integrated trade compliance strategy presentation october 2010
DESCRIPTION
The case for an Integrated Trade Compliance Strategy presentation including the visual silo based model and integrated trade compliance strategy model.TRANSCRIPT
The Case For An Integrated Trade Compliance Strategy
Reynold Martens
Executive Vice President
GHY International
President, GHY USA
Context
• “Manufacturing not what it used to be”• Global forces intensifying competition• Supply chain/markets diversifying beyond US• Complex new mix• Origins, manufacturing locations, destinations• Importers and exporters under surveillance 24/7• Compliance = price of admission to global trade• Non compliance increasingly costly• Lost opportunities, margins, penalties, reputation
Our Thesis
• Are international traders adapting to new trade reality?• Compliance outsourced or compartmentalized• Import and export functions internally are often “silos” • Trade related financials have limited corporate visibility• Regulatory interventions force executive focus• End result is clear audit trails and accountability• Integrated cross-functional approach reduces exposure• End game: reduce risks & maximize opportunities • Cost of reacting is more than a taking a proactive stance
Outline• Overview Canada’s shifting trade dynamics• Canadian compliance landscape• The problem with “silos”• The solution: An integrated approach• Building an integrated trade model• Overview a sample plan• Summary
Canada: Trade Volume Index
80
100
120
140
160
180
200
220
240
260
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
IND
EX
(19
89 =
10
0)
EXPORT VOLUME IMPORT VOLUME TOTAL TRADE
TRENDLINE PROJECTION:TRADE VOLUME WILL
EXPANDBY 1.4x TO 2020
Canada’s International Import Sources
2009 Imports: $365.2 billion
Data Source: Industry Canada, Trade Data Online, June 2010
Canada’s International Export Destinations
2009 Foreign Merchandise Exports: $334.6 billion
Data Source: Industry Canada, Trade Data Online, June 2010
North American Supply Chain
Trade/Compliance Intersections
• Global perspective: flow model from 30000 feet• Regulatory intersections create compliance implications• Global sourcing and marketing increases risk• Customs regimes enforce all trade-related laws• Tariff, value, origin just the beginning• Other government departments piggyback Customs• Product design-performance standards, • Consumer Safety• Quota Management,Permits, Licenses • Security Screening, Patents, Labeling-Packaging
CBSA Compliance Objectives
AlwaysSome
ComplianceGAP
Tariff - 31% Error RateNAFTA - Certs 50% Inaccurate
Values - 27% Error RateLinkages - Core Business/Customs
Systems are seperated
RISK
Oct 7th, 2002Clear Risk
Demarkation
AccountabilityPlan
Our Focus Today
Compliance Risk Overall 14m Commercial ShipmentsCompliance Risk at $100 = $1.4B --> at $1000 = $14B
As of Oct 31st, 2003 13539 Penalties $10,500,000As of Oct 31st, 2003 Post Audit Penalties 125 Penalties = $90,000
CBSA Audit Trend
0102030405060708090
100
2003 2004 2005 2006 2007 2008 2009 2010
CBSA Audits
Current Model
Board
Current Model
CEO
Board
Current Model
Executive Team
CEO
Board
Efficient Profitable Competitive
Product Design
Production/Manufacturing
Global Sourcing
Supply Chain/Logistics
Shipping
Human Resources
Information Technology
Assets & Liabilities
Cash Flow Management
Regulatory Compliance
Risk Management
Financial Report
Administration
Domestic Sales
International Sales
New Export Markets
Contract Negotiations
Contract Management
Sales Administration
Marketing
CDN Customs BrokerUS Customs BrokerTrade Services
CDN AuditorsUS AuditorsLegal Services
Finance Services
Current Model
Business Operations Financial Management
Product Design/Engineering
Production/Manufacturing
Global Sourcing
Supply Chain/Logistics
Shipping
Human Resources
Information Technology
Domestic Sales
International Sales
New Export Markets
Contract Negotiations
Contract Management
Sales Administration
Marketing
Assets & Liabilities
Cash Flow Management
Regulatory Compliance
Risk Management
Financial Report
Administration
Business Development
Executive Team
CEO
Board
Efficient Profitable Competitive
