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Articles posted during February 2017

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Next Player Up

Another NFL season football has come and gone, and the big game did not disappoint. It was a game for the ages, among the most entertaining in our modern football era. However, I considered turning the game off after halftime as Atlanta appeared to be coasting to victory. Fortunately, I was steadfast and told myself to just watch one more series after another, hoping it would get better, until it became not only interesting, but captivating.

As I reflect back on the game and season, I am struck by several observations that are relevant to all of us who are focused on operating our businesses and positively affecting our areas of responsibility. Like in football where you strive to outscore your opponent, we are all laser focused on improving our bottom lines. How do we transform raw ingredients into the highest quality finished goods with less overhead, optimal material, and labor costs all the while maximizing the usage of our assets in the process? We not only have to compete with others in the open market, we have to continuously improve relative to our historical performance in order to position ourselves to be successful.

When I consider the reasons why the New England Patriots have been so dominant over the last decade, I am left with one conclusion. While the easiest assumption would be to attribute their success to having arguably the best quarterback to have ever played the game, I prefer to think it is more fundamental than simply one player. Like any organization, football is a team sport. While you need quality players, perhaps even a few stars, you need everyone working together as a unit, towards one goal: winning championships.

Legendary Green Bay Packers Coach, Vince Lombardi once said, “The achievements of an organization are the results of the combined effort of each individual.” Today’s successful teams preach a message of next player up, focusing on the philosophy that success is not solely about an individual, that it is really the team that is fundamental to winning. Players get injured, others are lost to free agency; however, the winning teams seem to doggedly focus on the process of developing, training, and maximizing the talents of each of their individual players to perform as a team. When unfavorable personnel events happen, these teams are positioned to continue winning in spite of the personnel challenges.

As in football, we often lose our “players” for one reason or another, and we must guard against losing the momentum we have worked so hard to achieve. Each successful organization has a goal and vision of where they want to be at the end of each quarter, each year, or even five years. A team approach is critical in meeting the challenges along the way. When an organization faces the inevitable turnover of seasoned workers, it must guard against losing its ability to compete and win. It really is next man up.

As you focus on equipping your team on driving the results that define wining for your organization, please keep in mind that you have a partner in Aptean. Factory MES is a powerful tool, providing the essential real time metrics needed to make intelligent decisions to improve your operational activities; however, due to turnover, your team may be faced with a gap in proficiency with the system. We want to work together with you to help you achieve your goals, and be best prepared when it becomes time to rely on the next man up, we want to help with any training needs you may have. Please reach out to us and we will work together to develop and deliver training that is specific and tailored to your needs. 

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Global Trade Management in 2017

In 2016 the world was surprised by the passing of Brexit and Trump winning the US Presidential election. Looking to 2017 from a global trade perspective, these events make one prediction certain: trade barriers in the Western Hemisphere will not be lowered. To what extent there will be an increase in tariff and non-tariff barriers is unclear, but there is no time like the present to speculate a little.

An interesting year is ahead, and it’s being kicked off on January 1 with the 2017 Harmonized System (HS) Nomenclature overhaul per the latest World Customs Organization (WCO) directions. These changes to the HS Nomenclature will be one of the largest in recent years, with more than half of the changes impacting codes in the agricultural and chemical sectors. In total, there will be 233 sets of amendment revisions. These revisions are meant to address growing global concern around environmental and social issues as well as the importance of collecting HC trade statistics.

With customs professionals expressing a growing concern about their supply chain compliance/Global Trade Management (GTM) challenges, the recent political events in the UK and US have led to increasing uncertainty in the industry. Be prepared for an exciting 2017!

More Duties?

The average global rates have decreased over the years, yet the question is whether 2017 will buck that trend. Will the USA walk away from bilateral or multi-lateral Free Trade Agreements (FTAs), ban countries from General System of Preference (GSP), or increase duty rates for certain countries of origin to protect domestic manufacturing? Will Brexit have an effect on the UK – European Union (EU) duty rates? How will the UK re-create their own external tariff and will it be able to break off UK FTAs from the current EU FTAs? A step further, it is to be seen if any of these events will affect duty rates (initially) on a unilateral basis, if there will be repercussions, and whether a tit-for-tat culture will initiate a tariff war? It’s all not too likely. Negating FTAs is not easily done, and the UK will be cautious to create any economic upheaval that may negatively affect their status as a financial leader in the market.

However, the prospect of an increase in duty rates is realistic as a number of large economic forces will be closely reviewing their trade agreements and tariff structures. Who would have thought the General Agreement on Tariffs and Trade/World Trade Organisation (GATT/WTO) bound rates books would ever have to be dusted off to check possible rate increases would not violate these agreements?

Additionally, two other events could impact duties in 2017. It can be expected that the US will increase pressure on low cost manufacturing, which would lead to a significant number of new Anti-dumping duties/Countervailing Duties (ADD/CVD) cases as unilateral duty increases are possibly too obvious. Lastly, China’s growing debt may threaten current economic stability, but the association with duty rates will likely not be seen in 2017.

More paperwork?

Most likely there will be additional paperwork required for goods to move between the UK and the EU, and equally likely there will be UK FTA specific documentation requirements once it is clear how the UK will rearrange its trade relationships with the current EU FTA partners.

On the artificial side of trade barriers, some token reactionary measures may be taken to hamper certain trade lanes (read: importing from China), but expect additional non-tariff barriers to be more in the security, trademark, and consumer marking areas, specifically security around additional compliance measures for dual-use goods (a global trend), a stricter enforcement of trademarked goods, and closer reviews of consumer marking where safety of products containing certain materials is concerned. For example, ‘simple’ accidents like smart phones catching fire will pave the way for more agencies ensuring all imported products are safe for handling.

Some 2017 predictions

And now the unofficial 2017 predictions:

  • Sensibly common ground will be found and China manufacturing will continue as is, although there will be a face saving announcement about increased market accessibility of foreign products into China. This agreement will bear little result.
  • FTA utilization rates will improve. A common compliance standard (i.e. proof of eligibility) will be agreed on and this will boost the use of FTAs.
  • Hopefully, the WCO announces that in 2022 they will randomly make products obsolete by no longer allowing them to be classified (i.e. any logical or possible HS codes will specifically exclude these products). Under consideration are items such as flip phones, satchels, Yanni CD’s, and toy panda bears holding cactus plants.

One thing is for certain, 2017 will prove to be an interesting year in the Global Trade Management space.

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February 01, 2017 Anne Van De Heetkamp Jump to Comments

Tags :SCM | GTM | TradeBeam

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