Are you looking to increase visibility, manage supply chain compliance and mitigate risks?
Supply Chain Compliance Solutions to Analyze and Track Compliance and Mitigate Risks throughout your Global Supply Chain.
Compliance means conducting business according to the rules and regulations governing commerce — within states, between states and internationally. This article will focus primarily on international trade because it is the most complex and highly regulated model.
Who Enforces Supply Chain Compliance?
The primary regulating bodies are the following United States and overseas entities:
US Customs and Border Protection (CBP): A component of the US Treasury, CBP governs which goods can enter the country, as well as the form and quantities in which they can enter. Particular attention is paid to goods from countries with restricted trade agreements and those suspected of dumping practices. Customs can detain indefinitely any shipments that they feel require inspection for compliance. Customs also keeps track of unfinished goods that enter the country for further processing and re-export in a more finished form.
US Food and Drug Administration (FDA): Controls foods (except for certain meats and poultry products), drugs (human, animal and biological), cosmetics, medical devices and radiation emitting devices, etc., offered for entry into the United States through U.S. Customs.
Food Safety and Inspection Service (FSIS) www.usda.gov: Part of the USDA, FSIS is responsible for assuring that U.S. imported meat, poultry and egg products are safe, wholesome, unadulterated, and properly labeled and packaged. They have explict rules and regulations regarding inspections, quarantines, reinspections, labeling and much more on the USDA site.
Federal Maritime Commission www.fmc.gov: Regulates ocean transportation, particularly rate tariffs and service contracts between shippers, carriers and nvoccs.
Federal Aviation Administration www.faa.gov: Deals primarily with air safety, e.g. hazardous materials, as well as homeland security.
Compliance and the Logistics Management Lifecycle
Supply Chain Compliance requirements impact the Logistics Management Lifecycle (LML) in two main areas — Information Reporting and Operational Processes
Supply Chain Compliance Reporting
The specific information requirements to comply with each of the above entities can fill volumes. The main thing to understand is that the requirements are mandatory and strictly enforced — especially in light of September 11, 2001 and the resultant heightened premium on security. Thus, it is imperative to integrate compliance as much as possible with normal day to day operations in order maintain efficiency.
A prime example of this is submission of Import entries to US Customs. Long a manual, paper based process, today the vast majority of entries are submitted and cleared “paperless” via the Automated Broker Interface (ABI). Most import brokers have automated data feeds from their operational systems into ABI that eliminate the need for duplicate effort.
ABI has been around for many years. On the export side, the Automated Export System (AES) debuted in 1999-2000 for submitting export declarations to the Treasury Department.
Complying with FMC regulations is not such an easy matter. While the FMC has a web interface called ServCon for filing service contracts, ServCon is not designed for automated data exchange. Rather, it is more like a vault that Carriers and NVOCCs can open with a password to place their contracts inside. The contracts can be in virtually any electronic data format, from spreadsheets to word documents or pdf files. This design makes it difficult to automatically file contracts, even for those who have them in a database. However, their are now web based solutions emerging from leading providers that tackle this problem by filing contracts directly from the on-line rate database as soon as they are created.
The FMC also requires tariff rates to be published. Many Carriers and NVOCCs pay third party publishing houses significant sums to perform this function. As with service contracts, there are now web based systems that house published tariff rates in a database that is made accessible to the FMC. These systems are very cost effective compared to paying a publishing company by the Tariff Line Item (TLI).
Supply Chain Compliance Processes
Unlike reporting, this deals with the impact of regulatory compliance on the very process of moving goods through the supply chain. More specifically, we are talking about visibility, monitoring and control of goods in transit. We will get into this area in more depth in the next installment of this series, but it is prudent to mention some key points here.
While it will keep you on the right side of the law, proper reporting does not necessarily mean an effective and efficient supply chain. As a simple example, customs documents can be properly submitted and the containers still held for inspection. If the importer does not have visibility to this delay, then it may improperly plan dock labor or production schedules in anticipation of goods that do not arrive as scheduled. As enterprises run leaner and leaner supply chains, real time tracking and event driven alerts become more imperative.
For importers dealing with goods regulated by the FDA or USDA, this type of monitoring and control is vital because the probability of inspection related delays is much higher. Fortunately, there are technology neutral, web-based tools available to automate this process while fully integrating with virtually any logistics operations systems and ERPs.
Some look upon regulatory compliance as a necessary evil in the world of global commerce. But the mandatory nature means everyone is in the same boat. So with the proper tools and processes to do the job more effectively and efficiently than your competition, you can turn what is a necessary evil for others into a competitive advantage for you.
The Freightgate Team excels at finding innovative solutions to improve Supply Chain Compliance with our vast arsenal of flexible cloud technology tools – take a logistics cloud demo of our Supply Chain Compliance solutions and experience the difference yourself first hand. Share with us your toughest Supply Chain Compliance challenge and allow us to come up with a creative, potentially out of the box solution.