by Nathan Sykes, Writer, Finding an Outlet
The modern business faces many challenges these days that felt like far-off concerns just a few years ago. Even companies that were founded with a domestic focus have to contend with globalisation when it comes to finding new sources for materials and, inevitably, hunting for new markets. Complicated tariffs and international politics, rising and unpredictable rates for freight, complex regulations, risk mitigation and navigating multiple customs environments are just some of the challenges under consideration today by cross-border and cross-ocean shippers and supply chain entities.
If you’re looking for a way to better understand whether your organisation is well-positioned for growth in this changing landscape, keep reading. Thanks to some cutting-edge research by Peerless Research Group and Purolator International, we have a better understanding than ever of how many companies have already laid the groundwork to survive and thrive — as well as how many companies still have work to do. Most importantly, we have a good idea of what that “work” actually looks like. Let’s get to it.
Management for customs and compliance
Most organisations in operation today do business both domestically and internationally, according to research conducted by Peerless Research Group and Purolator International. For U.S. entities, the three largest markets are Canada, Mexico and East Asia.
Not surprisingly, these globe-spanning trade networks rely on a variety of methods for moving freight from their origin to the intended destination. In the PRG/Purolator survey, one-quarter of all companies indicated they rely on a combination of ocean, air and truckload transportation. The necessary variety of partner companies and freight movement techniques in meeting customer demands is one of the primary challenges faced by supply chain organisations today, and it requires higher-order organisational skills and tools.
This, in turn, carries a price tag in technology and personnel. For example, given that 61 per cent of surveyed companies have had trouble of some kind clearing customs, the case for more specialised customs experts and smarter enterprise planning software practically makes itself. Here are just some of these problems:
- Delays at the border while clearing customs due to preventable oversights
- Incomplete or incorrect customs paperwork
- Lack of visibility and transparency for goods in transit
- Too many logistics partners required to navigate complex customs requirements
The list goes on. Just as important as these challenges are their possible consequences, including customer dissatisfaction due to delays, the cost to replace damaged or misplaced goods and the lost revenue and customers. We also live in a world where international politics grow more fraught and adversarial seemingly by the hour, as with the still-unfolding Brexit process, which means we shouldn’t expect these challenges to abate any time soon.
So, what can companies do to improve their shipment oversight and their ability to navigate customs procedures without incurring costly delays?
According to the PRG/Purolator survey, 82 per cent of cross-border companies have chosen to draw up more comprehensive training programs for their personnel, while 40 per cent are looking to more advanced technologies — including import/export management platforms, trade agreement management systems and others. Some companies that don’t want to shoulder the cost of additional training have come to rely instead on the expertise of third-party logistics companies, which we’ll discuss in further detail below.
Management for global supply chains
Here’s the next challenge for cross-border shippers and logistics companies: integration and uniformity. What this means, in a nutshell, is that each of the entities within a given supply chain must be united in their company culture — their commitment to expedience, accuracy and customer service — and their use of compatible technologies. Among the companies represented in the PRG/Purolator survey, only 20 per cent indicated a “high level” of technological, cultural and decision-making integration between supply chain entities.
The rest operate with supply chains that are, in one way or another, fragmented. Here’s a breakdown of the current state of things:
- 33 per cent of supply chains have centralised all their functions up and down the supply chain and across partners
- 24 per cent of supply chains have centralised management but local decision-making capabilities
- 18 per cent of supply chains have no centralised/formalised control or decision-making mechanisms in place
In a further 17 per cent of supply chains, each business has full management autonomy and decision-making functionality. This, more than any other paradigm listed here, is likely to induce delays and compromise the customer experience.
As with customs management, the benefits of bringing in more cohesive supply chain oversight technologies practically speak for themselves. That means moving toward common software that helps multiple partners achieve end-to-end supply chain visibility or, alternately, electronic data exchange APIs that assist existing tech solutions in working more seamlessly with one another.
The next question is: who makes the decisions in supply chains?
