As globalization continues to cause the world to “shrink” and eCommerce rapidly spreads into every retail category, the requirements to source and manage a global supply chain also increase. Whether as part of its strategic direction or in order to keep up with the competition, there are few companies that do not have some type of eCommerce presence and global trade requirements. Managing a global supply chain with the increasing operational speed required to support a frictionless eCommerce model has ratcheted up the need to better manage the global trade function; providing greater visibility, control, and compliance while delivering on the planned savings and landed costs is the challenge.

Regardless of the business model and order management workflows for fulfillment, at the point of order placement there are some specific requirements necessary for eCommerce businesses to have in place to enable frictionless transactions for global trade items. The following are the typical checkout notifications, as well as some unique requirements for globally sourced items, that must be in place for the frictionless transaction to properly occur.

  • Accurate landed costs to ensure correct pricing for customer quotations
  • Product Classification for international identification based on HTS (Harmonized Tariff Schedule)
  • Export and Import compliance documentation
  • Duty paid notification before checkout on the site
  • “Restricted Party Screening” and licensing notifications, if they exist
  • Supplier product information for any special handling or attributes not covered by customs, compliance or regulatory agencies not disclosed in the product description
  • Certificates of Origin in order to provide traceability and may be a regulatory requirement for some materials
  • Certificates of Compliance may be required for B2B contract items subject to quality specifications
  • Hazardous material notification and MSDS (material safety data sheets)

The key components that a GTM solution must have to effectively manage the elements of global trade, are shown in Figure 2. This includes, in addition to the GTM solution itself, supporting transportation, integration and network, as well as third party logistics and service partners, the suppliers themselves, and risk screening partners not included in the GTM solution.

Figure 2: GTM Solution Requirements for All Levels


Source: Aberdeen Group, February 2016

Having a strong database for global trade content is the core of any GTM solution. This is where the HTS (Harmonized Tariff Schedule) product classifications are kept. These are based on the international HS codes, but include an additional four digits which specify U.S. duty rates and provide additional statistics. Getting the proper classification may be critical to the viability of the product. Even a product’s preparation can make a difference in how it will be handled by customs.

Another must-have feature is the risk management for “Denied, Restricted, or Sanctioned Parties (where transactions need to be screened at order and before a shipment is made)” that are required for the product to enter the country. Having the screening performed is a requirement, and timely automation of this process can minimize any delays that might occur.

The same holds true for any regulatory agency that may be involved at any point coming in to the U.S., or possibly outside the U.S. (typically handled through brokers).  Staying up-to-date on all documentation required for a seamless experience can mean the difference between paying penalties and making shipping commitments, or not.

Ensuring a frictionless transaction for commitments to be met may require intervention when questions arise. Constant collaboration and communication with brokers and customs through online exchanges can aid in avoiding unnecessary delays. Even with international standards, questions may arise and timely resolution may mean the difference in meeting a shipment schedule or avoiding unnecessary penalties or fees.

Every one of the components discussed throughout product classification, risk screening, regulatory changes and local practices all haves the potential to alter the landed cost of the product due to fees, penalties, or premium routing. For eCommerce, it is critical to the profitability of the business that these costs are constantly captured and accumulated through a costing application that monitors the transaction points for international shipment. Automation has dramatically improved the ability to track and accumulate these costs, which determine the pricing to the customer and ultimately the profitability of the product. The Best-in-Class have a high adoption of this capability as an indicator of its importance. They are 35% more likely to have this in place compared to All Others creating a competitive advantage over the competition when quoting global trade items.

For more information, please see the full report, Leveraging Global Trade Management (GTM) for Frictionless eCommerce.

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