Twist or turn it, compliance issues in global trade are a component of non-tariff barriers. With duty barriers ever decreasing, average duty rates went down from 8.55% in 2000 to 4.74% in 2014,[i] it is difficult to substantiate claims that non-tariff barriers have been put into place instead. However, the international focus on trade compliance, ranging from import facilities to export licenses for dual-use goods, has increased over the years, with more countries following the United States regarding the export compliance side and the European Union when it comes to simplified import facilitation.
A wide variety of legislation applies to the shipment of goods. An export shipment from the US going into the EU seems innocent enough, but at the very least a restricted party check has to be performed. If a dual-use item is shipped, product screening and possibly export licenses have to be applied. Shipping documents are required. Import and export declarations need to be filed. Customs value and HS codes need to be declared or identified. Not complying with these (inter-)national customs requirements results in delays at the very least to time in prison at the most, with financial penalties and export restrictions in between.
Often times, complying with customs legislation is complicated as some facets, such as license requirements, will be different based on the tradelane, and different types of licenses or compliance issues may arise based on the exact country of export and import combination.
Enforcement of export legislation has become particularly strict. A few simple rules will reduce the risks of non-compliance:
Having a compliance program in place does not ensure smooth sailing. Trade compliance is a collaborative effort, especially in the supply chain, where you are dependent on partners for certain data. Their efficiency will affect your programs. Getting your supply chain partners in sync with your compliance programs will result less issues and fewer delays, as well as faster resolution should compliance issues occur.
While it can be a challenge to get all supply chain partners on the same page, it is recommended to review opportunities for the following:
Prepare for the Unexpected
While it may be an over-used cliché, it applies to well-oiled supply and compliance chains. Run a mock audit. While not necessarily a fun exercise, it will point out the weaknesses in your compliance program. Ask your supply chain partners for support documentation on some invoices or customs values, ask a supplier for verification of an origin statement, challenge a logistic service provider with a few ‘what-if’ scenarios (‘what –if’ we have to change routing of a shipment or need to use a truck instead of a plane – will these chances affect paperwork needed and therefore our capability to be in compliance?).
In summary, it may not be as much about the risks associated with global trade management as it is about how to anticipate and deal with them. Identify the compliance requirements you are subject to, set up programs that make you compliant, and create a common understanding internally and externally about the importance of compliance. It can save you time in multiple ways: valuable time wasted in the supply chain or even time in prison.
[i] The World Bank, Tariff rate, applied, weighted mean, all products (%). http://data.worldbank.org/indicator/TM.TAX.MRCH.WM.AR.ZS
A woodsman was asked, “What would you do if you had just five minutes to chop down a tree?” He answered, “I would spend the first two and a half minutes sharpening my axe.” The first time I heard this statement, I recall thinking how profound it was. While it effectively communicates the power and importance of preparation, upon reflection I feel like the message is inherently flawed. When viewed through the lens of continuous improvement, I think about all the potential that may exist if he acted differently, if he acted intelligently.
For our purpose, let’s imagine that the woodsman not only has to chop down one tree, but an entire forest. This scenario would apply the message to many of our challenges we face today, as we are tasked with operating efficiently, making decisions, and taking action to improve our bottom line. What if the woodsman arrived at the forest with an already sharpened axe? What if he purchased a technically superior axe that only requires sharpening every 10 trees? Does his axe really require two and a half minutes of sharpening to perform better than just one and a half minutes spent in preparation, or does it really even need sharpening at all to perform adequately to cut down the same tree in the five minutes?
All good questions, but what our woodsman would really benefit from is a means of measuring actual performance to determine what provides the best relative balance of return. If our woodsman was interested in cutting down more trees in less time and doing it more consistently, it would be beneficial to know exactly how long it took him to chop down a sample of trees with his axe in its current unsharpened form as a point of reference. He could then begin sharpening his axe in incremental units and compare against past performance (rate of trees felled) to identify the point of diminishing return and act intelligently to determine and deploy the best course of action (Uptime/Downtime). Isn’t this what any business process owner really wants to know: what is really happening on the shop floor before and after a change is made?
