Safe Trip for Exports

Feature Article | December 13, 2006 by admin

September 11, 2001 was a watershed moment for international trade too. The terrorist attacks led to a tightening of statutory export regulations, which has in turn increased the complexity of export management. The U.S. and the European Union (EU) have drawn up boycott and sanction lists containing the names of people or organizations suspected of conducting trade with terrorist networks. Exporting companies are required to regularly check their business partners against the list. “If they don’t, they may face penalties of up to 500,000 Euro, and in some circumstances the company’s managers may even face the threat of jail,” says Philip Vospeter, consultant at the Bielefeld-based SAP full service provider itelligence AG. Not to speak of the damage to the company’s image.
Things are made all the more difficult for exporting companies by the fact that there is still little standardization of electronic customs clearing from country to country. In the U.S., for example, it is mandatory for import and export documents to be transferred to the U.S. customs authorities electronically via the Automated Export System (AES). As part of its e-customs initiative, the European Union plans to introduce a standardized Export Control System (ECS) and Import Control System (ICS) and a standardized system of international risk management.
Since April 2004, international trading companies already in possession of the shipping authorizations “Authorized Consignor” or “Authorized Consignee” have been required to participate in the New Computerized Transit System (NCTS), which has been implemented in Germany using the ATLAS system. Since August 2006, ATLAS-compliant electronic export registration has been voluntary for German companies. From 2009 onwards, it will be mandatory.
Companies can benefit now from changing over to electronic customs processing because in doing so they both comply with the current stipulations of national customs authorities and are also prepared for future requirements such as the ECS system. Moreover, they can transfer the required export data to the customs authorities electronically at any time of day. This saves a lot of time compared to manual processing. Electronic registrations are also processed immediately, which facilitates import and export procedures and reduces waiting times at borders.

A driving force – but a poor relation

SMEs such as those in the supplier, manufacturing or mechanical engineering industries are increasingly operating on a global level. They produce and distribute their products at a variety of sites and are therefore subject to the same statutory conditions as multinationals when it comes to exporting goods. Yet SMEs often treat export processes as a poor relation, believes Vospeter. Customs forms are filled out manually or using a typewriter. The same goes for the legally required inspection of boycott lists or for preferential calculations in applications for preferential customs treatment. This is time-consuming, prone to errors, and can lead to financial losses. “Every hour that a cross-border delivery is held up by customs deliveries on account of incorrect or incomplete export documents costs hard cash”, explains the itelligence consultant. “Companies that invest in integrated foreign trade software to replace their paper-bound processes with largely automated export processes enjoy a relatively quick return.”
A further key factor is that unlike global corporations, many SMEs do not have the financial means to set up and maintain their own export departments. Foreign trade applications such as SAP Global Trade Services (SAP GTS) therefore have a lot to offer them. The application, which comprises the three components SAP Compliance Management, SAP Customs Management and SAP Risk Management, supports all areas of foreign trade.

Safeguarding business processes

SAP Compliance Management monitors all goods import and export processes and ensures that all statutory requirements are met in full. It is particularly important to inspect the boycott and sanction lists. The solution includes the list of names from EU anti-terrorism directives in 18 languages, accompanied by comments in German and English. To maximize international coverage, it also includes sanction lists from the U.S. and Switzerland, which are maintained centrally and made available to all areas of the company.
The seamless integration of inspection processes in mySAP ERP and in SAP purchasing and sales solutions enables automated reconciliation of master data (vendors, customers) with sanction lists using the Sanctioned Party List (SPL) check function. The monitoring and reporting functions provide information about check results. All the activities in the sanctions list check are logged, archived using the audit trail function in the sanction list check, and can be used as legal evidence in external audits, for example.
Moreover, import and export control in SAP GTS helps users to process materials that require permits, to manage export permits, and to take goods-specific export and import licenses into account fully automatically. License management in SAP GTS is used to classify material that is subject to a license and the correct license is assigned to the export document. SAP GTS also executes quantity and value depreciation and covers goods movements that cross national borders or company codes. The embargo check is also integrated in SAP GTS. If a country is new on the embargo list, the software announces that all deliveries to this country have to be stopped.

Reliable export partner

SAP Customs Management facilitates electronic customs clearing processes. It supports the European electronic shipping method NCTS, the U.S. AES and the Australian customs clearing system Integrated Cargo System (ICS) and is certified for many European customs clearing systems.
Companies certified to NCTS, for example, comply with all the requirements of electronic customs and foreign trade management and are classified as reliable. Only then are they assigned the status “Authorized Economic Operator” at EU level. Companies also benefit from preferential and quicker clearance by the customs authorities. This is a competitive advantage for suppliers, who have to keep delivery promises.
SAP Customs Management is also seamlessly integrated in procurement and sales processes and transfers large quantities of data from the relevant applications to the customs documents. For example, it automatically fills out the complete export registration including customs tariff numbers, consignor and packing data, and declaration of weight. What is more, because SAP GTS utilizes SAP Interactive Forms by Adobe, users can fill out, process and dispatch all the forms required for customs directly from the SAP application.

Well equipped for the global market

It is a vital competitive advantage for exporters to be able to offer customers goods duty-free or at a reduced rate of import duty. To be able to do so, they require a verifiable preference permit. SAP Risk Management helps exporters to meet all the legal requirements for customs preference and certify their goods as authorized for preference. These requirements include vendor declarations that are procured, managed and monitored consistently and checked for compliance with the preference rules.
Vendors also have the option of maintaining their own declarations via a Web-based supplier self-service. This saves personnel and financial resources and the operating costs for customs clearing are reduced. “SMEs that use SAP GTS are always well equipped to carry out their export activities on the global market,” says Philip Vospeter.

Dr. Andreas Schaffry

Dr. Andreas Schaffry

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