The moves of JP Morgan Chase and TradeBeam, and their respective acquisitions, as discussed in Market Leaders of Global Trade Management of this note, indicate that the global trade management (GTM) space is consolidating and that point solution providers are disappearing. Leaders like JP Morgan Chase and TradeBeam understand that to truly improve global trade, one must be able to manage both the physical and the financial supply chain across the entire trade transaction. The physical supply chain consists of export/import compliance, document management, shipment tracking, supply chain electronic management (SCEM), inventory management, global parts management, security management, and contract management. The financial supply chain refers to tasks such as purchase order processing, letter of credit (LC) management, open account management, pre- and post-shipment financing, reconciliation, invoice presentment, dispute management, foreign exchange, and insurance management (See figure 1).
As for the acquisition of Open Harbor by TradeBeam, product integration should be complete by the second half of 2005, and TradeBeam pledges to maintain uninterrupted service and support for a key group of Open Harbor clients during the immediate transition phase and post contract execution. TradeBeam has also been engaged in discussions with Open Harbor's customers to understand their specific circumstances, the scope of their projects, and to jointly agree on terms to work together to ensure alignment of business goals. GTM is a new and potentially very large enterprise applications space that has been compared by some to be the next corporate paradigm after enterprise resource planning (ERP). TradeBeam is considered a thought-leader because of its significant "first mover" advantage. It has had a few years head start compared to most competitors, and began with an "end-to-end" GTM portfolio, and did not retrofit its solution onto other "cousin" enterprise applications. So far, TradeBeam has an impressive functional scope, and it promises much more in the future.
Figure 1: Physical and financial solutions value chart (Source: TradeBeam)
Some enterprise applications, such as international trade logistics (ITL) and GTM simply seem to lend themselves well to a hosted model. Because of their widespread nature, they can not efficiently work the other way. Namely, global import/export "procure-to-pay" or "order-to-cash" processes entail a number of activities, such as source suppliers and customers; process purchase and sales order; insure goods; issue and receive LC; finance trade; arrange shipping; create trade documents; customs compliance export/import; send and receive goods; send and receive invoice; reconcile; and initiate and receive payment (see figure 2).
On a more granular level, these activities belong to the following sub-processes:
* order—includes plan demand needs, manage bills of materials (BOM), manage product catalogs, check inventory status, create purchase orders, check compliances, manage inventory, manage purchase orders, assess supply chain management (SCM) risk, acknowledge order, classify goods, calculate landed costs, manage contract, insure goods, and obtain credit insurance
* finance—apply and manage LC, manage documents collection, manage open account, request financing pre- and post-shipment, check compliance, assess SCM risk, and arrange foreign exchange
* ship—request booking, ship book, create ship notification, create shipping documents, manage shipping notification, manage shipping guarantee, track shipments, manage events, assess SCM risk, manage customs, clear customs, receive goods, and manage returns
* settle— create invoice, present invoice, reconcile documents, manage disputes, prepare documents, present documents, manage insurance claims, and receive remittance
In any case, many of these could only be efficiently fulfilled through a Web-based hosted solution, priced per transaction. To optimally complete the global trade cycle, a business must automate, track, and provide visibility to the entire GTM process to optimize its supply or distribution chains.
The average global trade cycle of order through settlement is 120 days, whereas a comprehensive hosted GTM solution like the one from TradeBeam can reduce this cycle by an average of 12 days, which can improve users' cash flow by 10 percent or so.
Figure 2. Global order-to-cash and procure-to-pay cycle
This is Part Five of a six-part note.
Part One defined GTM.
Part Two discussed the tradeoffs.
Part Three addressed managing global trade flows.
Part Four presented the GTM leaders.
Part Six will present challenges and make user recommendations.
Web-Based Tools
The number of users wanting solutions delivered over the Internet with monthly subscriptions or transaction-based fees has noticeably increased. Most new customers want a transaction-based model rather than a straight purchase with a big, upfront, payment (see Trends in Delivery and Pricing Models for Enterprise Applications). Moreover, an enterprise-wide, on-premise approach to global trade and logistics might not be the best approach because of high costs and implementation difficulties. In fact, products with the broadest appeal for global trade today appear to be hosted, web-based solutions that allow companies to go outside their firewall to deliver supply chain visibility, event management, multimode logistics execution, import and export management, and trade security to enterprise shippers.
Such a web-based tool is not just the choice for connecting to far-flung carriers, forwarders, and other service providers, but is often a better approach than ERP-oriented solutions for trade compliance and documentation. This is largely because ERP systems usually only have product marketing descriptions in their item master data, not technical descriptions needed for regulatory compliance. So, for example, if Apple Computer is importing PowerBooks, its name and associated marketing description would not be adequate for US Customs. Trade compliance applications should be able to take the marketing description off of the purchase order and associate it with a commercially acceptable description and the correct Harmonized Tariff Schedule (HTS) classification. For example, the system should list the PowerBook as a laptop computer with certain features and specifications, and the right HTS code number.