In fact, this is what Factory MES provides. In our example, I would argue that Factory would allow our woodsman to not only see the trees before him, but to actually see the forest because of the trees by providing him a means of collecting data on each individual action. This visibility would give him the competitive advantage he would need to reach, and perhaps even surpass his goals. Armed with this information, now easily at his disposal, he could not only affect change in-shift, based on trending data, he would also know where to focus his energy to improve his performance over time. Equally as important is the visibility he would now have to determine the effectiveness of how his countermeasures are affecting current performance. In effect, using Factory-derived data, he would now act and react intelligently rather than just chopping away.
It’s this uncertainty that we all want to bring to light. We all want to do what we do more efficiently. With Factory MES, we have a powerful tool to meet the challenge as it is specifically designed to provide reliable and relevant data to give you that competitive advantage. Next week we will take a look at Dashboards, their purpose and best use in driving performance on your shop floor.
We have all heard anecdotes of the handyman whose only tool is a hammer and perhaps a roll of duct tape; some have even witnessed his work firsthand. While it may be possible to fix a leaking roof or patch a fence so equipped, I think it is apparent that the handyman will be quite limited in his scope of projects, and the quality of his work is questionable. The reality is that many businesses continue to operate like our handyman, by using the same approach and resources to tackle whatever problem arises.
Noted psychologist Abraham Maslow once said, "I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail." Now consider how you might approach individual challenges if you had at your disposal the precise tools to handle the task at hand. More importantly, imagine if you had the right tool and the expertise to wield it. Rather than seeing every problem as a nail, you would likely approach each challenge very differently, have increased energy and a renewed attitude to get the job done. Perhaps, you would even take on some of those challenges that were before so big and daunting, that these game changing improvements now become not possibilities, but reality.
In today’s business world, we are challenged to continually improve or be passed by. New methods and different, more precise ways of achieving excellence and eliminating uncertainty are now the norm. In the previous post, we touched on taking small steps and embracing a culture of experimentation as a means of driving your organization towards its targets, but what do you need to breakthrough and consistently outperform the competition?
The simple answer is that you need tools; not just a hammer and tape, but the right tools at the right time, and the knowledge of how and when to use them. What you really need is operational visibility in real-time and a means of analysis to determine the effectiveness of your actions and countermeasures. All businesses have to make real-time decisions to affect operational activity in the moment: in shift, during a product run or while getting a down-time issue resolved. In order to effectively change, set, and realize targets, you also have to reflect and determine the root causes responsible for the challenges you are facing and determine informed courses of action to close the gaps.
Not all businesses have the visibility we mentioned above, or at least not a comprehensive, consistent and immediate source of the invaluable data that Factory MES delivers. Aptean’s purpose built application is chock full of capability out of the box and configurable to fit your specific needs. Upcoming blog posts will dive into the individual tools that are built into Factory MES and those that are complimentary of its capability. Whether it be Metrics, Reporting, QA, Problem Solving, or Coaching, the intent is to help you extract the most out the Factory actionable intelligence application and equip you with the tools to excel.
Over the coming months, let’s build complete tool boxes together and load them up with proven tools made for specific applications. Let’s discuss their functionality, capacity and when they are the best tool for the task at hand. A hammer is indeed a very effective tool, but to be competitive we need the precision that job specific tools offer. So stay tuned as we open our tool boxes, put our tool belts and discuss the best tools available to us.
What a strange thing it may seem to encourage someone to think small while one is in the pursuit of excellence. It does seem counterintuitive to actually think small while our culture continually impresses upon us to do the just the opposite. However, I will lay out why it often makes sense to think differently, to think in incremental terms in order to make the right changes that move you closer to your goals.
Recently, I watched an interview with Jeff Bezos, CEO of Amazon, and what struck me was his strong belief and strategic use of experimentation across all of his organizations. He is a staunch believer that an organization must continually change in order to be excellent. Not dramatic, bet the farm types of change, but small steady steps that enable you to monitor whether the change is actually working and, if necessary, be positioned to change tack accordingly and swiftly.
These experiments are the small steady steps that many of today’s most successful companies leverage to effectively drive their change efforts. The challenge is knowing exactly what to experiment with. What are the right questions to ask? What are the correct actions to take? Luckily, there are answers to these questions if you know where to look.
