International trade is recognised as being extremely complex due to the wide range of requirements and compliance of exporting and importing countries. It involves understanding the correct use of documents, industry terminology, the management of payment and delivery risks plus the ability to establish procedures to manage the export process.
The United Nations Conference on Trade and Development reflects the complexities involved estimating that an average international transaction involves 27 to 30 different parties, 40 documents, 200 data elements (30 of which are repeated at least 30 times) and the re-keying of 60 to 70 per cent of data at least once. Furthermore, obtaining the necessary permits for import and export can take weeks in some economies.
Export pros and cons
If it’s so complex, then why bother to start exporting? The rewards for successful exporting can be substantial. Many companies begin exporting as a result of demand from new customers overseas. Others recognise the better growth prospects and higher profits that can result from selling their products overseas.
Initially, most exporters starting out would use the services of a freight forwarder to assist them in managing their export orders. This service includes the handling of consignments (a set of documents), health inspection certificates and/or customs clearance. While this can be an expensive exercise on a per consignment basis, it is convenient when you don’t have any staff familiar with the exporting process. Over time, and as exports grow, most exporters manage more of the process themselves.
Companies processing low volume exports can use the Australian Customs Service ‘Customs Interactive’ website to obtain their Export Declaration Number (EDN). Although entering data on the internet can be cumbersome, this option is well suited to the low volume exporter. There are still disadvantages in relying on the World Wide Web as a resource for managing exports. For example, if a user needs to rely on more than one website for entering export information there is a higher risk of producing errors through the re-keying of data. Entry level software is also available to help create some of the required export documents as well as facilitate the Customs or AQIS (Australian Quarantine and Inspection Service) clearances.
High volume export
How do companies doing higher volumes manage their exports? Generally, medium to large exporters; outsource their export management to a third party, modify their ERP system or attempt to develop an in-house system to manage international trade. These methods are typically inefficient, risky and costly.
The disadvantage of outsourcing documentation and compliance to a third party is that the exporter loses control of their process. Data must still be processed internally to then be passed on to the third party, which means unnecessary double handling. In most cases if an exporter were to modify their existing ERP system it becomes very costly due to the need for constant changes during upgrades. Finally, developing (and maintaining) an in-house system for managing exports is inefficient, costly and a risk to core business especially when a solution is available from a specialist developer. Taking into account all of the above, the potential areas for improvement are many and varied. The cost savings in selecting an efficient solution can be substantial.
Experienced players in the export game understand that there is more to managing global trade than a simple software package. Successful export management requires a thorough understanding of process and where it can be improved.
Making the process easier
When it comes to international trade there are a number of benefits that exporters look for in a solution. These can include cost reduction, risk minimisation, meeting compliance, time savings and ease of use. Exporters can reduce their costs by sending data and electronic compliance using the internet. Eliminating documentary discrepancies through automation and validation processes minimises risks and will ensure payment is correct and on time. Meeting compliance is of utter importance to exporters all around the world; it can be the difference between getting your shipment away or it being disallowed. By avoiding repetition and the unnecessary re-keying of data, the exporter can save valuable time. The most effective way to simplify procedures is through making the process easier at a user level.
An example of where processes are being simplified is shipping. Managing the shipping process is complex because exporters need to co-ordinate the booking of vessels and containers with the manufacture or trading of goods in a timely fashion. In recent times an effort has been made to remove time consuming paper-based methods and replace them with electronic capabilities. As an indication of future direction, technology is being utilised more and more to save exporters time and money.
Major benefits can also be gained by reviewing international trade processes together with technical requirements. The biggest benefits come from integrating your internal systems with an export solution. Exporters are increasingly benefiting from solutions that not only manage export requirements, but also link with ERP systems that manage order entry, distribution and supply chains. There are a lot of opportunities for integrating those manufacturing and warehouse distribution processes into the export process. Integration means the exporter can simply and efficiently pull any necessary information across from the ERP system rather than waste time re-keying data. If an exporter is using an integrated system, it means your time to react to market, time for getting things done and time for getting paid is shortened significantly by being able to transfer data within the system quickly.
More than meets the eye
Many companies perceive a solution for export process as a low cost, easily made commitment; whereas there is more to international trade than meets the eye. A reasonable amount of effort and investment is needed to maximise the outcome and efficiency required to make international trade a competitive option. Even if exports represent only 10 per cent of a company’s total revenue, the fact that export processes are far more complex than distributing within Australia means that more attention and ongoing investment is required to capitalise on the potential. n
Michael Rossi works for TridentGLOBAL Pty Ltd. Trident believe in developing an ongoing relationship with exporters in order to understand how their business operates and in turn how their processes can be improved. As medium to large exporters are constantly dealing with higher levels of complexity, a more thorough understanding of process paired with services and support is needed. Trident’s ‘CustomerCare’ approach ensures users are trained, supported and kept up to date and their solutions cater to all industry types.