Few businesses would willingly trade with criminal enterprises or
terrorists. Remaining compliant with a variety of domestic and
international regulations can seem an onerous task. In this QAD
Precision Report we look at how to establish a trade compliance program.
The Importance of Ongoing Trade Compliance
There is no doubt the world in which we do business is changing.
Globalization is increasing both the opportunity for businesses and
the complexity of commerce on a large stage. With that increased
opportunity comes international competition and pressures to be
bigger, better and faster on a global scale. Furthermore, the trend
toward world markets also introduces complicating factors for
businesses such as the influence of volatile international politics
and the growing threat of criminal activity and terrorism around the world.
Governments across the globe use regulation as a primary means to
limit the impact of these complicating factors. Nevertheless, while
most would agree that preventing crime and acts of terrorism is a
worthwhile goal, its pursuit comes with increased burden of trade
compliance for businesses moving goods throughout their country and abroad.
In the United States, for example, businesses contend with multiple
government agencies, each with a different set of regulations. These
include the International Traffic in Arms Regulations (ITAR) from the
Department of State, Export Administration Regulations (EAR) from the
Department of Commerce, regulations from the Office of Foreign Asset
Control (OFAC) under the Department of the Treasury, and even
partnership agreements like the Customs-Trade Partnership Against
Terrorism (C-TPAT) in coordination with US Customs and Border Protection.
In addition, if you’re an exporter, you must also maintain compliance
with country-specific regulations for the geographies into which you
transport your goods. As a result, managing the compliance landscape
can seem a formidable undertaking.
So how can your company continue to meet the demands of our
ever-changing global economy and avoid compliance pitfalls?
ESTABLISH A COMPLIANCE PROGRAM
The first step in avoiding compliance pitfalls is to establish a
compliance program. While compliance itself is the standard of
enforcement, there is a significant difference in the penalty between
cases of “willful” non-compliance and “negligent” non-compliance.
Therefore, due diligence in crafting and maintaining a trade
compliance program will go a long way to ensure any missteps fall into
the latter category.
When crafting your program, you should also pay particular attention
to parcel shipments. Parcels, as opposed to production shipments, are
often handled by less trained office staff or floor personnel. This
increases the risk of compliance mistakes, especially if staff do
Once you have established a trade compliance program, the next step
is systematizing its processes. Reduce or eliminate manual compliance
checks that require human diligence or regulatory interpretation.
There are item and material codes that can be easily matched to
regulation, license and corporate policy databases to automatically
check compliance requirements throughout material movement – from
shipment planning, to manifesting, to customs clearance.
INVEST IN THE RIGHT TECHNOLOGY
Putting those automated compliance checks in-line with standard
logistical workflows becomes a far easier task when you have the right
technology in place. Use trade
compliance software to automate the process as domestic or
export shipments are created.
Similarly, comprehensive transportation
execution software can automatically build and maintain an audit
trail for all shipping and compliance documentation associated with
your operations. Furthermore, electronic storage and retrieval of this
information will be more efficient, and far more accurate than rows of
filing cabinets or manual data entry into a separate database.
Lastly, consider syncing your transportation management and
compliance data with other key business systems to provide better business
intelligence for decision-making. If you have to be compliant, you
might as well get something in return.
When evaluating a global trade compliance solution ensure it offers
the following features:
Automatic updates to trade compliance content and regulation changes
Intelligent screening of trading partners, countries, restricted
parties and more
Smart ‘white listing’
Embargoed country screening
License determination and management
Data integrity and product-related compliance checks
Trade partnership questionnaires
Easy to use compliance management console
Management by exception
Audit trail and reporting
About QAD Precision – Trusted Global Trade and Transportation Execution
QAD Precision (Precision Software), a division of QAD Inc., provides
trade management, transportation
execution and multi
carrier shipping software solutions from a single, integrated
platform. Preeminent industry leaders in every region of the world
rely on QAD Precision’s global support centers to leverage thousands
of carriers and manage millions of shipping transactions every day.
Our open architecture easily integrates with Enterprise Resource
Planning, Warehouse Management Systems and legacy solutions. An
ISO-certified company, QAD Precision assists companies to minimize
shipping costs, optimize first mile and last mile deliveries, automate
free trade agreement compliance, avoid customs delays and mitigate
the risks associated with dynamic trading environments to
maximize their competitive advantage. QAD Precision’s customers span
multiple industries including banking and finance, life sciences, high
technology, retail, industrial, automotive, higher education and
public sector as well as logistics providers. For more information
about QAD Precision, visit www.qadprecision.com.
LET’S KEEP IN TOUCH
To subscribe to our blog, or to receive notifications about QAD
Precision events, webinars and news, please click here.