It’s in the data. The Factory MES data that you collect on your operational activities is the key to informing effective real-time actions and driving successful improvement activities. Equipped with this accurate and relevant data, you are now ready to take a step or multiple forward…or simply experiment. Embracing this philosophy of experimentation has the ability to yield significant results. This mindset, coupled with structured problem solving to get to the root cause of issues and to develop, deploy, and analyze countermeasures, equips one with a strong set of tools to achieve the big things they are after.
While the reality is that occasionally these experiments do not yield the desired results, you ultimately gain the knowledge of what doesn’t work, further reducing uncertainty and leaving you one step closer to what actually does. By taking small measured steps, you steadily move forward, even with an occasional setback…indeed a continuous process towards excellence. The idea is to have your eye always on your organizational true north, to keep you aligned with your vision while climbing the ladder upward rung by rung.
In order to achieve your targets, a change from your present state must take place. The competition is changing and industries are evolving in search of more efficient and cost effective ways of getting things done. The choice is to accept the status quo and risk getting passed by, to change using risky uninformed actions based on intuition or emotion, or to take steady measured steps that are based on actual data. Think small and deliver big by using your Factory MES data to inform your actions and create a culture of success.
Essex County Council (Essex CC) is an upper tier local authority based in Chelmsford and is the main public sector body in Essex, United Kingdom. The council looks after highways, social care, infrastructure and education, amongst other responsibilities. Essex CC has been using Respond, Aptean’s Complaints and Feedback Management solution, since 2008 to manage inbound enquiries and complaints, including Local Government Ombudsman (LGO) complaints, Chief Executive correspondence, corporate and social care statutory complaints, member service enquiries (a service which is provided for County Councilors), and Freedom of Information and Environmental Impact Regulation requests.
While the initial Respond system at Essex CC was fit for purpose at the time of implementation, Essex CC realized that both its own technology and that of Respond had moved on considerably since then. The organization decided to upgrade from Respond 3 and moved to Respond 6.0.1 in April 2016 in order to take full advantage of the latest product enhancements.
“The clarity and insight we have when reporting now is so much better,” said Olivia Shaw, Customer Experience Lead at Essex County Council. “We’ve got a lot more visibility across everything, and our reporting now makes it so much easier to pick up any issues or trends.”
To learn more about how Essex CC met their tight deadline and improved their reporting, click here to read the full case study.
The Altro Group business structure consists of two divisions: Altro, a leading provider of premium flooring and wall cladding systems for construction and transport; and Autoglym, which designs and supplies a range of premium car care products such as waxes, shampoos and alloy cleaners. Over 700 employees work within the Altro Group, which is headquartered in Letchworth, Hertfordshire in the United Kingdom.
Since 2002, Altro has been using the Aptean Pivotal CRM system as a means of keeping its databases organized and allowing for maximum efficiency across the company. In May 2015, Autoglym decided to invest in a CRM system as a means of improving operational efficiency. In line with an organization-wide strategy to implement more technologies into work processes, Aptean Pivotal was specified as the solution to help with automation and coordination within Autoglym’s marketing, sales and customer care channels.
“Together with Aptean, we have open and candid conversations that have led to trusted communications. This, combined with the familiarity and confidence in the product itself, made it a natural choice for Autoglym and is what has made me into a Pivotal and Aptean advocate,” said Suzanne Symonds, CRM Analyst at Altro.
To learn more about how Autoglym aims to capitalize on the success that Altro has already experienced with Pivotal, click here to read the full case study.
Take a moment to contemplate Murphy’s Law: everything that can go wrong in your supply chain (SC) will go wrong. You have a team of experts and partners that know what they’re doing, but sometimes things happen beyond your control. A data source system goes down, a tornado hits, a conflict breaks out, a labor dispute forces a port to close down, or an oil spill shuts down a larger ocean area. On the legislative side, what if a country where you source raw materials is suddenly embargoed, a supplier makes a misstep and can no longer export their products, a semi-finished goods’ supplier changes its strategy and is now sourcing in a country subject to new and very strict license requirements? On the positive side, how do you maximize profit from an unexpected resurgence of a long-forgotten product or from a new sales partner that opens new, yet remote, markets at lightning speed? Lastly, which risks are you and your partners’ IT systems subject to? Are there security concerns? Is system downtime an issue?
