thatcan unburden their resources and personnel fromadministrative tasks, allowing them to dedicatemore time and intellectual capital to higher value,strategic matters.For non-GTM users, the majority of their time isspent on documentation and licensing.18 GTMusers, on the other hand, spend the majority oftheir time on classification, which is a risk-proneand difficult task that has wide-ranging effects onyour products throughout the supply chain.For non-GTM users, their topchallenge in global trade was18the lack of automated systems.Here’s the practical difference.One group is spending their time on routinetasks that could be facilitated by a GTMsolution with integrated trade data. Theother group is able to spend more time onhigher-value, strategic actions that serve thecompany’s broader supply chain goals.“GTM users may still have roomto improve processes and furtherautomate tasks, but they havemoved past the initial hurdlesthat prevent trade managementspecialists from focusing onthe underlying intellectual andstrategic issues associated withdoing their jobs. This is the realpower of automation.”1819

Common manual tasks that hinder yourcompliance performanceAs we move into our next section, this is an excellent time to summarize our previous three challenges andshow how they all affect operational efficiency.When you’re performingtasks manually, your abilityto maintain up-to-dateregulations, reduce cost,and manage risk is greatlyhindered.Complex and changingregulationsIf you’re using Microsoft Access orExcel to manage your HS codes, thenevery time a government changes thatHS schedule, you need to not onlyupdate your records manually but alsoshare that updated information with allyour trading partners. Those updatescan add up quickly. In a single year, youmay see over 100 million updates totrade data around the world.Cost reductionSupply chain riskIf you’re considering adding strategiesto optimize your duty spend, thenthe manual labor makes it nearlyimpossible to incorporate anotherFTA or to analyze several trade lanesfor the best sourcing decision. Theamount of time it takes to maintainregulations or gather new tradedata may not be feasible for a smallcompliance team of two. That’s whereGTM technology, integrated with tradedata like FTA rules of origin, can helpyou do more with less.Supply chain risk is a broad topic, andthere are many avenues of managingrisk. However, there’s one area thatis particularly easy to automate –performing denied party screening(DPS) before and at transaction. If you’remanually screening your shipments,you’re asking for trouble. You mayspend hours manually screening andmaintaining updates to DPS lists.Automation allows you to screen moreefficiently and more often, ensuring thatyou’re not accidentally shipping goods torestricted parties.20

03.GTM gets a newbusiness case21

Meet the new business caseJust as we covered the four main challenges of global trade, we’ll cover the four main benefits of GTM technology.In this section, we will show you how GTM technology can help you:1Increase supply chainvelocity and preventdelaysWith timely, accurate tradedata, you can make sure thatyou have the right data at theright time. That means fewercustoms inspections and fewerdelays at the border.234Reduce costManage supply chain riskAchieve productivity gainsCompanies can reduce their totalduty spend through strategicsourcing and by taking advantageof preferential duty programs.With the correct automation tools inplace, you can decrease supply chaindisruptions while safeguarding thecompany reputation.Decrease the burden on yourcompany’s resources throughautomation and common compliantprocedures.22

Benefit #1: Having the right data at the right timeLet’s talk about the real impact of trade compliance on your bottom line.As a whole, companies often leave their employeeswithout the necessary, scalable technology toolsthey need to handle today’s enormous volumesand complexities. Routine trade activities, such asmaintaining up-to-date trade regulations, are stillbeing processed manually where technology isbetter equipped to facilitate.For example, cancellations happen in nearly 5%of sales due to export license delays.27 And that’snot for lack of trying. One study found that nonGTM users are spending most of their time ondocumentation and licensing.18 Most of their time,and yet cancellations and delays still occur.Consider the process of licensing withGTM technology instead.If you have trade data integrated into your exportmanagement solution, then your export departmentswould have visibility well in advance of a licenserequirement. This integrated trade data would allowthem to: Gain visibility into the license requirement Apply for the license before the order is in place Manage the license on file in the systemGTM technology can take theguesswork out of license anddocumentation requirements.This is a great example of howtrade compliance — when youdon’t have a complete pictureof how to enter a new countryor ship to a new customer —can impact the bottom line.23

