Appeal of GTM Solutions

Importers, exporters, forwarders, banks, and similar institutions increasingly see the appeal of GTM solutions. Gains from the top- and bottom-lines, derived from a corporate infrastructure that takes advantage of globalization, might far exceed any domestic-focused projects, (except in the case of new product development for those who do not outsource). Benefits include increased revenues through new global sales markets; decreased operating costs through lower cost materials sourcing, business process outsourcing (BPO), and globally distributed organizations; lower costs through improved working capital management; new business strategies, such as open account mechanisms linked to trade financing; and greater visibility and control of international receivables and payables.

Further, unlike several years ago, when the only option for deploying enterprise software was with multimillion dollar, multiyear customized implementation projects, the current, more mature software market gives companies a number of deployment options (for more information, see Trends in Delivery and Pricing Models for Enterprise Applications). Enterprises can now pursue pilot projects, deploy point solutions before expanding to broad-based solutions, and choose between hosted or behind-the-firewall, on-premise solutions.

However, while there are dramatic operational and cash flow benefits to be gained from implementing and efficiently executing global trade, as will be explained later in this series, global trade is a significantly more complex and risky business than domestic trade, . Further, despite the potential gains, there are organizational obstacles preventing many companies from taking advantage of GTM solutions. Namely, companies are still structured in functional silos, which impact decision-making, given that only a few companies have their corporate organization, technology, and processes properly aligned for global business.

Most large companies still run their businesses internationally rather than globally. In other words, large companies usually have an assortment of foreign subsidiaries that are self-contained businesses running their own systems that are out of sync with each other. Throughout the enterprise, functional silos further aggravate a seamless approach to global logistics management. For instance, compliance departments report to legal, whereas purchasing drives import; export is driven by sales, while transportation departments focus on getting the best rates. No one really questions whether or not the company is shipping efficiently throughout the system, given that the these silos often, inadvertently make gains or losses against each other.

Supply chain planning (SCP), trade compliance, strategic sourcing, and other strategic tasks cannot be managed on a global scale when key data is inconsistent and is not easily shared. Goods, in every step from raw material until delivery, might run logistics costs close to half of the total cost, and accounting can hardly assign these to the individual items. An example is a company that had seemingly, based solely on the unit price, saved dozens of million by expanding its global supplier base only to subsequently realize it had increased total logistics costs by twice the amount of their savings due to many non-economical less-than-truckload (LTL) shipments.

Successful implementation of GTM solutions requires companies to integrate their physical and financial supply chains in varying degrees and elements. To do this, companies must share data and collaborate across their functional silos and external business partners. Of coursee, making different solutions work seamlessly is a challenge for every aspect of SCM. Global logistics is perhaps the most difficult discipline to manage through one platform, because the universe of users is large and spread around the world, whereby systems- and user-capabilities vary widely. On the other hand, mandates for more functionality continue to grow, such as the recent trade security regulations from US Customs, as will be explained later in this series.