You do not know what the event will be, and you cannot wait, unprepared, for it to arrive. Consider it almost like in a fire drill. You hope you never need it, but you want to know where the weak spots of the plan are. There are four key components to consider as you examine both your readiness, and your SC partners’, to deal with adversity.
Your supply chain has to be adaptable to changing circumstances, and sometimes to rapidly changing situations. You want your supply chain to shift focus as needed, to be agile without losing focus on the bigger picture. This means the team has to keep its eye out for changes, and to solicit input from legal, sales, and IT to be better prepared. Be in tune with legislative proposals, with sales forecasts, with IT developments, and even with weather forecasts. It will be difficult to justify having a full time weather expert on your team, but reviewing where delays have occurred over the last 2 years due to the weather is not too much work. In similar fashion, work with your SC partners to ensure they are capable of adapting to new circumstances as well. Ask your Logistics Service provider about rerouting options when a port closes down, agree upfront on volume discounts in emerging markets, find out if your supplier has a compliance team that can obtain the necessary licenses should the export requirements change.
Configurable mostly applies to the applications used in the supply chain: why use a one size fits all if you like different sizes? But take care not to mistake configurability with customization. Typically, any and all applications can be customized; however, costs and timelines will likely not be in sync with your expectations when it comes to risk mitigation or a necessary change in the supply chain process. Configurable should mean that your systems can be adjusted by you and your vendors on short notice, without months or even years of development. For example, if you have a dropdown with possible ports of transit, you want to be able to change the dropdown on the fly when the usual port of transit is closed due to a strike and you have to reroute. Or if you want to change the warehouse picking location of a popular product to a more convenient picking location, you want to be able to make that change right away, and vice versa when the hype surrounding that latest novelty subsides.
If volumes, destinations, number and location of suppliers, etc. fluctuate, so should the bandwidth of your supply chain. From a systems perspective, scalability is a key element; ensure the solution offered is scalable, whether that means it is in the cloud or otherwise. From a partner perspective, you do not want to get stuck with logistics routes that are forced upon you because the provider does not have the right fleet on lanes important to you, with unnecessary inventory, or with suppliers that cannot meet your demands. It is vital that you not only consider scalability issues, but also contractually determine them. It is a hidden cost for many businesses. First, prioritize where to be scalable – is it tradelanes, volumes on particular lanes, or in a broader sense ‘options’? Then work with your SC partners to test capabilities, by volume testing, analyzing production capacity at the supplier’s various locations, and verifying inventory levels. Finally relate your findings in contractual parameters.
If nothing else, you want your supply chain and the applications you use to be stable. Downtime costs money as every SC is now 24/7. So be aware of your providers Service Level Agreements (SLAs), whether it is uptime, delivery time, or handling time. Ensure KPIs and metrics are available to proactively monitor the numbers. Add clauses to the contract with penalties and/or opt out clauses in case SLAs aren’t met. Be prepared for calamities by working with your vendors on unified Business Continuity & Disaster Recovery Plans, have a backup plan for vendors and partners, and never take stability for granted. Coordinate with your vendors on penetration tests to ensure your data is safe. The preventative money spent will be worth it to sleep better every night knowing you are prepared. And now and again, throw some coffee on a pc to see what happens.
In the end, it is clear that despite the randomness of nature, legislative proceedings, or sales driven events, preparation goes a long way. It is difficult enough to be great when it is business as usual, but when you document scenarios and scripts on how to deal with the unknown, work with your buyers, manufacturers, logistics service providers, and sellers to discuss potential scenarios and create a cross company team to anticipate the steps to take in a crisis situation, you can be great even when adversity hits.
For any manufacturing organization, achieving the highest levels of operational excellence is built upon the engagement of its employees. Employees are expected to be active in collecting information, surfacing and resolving problems, and recommending improvements that could be made as a result.
Unfortunately, all too often their insight is not acted upon, and the impact on factory-floor morale is considerable. They feel like they are simply doing it 'for the sake of doing it.' When an employee feels that the tasks they are being asked to do have no positive impact on them and the way they work, they almost immediately become disengaged with the entire process.
They might feel that their voice is not being heard or, in the worst case, that the feedback and data they are providing is not trusted by their superiors. That, in essence, indicates to them that their professional integrity is being questioned, and they are not truly valued, rather they are simply a workhorse whose intellectual contribution is effectively irrelevant.
