During the latter part of last year, and just about every passing month this year, Supply Chain Matters has provided our readers with continual updates as well as implications of the multiple global trade conflicts currently underway globally. They include the ongoing implications of Brexit, Britain’s on and off gain eventual exit from the European Union, the ever-escalating trade war involving the U.S. and China, and regionally specific trade conflicts, for instance a heightened trade conflict involving Japan and South Korea, primarily impacting high tech and consumer electrics supply chains.
Among the many implications of a heightened geo-political trade landscape are the added complexities, constantly changing regulations and required up-to-date information that importers and exporters require to conduct a successful and accurate product trade exchange. According to The World Trade Organization, there are around 420 regional trade agreements already in force around the world, many of which change continuously.
That implies the increased importance and value of Global Trade Management (GTM) focused software applications.
What Is GTM Software
In a nutshell, GTM software was developed and brought to market to assist and support business importers and exporters in their needs to adhere to country and/or industry trade regulatory requirements and practices.
While some businesses may view compliance needs as a cost of doing business, in the current global trade environment, compliance takes on a more complex and ever-changing landscape of changing trade regulations, tariff structures or multi-country routings that can well result in added delays, costs or legal implications.
From an export of products perspective GTM applications address adherence to needs for Restricted Party Screening, ensuring that compliance to various country export product or entity restrictions that ensure that no goods are shipped to prohibited countries, business entities or named individuals.
The software is quite different in terms of needed support, in that trade and restricted party information changes constantly, as is export classifications. Thus, GTM software providers must support teams that are constantly updating various information tables within the software, and timeliness of updates are a very important consideration for individual business software users.
Increasingly, these software applications have broadened support for managing the legal, regulatory and complexities of cross-border transactions, the managing of today’s more automated customs documentation filings and broker communications and needs for increased business process intelligence related to areas such as product landed cost estimations, monitoring variances of actual vs. estimated landed costs.
In this current environment of ever-changing tariff rates, the software needs to help companies identify how changes in tariffs will impact existing or planned future products under various global sourcing parameters.
In one example, this aspect was brought to light with U.S. home improvement retailer Home Depot’s recent report of quarterly financial performance. When asked by equity analysts what the specific impacts of the current U.S. and China trade war has on existing and future performance, CEO Craig Menear, was able to articulate a specific monetary cost impact. Executive Vice President of Merchandising, Ted Decker, was able to articulate that this retailer can calculate precisely how added tariffs will impact every product being offered in merchandise inventory selection.
Changing Market Landscape
As with most specialty software, GTM software applications first made their market entry under the umbrella of best-of-breed supply chain execution or transportation management providers. As market needs began to grow, ERP customers demanded such functionality as an augmentation to logistics, transportation and procurement process decision-making needs. Thus, ERP providers themselves either internally developed or acquired best-of-breed technology to augment their supply chain execution and transportation management process support.
Today, ERP software suite providers such as Infor, Oracle and SAP provide competitive or leading GTM offerings. Similarly, best-of-breed GTM providers in the personas of Amber Road, Descartes Systems, JDA Systems, Panjiva, TradeBeam, and some others, continue to innovate and broaden their application support features.
Newest Market Twist
The newest market development has been the increased attractiveness of GTM augmented into end-to-end supply chain B2B Network platforms.
In May of this year, B2B Business Network technology provider E2open announced a definitive agreement to acquire Amber Road for $425 million. This was E2open’s second attempt to acquire the GTM provider.
The acquisition announcement come on the heels of E2open’s October 2018 announcement relative to the acquisition of INTTRA, a prominent B2B ocean shipping network, software and information provider. The combination of INTTRA’s ocean carrier and shipper network with E2open’s industry business network platform was targeted to create a unified global logistics and supply chain network and streamline the information flow between manufacturers, suppliers, shipping service providers, ocean carriers and all the participants in global trade. The INTTRA acquisition followed the acquisition of Cloud based TMS systems provider Cloud Logistics that same month.
When the Amber Road acquisition closed in late June, E2open was then able to share its broader vision and intent. Executives confirmed the importance of the content and knowledge management that GTM provides, and in the specific case of Amber Road, a team of 180 dedicated content support staff than can converse or support 30 native spoken or written languages. With a stellar listing of lighthouse retail, high tech and industrial GTM customers, E2Open’s objective is to offer a cross vertical industry B2B network platform offering that supports end-to-end supply chain business processes that span supply network, omni-channel customer demand and sales channel logistics execution.
In summary, the importance of robust GTM technology is indeed increasing among large and small businesses, and the market options are changing as well to broader integration of trade compliance with business process synchronization and increased intelligence. If business and supply chain managements teams have not so far done so, now may well be the time to evaluate the adoption and leveraged use of such technology.
© Copyright 2019, The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.