Regulatory risk as a strategic priorityWhile the everyday concerns of compliance may not reachyour CEO — supply chain disruptions do. Companies areoften caught unaware when they make new sourcing orprocurement decisions. It happens all the time. A decisionis made on what to sell, where to buy, and how much. Thepurchase order is sent, and everything is fine until yourshipment is waiting at the dock because you don’t have theright documentation or export license.That supply chain delay has a rippleeffect downstream. Now your storesaren’t stocked, sales aren’t comingin, and your CEO notices.Even the narrowdetails have a bigpicture impact.According to recent studies, CEOs around the world recognize the need to manageregulatory compliance.1734%were activelyconcerned aboutregulatory risk19%consideredregulatory solutionsas a company-wideinvestment priority17%cited effectiveregulatory response asa strategic priority fortheir organization24

Why best-in-class companies use integratedtrade data solutionsBy adopting GTM technology with integrated trade data, companies can:Address new regulationsin a cost-effective mannerReduce over orunderpaid dutiesAccording to a 2016 study, 77% ofbest-in-class automated companieshave online access to trade-relatedregulations.4 The reason is simple.It saves you time because youdon’t have to manually researchregulations, and it eliminates the riskof using an outdated tariff scheduleby accident. It’s no surprise thatcompanies who prioritize automationfor their global trade activities seea 2.69% decrease in dollar value offines due to trade compliance errors.1370% of best-in-class companiesshare or centralize their tradecompliance data at the enterpriselevel.4 Why? That shared andaccurate data leads to moreinformed decisions about complianceand the supply chain. Sourcing is oneexample. When you have the correctdata on import and export controls,country of origin rules, and availableduty deferral programs, you canimprove the overall cost of sourcingfrom a particular location. With thatinsight, best-in-class companiesare able to save a yearly average of12.8% from sourcing decisions.14Avoid risk of penaltiesThe majority (58%) of best-inclass companies automate theirdenied party screening before andat transaction.4 The result is fewergovernment fines. For example,one study found that companiesautomating their denied partyscreening are 35% more likely tomaintain or decrease governmentfines for non-compliance.1Keep the supply chainmovingComplete and accurate datamakes a world of difference forsupply chain speed. Automatedcompanies actually decrease thenumber of supply chain disruptionsdue to trade compliance errors by4.29%, whereas mostly manualcompanies see their disruptionsincrease by 1.03%.1Saving with classificationOne Thomson Reuters client discovered a classification error that,once corrected, saved the company more than 100,000.25

Case in point: Retail client saves 1 millionannually with the GSP programA large Thomson Reuters retail client saves more than 1 million every year by participating in the GeneralizedSystem of Preferences (GSP) program.The client uses GTM technology tohouse their product information inone centralized location — a GlobalClassification database. Operatingfrom a “single version of the truth”rather than various documents or excelversions, allows for greater accuracyand also decreases the likelihood ofpenalties for inaccurate data or nonsupportable FTA claims.Furthermore, you have the ability toelectronically communicate all yourclassification data (including GSPeligibility) with your broker. All thismakes it easier for your broker tohave complete and accurate eligibilityinformation to file at the time of entry.What is GSP?Using GTM technology to close the loopGSP is the largest and oldestUS trade preference program,eliminating duties for over 3,500products from designated beneficiarycountries.21 Given the relatively lowthreshold for qualification (35%domestic content is required), manyshippers assume that they’re withinrange. Best practice, of course, is toalways prove your due diligence.A combination of GTM functionality can ensure that your key stakeholders havethe right data at the right time.With FTA Management,you can automate thesupplier solicitationprocess to confirmeligibility statusupfront, therebyavoiding potentialdelays or lost savingsdownstream.SolicitStoreWith Global Classification,you can store productdata in our centralizeddatabase that allowsfor greater accuracy andeasier sharing amongsupply chain partners.AuditWith Entry Verification, you can automate the postentry process to ensure that eligibility status wascorrectly and consistently claimed by your broker atthe time of entry.26