MinimizeRisk
OptimizeOpportunity
Integrated InternationalTrade Strategy
Predictable Compliant Sustainable
Service Providers
·Legal ·Financial ·Trade ·Customs
Integrated Model
Business Operations Financial Management
Product Design/Engineering
Production/Manufacturing
Global Sourcing
Supply Chain/Logistics
Shipping
Human Resources
Information Technology
Domestic Sales
International Sales
New Export Markets
Contract Negotiations
Contract Management
Sales Administration
Marketing
Assets & Liabilities
Cash Flow Management
Regulatory Compliance
Risk Management
Financial Report
Administration
Business Development
Executive Team
CEO
Board
Efficient Profitable Competitive
MinimizeRisk
OptimizeOpportunity
Integrated InternationalTrade Strategy
Predictable Compliant Sustainable
Service Providers
·Legal ·Financial ·Trade ·Customs
Integrated Model
enterprise performance enterprise expansion
enterprise risk/liability
accountability framework
Business Operations Financial Management
Product Design/Engineering
Production/Manufacturing
Global Sourcing
Supply Chain/Logistics
Shipping
Human Resources
Information Technology
Domestic Sales
International Sales
New Export Markets
Contract Negotiations
Contract Management
Sales Administration
Marketing
Assets & Liabilities
Cash Flow Management
Regulatory Compliance
Risk Management
Financial Report
Administration
Business Development
Executive Team
CEO
Board
Efficient Profitable Competitive
MinimizeRisk
OptimizeOpportunity
Integrated InternationalTrade Strategy
Predictable Compliant Sustainable
Service Providers
·Legal ·Financial ·Trade ·Customs
Integrated Model
key performance indicators KPI strategic planning
expansion assessment
partnerships, acquisitions
enterprise risk assessments
executive team leadership
budgets, revenue projections
Business Operations Financial Management
Product Design/Engineering
Production/Manufacturing
Global Sourcing
Supply Chain/Logistics
Shipping
Human Resources
Information Technology
Domestic Sales
International Sales
New Export Markets
Contract Negotiations
Contract Management
Sales Administration
Marketing
Assets & Liabilities
Cash Flow Management
Regulatory Compliance
Risk Management
Financial Report
Administration
Business Development
Executive Team
CEO
Board
Efficient Profitable Competitive
MinimizeRisk
OptimizeOpportunity
Integrated InternationalTrade Strategy
Predictable Compliant Sustainable
Service Providers
·Legal ·Financial ·Trade ·Customs
Integrated Model
business plan execution
P & L --financial performance
risk management and reporting
strategic plan execution
management team leadership
Business Operations Financial Management
Product Design/Engineering
Production/Manufacturing
Global Sourcing
Supply Chain/Logistics
Shipping
Human Resources
Information Technology
Domestic Sales
International Sales
New Export Markets
Contract Negotiations
Contract Management
Sales Administration
Marketing
Assets & Liabilities
Cash Flow Management
Regulatory Compliance
Risk Management
Financial Report
Administration
Business Development
Executive Team
CEO
Board
Efficient Profitable Competitive
MinimizeRisk
OptimizeOpportunity
Integrated InternationalTrade Strategy
Predictable Compliant Sustainable
Service Providers
·Legal ·Financial ·Trade ·Customs
Integrated Model
Business Operations Financial Management
Product Design/Engineering
Production/Manufacturing
Global Sourcing
Supply Chain/Logistics
Shipping
Human Resources
Information Technology
Domestic Sales
International Sales
New Export Markets
Contract Negotiations
Contract Management
Sales Administration
Marketing
Assets & Liabilities
Cash Flow Management
Regulatory Compliance
Risk Management
Financial Report
Administration
Business Development
Executive Team
CEO
Board
Efficient Profitable Competitive
MinimizeRisk
OptimizeOpportunity
Integrated InternationalTrade Strategy
Predictable Compliant Sustainable
Service Providers
·Legal ·Financial ·Trade ·Customs
Integrated Model
Business Operations Financial Management
Product Design/Engineering
Production/Manufacturing
Global Sourcing
Supply Chain/Logistics
Shipping
Human Resources
Information Technology
Domestic Sales