Who makes decisions in modern supply chains?
Judging by the responses to the PRG/Purolator survey, about 40 per cent of business organisations use committees to make critical decisions. Not surprisingly, these committees contain a variety of personnel types with clearly defined roles. Here’s a breakdown:
- 58 per cent of supply chain committees contain senior supply chain managers (e.g., vice president or director) as well as procurement managers
- 54 per cent of supply chain committees have logistics managers
- 46 per cent of committees have transportation managers
- 39 per cent have finance managers
- 39 per cent have warehouse or plant managers
Other types of talent generally included in these committees include corporate-level management (CEOs, presidents and company owners) as well as general operations managers.
It’s not hard to imagine why this variability of talent is essential for the modern supply chain or cross-border company. Logistics managers are responsible for a variety of transportation and other decisions, executives help lay the foundation for long-term planning, procurement experts shape vendor and supplier decisions and finance managers help keep the balance sheets in line with expectations.
Who manages customs in modern organisations?
This might come as a surprise, but even today, with so many companies taking part in multi-continental supply chains and engaging in cross-border commerce, relatively few companies have dedicated teams responsible for navigating customs procedures. In their survey, PRG/Purolator found that only 42 per cent of cross-border organisations have an in-house department devoted solely to compliance and customs management. In companies like these, that function falls to compliance officers or logistics managers, who already have their hands full with other concerns.
Here are just some of the many customs functions which must be taken into account any time goods change hands across borders:
- Effective management and coordination across time zones
- Navigating cultural and language barriers
- Filling out and verifying a multitude of paperwork for compliance purposes
- Understanding and paying tariffs and duties, which add to the cost of doing business
Mistakes or even run-of-the-mill miscommunication in any of these functions can be costly. It can cause delays, lost or spoiled merchandise, and customers who look elsewhere in the future for a more trustworthy or reliable partner.
Speaking of partners: cross-border shippers and supply chain companies stand to recover a lot of value by partnering with third-party logistics providers, or “3PL” companies. According to PRG/Purolator, more than 50 per cent of shippers have partnerships with 3PL companies and a further 23 per cent are actively considering such a partnership.
In a nutshell, the benefits of retaining a third-party logistics company include:
- Dealing with one point of contact for all of their cross-border shipping needs
- Having deep experience to rely on for tracking shipments through various jurisdictions
- Ensuring the proper documentation is completed at every step
Moreover, 3PL companies can afford to be more proactive when it comes to foreseeing and tackling potential problems, as it’s their job to do so. Compared with relying on the expertise of a single in-house officer, the benefits of 3PL nearly speak for themselves.
Changes in global trade call for a new approach
If you represent one of the companies that have not yet realised the benefits of a more cohesive and connected supply chain, haven’t taken a hard look at which specialties and talents are accounted for in your supply chain committees or doesn’t fully understand the benefits of partnering with a third-party logistics company for cross-border shipping, supply chain or customs oversight, check out the full report by Peerless Research Group and Purolator International.
We can reasonably expect that the number of cross-border shipments — and all of the logistical complexities they entail — will only increase in the coming years, even for companies of modest sizes, as both supply and demand function on an ever more global scale. Cross-border shipments in ecommerce alone are on track for a 17 per cent growth rate, per year, between 2017 and 2022.
As we’ve seen, there’s never been a better time to take stock of our own organisations by answering this series of questions:
- To what extent is your supply chain “integrated” from top to bottom?
- Who makes supply chain decisions, and are the needs of all departments represented?
- Who oversees customs management? Do you have an in-house team or does the responsibility rest on one overtaxed individual?
- When it comes to tying the whole logistics picture together, does it make sense to outsource the responsibility to a third party?
We hope this has been an instructive primer on answering these questions. For a more complete set of insights, remember to check out the full guide from Purolator International and Peerless Research Group.
About the Author
Nathan Sykes writes about anything IT & Tech related and enjoys learning and sharing the latest in how IT can help the business world.