Benefit #2: Cost reduction and thetax-efficient supply chainAs we have discussed, GTM can do more than avoid fines and penalties — it can save you money.An effective GTM strategy can help you design a tax-efficient supply chain.What is a tax-efficient supply chain?A tax-efficient supply chain is exactly what it says: a supply chaindesigned with duties and taxes in mind. The goal is to optimize thesupply chain with a holistic view of duties and taxes and to performwhat-if scenarios that determine overall cost, supplier sourcing,manufacturing strategies, and more.19The tax-efficient supply chain is a current priorityfor many companies. More than 85% of companiesrecognize the importance of a strategic sourcingoptimization process to manage trade and supplychain costs.13 The ROI is there. Every year best-in-classcompanies save an average of 12.8% from sourcingdecisions compared to the 5.6% savings of their peers.14Simply put, where you’re sourcing parts and where you’re assemblingproducts does matter. It can be the difference of millions of dollars,and it can even cost you the competitive edge.27

Supply chain design: The devil is in the detailsIn order to design a tax-efficient supply chain, you need the right information at the start.When analyzing possible tradelanes, you should incorporate theimpact of import and export controls,applicable country of origin rules,documentation requirements, and dutysavings opportunities like free tradeagreements or foreign-trade zones.All of these details can affect yourability to freely move goods in or outof origin and destination, as well asthe overall cost of sourcing from aparticular location.Here’s a simple illustration of howduties and taxes can affect supplychain design decisions. Here are threetrade lane scenarios for “flexiblemagnets” (HS 8505191000) cominginto the United States. Trade lanes 1and 3 both offer opportunities for a 0%preferential duty rate through eitherGSP or NAFTA. On the other hand,trade lane 2 offers no preferential dutyrate and may be affected by sanctions.Upstream sourcingdecisions always have aripple effect downstream.Designing a tax-efficient supply chainYou may choose the cheaper sourcedproduct at the risk of altering yourdomestic content percentage andlosing FTA eligibility status. If you losepreferential treatment, that increasesthe cost of your goods, which couldput you at a competitive disadvantage.That’s why it is critical to consider thedetails when creating the big picturefor your supply chain.Trade Lane 1: BR - USTrade Lane 2: CN - USTrade Lane 3: MX - USMain duty rate 4.90%Preferential duty rate 0% (GSP)No sanctions applyNo ADD/CVD rate appliesNo other duty5 HS specific controls may applyPotential of 24 required import documentsCorruption Perception Index 35%Main duty rate 4.90%No preferential duty rateSanctions may applyPotential ADD/CVD ratesOther duty 25%5 HS specific controls may applyPotential of 24 required import documentsCorruption Perception Index 39%Main duty rate 4.90%Preferential duty rate 0% (NAFTA)No sanctions applyNo ADD/CVD rate appliesNo other duty5 HS specific controls may applyPotential of 24 required import documentsCorruption Perception Index 28%28

Case in point: Nearly 4 million saved with duty deferralIn a feasibility study, a large retail clientfound that they would save nearly 4 millionin the first year by locating an FTZ in the US.Those 3 million savings come from brokerfees, MPF savings, and the deferment ofduties, which results in improved cash flowand working capital.Even when considering the setup costs ofthe zone, as well as the software, the netsavings still amount to nearly 4 million inthe first year and over 1 million in the yearsafter. In 10 years, you would see net savingsof more than 13 million.Many shippers are unable totake advantage of FTZs dueto the manual complexity ofregulations and reporting— which are tasks that GTMtechnology can facilitate.That’s good news becauseFTZ savings can be significant.More than 50% of companiesreport decreases in import feesafter effectively using FTZs.1329

Benefit #3: Managing risk in the supply chainWhen we talk about risk,what are you actuallyrisking?We talked earlier about how risk intrade compliance typically refers to thelikelihood of non-compliance — whichcan, of course, result in bigger pictureconcerns such as fines, penalties, andsupply chain disruptions.And when we talk about the risk ofsupply chain disruptions, what are thereal consequences?In one study, the Business ContinuityInstitute totaled the approximatefinancial cost of their respondents

trading partners, suppliers, and customers. That calls for a stronger, faster supply chain and a better approach to GTM. Companies are now exploring how an effective GTM strategy can: We know that GTM technology can help your company move forward. That's why we created this e-book to help you understand the business value