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Key Performance Indicators for Import-Export Management (TRDD61W)

Presented by: Randi S. Waltuck Barnett
 
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Pre Recorded Webinar
60 minutes
Event Description
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Using Metrics/KPIs for Global Trade Management (GTM) and for Staff and Departmental Management

As in any business, importers and exporters need to focus constantly on improvement to compete in the marketplace. But how do you know if your import or export operations’ performance is improving, staying the same, or getting worse? Successful import and export companies use metrics or key performance indicators (KPIs) to measure salient aspects of their performance, whether in support of operations, compliance, or trade strategy.

KPIs act as practical and objective measurements of progress, either towards a pre-determined goal, or against a required standard of performance. At a minimum, importers should track the number of entries [by method of transport and by port], the percentage importations that are paperless, that have entry documents required (EDR), or via intensive examination, and the total entered value [by mode and port]. Exporters should track number of exports by country, method of transport, value of and number of automated export system (AES) entries, transit times, percentage of exports requiring a license, and export order processing times.

When effectively applied, import-export metrics/KPIs drive process efficiencies, provide better visibility, allow for objective staff management, and promote the efforts of the import-export department to the executive team and throughout the organization. Remember, what gets measured gets done!

This session by expert speaker Randi S. Waltuck Barnett will discuss the setting up of appropriate metrics/KPIs for any business function, which highlights success and opportunities, risks and accomplishments. Setting the right objective measurements for personnel and systems points to possible gaps that can lead to inadvertent material errors and penalties; pro-actively identifying lessons learned allows for continuous business improvement, kaizen; and setting objective KPIs highlights to cost avoidance and tangible savings that can be gained through best import-export management practices.

Session Highlights

  • Metrics & KPIs: what they are and what they are not?
  • Importance of KPIs to import-export management
  • Creating effective KPIs for import-export management
  • Examples of KPIs for import-export operational management
  • Examples of KPIs for import-export compliance management
  • Examples of KPIs for trade strategy management
  • Overall benefits of effective KPIs for import-export management

Who Should Attend

  • Director, CEO, CFO, COO, VP & C-level Professionals
  • Supply Chain Manager
  • Legal
  • Finance
  • Procurement Manager
  • Customs Regulatory Manager
  • Customs Compliance Manager
  • Operations Professionals
  • Regulatory Compliance Professionals
  • Custom Compliance Personnel
  • Customs/Logistics Supervisor
  • Trade Compliance Manager
  • Purchasing Manager
  • Quality / Process Control Engineer
  • Project Manager
  • Global Compliance Manager
  • Import Export Supervisor
  • Shipping and Logistics Personnel
  • Legal Personnel
  • Trade Consultants/Advisors
  • Foreign Trade Agency Professionals

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I would like now to introduce you speaker for today Randi S. Waltuck Barnett. Ms. Barnett is a highly regarded global trade professional, having created and implemented global and domestic trade compliance programs across many industries for companies large and small. Her experience includes oversight of a $5B, 65-location division of Honeywell, a $3B, 17-location division of Motorola, Global Trade Optimization for Dell, Inc., among others.

Barnet has worked in the international trade arena in various industries for nearly 20 years. Her professional accomplishments include multi-million dollar global supply chain savings under various legal theories, as well as end-to-end global trade mitigation processes and procedures, identifying “right sized” technology tools, including
“compliance on a shoestring” practices.

She has served on councils and boards for various organizations, including the American Association of Exporters and Importers (AAEI), the Organization of Women in International Trade (OWIT), is a charter-member of the International Compliance Professionals Association (ICPA), and a frequently sought-after trade and supply chain conference speaker for various well-known conference organizers, including the International Compliance Professionals Associations (ICPA), the American Conference Institute (ACI), Marcus-Evans, and Richardson Conference Events.

A licensed customs broker, Randi holds degrees in International Business, an MBA in Finance, began her pursuit of a J.D. in International Trade Law; she is Lean Six Sigma Green Belt certified and a Motorola Certified Instructor, available to meet any of your trade compliance, operations or global trade strategy needs. Ms. Barnet welcome to the program we are now ready to being.

Ms. Barnet: Billy, thank you so much for the introduction and will get started. A couple moment of housekeeping I believed the session is approved for 1CC after CES credit if you hold that accreditation please do contact the organizers and will get make sure that you get your credit appropriately. And also we will be doing the Q&A session at the end. So, you can insert your question through the chat window or we will open the line that the end that Billy mention at the end of the session and without further we do let’s go ahead and get into the program.

