The Free Trade Agreement tool that’s saving on cost and lowering risk
While Free Trade Agreements seem to offer importers and exporters simple, tariff-free trade, realizing the full benefits when dealing with complex supply chains is a resource-heavy process.
Complexities often come from the differing Rules of Origin that determine the basis for FTAs, so using multiple supplier options – as any astute business does — can mean that the company might easily overpay tariffs or find themselves in breach of compliance regulations.
To keep on top of the situation and keep monies due at a minimum and remain compliant in a worldwide marketplace means companies dedicate significant human resources to the issue. Staff calculate and recalculate the costs, and they consider the potential legal ramifications of even small procurement changes.
As companies strive to become more agile to the demands and vagaries of markets, it’s a simple matter not to have enough detail to keep duty figures as low as they might be.
Furthermore, even large global players place themselves and their supply chain at legal risk because they are unaware of changes in circumstances, local law amendments, changes to accepted means of data submission, and other factors. The fear of doing so limits many business decisions and undoubtedly prevents accurate planning and modelling of the future.
To take better advantage of their company’s options, software from specialist purveyors helps them and their supply chain create a global view of all relevant country-of-origin data. Assembling the required — and constantly shifting — library of data needed can be automated where possible by integration with existing systems in-house and those belonging to supply chain partners.
Of course, it’s not a given that every supply chain element will be capable of electronically submitting required data. There will always have to be some manual input; even tasks like reminder emails, requests for specific submissions, chase-up calls, and the like. The MIC software platform helps companies automate fully or partially even these more mundane bureaucratic tasks. It offers multiple options for both the business and its partners down to the very granular, purchase order-based supplier declarations needed.
At times of significant upheaval (take for example, Brexit and its knock-on effect issues), it’s easy to lose sight of the overall picture. If addressed in granular detail, times like this can help businesses find the savings available from optimizing according to Rules of Origin and FTAs in general.
MIC’s software solution optimizes origin calculations and helps bundle FTAs (for instance, in EU jurisdictions), applies rules automatically, and creates optimum outcomes in lowered costs and safe compliance and is the platform on which plans can be safely constructed.
The beauty of the technology is in its ability to percolate any changes in regulations and allowances throughout the financial planning and reporting that are a constant when working with a complex, global supply chain and export field.
Freeing up staff mired in complicated Excel formulae and piles of paper is just the beginning of the benefits to enterprise bottom lines. The company’s risk profile is dramatically lowered, and there’s a faster submission of the required information at customs offices around the world. Especially when coupled with the other MIC software solutions, companies can now lift their bureaucratic burden and capitalize on an extraordinarily detailed knowledge (in software form) of the world’s agreements and stipulations regarding trade across borders.
To read more about Free Trade Agreements, the implications of countries-of-origin in complex supply chains, and the fastest ways to unpick the puzzle, we urge readers to read MIC’s latest case study on this topic.