What's in Your Sourcing Tool Kit?

6/11/2013
Everybody has "tools of the trade” that they like to use to complete their job.  Tools that make you feel like you've found the golden key, opened the secret door, or grabbed the golden ring are what make you good at what you do.  They make you a subject matter expert on sourcing, procurement, supply chain, trade compliance or some combination of these.  But what if you could make your good tools even better?  What if it meant replacing an older tool with a newer model?

The world of supply chain management is constantly changing, certainly.  It's important to have the flexibility to adapt as these changes are being made, and have business processes and tools that can easily change as well. Companies today sometimes struggle with keeping up with all the regulatory changes in each of the countries in which they operate. 

Take, for example Brazil; the Brazilian Tariff, or TEC, has been updated as many as 85 times in a single year.  If you use a tool that relies on static data being input, you are going to spend a lot of time making updates and not as much time looking for savings opportunities.  This is why having the right tools in your sourcing tool kit is imperative.

What are those right tools?  How can you sharpen your current tools or find a better replacement?  Let's first start by looking at the core tools that every apparel company should have in its sourcing tool kit.  These include:
  • Product classification system that allows for classification at the global level as well as the country level, manages different colors, styles or sizes of the same product, and handles multiple HTS codes for sets and other government reporting requirements
  • Document determination and management of all documents required for importing, exporting, and trade compliance globally
  • Trade agreement management solution that allows for multiple Bill of Materials (BOMs) analyses based on dynamic, not static, BOMs
  • A way to evaluate sourcing options by inputting multiple countries of origin and countries of destination with an associated HS number to see what savings are available
  • Export solution that assists with the export process through automated screening, license checks, and documentation creation while at the same time electronically feeding the creation of documentation for the importer
  • Database of regulatory information (HS numbers, import duties, excise taxes, reporting units of measure, etc.)  that is automatically maintained and updated without requiring additional headcount or IT resources
  • Landed cost analysis tool to be able to see the full cost of a shipment before making a sourcing decision
  • A way to evaluate all Customs entries filed by various brokers in countries around  the world, instead of just a small subset dictated by resource availability and limitations, to ensure filings are correct and to provide brokers with progress reports on their performance
  • Procurement system that will automate the PO workflow and approvals while providing visibility and controls to ensure budgets are not overdrawn
  • A system to manage complex valuations issues like First Sale and Assists to ensure optimal savings and compliant reporting
Along with these resources, it is important to make sure your sourcing tool kit includes solutions and processes that afford complete visibility of your entire supply chain and facilitate running reports and audits on trade compliance. 

The right solution should also aid in making good sourcing decisions that are both fiscally and socially responsible, and connect you to all government and regulatory agencies through a single software platform.  This last one is important, as more and more government and regulatory agencies are moving to electronic filing.  If you can process all the required information in one place and submit it one time to all required agencies, you're saving time and creating efficiencies within your supply chain.

Let's look at an example of an apparel/footwear manufacturing company in the U.S. that has begun to make sure it has the right tools at its disposal. This company was searching for a way to automate its export compliance and screening processes without changing business processes.

The solution needed to be able to allow requestors to log into the system, create a request, and complete an automated logic/workflow to see if the requirements were met.  If they were, the request is then sent to the export team to create the documents, handle the screening, prepare for shipping, etc. 

In less than a month's time, the company went from relying on a completely manual Excel-driven shipping document to a fully automated export management and screening process that preserves the current business processes and workflows already in place. This same company is also using a U.S. foreign-trade zone (FTZ) solution that includes QP/WP and Automated Broker Interface (ABI) – electronic connectivity to government/regulatory for easy regulatory filing.  And the firm is also implementing an Automated Export System (AES) solution to connect directly to the U.S. Census to file all export documentation electronically.

Having the right tools in your sourcing tool kit is important – especially if your company is looking for ways to increase savings and improve efficiency.   While you may not need all the tools noted above immediately, it is a good idea to find a partner from the beginning that can grow with you and continue to provide the solutions/process improvements needed on a single platform.  

So what's in your sourcing tool kit?  It's probably time to take a look and set up a plan to begin fine-tuning the set of resources as your disposal so that when your organization makes sourcing decisions, you can provide the best data available and make holistic choices for the entire enterprise.


Elizabeth Connell is vice president of product management for Integration Point, a provider of global trade management software.
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