Alright, Key Performance Indicators, let’s very broadly first and then we get more narrow into what Key Performance Indicators are appropriate for Import-Export Business Management. I pull this out of Wikipedia KPIs; I’m not read through the whole thing of course you can do that on your own. But the selling points here are the idea of identifying what’s important in your business and making sure that it’s managed appropriately. And I will just pull out this particular words KPIs evaluate the periodic achievement of some operational goal, and then of course there all kinds of information around that, that will get into. And then they talk here about the balance score card and you can go into Wikipedia again of course to identify a little bit double click on balance score cards which is a performance management tool, and we will talk about putting that in a little bit of a context as well.

I want to share something with you as well with respect to KPIs. I was on a panel that ICPA a couple of years ago to five years ago. Now, with couple of my professional pairs these happen to have been with Larry Hanson who is a trade attorney in the Huston area. And I just to talk about management by objective in the next slide I will put that in context as well. Management by objective is sort of been the bug phrase for overall business management since the 1950’s and it sort of the overall thing theory for using Key Performance Indicators to identify what the objective is for a business you measure and then you act appropriately based on the measurement that you’ve taken in it you identify.

But one of the points I want to make here is that you don’t want to use only quantitative objective measurement because you lose a lot of the qualitative and that’s equally important to putting things in its context. And we will go back at the end and we’ll talk about the summery of things and we’ll come back to this and go both circle.

I just want to go down to the bottom here of point two highlight for you that there was the review about 25-year-ago in 91 56% gain in productivity in businesses that relay more on a management by accept off by a management by objective. There versus a 6% gain in productively. So, you can see that’s a pretty startle link of result that if you don’t know what you’re trying to accomplish any work will get you there. And if you do know what you’re trying to accomplish and you measured appropriately you got to a much greater potential for success.

And the idea of KPIs is Key Performance Indicators sometimes call metric in business operations. You now, it’s sort of actionable items at a glance. You know when you got a $5 billion business so even a smaller business you can’t look at every detail you have to identify what’s important and why it’s important and what it should look like to be able to measure appropriately effectively and efficiently.

One point on this slide in terms of the management by objective context I just want you be aware of the Peter Ducker who he sort of like the father of management in the 1950’s this was segmental work the practice of management in 1954. So, you should know the name Peter Ducker to put KPIs in their sort of historical context with respect to modern business management practices.

Alright, let’s talk about why KPIs are important generally speaking every business have to try to mitigate it’s risk and maximize its profit and if you talk to just the internal business folks they’re probably only talking about maximizing profits, but if you do anything with respect to import-export you know, that there is the compliance component to the government doesn’t care how fast you do thing or how much it cost you to do thing they only care if you do them correctly. And we will talk kind of marrying the internal and the external as we go through the presentation as well.

But generally why KPIs why Key Performance Indicators, you know we’ve got this huge octopus called the business and we have to figure out what we want to measure what are the agreed upon goals and we standardized the process. The criteria should be objective how many rigid did we produce this month should we’ve produce more should we’ve produce less and how do we capture that data and report on it. We have to allocates scares resources it’s expensive to run a business and we all want to do lean, leaner, leanest will come back to that in a bit as well.

Every business that’s run appropriately tries to allocate its scars resources to maximize its profit and minimize its risk. Import-Export is business critical if you’re on this call you know that I’m preaching to the choir. But cross border transaction they’re not going away regardless of any political climate, you know the global supply chain has only grown exponentially in the last 50 years and I don’t think it’s going away anytime soon anytime something crosses a border there is any import-export we won’t get technically into deemed export it’s a little out of scope. But it might come into play if it’s part of your business issue. We will talk about if maybe on some way.

But business critical in any business have target import or export suspended by the government for none compliance we will tell you that it’s business critical. Hi, do we have somebody on the line? Alright, so that’s an internal management issue business critical. Supportive reasonable care and due diligent on the external side the law in the
United States says, if you are an importer you must exercise reasonable care that’s the legal standard, if you’re exporting you much use due diligence that’s the legal standard if you don’t do those things you’re in potential material violation of the law and that’s not place you want to be because of the potential penalties or getting shutdown by the government. You need an eye and ears throughout the organization every piece of every transaction cannot be looked at you have to identify what most important measures it and react appropriately.

And from top to down you want to align to the corporate and the government the internal and the external requirements. I will say something about this-- this is I work for very brilliant gentleman one time actually I work from twice. His comments was what get’s measured gets gone. I want to talk about its corollary I think that is right to it helps focus what’s important the energies and the efforts on what important but I want to talk about what I would call my own personal corollary to what gets measured gets done.
Unfortunately sometimes what gets measured gets cheated on.

So, be very cautious in terms of establishing your measurement with respect to KPIs or any metric that you’re implementing and identified ways to make sure that cheating doesn’t happen it’s very important especially when you’re dealing with government issues. The government will find out if you’re breaking the laws believe me.

