Today’s companies increasingly buy, sell and outsource around the world. The opportunities are immense. But without proper workflow and effective IT, leveraging these opportunities is far from easy.
Why? Because the increasing level of complexity associated with moving goods across borders has made global trade business difficult and risky. New trade agreements are being put in place in one part of the world, for instance, as protectionism increases in another.
Companies are forced to comply with ever expanding and increasingly automated regulatory filings, including those for security and customs. If you fail to manage this complex environment properly you could face higher costs and greater risk in already pressured supply chain – and that can put you at a significant competitive disadvantage.
Challenges of Global Trade
Companies which trade at a global level need to be aware of – and comply with – legal regulations, and must adapt to custom changes, communicating electronically with customers, suppliers, logistics partners and custom authorities. Furthermore, they need to be aware of customs procedures in order to proactively benefit from custom concessions and not to get trapped by restrictions.
Addressing the global trade properly will not only minimize the risk for companies to get sanctioned but will also increase the competitiveness by taking advantage of the benefits that are occurred in that area.
There are three global trading subjects on which proper assessment and adequate IT structure can bring competitive advantage over the companies.
- Customs Management– A proper handling and monitoring of import and export processes is an essential part of most companies daily business. Inefficiency and errors in that area generate unknown and unmonitored costs in many companies which can very simply addressed.
- Processing under customs control – Companies can avoid paying import duties on goods that are to enter another customs territory for a given time by taking advantage of tax suspension using inward or outward processing or putting the goods into a bonded warehouse.
- Profitability Management– Take advantage of the commercial benefits given by customs decreasing or suspending import taxes and with lower the market price of the product. This, by benefiting from preferential trade agreement import tax reduction.
- Compliance – Important in order to ensure that the company does not break any law and as a result gets trapped into sanctions
Most companies outsource the creation of the import or export declarations to the carrier. These costs are usually very high and usually hidden in the transportation forfeit. The alternative is to introduce an integrating tool which will automatically transform your logistics documents into the appropriate form, add missing data, and communicate automatically with customs. This enables efficient communication and flawless monitoring which will drastically reduce transportation bills.
How SAP technology can Help
In order to profit from these customs advantage – and to be able to comply with fast changing legal and compliance requirements – companies must be able to monitor and manipulate their trade data with regards to the prevailing customs guidelines. In short, the companies must ensure that their system is adapted to today’s foreign trade requirements, and that it constantly adapts to changes in regulations.
SAP Global Trade Services (SAP GTS) not only automates trade processes, but also enables companies to manage large number of business partners and high volume of documents.- while also helping to ensure compliance with changing legal regulations. It further facilitates global trade by providing the required tools to respond to government’s trade modernization initiatives, by for example including technology to enable electronic communication with customs authorities.
In short, SAP GTS helps you to avoid costly delays in your export and import processes, respond quickly to global business opportunities, and mitigate financial and compliance risks.
SAP GTS fulfills the requirements
As a foreign trade solution, SAP GTS enables companies to handle the increasing demands and challenges in Trans – border goods traffic.
- SAP GTS Custom Management – It enables the electronic exchange of customs documents with the customs authorities for import, export and transit processes. It also contains advanced bonded warehouse and inward and outward processing management, together with the appropriate electronic communication to the custom authorities.
- SAP GTS Preference Handling– It supports the monitoring and optimizing the value flows in international trade. It monitors and manages requests for long term vendor declarations, computes the eligibility for preference for each sales transaction, and mark it accordingly. It also enables companies to consider preferential origin issues in their purchasing strategies.
- SAP GTS Restitution Claim – It handles the complex gathering of amounts of products eligible for restitution in the export process, assigns it to a license in order to provide the necessary data, and handles the appropriate reporting to the relevant authorities. Furthermore, it helps companies to apply for new licenses at the correct time in order to avoid any loss of claim.
- SAP GTS Letter of Credit – It provides support for calculating and handling financial commitments such as letters of credit and bank guarantees, thus enabling companies to handle multiple letter of credit processes in inbound and outbound flows.
- SAP GTS Compliance Management – It facilitates compliance checks against applicable regulations and statutory requirements. Goods import and export processes are monitored, with import and export control functionalities combined with boycott and embargo lists.
Benefits and the Value of the Solution
Due to new laws and business requirements, most customs systems are a growing and evolving solution. SAP GTS is the only one that offers steady integration point to the ERP. Upgrades of the GTS solutions do not involve any changes in the ERP system or in the interface between it and GTS. The integration, which is the biggest part of the work in a customs solution implementation, remains unaffected by the upgrades that need to be done to GTS.
Furthermore, due to the large variety of customers using the GTS, almost all industrial sectors are covered and new legislation’s that may apply to a specific branch are taken into consideration and the solution enhanced to comply with it.
In contrast to most other custom solutions, SAP GTS offers a global solution which covers the global trade requirements of most countries, and is not a one country specific solution. This means that once it has been setup to work with the ERP system, it can easily be rolled out with minimal effort, in order to cope with all other affiliates global trade issues. Furthermore, the aim of companies is to address local customs issues centrally in order to build a pool of customs competencies. SAP GTS allows companies to do so, as all ERP systems can be connected to GTS as a central platform that can handle the customs topic of all countries.
SAP GTS is based on SAP NetWeaver technology and can be connected to both SAP and non SAP feeder systems. All modules of SAP GTS are fully integrated with other SAP relevant modules and can gather and process data so that logistics, customs, IT and compliance team have all the data and management tool they need.
Even though SAP GTS is an integrated tool, some implementation work needs to be done in order to integrate the ERP, that was adapted to the business’s needs and to the GTS solution. Furthermore, the companies specific requirements with regards to the global trade need to be considered in the building of the GTS solution. For that, the company must choose an integrator that brings both knowledge of global trade, SD, MM and offcourse technical SAP GTS knowledge.
Global trade solutions are essential for any modern business seeking to combine trade law compliance with the smooth enactment of international trade transactions. Any company already using SAP as an enterprise platform will benefit from implementing SAP GTS because the integration is done through a SAP standard plug in which ensures flawless cohabitation’s of the systems, as well as minimum setup and maintenance effort.
SAP GTS is an all in one solution that will enable companies to single handedly address all global trade related issues and high efficiency of all affiliates centrally.