Last year I had an opportunity to travel to three regions in the US with one of my SAP colleagues to visit ten of our best customers in the global trade management field. We had a chance to exchange information on what they're using our SAP Global Trade Services solution for, and we had a chance to gather feedback and provide some roadmap direction as well. Having been more focused in prior years on the “traditional” enterprise governance, risk, and compliance (GRC) topics, I didn't always understand clearly how the trade compliance piece fit in overall GRC and why it wasn't in the supply chain side.After visiting with the aforementioned customers as well as many others at trade shows and events, I understood that at least half of the global trade compliance professionals reported up through legal/finance, while the other half reported up through supply chain. So while there is definitely not a “one-size-fits-all approach” for how trade compliance reports up through an organization, there is a very strong case to consider the impacts the global trade compliance function has at various levels of the organization, and why it is a broad, GRC topic.
For Starters – GRC: The Domain
There are many different definitions of GRC, but I like Forrester’s as one example:
Every organizational business function and process is governed in some way to meet objectives. Each of these objectives has risks, as well as controls that increase the likelihood of success (or minimize the impact of failure). These are the fundamental concepts of GRC…
What would happen to a new product launch if shipments were held up at port due to a lack of correct licenses or documentation? How would reputation—or more importantly export and import privileges—be impacted if a company didn’t have the right controls/checks in place and were trading with an embargoed country or sanctioned party? What if a company could take advantage of zero duties claimed through a free trade agreement and improve the bottom line by millions of dollars?
The Broader GRC
Recently, Jan Gardiner shared in her GRC 'pet peeve' blog post that she would "just like to see a little more precision in language that reflects an understanding that:
- GRC is much more than access and authorization management
- GRC is much more than software—it’s people, processes, and perhaps technology working together to help the company achieve its objectives while acting responsibly
- And, our SAP GRC solutions are more than SAP Access Control"
For a little more color, I would like to add that SAP Global Trade Services not only complements our GRC solutions, but as the leading trade solution in the overall market place, it is actually the second leading revenue generator in the SAP GRC portfolio.
Global Trade Management in the Extended Enterprise
Global trade touches virtually every area within a business. Though many people are familiar with those touch points in areas such as supply chain or legal and compliance, many don't consider the impact global trade teams can have on activities such as manufacturing, sourcing, or finance. As soon as a business considers engaging in cross-border business, it's increasingly important to include global trade specialists as early as possible to consider the implications and business readiness for such activities.
Consider again the areas global trade touches within an organization including:
Legal and compliance
- Contracts, regulatory compliance, internal controls
Sourcing and procurement
- Country of origin, import and export restrictions
Manufacturing
- Application of economic customs procedures
- Customs as element of cost price reduction
Finance
- Reporting
- Link to tax function and bottom-line impact (profitability)
Supply chain
- Simplified customs procedures
- Just-in-time, avoidance of supply chain disruption and reducing buffer inventories
Logistics and distribution
- Customs documents, and customs warehousing
Sales
- Partner screening, embargo checks, and blocked orders
IT department
- E-customs, customs, and trade data governance (master data)
What Do Our Customers Say?
Take some time to hear what Janice Showacre at McCormick & Company, Inc. and Kevin Riddell at Tremco Incorporated are saying about how global trade impacts in the larger organization and the benefits of an automated solution.
With the global nature of companies today and the stringent compliance requirements associated with international business and trade, not to mention increasing risks, I do not know of a better topic within the GRC realm that has as much impact to an organization’s ability to conduct business and achieve its stakeholder objectives than global trade.
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