Alright, that’s a little background in context. Another way of looking at Key Performance Indicators by the way and this sort of newer words a what, so what, now what, data information metrics right? What’s going on in our business, what’s important about it and what do we need to do about it. Alright, what needs to be measured let’s now drilled down a little bit to the Import-Export context because the back the past is prolog that’s just kind of general KPIs or metrics in general.

This is a nice heat map that tell you what might happen and if something happen how important is it this is something that you can implement in your own business by indentifying if these things actually happen in your business and we will talk about how to capture the data as the frontend make this determination. We will do that toward the end in terms of establishing effective KPIs. But these give you sort of an overview that you can report out sort of in a snapshot to management. What’s important where our risks in Import-Export?

We have to classify our goods we have we have or we having a government audit what’s the country of origin for import or export? How many are we shipping? What is the government say do we have chemical weapons are we subject to any anti-dumping or counter availing duties.

How do we value our goods for import and export? Do we have re-exports? Do we participate in C-TPAT? Do we retain the appropriate records to support our import and export we export in deemed export transactions and so on. I’m not doing through this all but you can see that you have to identify internally what’s important to your business and how did we get that heat map we identify those issues you can see the first column on the left. We said four our business what’s the probability that we’re going to engage in that import or export activity. In this particular case screening you have to know you customer you have to know who you’re doing business with there is the legal mandate not to do business with the

So, if you have export or deemed exporter or re-exports there is a very high probability that you will screen business partners in conformance with exports law and regulation. So, that’s way at the top. If you breach that requirement what’s the significant very high the penalties can be very significant if you do business with a bad guy. And so we take the probability time is significant we embed the penalty provision which we will talk about later and we rank order. Let me go back a little bit. That’s how the map derived and we parade all of these results and we say wow we’ve got scarce resources we need to do more with less how do we focus our attention not to say that if we get into trouble with something at the bottom of this list we could be in serious trouble.

You know, one was battery that blows up in the belly of a cargo plane can take the whole plan down and even though its one single event and it might not happen very often. But you’ve got to put together your own measurement to see—excuse me, what’s important to you and how important is it to identify which things that you do which activities you engaged in that are important-- we will talk about how you can do data capture. A lot of companies don’t know what they don’t know right? So, we will get back to that towards the end.

Alright, who create the Key Performance Indicators? When are they created? How often do you review them and what are good Key Performance Indicators or metrics for your import-export activity? One of the thing here in terms of looking at each event there are multiple effective to each event right? So, we will get into that as well.

Alright, how create the Key Performance Indicators in an ideal world its collaborative effort between those that are closest to the event and management of that event. I don’t know in your organization where import or export management roles under it’s one of those hot potatoes nobody wants it everybody wants it and it’s got so many facts to which we will talk about their operational aspect that set more squarely under maybe logistic or supply chain there are compliance aspects that set more squarely under legal, they’re cost aspect that fit potentially more squarely under finance and in over the art of my career I’ve been aligned to pretty much all of those. And I’ve also she where it’s a very important component of a business where they’ve actually functionalized import-export.

So, when you get to the C suit you’ve got the VPs under the C suit level. There is the vice president of import-export and operations compliance and strategy all grow there. Because import and export matters can touch pretty much every functional area of the business. Excuse me from snoop to knots you known from the back receiving dock to the legal department who is writing contract and so on.

So, ideally collaborative was all the stakeholders and up and down like a 360. Of course you want your metric to cascade from the top and with upper management tell you hey, we’ve got objectives in this here and the five year plan and so on to reach this goal. How do the things that I measure cascade under there and of course that’s the internal objective. But we want function of staff management as well. How many purchase orders? How many sales orders? Those things have to be taken into account because sometimes those were the fundamental drivers that push the import-export activity and we want the staff as I mention close to the event to say wait a minute I can’t do, I can’t clear a thousand false positive on my screening a day.

Whatever, there are constraints, so we want to set reasonable metrics and we want living
KPIs maybe what we’re looking at today is not what we need to look at tomorrow and we want to make sure that they’re properly communicated in a 360 way.

Also, prospectively if we can established metrics for future period then we’re marching to the same drum ahead of time instead of kind of blind siding particularly staff to say I forgot to tell you that this was important and now you’re fired or you’re on a performance plan or something performance improvement plan. And how often do you take and look you metrics and review them and we will talk a little bit about that in more in depth as well.

