Fines Could Hit U.S. Apparel Importers Hard in 2010
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By Matt Gersper
Failure to comply with the Importer Security Filing (ISF) regulations could bring financial disaster to unprepared U.S. businesses. There are three major reasons business leaders should assure their companies are compliant and each reason has direct bottom-line impact.
First is the risk of significant penalties for
non-compliance. The ISF regulations, commonly referred to as
This chart shows penalties that could be incurred in just the first 60 days of the penalty phase for 5 companies. Penalties of this magnitude would quickly get a CEO's attention, and could have a devastating impact on any business. You can calculate your potential exposure based on the number of ocean entries you have.
The second reason is Custom & Border Protection's (CBP's) renewed commitment to enforcement and revenue collection.
CBP's recently published Trade Strategy for Fiscal Years
2009-2013 makes clear just how important revenue
collection has become to the U.S. Government. Shockingly,
CBP's report lists
The third reason is the impact supply chain delays could have on your business. A recent study by the National Association of Manufacturers (NAM) estimates the ISF regulation will create a permanent 2.8 day delay in supply chain speed.
This chart applies the cost model of supply chain delays from a Purdue University study and estimates the annual financial impact that would be incurred if these five companies suffered the 2.8 day permanent delay estimated by the NAM study. The potential impact of 10+2 is very serious business indeed. Just imagine penalties and supply chains costs of this magnitude suddenly thrust on your bottom line.
While some importers hold out hope that the penalty phase
will be postponed by CBP, it is said that hope is not a
American Shipper, BPE and the International Compliance
Professionals Association conducted a research project
to understand the current state of ISF compliance, the
impact this regulation has (and will have) on the supply
chain, the challenges that companies are facing in their
attempts to comply with ISF and the best practices importers
can leverage to comply with
DATA MANAGEMENT CHALLENGES
These are the very three issues causing penalties to be assessed. To make matters even worse, the penalties estimated above could be twice a large since the regulations state fees can be as high as $10,000 per filing if two or more violations occur. For example, the filing is not timely nor is it not complete.
Modern database and workflow applications can dramatically improve a company's data management efficiency and significantly bolster capacity to achieve ISF compliance. Web-portals or central information hubs allow parties around the world to collaborate and interact online, with the same information though a single platform. Here are six tips that can help you select the right solutions to achieve ISF compliance and improve enterprise-wide data management efficiency.
Your solution should provide a unique and secure state-of-the-art website accessible worldwide by any authorized user through the Internet. Your manager should have complete control of multi-party collaboration including the functions any given user may perform, the data any given user may see, and the responsibilities any given user may have based on the unique role each person provides your company.
Your solution should provide a database or portal that
becomes the system of record or the
Your solution should make it easy to upload data from any system, from any business unit or supplier around the world. It should provide features to normalize data into one company-wide standard, and functionality for viewing, sorting, filtering and working with data that is easier to use than Excel. It should automatically update the database as tariffs change for different countries at different times around the world.
Your solution should easily integrate with existing computer systems. It should make it easy to create and manage 10+2 and other data for use by various business applications that require reliable global trade data. Few companies have one single system to manage their entire enterprise. Your solution should be designed as the enterprise-wide database providing accurate trade data to every system that needs it.
Your solution should leverage best-practice functionality that can drive up productivity. Web-based applications can automatically updates users with the latest enhancements installed since their last login. Your solution should empower your staff and supplier network to create and maintain trade data more efficiently, and enable each person to work dramatically more effectively.
Your solution should put powerful oversight tools in
your hands. It should provide automatic record keeping of
the critical data elements created in each step of the
workflow in every business unit around the world
Applying these six tips will dramatically improve a company's enterprise-wide data management efficiency, help achieve 10+2 compliance and avoid financial penalties. In fact, 10+2 can be a hidden opportunity for strategic thinking companies. Optimizing currently inefficient data management processes can improve supply chain performance, and deliver a positive return on investment.
The Purdue Study works in the positive direction also. Improving supply chain speed by just one day would be worth $800,000 per year for a company importing $100 million annually.
I strongly advise executives of companies importing into the
U.S. to act with urgency.
Submitted by: Matt Gersper
Global Data Mining, LLC
Matt Gersper (email@example.com), founder and president of Global Data Mining and co-owner of CUSTOMS Info, has over 20 years of experience optimizing processes and helping customers turn unorganized data into information that managers and executives can leverage to improve performance.
Survey of U.S. Companies: Current and Potential Future
Impact of the
Purdue study: David Hummels,
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