Economic globalization and the growth of trade volumes worldwide continue to drive increased focus on global trade compliance among exporters and imports.

A recent Aberdeen Group study, which examines the global trade compliance practices and strategic initiatives of 340 global exporters and importers, determines the top pressures forcing companies to focus on global trade compliance are 1) growing global operations (52 percent), including sales, purchases and distribution networks, and 2) growing complexity of security regulations for international trade (37 percent).

"In the past five years, significant changes have begun to occur in the way global companies handle trade compliance: as our study shows, global trade compliance is now being transformed from a back-office, often neglected function, to being the focus of strategic corporate-wide initiatives," Viktoriya Sadlovska, research analyst and author of the report, said in a statement.

Based on the 340 responses, attained in February and March 2008, Aberdeen's Global Trade Compliance Priorities in 2008 report reveals that 74 percent of all companies (and 94 percent of the "best in class") are currently in the process of improving their global trade compliance practices, with an additional 21 percent planning to begin improvements in 2008.

About three-fourths of research respondents are currently in the process of improving global trade compliance capabilities. As for improvement priorities for 2008, companies are planning to focus on the following areas of such global compliance initiatives this year:

• Compliance with government security regulations, such as restricted-party screening and license management (59 percent);

• Compliance with multi-country import and export regulations (54 percent); and

• Product classification (50 percent).

"Trade compliance departments have begun to behave more strategically — their increased responsibility driven both by growing company operations and the lack of understanding of global trade compliance risks among internal stakeholders," Sadlovska writes in the executive summary.

Aberdeen's recommendations for trade compliance professionals and management focus on the following organizational strategies: instituting a centralized organizational structure to manage compliance; defining involved stakeholders and leaders for improvement initiatives and securing executive management support; streamlining core processes and enhancing process visibility; and introducing certain technologies, such as transaction-/document-processing automation, for faster, less error-prone management.

Compared with "laggards," the best-in-class companies in Aberdeen's study are, among other strategies:

• About 50 percent more likely to have the ability to access timely information on the latest trade regulations updates (e.g. restricted/denied parties);

• Approximately 80 percent more likely to centralize global trade compliance at the enterprise level and 57 percent more likely to involve executive management in global trade compliance initiatives;

• Almost 80 percent more likely to have automated communication/document exchange with forwarders/third-party logistics providers; and

• Three times as likely to use automated analytics tools for import/export transactions (e.g., reporting, scenario analysis, etc.).

As with most things in an increasingly complex supply chain, there is no silver bullet for global trade compliance. However, through these strategies along with other contributions to improving performance, the best-in-class companies in Aberdeen's study are shown to be twice as likely as the industry average to have decreased the number of supply chain disruptions due to trade compliance errors over the past year — which helps them to achieve more secure global supply chains.

Resources

Global Trade Compliance Priorities in 2008
by Viktoriya Sadlovska
Aberdeen Group, March 2008

Global Trade Compliance in the Corporate Spotlight
Aberdeen (via Reuters), April 8, 2008