Okay. Most objective business measurements are a communicated across management on a monthly basis everybody said how did we close the books every month? How do we close the books because the business managers are looking at finance and they’re saying did we meet our financial goal this year? Did we enough sales? Did we have enough profit? Did we have too much cost of goods sold and those things. So, it’s very nice sometimes it import-export to aligned to the monthly cadence of the general business measurements if that makes sense.

Do we want to consolidated them quarterly and look at them quarterly. If you’re doing post transaction amendment maybe PEAs and post summary corrections and we will talk about that in a minute. Maybe we want to look at these things quarterly as well and review them annually I mean the big thing of course in finance from business management is the fiscal year. And I don’t know if your fiscal year aligned with your calendar year or not. But, you might want to also align these things annually to align up with standard business measurement.

One more point I want to make here that it’s kind of unique I would say to import management in the U.S. There is the import entry summary period when you import something in the United States you do an entry declaration you’ve got a 10 day period within which you can correct that entry and customs are saying they don’t see that initial one if you corrected it within the entry summary period you may want to have a weekly cadence for import management so that you can get your data weekly review it and do a management by acceptation MBA to correct anything that’s come up in that weekly period, and may not want to report upward in that weekly period but you might want to have Key Performance Indicators on a weekly basis. So, that you can correct things with the government before they see it potential errors which could be soon material violation.

Alright, let’s talk about the example for import-export management and get more into the ways a little bit. I’m wants to talk as I mention before in three kind of the three legged stool of global trade management operations compliance and strategy. Operation and support of global supply chain in the logistics functions. How many, how fast, how well did I do and how much does it cost? And I think those are sort of the four aspects of almost any event how many, how fast, how well and how much. And so, each event might have those and you will have to see in your own business of every assets is applicable for each event that you’re managing in import-export activity.

Alright, so how many import. How many exports? And we will talk about each of these compliances again. Operation to internal compliance is sort of the external. The government says you much comply with our laws and regulations and if you don’t you can get into trouble, and you probably want to know if you’re in trouble before somebody’s shows with a badge at your front door. So, you want to identify at your error rates how long it takes you to correct them and what the cost of making the stake might be for you so that you can overtime be proactive and it’s almost always cheaper to do it right the first time then go back and fix up the second time or certain time were so on. The government gets very tired of you making the same mistake over and over again and from a level of cop ability prospective if you make the mistake same mistake over and over again you go from a level of negligence to gross negligence to fraud and the penalties increase and I will show you that later on as well.

And strategy, a particularly we would import and you can codify a little bit on the export side if you importing under certain trade agreement pro free trade agreement or someone you can fine cost savings in your import activity, you may able to be able to fund your compliance activity out of the strategic savings that you can find but you have to know where to look and you want to report that to management as well you want to say hey, look at the money that we’re saving.

Alright, let’s me talk a little bit about Statistical process control (SPC). This is way also to kind of frame your Key Performance Indicators you want to be able to look for outliers are you doing better or worse than your standard. So, in this particular sample you see that the green line in the middle it’s your control level and you’ve got an upper control level and a lower control level. This may or may not work for your business you might say if go below the green line I now have a material violation and therefore I have no lower control level and then you’ve only got to go from the green line up you can only do say 95% and above accuracy something like that because you don’t want to be have a material violation. But this is another way that you can take a look your data and potentially review your data and in your standard operating procedures you should have measurements like that to say you know, what’s important on the upside what’s important on the downside.

Alright, so kind of just to talk a look at that operations compliance and strategy. So, we’re going to break those into pieces and we’re going to take a look at each of them in turn. Alright, here is operations how many import entries and we will tell you later on how if you don’t know how many import entries you’ve got I will show how you can find out. Do you want to slice and dice that data once you’ve got the information? Do you care about your import entries by motive transportation or by cord of arrival or a by value do you want to parade all by whose sending you stuff by the amount of cost to your foreign supplier. Do you care about parading in it by the HTS a Harmonized Tariff Schedule number those are kind of the question you have to indentify it for your business what makes sense for you can see there a pull out to the right there that has a pivot table this is I think data which I will show you later on sorted by HTS by a Harmonized Tariff Schedule number.

What is it by classification what it that I’m importing how many times do I imports something under that tariff classification number. And the example to the right you can see you’ve got two lines and the first one very significant in chapter 98 that’s a special tariff provision do you meet the criteria for using that. So, those we will talk a little more about the risk associated with that.

Alright, for export how many export declaration. Do you file on AES direct yourself does you afraid forward you file your electronic export information for you-- we suppose to have done in 2016 but the export declaration are migrating to ACE which is the custom system again by agent did you afraid forward to do it. Are you declaring your export under routed export transaction which carries their risk? Then we will talk about that if it becomes important. And if we run of time by the way to do a double or triple click any of these issues that are important to you, my email is at the bottom left please don’t hesitate after the event to ping me and –we didn’t have time to get into this detail can you help me and I will be glad to do that.