International Sales
New Export Markets
Contract Negotiations
Contract Management
Sales Administration
Marketing
Assets & Liabilities
Cash Flow Management
Regulatory Compliance
Risk Management
Financial Report
Administration
Business Development
Executive Team
CEO
Board
Efficient Profitable Competitive
MinimizeRisk
OptimizeOpportunity
Integrated InternationalTrade Strategy
Predictable Compliant Sustainable
Service Providers
·Legal ·Financial ·Trade ·Customs
Integrated Model
• client qualification and negotiation
• contracts/purchase orders
• product design, packaging, labelling
• product licensing, patents, trademark rights
• related/unrelated parties valuation
• importer of record determination
• currency of settlement
• financial terms, instruments
• global tariff classification, origin
• logistics-supply chain management
• supply chain security reporting protocols
• customs clearance and reporting
• OGD special requirements
• regulatory intervention management
Business Operations Financial Management
Product Design/Engineering
Production/Manufacturing
Global Sourcing
Supply Chain/Logistics
Shipping
Human Resources
Information Technology
Domestic Sales
International Sales
New Export Markets
Contract Negotiations
Contract Management
Sales Administration
Marketing
Assets & Liabilities
Cash Flow Management
Regulatory Compliance
Risk Management
Financial Report
Administration
Business Development
Executive Team
CEO
Board
Efficient Profitable Competitive
MinimizeRisk
OptimizeOpportunity
Integrated InternationalTrade Strategy
Predictable Compliant Sustainable
Integrated Model
Service Providers
·Legal ·Financial ·Trade ·Customs
• client-lawyer privilege situation
• client-vendor disputes
• regulatory interventions/audits
• intellectual property/licenses, trademarks
• proprietary information breaches
• appeals
• lawsuit- pursuit/response
• international financing
• international credit instruments
• insurance in transit, cargo, receivables
• foreign currency exchange facilitation
• foreign currency exchange hedging/contracts
• regulatory bonds and sureties
• domestic/foreign tax strategies
• domestic/foreign tax preparation
• international/domestic tax representation
• internal audit corporation, branches, subs
• valuation formulae and transfer pricing
• international /domestic trade audit trails
• regulatory interventions/audits
• regulatory appeals and tax rulings
• global sourcing assessments-regulatory impact
• global market assessment-regulatory impact
• free trade agreement assessments/application
• landed cost assessment imports/exports
• importer of record representation to regulators/OGD's
• import database creation by product-tariff, valuation,origin
• customs clearance, reporting, financial settlement
• importer of record bonding, surety
• regulatory interventions/audits
• Customs/OGD appeals and rulings
Business Operations Financial Management
Product Design/Engineering
Production/Manufacturing
Global Sourcing
Supply Chain/Logistics
Shipping
Human Resources
Information Technology
Domestic Sales
International Sales
New Export Markets
Contract Negotiations
Contract Management
Sales Administration
Marketing
Assets & Liabilities
Cash Flow Management
Regulatory Compliance
Risk Management
Financial Report
Administration
Business Development
Executive Team
CEO
Board
Efficient Profitable Competitive
MinimizeRisk
OptimizeOpportunity
Integrated InternationalTrade Strategy
Predictable Compliant Sustainable
Service Providers
·Legal ·Financial ·Trade ·Customs
Integrated Model
Summary
• Intensifying trade complexity –supply chains & markets• Increasing regulatory surveillance and intervention• Compliance is a competitive weapon• Integrated approach addresses gaps presented by silos• Increased visibility and shared ownership reduces risk• Maximize commercial opportunity and profitability• Minimize downside risk that erodes margins• Grow your business!
More Information
Reynold Martens Executive Vice President GHY International 204 947 6700, ext 286 [email protected]
• White Paper: “Why Trade Compliance Matters”
• Sample Compliance Responsibility Matrix• Sample Compliance Manual