Companies Concerned about International Trade Capabilities

Sept. 16, 2013
Global trade management methods must be vigilant to changing regulations, taxes and transportation costs, report concludes.

Global trade management has begun to outgrow most companies’ largely manual processes, according to research conducted in April 2013 by SCM World, a global community of senior supply chain professionals from 150 companies. According to the researchers, where globalization once meant low-cost country sourcing, today goods must move in all directions at once – east to west, north to south, rich country to poor country and back again.

“Movement of product, whether as raw material input, finished goods or capital equipment, requires an approach to global trade management that is ever vigilant to regulations, taxes, transportation costs and more – and one that is equally capable of facilitating inbound supply and outbound delivery to end customer markets,” their report concluded.

The survey, based on responses from 114 SCM World community members, and 10 in-depth interviews, resulted in several key findings:

• Three-quarters of the companies surveyed conduct trade across more than 10 countries, with almost half (48%) trading across more than 50 countries.

• Over 41% of the companies surveyed import more than half of their products from international suppliers.

• More than 97% of respondents say that product cost savings are either “important” or “very important” business drivers of international sourcing.

• More than a third (35%) of the companies realize more than half of their sales from customers located in foreign markets. Further, over the next five years, two-thirds expect their total share of international sales to grow by more than 10%, while more than a quarter (28%) expect growth of more than 25%.

• Almost half (48%) of respondents say that an inability to control global transportation costs and the lack of visibility of global shipments moving through the global supply chain are among their top 5 business challenges.

• Over three-quarters (80%) agree that shipments delayed by customs or experiencing customs problems are impacting customer service in a material way, and nearly 90% say the same about unpredictable lead times on international shipments.

• Over half (58%) agree that their inability to take advantage of preferential duty programs or free trade agreements is costing them a material amount today and unless corrected will only increase.

• More than 57% of respondents agree that complying with global trade regulations is one of the top concerns they face as a global business.

• Only 12% of respondents indicate that their collaborative execution with extended global trading partners is fully automated.

• Less than 4% of respondents say their import compliance is fully automated.

Among the most important overarching conclusions of this research is that loosely connected, ad hoc and manual processes and systems will almost certainly be inadequate as supply chains continue to expand their web of global trade. Anecdotal evidence from interviewees confirmed repeatedly that visibility to and preparedness for changes in the rules and costs governing global trade will be vital as companies seek to expand sales in new growth markets and source more widely.

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