Alright, on your export declaration by motive transportation by port by value by HTS or schedule be for export. By license or license acceptation did you have any EEI errors that your electronic export information that’s required under SubPart 30 of this title 15 of the CFR and so on the foreign trade regulation. How many screenings have you this is just the how many right this we’re talking just how many. Most folks do their screening now by an automated tool and that tool should be able to report out to you and how many hope does the result which could be false positive or true positive.

Do you argue capturing end use and user statements are you knowing your customer are you meeting you due diligent requirement so just a count and how do you make sure that you capture that data and how many shipment did you cleared; if you’ve got to hold on one of your exports shipments how many will cleared. So, just account of many for every aspect of your import-export operation.

Alright, in support of so that’s how many the next question is how long, how long did it take to do these things arrival to clearance, clearance to delivery time from request to resolution across the work of my career you’re going to shutdown the factory that raw materials stuck in custom, how long very important and are those the exceptions and what can do to get to a route cause if there is a problem so that you can be proactive. But you won’t know that there is a problem unless you’re capturing the data looking at it and finding a solution.

Alright, shipment to port, port to export time to clarify positive, how long to process a license application if some of your goods for export require an export you’re using this to map our system are you submitting all the information proactively so that the license doesn’t get delayed and it’s processing by the government. And the last one here is an engineering change notice a lot of folks don’t realized that if an engineer comes into one of the parts that’s in your material master and makes the changes to it. Do you have a gate in that process they did with the data engineering change, change the classification of the product. That it’s related to even though the part number didn’t change and if the change in the classification does it require now a license or for import or export.

So, all these things that depends on what’s going on in your business, what you capture how do you gain it, how do you capture the data. Alright, quality as I mention this is what the government cares about if you made a mistake could be material violation you’re subject to penalty again overall timely we want to mitigate risk and maximize profit and if you’re making lots of mistake the government will know at that some point. Do you have mistakes in the classification in your database could be HTS it could be schedule B it could ECC and right whatever it’s important to you. Do you have the right value on your export invoices in the United States the value for export is the value at the port of exit. Not just the X work of value of the goods or your declaring that correctly. Do you have the right origin, origin is highly dynamic and most companies deal in fundable goods you’ve got co-mingles goods from various origins around the world. What else is important to the quality from in your import-export operation I mean this is a long list and we will show you some example.

And the cost, management cares. So, that the cost how much does it cost for us to this business and do our writing off. And how much money are we saving and what cost are we avoiding and time to complete the task. The average cost per hour for staff management if you managing a staff of 1 to 100 how long does it take each individual to clarify positive; do you have those folks that are doing a better job or a worse job and you want to indentify fixed cost and variable cost in your business this is the finance guys will understand this very well. Fixed cost is like how much it cost to put in the screening systems you got to fixed cost it costs us $100,000 to buy the system and they charge us an nickel per each transaction something like that.

So, those are the kinds of cost that you want to be able to capture so that you can see if your costs are increasing decreasing; do you have a cost saving opportunity. And another important area I think for import-export management is controllable versus noncontrollable costs. Management always says decrease the duty how come you’re spending so much on duty. Well, you can’t go to the government and say you know, I’m importing a lot of these witches and I was like a rate reduction on the big that’s the duty rate if you got volume discounts for fried and volume discounts for the quantity of goods that you’re purchasing those things maybe controllable and you may fine you opportunity for cost savings.

But you don’t have the same kind of cost savings for your imports if there are foreign duty rates unless and we’ll talk about strategies for decreasing those cost, but that’s another matter. Alright, how many compliance, this is an example for import-export operation; this is a pour out from one of the scorecards that I’ve used in the past. Cost port per importer to compliant line received. You know, how many imports you’ve got, you break them up by line and you identify if their compliance, if there’s an error in it, you’ve got to break that up and say, do we had errors but for those that would had no errors, we’ve got to plan an and actual who’s the owner of this, what’s the target and what’s the variance, so that we can do some variance analysis so we can identify if we’ve got some work to do or not so this is one example. And this actually is quality and cost because it’s not just how many, it saves the costs and its compliance. So we’ve embedded a few of this issue, import lines received, we’ve added the cost and the compliance aspect to it so that’s one example.