This is the worst use of people, the strongest asset companies have available. These are the people who have the benefit of years' of experience; they understand the issues, and it is of utmost importance that their innate knowledge is collected as data, transformed into information, and converted into the knowledge that a company needs to improve operational efficiency.
Finding a means to engage your people on a company-wide basis is the route to achieving this.
The tools to perform
By giving operators a simple, unobtrusive tool that makes their working life easier, it becomes very straightforward to enter their knowledge and experience into the company's system. But not only that, it should be a sophisticated, intelligent tool that allows this feedback to be presented in real-time, meaning it can be acted upon immediately, and employees can see that their input is being used and is trusted.
This real-time element is key. Waiting until a shift has ended is too late to analyze performance and quite often, valuable insight gets lost among the noise. This gives the impression to the employees that the company is 'driving in the rear view mirror'- without focused direction, missing the factors that can keep a business on track.
The ability to review the data, both in real-time and at key intervals during the shift, means action can be initiated to ensure inefficiencies are removed from the process in-flight. By performing these frequent reviews, operators see that their input is being used to drive continuous improvement. They feel trusted. They feel engaged. They feel motivated to continuing to perform to the highest standards, not just for their own sake, but for the sake of the team. Quite simply, they won't see any reason to consider leaving, which of course has its own business benefits in terms of preventing high staff turnover and the associated costs of employee churn.
Furthermore, satisfaction and pride in their employment will inevitably lead to them vocalizing this outside of the workplace- to their familiy and friends, or to potential customers and even prospective employees.
Developing a coherent, lasting working relationship- from the upper management through to each individual contributor- will only service the company well in the future.
Good data in equals good data out
Of course, realizing this operational nirvana is dependent on the quality of the data and the system being used to capture it, and on how this system is integrated into day-to-day operations.
That means collaborating with a software partner that not only installs and implements the software, drawing upon years of experience of successful projects in the specific business vertical, but implements a system aligned to common manufacturing metrics. At the same time taking care to balance the organization's needs and its working culture, to ensure high awareness and engagement so employees can execute their roles in the most productive manner. Factory-floor employees are the ones who can identify the biggest, most frequent pain points that need resolving. Then, the solution can be tailored to match, and thus, built to make positive gains in the key areas.
A business might have a problem with a wasted product, a culture of costly overtime, or an issue with machines not being optimized to their full capacity. There are so many factors that impact operational efficiency that, if neglected, impact employee engagement. It may surprise you how quickly an effective manufacturing execution system will deliver a return on investment- not only in terms of efficiency gains and your company's bottom-line- but in the overall happiness of employees.
Having insight into manufacturing inefficiencies means businesses can be more agile in production and allows them to continue to meet production demands and growth targets in a structured, manageable way. A way that says to the employee, 'you are what makes this business work'- from the operators, to line managers, to data analysts. Once the stream of data flows into a sea of knowledge, the strategic decision makers will be better placed to identify historic trends, build analysis and make changes for the better.
Quality data and a quality system to capture it are the keys to driving a collective culture to never stop improving. Only by recognizing and acting upon employee input can the circle of engagement be complete.
Roughly one in six Americans (or 48 million people) are estimated by the CDC to get sick from foodborne diseases each year. When someone reports a foodborne illness, the immediate response is to figure out where the contamination occurred and issue a recall. However, with the Food Safety Modernization Act (FSMA) coming into play, the focus in the food industry will go from responding to contamination to preventing it. FSMA is also increasing the need to track what happens to food across the entire supply chain.
Tracking your food across the total supply chain ensures that manufacturers and distributors take a “one up and one back” approach. This approach enables everyone to know where it came from (one back) and who it was sold to (one up). Confirming the integrity and safety of your food is not just an issue of what happens inside the manufacturing walls anymore. It’s all about being able to promptly respond to a recall during the unfortunate event of a food safety issue, mock recall or demonstrate compliance.
One Back to the Supplier and One Up to the Distributor
Many producers, manufacturers, and retailers have product tracing systems already in place. However, they vary on the amount of information the system records and how far forward or backward in the supply chain the system tracks.
