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
First is the risk of significant penalties for
non-compliance. The ISF regulations, commonly referred to as
, state an importer can be fined $5,000 per filing if
an ISF is not timely, complete and accurate. The penalty
phase begins January 26, 2010.
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
Enforce US Trade Laws and Collect
as its number two strategic goal ahead of
Advance National and Economic Security.
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
I'd let my CFO know the penalty phase will be
going into effect as scheduled and the implications could
have tremendous negative impact on the bottom line
Beth Peterson, President of BPE ([email protected]).
Peterson has been a strong advocate representing the
interests of industry to CBP regarding the impact the ISF
regulations could have on U.S. businesses.
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
and ideally benefit from
compliance. Their study revealed 3 of the top 4 challenges
importers are having with 10+2 compliance are related to
DATA MANAGEMENT CHALLENGES
Nearly 60 percent of companies have challenges providing
timely ISF data.
Nearly 40 percent struggle to collect complete ISF data.
Around 20 percent have problems with the accuracy of the
data they are providing.
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
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
Your solution should provide a database or portal that
becomes the system of record or the
single version of
for 10+2 and other customs information about
every item enterprise-wide. It should include powerful tools
for document management and storage. The database should be
capable of growth beyond ISF to meet unforeseen business or
government requirements that may arise in the future.
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
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
meet the reasonable care standards of customs agencies.
Workflow applications can also be used to establish
enterprise-wide process controls, and to measure performance
of global trade staff, suppliers or third party service
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
I strongly advise executives of companies importing into the
U.S. to act with urgency.
According to estimates by CBP,
stated Beth Peterson during a recent webinar,
it takes sixty to ninety days to ramp up and be filing
correctly but I think this is a very conservative
Best-in-class companies are funding
cross-functional teams to develop a strategic
enterprise-wide solution, using 10+2 as a catalyst to
optimize currently inefficient business processes, and
creating competitive advantage for their company at the same
Submitted by: Matt Gersper
Global Data Mining, LLC