General Motors Global Customs Director Amy Martin discussed how tackling projects in a way that stretches beyond compliance got her greater attention for duty reduction initiatives.
Building a business case for global trade automation is often about knowing the pain points in an organization and figuring out ways to address them.
Much of the discussion on panels at the American Association of Exporters and Importers Annual Conference, which concluded Tuesday, centered on elevating the compliance function within an organization.
There are so many ways to go, but a popular route is better leveraging duty management mechanisms, also known as preferential treatment programs. This area encompasses the use of free trade agreements and U.S. foreign trade zones (and their counterparts in other countries).
“Having a system helps us determine what to go after,” General Motors (GM) Global Customs Director Amy Martin said during a panel on duty reduction programs. “We’ve changed our priorities to get the data that’s more impactful to the bottom line. Previously we didn’t really know how much duty we were paying globally.”
That exercise has changed the tenor of the relationship with GM’s suppliers.
“In the past, a supplier might say that a part (the supplier is making) doesn’t qualify for preferential treatment, and we just believed that,” she said. “Well, we don’t just accept that anymore. When we looked into it, we couldn’t believe how many times a supplier said that, and the part did qualify. That’s a huge stream of positive EBIT (earnings before income and tax).”
The implication was that the suppliers didn’t necessarily want to do the legwork involved in the qualification process.
Martin also discussed how tackling projects in a way that stretches beyond compliance got her greater attention for duty reduction initiatives.
“GM is a ‘business-case’ enterprise,” Martin said. “We needed cross-functional teams to understand what touches customs. (In one particular case) the savings in the inland freight network were huge, bigger even than the customs savings. Knowing that made for a more powerful business case.”
American Shipper recently released a white paper evaluating the benefits of a duty management strategy.
Andrea Appell, director at the global trade consulting firm BPE Global, said that while duty management programs can yield savings, a more impactful starting point is addressing a company’s compliance risk profile.
Usage of preferential treatment mechanisms can put a company on customs’ radar, and if they aren’t administered correctly, that can increase a company’s risk, she said.
GM: Duty management automation shines light on opportunities
