one likes economic down-cycles, they do serve the useful purpose
of exposing unacceptable hidden costs in business processes that
often remain unnoticed during periods of prosperity. How one
reacts in a down-cycle can determine whether a business emerges
stronger and prepared to maximize the up-cycle opportunities
that inevitably lie ahead or becomes crushed by the weight of
the down-cycle itself. Since global sourcing is in a long-term
growth cycle, investing now to optimize Product Lifecycle
Management (PLM) and sourcing processes can provide fast and
significant returns on your investment.
Inadequate global sourcing processes may cost you more than the
costs of inefficiencies hidden in your company financials. The
U.S. government is increasing trade enforcement and revenue
collection efforts during these tight budgetary times. U.S.
Customs & Border Protection (CBP) is aggressively increasing
oversight by utilizing sophisticated technology and levying
dramatically larger fines and penalties. Does your company have
systems and processes in place to know more about your global
trade data than the government does?
Dependable knowledge drives everything, notes Nancy Johnson,
founder and CEO of Optimyze LLC ([email protected]),
an advisory services firm whose Optimyze Solution guides
companies to achieve a strategic approach in order to reduce
redundancies and waste and improve the way products are created
Integrating best-in-class technology, data management and
process best practices accelerates speed, eliminates unnecessary
costs and improves bottom-line profits,
companies, she says, take a solid approach, without enough
coordination or strategy employed in the early stages of product
development. Technology investment and commitment is often
missing as well. It's critical, Johnson believes, to involve
technology partners, content providers and industry experts
early on to streamline sourcing activities and effectively
manage the product lifecycle.
with many companies, Johnson says, in which compliance and
trade managers never interface with product management or
product development to make informed decisions.
And in cases
where people do talk, she adds, data and systems integration
is often inadequate or missing altogether.
Integrate Data Early
to make superior decisions and create competitive advantage,
advises Johnson. Global trade data includes external content
about the different countries you trade with and about your
competition as well as internal content about your own business
and the items you're managing, she says. When you integrate and
evaluate global trade data over the lifecycle of the product,
you create dependable knowledge much earlier in the process.
With the Optimyze Solution, data works for you rather than you
working for the data.
as product development begins, enough information exists to
evaluate the item and assign a target Harmonized Tariff Schedule
(HTS) classification code. Once an HTS is assigned, a whole host
of critical data can be automatically linked to the item,
allowing for more informed and superior decisions.
companies, Global Data Mining (GDM) and CUSTOMS Info (CI),
provide enterprise solutions to help businesses optimize Global
Trade Management (GTM) and PLM systems to streamline global
trade automation. Your system can be automatically populated
with the full HTS description, column one duty rate and list of
Free Trade Agreements (FTAs) that can reduce or eliminate your
works with importers to acquire and integrate their own
transactional import data that is captured by CBP. Imagine your
own historical import data automatically populated within your
PLM system, including last year's actual volume of this HTS
classification and the actual effective duty rate paid to the
U.S. government. With this information you can make more
informed sourcing decisions.
witnessed that sourcing decisions are often made without any
consideration for duties and taxes. Suppose you had dependable
knowledge that repeating last year's decisions would cost you a
10% disadvantage on import duty compared with your direct
competition for an important and high volume product line. The
delivers this level of dependable knowledge.
acquires and maintains data about all U.S. importers for every
U.S. HTS code. This data can be configured to automatically
populate your PLM system as soon as you have assigned an HTS
code without a single additional key stroke.
system can also be populated with the complete list of sourcing
countries for that HTS item, with total volume and effective
duty rate imported from each country. Now you have, right at
your fingertips, the ability to use data to outthink and
outperform your competition. And that's still not all. Another
data source can identify and qualify specific suppliers of that
product from all around the globe. Now you're really beginning
to let data work for you!
Supply Chain Risk
Optimyze Solution partner, specializes in sourcing data that
allows companies to search for and qualify suppliers in specific
countries by product category. Panjiva also conducts health
checks on existing vendors and suppliers. This knowledge, when
captured early in the process, gives you negotiating power or a
heads up if a supplier may be at risk.
deKieffer & Horgan law firm and CUSTOMS Info, both Optimyze
Solution partners, maintain databases of sanctioned parties,
counterfeiters and diverters. This important data can be used
early in the process to screen out potential suppliers of
dubious character or worse.
you've sourced your prototypes and are getting costing back for
the first time,
says Johnson, you need to know immediately
whether the costing is advantageous or not. If you have to
review multiple spreadsheets to come up with individual as well
as group costing scenarios, she notes, you're wasting time and
time is money.
integrating critical information automatically to each and every
product record, you can spend your valuable time and expertise
evaluating the data and outthinking your competition, she
explains. An added benefit of building your information early
and steadily over the lifecycle of the product is more accurate
and complete information to fulfill the new 10+2 Importer
Security Filing regulations for importers, adds Johnson.
information can and should be used to outperform rivals,
Johnson points out,
and there's no better way to do that than
by using analytics to make superior decisions.
Importer Case Study
and GDM recently collaborated with a sportswear company that
imports $150 million annually. We helped them to acquire and
analyze their import data. It took 6 weeks and $350 to acquire
the data from CBP and another week and $5,000 to process their
data into hard-hitting analytics to assess current performance,
develop targeted strategies to improve global trade processes
and financial performance, and free literally millions of
dollars in cash from their supply chain.
company received 10 financial opportunity reports, seven Red
Flag analysis reports to help them identify risk in their supply
chain, 22 reports to help them identify trends in their import
operations and 5 Port Summary reports. Among many other
insights, the data revealed:
$1.5 million is
currently being saved annually using trade agreements and
special preferences to reduce duty spend.
$2.7 million could
have been saved if the company had operated in a Foreign Trade
Zone last year
net of all costs.
$9 million was
identified as potential savings from shifting more sourcing to
existing suppliers with trade agreement benefits.
$4 million was
identified as potential savings if this company performed as
well as its average competitor regarding duty spend.
$15 million was
identified as potential savings from re-sourcing to global
suppliers outside their existing supply chain with trade
$5 million in
potential savings for renegotiating finance terms with global
Constant Change Requires Dependable Knowledge
the last time you did serious analysis on the optimal location
to manufacture your products? If it wasn't recently, your
knowledge may not be reliable. Globalization is continually
reshaping supply chain scenarios across global markets and
creating dynamic shifts in sourcing advantages.
example, McKinsey & Co recently analyzed goods manufactured for
the U.S. market and mapped them to the optimal region to
manufacture them in 2003 versus 2008 (see accompanying table).
The study compared China (offshore example), Mexico (near shore
example) and the United States relative to five types of goods:
High End Servers, Ethernet Switches, Mid Range Servers,
Assembled TV's and Mid Range Copiers.
You may be as surprised
as I was at what they discovered: the United States
we hear in the media is increasingly competitive. And this
unprecedented shift has taken place in just five years! It's
hard to imagine a better illustration of how fast the global
landscape is continually changing and why your company needs a
solution that leverages dependable knowledge to optimize your
global supply chain now.