There is no doubt that the process of importing product is complex. These complexities arise from both the door-to-door movement and the administration required to import product from a foreign source to a local point of delivery. This is complicated further by the different disciplines involved in the process of importing product for a business including buying, shipping, treasury and overall supply chain management and planning.
After product has been sourced then the real complexities begin.
How does the import buyer get an accurate delivered cost per unit of product?
To achieve this, in the currency of the importer, conversions are required for each foreign currency cost – that is just the first challenge! What about accurately spreading the cost of all the steps in the import process into the cost per unit of product, such as:
- moving the product from supplier factory to foreign port
- getting the product packed for shipping
- clearing the product out of the country of origin
- booking and loading the product onto a ship or aeroplane
- tracking where the product is and when it arrives in the local port
- moving the product through the local port and Clearing it through customs
- delivering the product to your local warehouse or store
Each of these steps has levels of administration, cost and complexity.
The accurate cost per unit needs to be obtained before confirmation of the order. Failure to do so means the buyers must buy “blind”. Furthermore, best practice must surely be to compare the pre order cost per unit with the post delivery cost per unit so that adverse variances can be assessed and manged out of the process.
In addition to getting the accurate cost per unit there is the matter of actually getting the product moved from foreign source to local delivery. In that process there will be changes from planned and costed shipments and clearly the best practice here must be for the financial impacts of such changes on the delivered cost per unit to be determined (real time) and to be managed as best as possible.
The above complexities are applicable to importers whether large or small. Of course, large importers generally obtain access to better rates, services and systems using their buying power and financial capacity. There are numerous providers of expensive parts of supply chain management systems which large importers often purchase and apply using their internal technology, shipping and treasury departments.
Although obtaining the imported product is core and critical to the business of the importer, large and small, the specialist systems and services in costing and moving and processing the import trade can be strongly argued as not core. The purchase of systems to cost and process imports results in a disproportionate non-core investment in time and money when in fact the entire process and import supply chain information should be serviced and provided by a party whose core business is just that activity. Best practice also dictates that no importer should lose visibility, control and risk management over its import trade and supply chain.
World class, best practice systems and services need to ensure that importers achieve the following key criteria and issues with regard to their import trade:
- Avoid a large investment and ongoing overheads in specialist import systems, large shipping department costs, large treasury department costs and large technology department costs to manage import trade
- Achieve world class import buying decision making information, import trade visibility, control and risk management without dependency on any one logistics service provider and one bank to service import trade. Ensure that import buyers are well serviced with accurate pre and post shipment costs of their imported product
- Secure access to a fully integrated solution that services, on one platform, the key aspects of import trade consisting of buying, shipping and treasury. Such a platform should not entail the purchase of one or two facets of import supply chain management. It is common to see supply chain offerings of one of the key facets of managing an import supply chain or of importers locking into unhealthy dependency on a logistics service provider that cannot provide the full scope including integrated treasury and fully inclusive costings per unit of product. Importers then tend to incur much higher costs than necessary, and with that, have to introduce work arounds in processes and other systems involvement
The way forward for both large and small importers must be for import trade to be serviced by a world class, best practice, integrated import trade management system and service. The level of system configuration and the combination of self-help importer use of the system versus import trade implementation service must be flexible to suit and optimise the size and circumstances of each importer.
The overriding key driver must be to ensure that the importer optimises the world of leading edge technology in a way that elevates the import trade activities while at the same time reducing investment and costs in the non-core import costing and shipping activities.
Smart technology provides importers with exciting opportunities. A cloud based specialist import trade system with options for flexible use is worth a solid second look.