All right, we’re going to go to compliance and then with sort of the segway. Alright, what’s important on the compliance side of import-export? Again you’ve got the overlap between what management cares about and what the government cares about. And a lot of folks you know, they work in an environment where management says well, we don’t care if we made a mistake if so we get caught, find another job right? Otherwise there will be a compelling event and sometimes the folks that are responsible for import-export compliance are in a tough spot. If everything goes well, if management says, what do we need you for, everything is going well? If something goes wrong, they’d say what did we need you for if something went wrong? So if you can establish the rate key performance indicators, you can show why things have gone well and why there are no problems, just because you’re doing your job properly.

Alright, the government only cares about you doing it right and they are typically materiality threshold. I have to tell you that you may as well aim for a 100% accuracy because the materiality threshold is pretty high, 95, 98 percent and it depends on what it is, it could be a 100%, you know. In export control, if you sell weapon system to somebody and an embargo country, one of them just needs right? So you may as well aim for a 100% conformance to laws and regulations that affect your business and there are significant penalties for material violations.

Alright, in the quality or government regulation or the compliance aspect of importexport, you have to identify what is it, HTS, schedule B, ECC and you have to know what am I importing, what am I exporting. You have to know how much is it worth, this is to get valuation code for import and export. As I mentioned, exports from United States per your EEI are supposed to be at the quote on quote, Echo B value, that it’s really for any motive transportation but it’s not just the value of the goods, it’s the value of the goods plus the cost to get them to the port of export.

Where was something made? Was it made in a country where you have trade preference or not so we have non-preference or preferential countries of origin on your imports, where was it made is the third key element to your declaration whether it says how much is it worth, where was it made and on your exports as well and you have to declare an EEI if it’s domestic or foreign. And are we doing-- dealing with bad guys, are we doing any business with bad guys, you’re precluded from doing business with bad guys, that’s not what it says in the regulations but something like that and for exports under title 15 and title 22, you have to know your customer. You can’t just assume one way or another and you can’t do business with and so KYC, know your customer.

Not only doing screening techniques that where you can fine tune the aspects of any transaction to say it so that hit or not but you definitely want to air on this side of caution so you don’t do business with bad guys and you have to know what they’re going to use your product for, are there any red flags? Is it a cash transaction where it shouldn’t be a cash transaction; and things like that. So you want to make sure that you’ve got mechanisms by which you’re managing all the requirements for export and if it’s subject to export licensing, for export we export or deemed export. I’ll give you one example on deemed export.

I didn’t want to get too far down that but just to bring to your attention, many companies have a workers in their facility. If they’ve got a piece of machinery or equipment that subject to export licensing for whatever reason and you’ve got a non-U.S. persons operating that equipment, they may need an export license to operate that equipment in the United States. One example of a deemed export, that often is so overlooked. You have to be aware of that and how do you capture it and how do you report on it and do you have a license exception, are you making use of license exceptions to minimize the amount of license you have to apply for and maybe shorten the cycle time in terms of that effect or you don’t have to get an export license but you can make use of inception, are you using them correctly.

All right, so here’s another example for compliance, do we have expertise-- and this one is kind of more high level. Do we have adequate internal customs expertise, do we proactively manage the consultation – excuse me so that it’s embedded properly and we can avoid problems instead of reacting to them. Do we have the right standards for talking to government authorities and do we capture that information is someone shows up or calls or writes or faxes or emails? Are we capturing those events and are there any fine penalties or enforcement actions that we have to make sure that we manage properly. If you get what we – sometimes, very sarcastically to call a love letters from the government, make sure that you capture that information and report on it and there are lots of events like that and may happy too.

Here’s another example, again this is very low level but you know, this is important and here’s one measurement of it. Classification, this is US import but you can apply it in a lot of other ways, here’s from a list management compliance perspective. Did you get customs form 28 or request for information or a custom form 29, a notice of action that you made a mistake potentially in the classification of your good or the valuation or using a trade agreement or, or, or, whatever may be applicable to you. And this is an accuracy measurement or we call it quality, how well did you do it.

All right, and I promised you I would tell you about penalties, I just want to show you here with levels of capability. We’re not going to talk about prior disclosure in mitigating your risk if you’ve got material violations but you can see in both the right and the left columns, there’s fraud, broke, negligence and negligence and this is similar in the export control world. Ping me if you need the export control violations chart, I have a nice one; I forgot to include that in the slide the export piece, so please forgive me.

But you can see that their increasing penalty. So if you just make a clerical error what we say an inadvertent clerical error, there are penalties. If you make that same mistakes over and over and over again, you’ve got systemic errors, you are now group for negligence and the penalties are higher and of course we called the f word fraud, a willful violation of the law. You’re selling weapons systems to the bad guys, don’t do that or you’re double you‘re having your foreign supplier let me go back, the foreign suppliers doubling licensing that the value is half what it really is so that you can pay half the duties, that’s fraud, right? So, don’t do that. If you’re doing that you’re not on this call because we’re preaching to acquire.

