Global Trade Management (GTM) optimizes the entire lifecycle of global trade, from order placement to logistics and final settlement. This is done to increase the efficiency of operations and subsequent cash flows. Companies that follow the philosophy of global trade as a cross-functional and system-spanning process can derive vast benefits from GTM practices. However, GTM practices involve crossing the traditional function-based silos within companies. As a result, companies may have to endure a period of poor performance that may span over years before they can fully derive the benefits of implementing GTM solutions.

Conventional GTM systems focus on enabling organizations to comply with innumerable rules that govern how products and components cross national boundaries. While trade compliance is still the primary focus, several GTM system vendors are expanding the capabilities of their solutions. For example, some systems feature an expanded concept of compliance that checks whether products were produced, packaged, and transported according to user-defined parameters.

Other systems are adding functionality that allows for the coordination of the tangible flow of goods, grants total visibility for products and inventory, checks if the specific materials are subject to preferential treatment under trade agreements, and facilitates the processes of settlement.

Key Components of the ideal GTM solution

GTM is challenging for many organizations because it requires enterprise-wide implementation. In today’s outsourced and decentralized business landscape, gathering the necessary expertise and resources for a global trade management program is difficult.

The success of a global trade management program lies in its comprehensiveness. The ideal global trade management program needs to accommodate sourcing, transportation, purchasing, compliance, sales, and expertise in accounting. Conduct and formally document a thorough analysis of an organization’s export and import procedures. The procedures that are documented will require each division to develop processes and procedures that revolve around the established goals. Only then will the organization be able to develop and implement a global trade management program that is comprehensive? We recommend reading Improve Domestic and Global Transportation With TMS

Goals for implementing GTM programs

The essential goals of any global trade management program have to include:

• Compliance according to the regulations set for each commodity
• Cost efficiency in the movement of all products
• High benchmarks for delivery on time
• Striving to meet all expectations of the customer

Moreover, every step has to be traceable and checked to enable providing flawless customer service.

Managing Change

Organizations need to develop partnerships with supply chain partners who are proactive. This is the basis on which change can be managed. Proactive partners will notify you of any changes in cost variables that could significantly affect your budget, or in compliance standards, geo-political setting, or the geo-economic setting that will disrupt the existing supply chain. Given today’s complex world, there is a multitude of variables that have the potential to affect your business. By extension, it becomes imperative for your supply chain partner to consistently analyze the necessary.

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However, the concerns of international trade and logistics are extremely varied, to say the least. To handle international logistics, ERP systems must efficiently manage complex requirements, particularly in global supply chain control and execution. This compromise would ironically be the result of expanding the functionality of ERP systems.

ERP systems: advantages and disadvantages

To keep pace with dedicated SCM software, ERP systems are beset with the twin problems of mobility and integration. ERP systems are great for systemizing the workflow within the warehouses of a single company, but cannot keep up once there is a shift of focus towards other processes that are of greater complexity. One of the processes is the involvement of third or fourth parties across different sites and systems, managing multiple vendors, and increased variability of material handling systems.

The integration of systems for facilitating the exchange of data and collaboration between partners of different enterprises is a necessity in global supply chain management. The problem is that most ERP systems simply do not have all the necessary data to be considered an effective solution. As a result, ERP providers have created more modules to accommodate such requirements. However, for most companies, the ERP system is the core on which the IT infrastructure of the company is based. As a result, it contains sensitive information, which is the reason why businesses wouldn’t want to permit “outsider” access.

The processes of global trade present another dilemma for ERP systems. We can use the example of customs processes to illustrate this. The regulatory requirements for customs change constantly. ERP systems cannot handle constant updating which is a necessity to conform with compliance policies.

SCM software

Dedicated SCM software programs are not designed to be as all-inclusive as ERP software. Their solution focuses on key areas like customs clearance, transport management, and collaborative supply chains. This is the advantage that dedicated solutions like these present. However, there needs to be a platform that facilitates all parts of the supply chain. Solutions dedicated to individual areas become restrictive by the very fact of their specialization, and hence cannot deliver an integrative benefit.

Conclusion

Therefore, deciding between an ERP system or SCM system, or both, depends on a company’s individual requirements and operational processes. A company needs to be especially careful if its requirements are highly complex, and should ideally adopt a solution that incorporates both systems.

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