Global trade is becoming increasingly complex. The many rules and regulations are virtually guaranteed to change—just consider the challenges of understanding and complying with the rules and regulations in the United States-Canada-Mexico Agreement that is replacing NAFTA.
Global trade complexity is not just a factor of countries and products. Partner government agencies (PGAs) like US Department of Commerce, US Department of Agriculture, and US Department of Treasury affect various aspects of supply chain compliance. You’ll likely need to adapt your routing guide to ensure compliance with PGA regulations. As a result, nearly every organization involved in global trade has to navigate a regulatory maze of vendor compliance issues to ensure supply chain vendors comply with applicable regulations.
Vendor Compliance Issues: How Many Partners Are in Your Supply Chain?
Importers and exporters need to survey their supply chains and proactively identify vendors that may pose compliance risks. If you haven’t done a recent vendor inventory, we can almost guarantee that the number of vendors is greater than your initial estimate. The greater the number of vendors, the greater the potential risk.
SAP GTS Complements Existing ERP Investments
Without the aid of automation, monitoring vendor compliance issues can become an overwhelming task. Fortunately, ERP software specifically designed to facilitate global trade can help enterprises monitor vendor compliance in complex supply chains.
SAP Global Trade Services (GTS) complements your existing SAP ERP investment, utilizing the wealth of partner data you may already be managing in SAP. It automates many global trade processes, providing automated compliance checks as part of those processes. SAP GTS facilitates the process in two ways. First, automated sanctioned party screening to exclude such vendors from participation in your supply chain. Second, accuracy and timeliness of partner data that can be used to evaluate vendor performance.
For optimum benefit, that software needs to be implemented to meet your specific business needs and vendor compliance requirements. Working with an experienced ERP global trade implementation partner who includes global trade compliance consultants on the team is the ideal approach to successfully address these needs.
Automated Partner Screening Against Sanctioned Lists
SAP GTS also automates the sanctioned party list screening process. Government agencies, such as OFAC, publish and frequently update lists of entities prohibited from participating in trade with the United States or embargoes currently in effect. Based on rules configured during GTS implementation, vendor data in business documents is automatically checked against sanctioned party lists. Authorized employees can be notified via email when there is a blocked document, which can then be reviewed for further processing or correction. In the event that vendor information changes during the course of a transaction, GTS automatically checks the vendor information against the sanctioned party lists.
In comparison to inefficient, manual methods of comparing vendors against sanctioned party lists (which many companies continue to do) automated screening saves time, improves the accuracy of the process, and prevents importers and exporters from working with sanctioned parties, incurring fines, or being subject to ongoing government audits.
Accuracy and Timeliness of Vendor-Provided Data
Supply chain efficiency depends upon accurate and timely submission and processing of information. If a vendor does not supply the required data on-time or fails to provide accurate data the result can be:
- Transaction or shipment delays that hit revenue and reputation; and/or
- Importers paying unnecessary taxes or duties that could have been avoided if the vendor provided the required data.
SAP GTS automates the processing of import data provided by vendors, eliminating the inefficiency of manually entering that data. Delays in providing the data or inaccuracies that require corrections can be tracked by GTS. An experienced global trade compliance consultant can advise you on how these data can be analyzed. You’ll be able to determine which of your vendors present potential problems that may result in compliance issues and offer strategies to mitigate them.
Audit and Reporting Identify Vendor Compliance Issues
The centralized data management enabled via the integration of GTS with ERP systems gives importers and exporters ability to capture supply chain process details and maintain an auditable record of transactions. These can be analyzed and reported to identify anomalies that present potential risk and allow importers and exporters to remedy vendor compliance issues before they negatively impact and endanger the supply chain process. Analysis and reporting can also provide an added level of confidence that you’ve implemented the appropriate processes and controls to support compliant trade practices.
Pinary, Inc. focuses its consulting practice on SAP global trade services (GTS), and has achieved a perfect SAP implementation record during 20+ years of business. We are a Strategic Champion Partner of the American Association of Exporters & Importers (AAEI). Our SAP GTS implementation experience combined with industry expertise can help you establish the processes and controls to track and minimize vendor compliance issues. Contact Pinary today to take the first step in realizing these benefits.
