How automation is redefining global trade management 

In today's interconnected economy, global trade management (GTM) professionals at multinational companies increasingly feel the speed of technological change as they work to keep their enterprises operating through a shifting geopolitical landscape.

As futurist Ray Kurzweil's Law of Accelerating Returns suggests, the technological transformation in this century is exponential, impacting every facet of global supply chain operations and international trade compliance. For multinational companies, adopting global trade compliance automation is no longer optional — it's essential for staying competitive.

The role of technology in modern global trade compliance

In a recent Deloitte survey of global trade compliance professionals, virtually all the respondents said their organizations had implemented, or intended to implement, a software solution for global trade compliance automation. Clearly, companies expect a return on their investment.

The survey found that the top reason for GTM technology adoption is to gain greater visibility into business transactions and cross-border operations. GTM systems can collect and consolidate data from multiple regions and sources to provide a single consolidated view of global trade compliance and related supply chain activities.

Survey respondents cited additional objectives for automated GTM solutions:

• Greater efficiency in classifying products, processing imports and exports, and calculating trade transaction volume and value
• Greater accuracy and easier correction of errors, and an associated reduction in compliance failures and penalties
• Reduced customs and border delays
• Improved free trade agreement (FTA) and duty minimization strategies
• Savings derived from retiring legacy systems

Global trade is experiencing a digital transformation 

Global trade compliance specialists understand that as technology accelerates the pace of change, staying ahead of the disruption requires, well, more technology.

Today, emerging global trade management technologies are eclipsing traditional data processing software and stand-alone solutions — and redefining how companies manage global trade activity and stay compliant.

For example, application programming interfaces (APIs) enable companies to access real-time data needed to analyze global trade issues and make informed, time-critical decisions.

Big data delivers predictive analytics and “what-if” scenario planning to help trade professionals assess the impact of disruptions such as tariff increases, regulatory changes, and new or changing trade agreements.

The World Trade Organization, meanwhile, recently reported that blockchain technology can impact a diverse set of GTM-related applications “from finance, including trade finance, to customs and certification processes, transportation and logistics, insurance, distribution, intellectual property, and government procurement.”

The digital transformation of trade management is accelerating; companies that fail to keep up risk falling behind.

AI in global trade: Revolutionizing product classification

Artificial intelligence (AI) is particularly suited to make one of the most complex and time-consuming areas of trade compliance — product classification — faster, more efficient, and more accurate.

Many companies grapple with correct classifications, either relying on manual searches of the Harmonized Tariff Schedule (HTS) or struggling with disparate databases across geographies. Others use technology solutions that claim to fully automate the classification process, but yield results based mostly on probability and guesswork — and produce unacceptably high error rates.

Classification assistance software rooted in the principles of AI can streamline the classification process, ensure accuracy, and generate a “customs-ready” audit trail. As a result, global trade professionals can avoid the accidental under- or overpayment of duties, work more efficiently, and improve compliance performance.

AI-powered product classifications are available in software tools like Smart HS, which is part of the ONESOURCE Global Classification solution. Smart HS uses natural-language processing that enables users to classify products using common, everyday vernacular rather than requiring them to precisely match a specific phrase in a database. It understands phrases such as “airbag inflator for cars” and brand names like iPad and Gatorade. It can also interpret product attributes like cylinder capacity, circuit breaker voltage, and textile composition, and distinguish between wholes, parts, and sets — distinctions that affect classification.

This capability is a game-changer in a world where baby food is classified as “homogenized composite food preparation” and trade professionals may not know whether rayon is classified as an “artificial” or “synthetic” fiber.

How to build a business case for global trade compliance automation

If new or additional budget is required for GTM software, senior management will likely require a business case analysis that articulates the return on investment (ROI). Here are four steps to take when calculating ROI and building a business case:

1. Identify the pain points that GTM software can address

To start, describe the gap between your current operation and the desired state.

At a high level, the goal is to automate the entire life cycle of the global trade function across the supply chain. Doing so will maintain compliance, reduce overall duty spend, and avoid violations and penalties while improving operating efficiencies and gross margin.

What’s standing in the way? Global trade compliance departments are often saddled with time-consuming, error-prone manual processes. These include import and export documentation, origin determination for preference programs, and classification processes that can lead to shipping delays, compliance violations, and poor visibility into cross-border operations.

Companies relying on manual processes and spreadsheets or disparate solutions that only handle one task — such as HTS classification or FTA qualification — lack checks and balances, cannot make timely decisions based on reliable reporting and analytics, and risk costly regulatory errors.

2. Align software benefits to corporate strategic objectives

In most organizations, GTM touches nearly all strategic operations, including sourcing and procurement, manufacturing and inventory, product development, sales and order management, customs and clearance, regulatory compliance, and finance.

It can impact delivery times for essential raw materials and finished products, landed costs, market expansion opportunities, mergers and acquisitions, sales strategy, and much more. Which benefits do you pursue and which do you highlight in your business case? Whatever helps the company’s leadership achieve their strategic priorities — that’s the primary selling point for GTM automation.

So, before approaching your senior management team with a request to implement a GTM software solution, it’s important to understand the benefits inside and out and align them with the strategic priorities set by your C-level leadership and board of directors.

3. Benchmark competitors

Many senior executives will want to review third-party benchmark data describing how companies are implementing global trade compliance technology and how it benefits them.

Describing the competitive landscape and accurately depicting the risk of falling behind is an essential component of your business case.

Sources of benchmarking information include reports from analysts such as Aberdeen, consultants including Deloitte and KPMG, trade associations, presentations at industry conferences, guides published by trade media outlets, and your professional network.

4. Showcase ROI

Ultimately, your business case is all about return on investment. A global trade management solution design workshop is the first step to quantifying savings specific to your company.

Here’s how it works:

• Review existing processes. Analyze current global trade operations and generate new corresponding process maps.
• Review future-state processes. Develop new process maps for vital global trade management processes, leveraging the functionality and capabilities of the new GTM compliance software.
• Quantify costs. Calculate the costs of manual, non-automated processes versus global trade automation processes. Account for expenses associated with software licenses, implementation, and ongoing operation.
• Quantify benefits. Identify and measure the financial benefit from automating global trade compliance across all areas within the supply chain.
• Establish relevant use cases. Agree upon the user scenarios that illustrate the ways GTM automation will advance strategic objectives.

In your formal business case, provide an executive summary focused on the strategic priorities it will support, along with detailed metrics, forecasted growth, benchmark data, and the ROI analysis.

The competitive advantage of GTM automation

In a fast-paced world, global trade professionals must leverage advanced technologies to navigate regulatory complexities and geopolitical shifts. Automated GTM solutions provide the tools to stay compliant, improve decision-making, and remain competitive in a rapidly evolving market.