One part of the FSMA focuses on tracking back to the supplier. For example, if you are a tomato sauce producer, it is likely that you do not get your tomatoes directly from the farm. You probably buy them upstream from a tomato supplier and process it into the tomato sauce that is sold in stores. While it is important to know which supplier your tomatoes came from, FSMA focuses on the immediate supply chain – one up and one back. If tomatoes come into your sauce factory contaminated, they will need to be traced back through each system to find the source of the contamination.
The other part of the FSMA focuses one up to the next step, either distribution or customer. It is necessary to trace who you’re selling the product to, where it’s going and how it got there. Traceability plays a tremendous role in this and as the importance of track and trace moves downstream into the food supply chain, manufacturers and distributors will benefit by using traceability solutions to meet FSMA standards and compliance and understand where their product is going. There are other benefits as well. With traceability, labor in the supply chain is more efficient and easy to track and trace. Food is being moved more rapidly through the supply chain and with less risk of spoilage or contamination.
Tracking Your Way Through the Supply Chain Round Trip
While the FDA does not require companies across the supply chain to use electronic traceability solutions, many are recognizing that keep records electronically is the only way to comply with the FSMA. When it comes to tracking up and back through the supply chain, electronic traceability gives manufacturers the capacity to view information at both a high level and a more drilled-down version.
Having access to these different views empowers everyone within your organization to gain a better understanding and track the supply chain process round trip – from receipt of raw materials to shipment to customers and back again. In the end, no matter which part of the supply chain your organization falls in, ensuring the safety of your consumers puts your company’s reputation on the line all the time. FSMA sanctions manufacturers to take a proactive stance and commit the necessary time and resources toward compliance planning for prevention and supply chain traceability implementation.
The number of U.S. food products recalled, and the cost associated with those recalls, has nearly doubled since 2002, according to several reports. With the recent influx in food safety issues, it's no surprise the spotlight is burning brightly on supply chain management.
Fatal mistakes made by well-known brands, like Blue Bell Creameries, have called into question how manufacturers - and supply chain executives specifically - are executing two major components of food safety: prevention and response. Could it be time for supply chain executives to recall their own processes?
Some still leverage antiquated and error-prone manual techniques, while others aren't properly using the track and trace technology they have. With advancements in these solutions, supply chain executives have no excuse for not being more proactive in mitigating risks.
When it comes to reducing the number of food recalls, preparation is prevention's greatest ally. Continual process refinement paired with the proper use of track and trace technology can greatly reduce the occurrence and effects of food safety issues. Establishing automated preventative measures, including mandatory product checkpoints and quality tests during the procurement and manufacturing stages of the supply chain, can help identify issues faster and more consistently.
If used correctly, track and trace solutions can notify manufacturers in real-time so issues are addressed before the product leaves the production floor. Furthermore, accurately implementing track and trace technology into the supply chain provides you with greater visibility and actionable insight to improve pre-distribution processes. At the same time, in the event that a recall needs to be issued, track and trace technology can also quickly and easily kick-start the recall process in a more strategic manner - aiding in avoiding common pitfalls.
Let's say you manufacture a particular type of sauce and leverage a variety of outside vendors to source its ingredients. You also supply the sauce to thousands of grocery stores throughout the country. News hits about a listeria outbreak at one of your vendor's plants. Now what? Without a clear understanding of the flow of product and materials coming and going, you jeopardize your brand and the well-being of consumers.
Properly using track and trace technology can allow you to document your sauce's ingredients and suppliers while also identifying - in real-time - where sauce produced during the outbreak is located within the supply chain. This enables you to quickly determine every point of possible contamination and recall accordingly.
Seemingly simple answers to questions like where, when, and what quantities of products were shipped to and from, are being missed daily by supply chain executives. Not knowing the ins and outs of your product's lifecycle during a recall can truly cost you. In fact, according to Food Safety News, in more than half of the recalls occurring over the past 15 years, the recall cost each affected company more tha n $10 million. Some lost more than $100 million, and a few closed their doors for good because of the excess cost.
Many supply chain executives have product tracing systems, but they differ in quality based on precision and how far forward or backward in the supply chain they can track. Whether or not they can provide full control over the end-to-end process is critical to meeting compliance and maximizing efficiency.
Amidst growing consumer concern and compliance demands, increasingly more changes to the supply chain are necessary. Now is the perfect time to re-evaluate your recall processes to ensure you're using the right technology to minimize revenue losses and maximize consumer safety.