The Internet has enabled a networked world creating a communication infrastructure and ensuing enterprise applications, all which have opened the door for global trade. This, in turn, demands multi-enterprise services and software to automate the transportation and Internet-based logistics management needs of a global trading network. As the global trade management (GTM) space continues consolidating, it is becoming clear that market leadership belongs to companies that understand that, to truly improve global trade, one must be able to manage both the physical and financial supply chains.
Communications and transportation networks have improved so dramatically over the last few decades, that even the most faraway regions and nations are within the reach through a mere Internet connection. As a result, many companies have jumped into international markets, and have outsourced their manufacturing or procurement operations to cheaper overseas manufacturers and suppliers, while some have established subsidiaries around the world. E-business promises to further shrink the world into a "global village" as people, collaboratively or not, research, offer, source, and procure products globally via the ubiquitous Web. They buy and sell through various e-commerce sites, storefronts, and marketplaces and manage international supply chains with interactive software and trading exchanges.
Logistics managers have long sought technology solutions that offer a secure Internet system for scheduling and planning and provide the maximum benefit for multi-carrier, multimode, and multi-leg shipments in an overriding business process system—one which can also handle domestic and international transactions within the logistics trading community. The Internet naturally acts as the means of communication between traders and customers, and they want these systems to deliver almost real-time information in a cost-effective manner, virtually anywhere in the world.
However, this kind of e-business has yet to surmount the challenge of global trade compliance and the diverse needs of international customers and trading partners. Simply put, most supply chain management (SCM), let alone enterprise resource planning (ERP) vendors still typically lack strong international trade logistics (ITL) and global trade management (GTM) capabilities. Simply put, while technology may render a world that appears a lot smaller, in reality, the world is a lot more complicated. There are many barriers that exist to conducting international business over the Internet, of which most businesses are ill-prepared.
Few applications really offer multi-enterprise services and software to automate the complex, multimodal transportation and Internet-based logistics management needs of a global trading network. Most modern, Web-based, buy- and sell-side applications fall well short of providing automated global trade management, and traditional international trade logistics.
As described in the article, International Trade or ITL Adoption, ITL and GTM are execution systems designed to automate the import/export business process. Their basic functional components are trade document generation and transmission, and regulatory compliance validation, and includes a complex exchange of information between multiple entities, including suppliers, carriers, freight forwarders, customs brokers, banking institutions, and other third-party transportation and storage providers. A true ITL/GTM system is an interenterprise resource management system, and requires a data model that can account for the breadth and depth of information that is exchanged between this multiplicity of interrelated entities. Thus, ITL and GTM systems should support export and import borders-crossing processes; documentation and compliance (which are incomprehensible to ordinary mortals); and accounting, and financial reporting in a multicurrency, multilingual and multi-units of measure (UOM) environment.
This is Part One of a six-part note.
Part Two will address tradeoffs.
Part Three will discuss managing global trade flows.
Part Four will note the GTM leaders.
Part Five will cover dealing with GTM complexity.
Part Six will present challenges and make user recommendations.
While many have strong and divided opinions about globalization and outsourcing products and services, everyone will agree that these modes of business are here to stay. Some reports claim that nearly 30 percent of the world's gross domestic product currently crosses borders, thus global trade is becoming an integral and growing part of almost every business. Yet, exporters and importers continue to struggle to coordinate old-fashioned, international freight, financial, and regulatory processes, and although they might isolate production from inbound logistics to mitigate this conundrum, increasing market pressures continue to force better coordination. Help may come from adopting a new crop of Web-based applications aimed at improving and automating intricate multiparty coordination. As a result, businesses have created GTM to define the challenges and opportunities unique to the new, highly global business environment. There are some compelling trends that have made GTM (which has lately begun incorporating ITL) a topic of interest to avant-garde businesses, including the fact that global trade is substantial, and will only increase with time.
Nonetheless, while many may see the rationale for sourcing goods from far-flung locations with cheaper labor and costs, not many clearly realize the intricacies and costs associated with such trading activities—a cost which often may negate the initial benefits of cheaper, nominal prices of imported items. Although many enterprises have made progress in improving aspects of their financial supply chains by implementing ERP or financial applications such as accounts receivable (AR), general ledger (GL), and accounts payable (AP), global trade requires a number of additional, crucial functions that are frequently absent from domestic trade, including functions like letter of credit (LC) management, global trade financing, country and party risk assessment, and transaction reconciliation (settlement), to name a few. Proper management of these specialized functions require GTM-oriented financial management solutions that should give organizations greater visibility and control over their international business partners, receivables, payables, working capital needs, and overall financial position.
No comments:
Post a Comment