SOURCE:
http://www.technologyevaluation.com/research/articles/dealing-with-global-trade-management-complexity-18010/
As for the acquisition of Open Harbor by TradeBeam, product integration should be complete by the second half of 2005, and TradeBeam pledges to maintain uninterrupted service and support for a key group of Open Harbor clients during the immediate transition phase and post contract execution. TradeBeam has also been engaged in discussions with Open Harbor's customers to understand their specific circumstances, the scope of their projects, and to jointly agree on terms to work together to ensure alignment of business goals. GTM is a new and potentially very large enterprise applications space that has been compared by some to be the next corporate paradigm after enterprise resource planning (ERP). TradeBeam is considered a thought-leader because of its significant "first mover" advantage. It has had a few years head start compared to most competitors, and began with an "end-to-end" GTM portfolio, and did not retrofit its solution onto other "cousin" enterprise applications. So far, TradeBeam has an impressive functional scope, and it promises much more in the future.
Figure 1: Physical and financial solutions value chart (Source: TradeBeam)
Some enterprise applications, such as international trade logistics (ITL) and GTM simply seem to lend themselves well to a hosted model. Because of their widespread nature, they can not efficiently work the other way. Namely, global import/export "procure-to-pay" or "order-to-cash" processes entail a number of activities, such as source suppliers and customers; process purchase and sales order; insure goods; issue and receive LC; finance trade; arrange shipping; create trade documents; customs compliance export/import; send and receive goods; send and receive invoice; reconcile; and initiate and receive payment (see figure 2).
On a more granular level, these activities belong to the following sub-processes:
* order—includes plan demand needs, manage bills of materials (BOM), manage product catalogs, check inventory status, create purchase orders, check compliances, manage inventory, manage purchase orders, assess supply chain management (SCM) risk, acknowledge order, classify goods, calculate landed costs, manage contract, insure goods, and obtain credit insurance
* finance—apply and manage LC, manage documents collection, manage open account, request financing pre- and post-shipment, check compliance, assess SCM risk, and arrange foreign exchange
* ship—request booking, ship book, create ship notification, create shipping documents, manage shipping notification, manage shipping guarantee, track shipments, manage events, assess SCM risk, manage customs, clear customs, receive goods, and manage returns
* settle— create invoice, present invoice, reconcile documents, manage disputes, prepare documents, present documents, manage insurance claims, and receive remittance
In any case, many of these could only be efficiently fulfilled through a Web-based hosted solution, priced per transaction. To optimally complete the global trade cycle, a business must automate, track, and provide visibility to the entire GTM process to optimize its supply or distribution chains.
The average global trade cycle of order through settlement is 120 days, whereas a comprehensive hosted GTM solution like the one from TradeBeam can reduce this cycle by an average of 12 days, which can improve users' cash flow by 10 percent or so.
Figure 2. Global order-to-cash and procure-to-pay cycle
This is Part Five of a six-part note.
Part One defined GTM.
Part Two discussed the tradeoffs.
Part Three addressed managing global trade flows.
Part Four presented the GTM leaders.
Part Six will present challenges and make user recommendations.
Web-Based Tools
The number of users wanting solutions delivered over the Internet with monthly subscriptions or transaction-based fees has noticeably increased. Most new customers want a transaction-based model rather than a straight purchase with a big, upfront, payment (see Trends in Delivery and Pricing Models for Enterprise Applications). Moreover, an enterprise-wide, on-premise approach to global trade and logistics might not be the best approach because of high costs and implementation difficulties. In fact, products with the broadest appeal for global trade today appear to be hosted, web-based solutions that allow companies to go outside their firewall to deliver supply chain visibility, event management, multimode logistics execution, import and export management, and trade security to enterprise shippers.
Such a web-based tool is not just the choice for connecting to far-flung carriers, forwarders, and other service providers, but is often a better approach than ERP-oriented solutions for trade compliance and documentation. This is largely because ERP systems usually only have product marketing descriptions in their item master data, not technical descriptions needed for regulatory compliance. So, for example, if Apple Computer is importing PowerBooks, its name and associated marketing description would not be adequate for US Customs. Trade compliance applications should be able to take the marketing description off of the purchase order and associate it with a commercially acceptable description and the correct Harmonized Tariff Schedule (HTS) classification. For example, the system should list the PowerBook as a laptop computer with certain features and specifications, and the right HTS code number.
SOURCE:
http://www.technologyevaluation.com/research/articles/dealing-with-global-trade-management-complexity-18010/
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