All right, let me take a couple minutes in terms of state trade strategy. You at management love this where you can find savings for your import activity so that your total landed cost are minimize which of course maximizes your profit but if you’re doing it compliantly which the government cares about and potentially, participating in strategy for your export so that your customers which might be a related party by the way at the big high level or not, when you can find cost savings of the other end of that same stick of your export if they’re import.

And you want to make sure that you capture the bottom line savings on your imports, below your own a little bit, so that you can prove your worth. Sometimes folks say, what do we need you for as I mentioned especially if you’re heavily focused on compliance and you’ve never gotten caught making a mistake, but you want to make sure that you took your horn and say look, we’re saving this money because we are participating in and what are those things. Special prefix indicators, general note three, those are things like NAFTA or the US Singapore free trade agreement or the US courier free trade agreement or the generalized system of preference.

They’re conditionally free imports or partial duty savings under the US Chapter 98 and Chapter 99. You might participate in tariff engineering, if I make a slight change to this widget, it’s not properly classified elsewhere in the tariff and where it’s not properly classified as the lower rate of duty, then was manufactured before and I’ll show you a slide on first sale and then other opportunities like foreign trade zones. I work processing, inward processing, bonded logistic zones, P tax which is like which is like in Mexico. There are all these other strategies that you might participate in to find cost savings for your business and show how you’re adding value to the company.

And then on the export side, what are you doing to support the other end of that same stick so that the importer at the other end can participate in any of those programs into saving them money but you have to support. Then you want to potentially estimate the savings on your customers export to show how you’re supporting them.

All right, this is federal notice for you in the United States. Most of the tariff savings programs on imports in to the US are based on the country of origin and they have to meet the preference rules of origin. Some are based on the actual type of commodity that’s being imported like the automotive products trade act or the agreement civil air craft. Again there’s some opportunities here but they are all conditional and you must meet the condition so while you have the strategy opportunity, you’ve got the compliance risk so you want to make sure that you capture both aspects of those events so that you can properly report in your KPI to management.

And here’s where the cost saving opportunity is, tasks around the world look very similar to this than what is it is the row of crops, the columns in the US, we have the rates of duty column one, general and special in column two. The good guys, the really good guys and the bad guys I often say. If you can participate in one of those special, in column one special, you can see in that first row, you can go from a 37 and a half percent lawfully assessed duty on the value, the loss of value of the goods you’re importing to free. There’s a huge opportunity if that fact pattern, you can’t just make it up, break the thing, you’re in violation of the law. So these are some of the opportunities. I have a buddy who says you have to read the tariff from left to right, not right to left, you don’t get to pick which rate of duty applies, you have to have the under penning and have them calculated correctly from the bottom up.

All right, here is some way to present your savings, your nest of savings for example and some monthly matrix, there’s another example of how you might present the data and have those issues. For example, if you’re just estimating the money saved by your customer in Mexico, how many NAFTA certificate of origin did you issue? How many other certificates of origin did you issue? How many manufactures and may have manufacture affidavit if you’re manufacturing in the United States and you have somebody that needs that proof of origin, how many classification did you do? How many foreign trade issues and so on. So it depends on what’s important to you but you can see there are lots of different ways to present the data. You want to be able to have actionable information at a glance right?

Alright, here’s another slide on first sale, you might have some input for sale opportunity for your strategy and the interest of the common but let’s skip over this because we’re running short but ping me if you need. Another example of how many, how many, this is just a sort of a how many, there’s another way to present that right? These are just counts and this is counts per hour or you can do counts per week or counts per month or counts per quarter, counts per year. This is just a quantity measurement and you might want to say, okay what’s our goal and who would over rate the goal.

Here if you’ve got an idea of what your goal should be as opposed to what it is, this would be the right then, you would want to overlay the so what and then the now what. If your goals or significantly different than what you attained, you have to identify root cause analysis, find why any of those procedures to identify what you need to do and how you need to get that information. But this is another way just to show you of presenting data.

And here’s another way, and here we’ve got a red, yellow, green, I think this is just red and green here we’ve got a variance. We show here a variance of a positive five in that last column that’s green but the negative five above it is the red. In this way, at a glance, you can say, gee, I’ve got a problem here, what do I need to do about it so that you can use scarce resources in an effective way and do a management by exception, just not look as of things that are going well, we have to make sure that we continue to do them well but focus our scarce resources on what’s going on and how do we fix it.

Okay, and another, here’s a program management, how many parts to be classify, how many did we do, are we red, yellow, green and so on but just another way of presenting data and again focusing our intention where it needs to be and another one red, yellow, green or orange like and so on.

