After experiencing a slight dip in 2020 due to the global pandemic, world trade made a strong comeback in 2021. Driven by a strong recovery in demand due to subsiding pandemic restrictions, economic stimulus packages and increases in commodity prices, world trade jumped up 23% to $28 trillion in 2021, exceeding the 2019 pre-pandemic total by nearly $3 trillion, according to the UN Conference on Trade and Development (UNCTAD).

During the third quarter of 2021 alone, global goods trade set a new all-time record when it reached $5.6 trillion, UNCTAD reports. And while the global semiconductor shortage, supply chain disruptions and various geopolitical factors may create a more uncertain environment in 2022, consumer demand for products doesn’t appear to be waning.

This is music to the ears of shippers that continue to think outside of their domestic borders when sourcing and selling goods. Whether they’re exporting, importing, or some of both, these companies need systems that can help them comply with complex trade regulations, navigate the changing tariff environment and facilitate the flow of information, goods and money across expansive, international supply chains.

Companies also need solutions that support any reshoring or nearshoring activities they may have planned or have already in progress. A company that relied heavily on Chinese sources of supply pre-pandemic, for example, may be diversifying that sourcing strategy to include more U.S.-based partners (reshoring) or those based in countries like Mexico and Brazil (nearshoring).

“It’s not business as usual right now. Companies’ operations have been disrupted and as a result they’ve had to change the way they’ve been doing things for the last 10 years or more,” says Bill Brooks, vice president, North American transportation portfolio at Capgemini. “As they work to become more nimble, flexible and ultimately more profitable, these companies are increasingly turning to software for help.”

Streamlining and automating key processes

Global trade management (GTM) platforms have long been seen as the solution of choice for companies doing business overseas. Over the last two years, these platform makers hunkered down and strengthened their positions as the global trade environment became increasingly complex and confusing.

By streamlining and automating processes associated with customs and regulatory compliance, global logistics, and trade financing, their GTM platforms facilitate the flow of information, money, goods across buyers, sellers and intermediaries (including customs agencies), banks and freight forwarders.

“There are many different types of solutions in the
GTM market with different focuses, so it’s likely
that one single solution might not be enough to
cover all of those requirements.

— Oscar Sanchez Duran, Gartner Supply Chain

Of course, with every new problem comes a new opportunity. In that regard, Brooks says he’s seeing more GTM vendors step in to help companies manage the complexities of global trade.

By embedding artificial intelligence (AI), machine learning (ML) and other advanced technologies into their GTM platforms, for example, software developers are helping companies be more predictive about their global trade activities, better understand the evolving environment and move away from using spreadsheets, e-mails and phone calls to orchestrate transactions and agreements across their commercial trade partners.

“Companies need tools to help them analyze free trade opportunities, tariffs, new treaties and other variables in the global trade environment,” says Brooks. “In response, GTM providers are realizing that if they made this tweak or change to their software, they can help customers eliminate manual sequences from the process, analyze different
scenarios and get answers faster.”

These and other GTM functionalities are helping companies tackle global trade requirements in a faster, more confident and compliant manner than they’d ever be able to manage using manual approaches.

Optimizing key processes

By supporting the complex and unique logistical, regulatory and financial aspects of the import and export processes associated with international trade, GTM helps companies orchestrate transactions across many different involved parties.

Those parties include, but are not limited to, freight forwarders, custom brokers, government agencies, lawyers, banks, insurance companies, consultants, customers and suppliers.

Looking around at the global trade management space right now, Oscar Sanchez Duran, senior principal research analyst for Gartner Supply Chain, says the two key focuses are optimizing processes and using more automation. By 2023, he expects at least 50% of large, global companies to be using ML-enabled GTM platforms.

“The inclusion of technologies like AI and ML in GTM solutions provides better insights in analytics and further improves the automation capabilities of these solutions,” Sanchez Duran adds.

According to Sanchez Duran, AI and ML in GTM can help in many different areas. For example, he says ML is commonly used to more accurately calculate a shipment’s estimated time of arrival (ETA). The platforms continually receive data from multiple sources (carriers, ports, satellite, weather, etc.). Once cleansed, reviewed and compared to historical data, that data helps companies build out better prediction models.

Artificial intelligence and machine learning are also being used in global trade management to reduce false positives and compliance risks during restricted party screening activities. The software manages this by filling in missing data in the files or by reducing time spent on the product classification process.

To fill in these and other “gaps,” the software uses natural language processing (NLP) to guide the end user to match product definitions to a specific harmonized system (HS) code. Commonly used throughout the export process for goods, these codes use a numerical method of classifying traded products and are used by customs authorities worldwide.

Sanchez Duran says he’s also seeing increased emphasis placed on business networks in the global trade environment, where software vendors like Bamboo Rose, E2open, Descartes, Infor and others are coming up with new ways to involve as many stakeholders in the process.

This is a broader trend that’s taking place across both software sectors right now, where trends like remote work are forcing companies to bring together more people, processes and technology onto shared or integrated networks.

“[GTM] providers are offering to connect all of the different stakeholders,” Sanchez Duran says, “and streamline the communication as well as improve collaboration between the different parties.”

Breaking down silos

With the pace of change and disruptive events in global trade highlighting the need for technology that helps shippers increase resiliency, agility and compliance in supply chain operations, companies are turning to their software providers for help.

On the GTM front, Sanchez Duran says the biggest requests are for all-in-one solutions that allow organizations to digitize their operations, easily share information among both internal and external stakeholders, and automate highly-manual processes that could be prone to human error.

Shippers also need help tackling global trade complexities that require a high level and/or attention or analysis, such as product classifications, simulation of landed costs, evaluation of free trade agreements (FTAs), documentation and requirements management.

Sanchez Duran says vendors are responding to these requests by offering products in a platform format, which allows companies to select the modules that they need while also maintaining integration between the components. In other words, companies can choose some or all of the offered modules while still being able to leverage good connectivity across the chosen components.

To help shippers better manage their global trade activities, vendors are incorporating expanded configuration options in their solutions, Sanchez Duran explains, plus capabilities like rule engines—and the already-mentioned AI and ML—to help improve their solutions’ automation capabilities.

GTM providers are also partnering up with or acquiring other vendors with the goal of offering complementary and extended capabilities to their own customers. Despite these actions, Sanchez Duran said in a 2021 report that the GTM software market remains fragmented—a point of frustration for some software users. “Integration of disjointed applications that support siloed processes,” he points out, “is often one of the biggest complaints of GTM end users.”

Shopping around?

Looking ahead, Sanchez Duran sees blockchain technology playing an increasing role in global trade in the near future. While not currently a trend or even something companies are requesting, he does say that blockchain “should bring further capabilities to digitize processes related to the use of international documents.”

To companies that are shopping for a new GTM in 2022, Sanchez Duran says knowing your scope, requirements and priorities before exploring the option is very important. With this information in hand, you can ensure a better vendor evaluation process and more easily discern the top candidates from those with solutions that may not fulfill your organization’s needs.

Sanchez Duran also cautions that there may not be a “one-size-fits-all” answer to your company’s requirements. “There are many different types of solutions in the GTM market with different focuses, so it’s likely that one single solution might not be enough to cover all of those requirements,” he continues. “Additionally, it’s important to use a proper request for proposal process to evaluate vendors and understand their capabilities versus defaulting to one vendor because of its name or an [existing] relationship.” 

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The post Global Trade Management Software Update: Using technology to manage global trade complexities first appeared on shrisaimovers.

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