G lo b al Tr a d e M a n a ge m e n t
Approaches
In response to all of these pressures and
opportunities, some shippers are taking a
more advanced approach for managing their
global trade.
Most shippers take a basic path, optimizing
supply chain costs and risks during the physical
movement of product from suppliers through
production to destination markets. In this
model, activities focus on duties, freight costs,
documentation and the need to support the
physical movement of goods. These legacy
supply chains typically approach production
and distribution as fixed variables within
the equation, and decisions are made from
(typically lowest cost) supplier through to
destination market. This approach is depicted
in the top half of Figure 13.
The bottom half of the figure shows an
advanced approach to global supply chain
management, which considers a more complete
set of variables to optimize decisions at each
point within the supply chain. Calculations
take into account the complexity of moving
finished and work-in-process products across
country and regional borders, and optimize
paths early in the supply chain to minimize
these costs and risks throughout the chain. In
an advanced approach, short- and long-term
sourcing, production and distribution location
decisions are made early in the product design
process with the goal of aligning the country
of origin with the destination country, and
thereby being able to take advantage of a PTA.
Global Trade Management Maturity
Shippers with an advanced approach to
supply chain management often find value in
developing a mature Global Trade Management
(GTM) methodology.
The maturity of company’s GTM approach can
be assessed by examining their organizational
structure, supply chain decision points and the
completeness of their GTM tools:
• Organizational structure: In a mature
approach to GTM, an integrated crossfunctional team makes sourcing and routing
decisions and shares data, rather than limited
groups in silo’ed functional areas. These
shippers have well-developed relationships
with providers and third parties.
• Supply Chain Decision Points: Sourcing
and routing decisions are made early on in
product design/development. The company
optimizes for risks and costs backwards,
from the destination market back to suppliers
— a capability that requires comprehensive
and accurate forecasting capabilities.
• Completeness of GTM tools: These
companies use complete and realtime technology solutions rather than
spreadsheets. Calculations include PTAs
and tariff/duty updates, and the results are
integrated with forecasting to account for
changes in tariffs/duties as well as market
demand. These shippers possess decisionmaking modeling capabilities, including the
location and investment in assets (production
locations) throughout the supply chain.
This allows the shipper to identify the
requirements and benefits of complying
with a PTA.