All right, I promised you that I would tell you how you can capture data to see the KPI and sometimes this is a challenge because again, we don’t know what we don’t know. On the import side of the United States and I’ll just mention if you are operating in Canada, you can get similar import-export data. In Canada what’s called the firms report,
F-I-R-M-S. If you need more on that, again ping me but in the US, you can order from US customs, your iTrack data or you can pull your data ACE successful free web portal and if you need information on that, please let me know again, I mention ping me and I’ll get that information for you. The automated commercial environment basis sort of the body of data, of all your US imports and I’m going to put all in quotes. I recommend for US importers so they order one time their iTrack data, there is a cost, but it’s a system of record as it migrates all intake, so you want to compare iTrack to ACE data and make sure that ACE is wholly representing all of your imports so that you can make sure you’ve capturing all the data that the government sees.

And according to management, all your transactions and the reason why I say all in quotes is the next bullet point couriers. I cannot tell you how many global traders overlooked the fact that couriers FedEx, UPS, DHL can act as a nominal importer, exporter of record under various legal provisions and you are completely liable for the accuracy or inaccuracy of the data they present to the government and you’ve got very little visibility. So we want to make sure that you capture all your courier data as well and marry that with your iTrack and your ACE data so that you get a complete picture of your import activity.

And another source of import activity is your licensed customs broker unless you’re self brokered. If you’re self brokered, you’ve got ABI- Automated Broker Interface software, you can pull reports from your ABI system but if not which most importers are not, they authorized a licensed customs broker by a duly executed power of attorney or broker has systems that can capture that and provide it to you and your internal and your ERP, your internal systems and I’ll show you some examples of each.

Kind of similar and parallel, the mirror image on the export side, you can order your census data from US census and as I mentioned the Automated Export System migrating in to ACE, you’ll be able to capture that data. And again, don’t forget your couriers and your internal EOP. And then, there might be others, a lot of companies have both on systems or they capture a lot of their import-export activity offline and excel it so that the work course of business activities so don’t overlook that.

All right, let me give you some examples of where you can get some data collection. Every import transaction after summit at the CF 7501. If you get your ACE study, it will look something like the lower left and you’ve got every line of the entry data identified in ACE unless it’s handled by a courier because the courier uses their tax id number there, IOR number not yours so will never be included and you want to the courier data to this data. So this is one way you can see your KPI in terms of data capture. This is a blowout of that so you can see it again so that you can see it a little more clearly. And you can look for example, you can see that CA, that’s special prefix indicator that when you imported I know that Civil Aircraft I think, whatever. You can see there’s lots of information here that you can you can do a count it and so on.

All right, and then broker data, this is the bottom of the 7501. You might want to break out, for example, your duties, your government fees, the broker fees and act up to your general ledger and when we get to general ledger on the money side, if you have these things coded appropriately in your accounting system, you’ll be able to capture those data and pull it out of your general ledger. And you want them be able that they’re big enough of course to negotiate with your customs broker or you have paid for a similarly on the export side to get the data presented to you in a way that make sense to you.

All right, here is census data on the outbound side if you order your data, your export data from census and usually get three files for routed your files and agent files and so you want to marry all that data so you can get a complete count and so on and Excel again and so that the workforce in this area. Here’s a courier data you can see that there’s a lot of things imported here declared by the courier under chapter 98. You’d want to make sure that you can point to that from a compliance perspective how many, how well, how fast, how much.

All right, the big other source of data in terms of capturing information that’s important for import-export is your internal system. If you identify what’s important, you can go ahead and then run data of approach from your ERP and you might be running on SAT, you might be running on Oracle, JD Power, you might have a home grown system but you can see that various systems have different data elements, different fields that are relevant to import export business management.

So you can see in this particular one, there’s trade data. You have an import code, you’ve got a control code, you’ve got the market organization country of origin, you’ve got an export licensing on the left. In the right, you’ve got another frame that’s got the sanction party screening, embargo checking, license determination, import-export declaration of creation and filing, product classification, preference determination, letter of credit, you handle that on the finance side and so on. If you have to determine which events are important to you and how do you capture that data. Are they embedded in your ERP, if not can you prove that you would save money on the side so that you can automate that process......

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About Our Speaker(s)

Randi S. Waltuck Barnett | trade compliance programs SpeakerRandi S. Waltuck Barnett
Ms. Waltuck Barnett is a highly regarded global trade professional, having created and implemented global and domestic trade compliance programs across many industries for companies large and small. Her experience includes oversight of a $5B, 65-location division of Honeywell, a $3B, 17-location division of Motorola, G... More info

 
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    Event Title: Key Performance Indicators for Import-Export Management
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