In a recent webinar moderated by SupplyChainBrain editor-in-chief Bob Bowman, a panel of global trade experts gathered to discuss the Thomson Reuters 2023 Corporate Trade Survey Report, which explores how global trade professionals are thinking about the issues they face and what their current management priorities are.
Indeed, the challenges facing global trade professionals are many and growing. Inflation, regulatory changes, geopolitical conflicts, supply-chain disruptions, a talent shortage, data security, expanding reporting responsibilities for environmental, social, and governance (ESG) initiatives—all these issues and more are pressuring global compliance and trade departments to find practical solutions that are both cost-effective and sustainable.
The need for more transparent supply chains
The panel began by discussing the need for more responsible, resilient supply chains, and how the push for greater supply-chain transparency is forcing companies to adapt both operationally and technologically.
“We’re seeing restrictions and requirements on U.S. companies (e.g., from the “Uyghur Forced Labor Prevention Act”) to know their supply chain all the way down,” notes Shane Williams, managing director of EY’s global trade practice. “Not only do you need to know where the product is coming from and whether it’s from the Uyghur region or not, you need to know where the raw materials are from, and be able to trace and prove it if there is a compliance check.”
ESG compliance is another area where supply-chain transparency is critical, and where global trade managers are playing an increasingly important role. According to Karen Lobdell, a senior product manager with Thomson Reuters, ESG requirements such as the European Union’s new Deforestation Regulation are “going to require clients to really dig deep into their supply chain to collect more data” to prove that certain products were not produced with raw materials obtained through deforestation.
Similar challenges arise when trying to obtain reliable certificates of originfor steel and iron from Russia, Lobdell says, and from new ESG regulations in such countries as Germany and Canada. And because of this increasing pressure to conduct more thorough due diligence in their supply chain, more companies are using technology to gain greater visibility into their supplier network, Lobdell says—not only for Tier 1 suppliers, but also Tier 2, 3, and 4 suppliers, which are harder to reach and where problems are more likely to exist.
Listen to the webinar Managing an evolving trade landscape: Insights and practical tips to stay ahead of the technology curve, offering practical advice on how trade compliance departments can navigate turbulent times using the right technology.
Cross-departmental data-sharing in global trade technology
EY’s Shane Williams adds that global trade technology is also being used by more than just the trade and compliance departments—government relations, legal, tax, and other departments are finding trade data useful as well.
“We’re really seeing an expansion of who is actually using this trade software,” Williams says, noting that siloed departments are not effective when the same data needs to be shared by multiple groups. “Right now, companies that are communicating trade information between multiple groups are ahead of the curve, and, I think we’re going to see more companies get more groups involved,” he adds.
However, according to Myesha Cottom, director of international trade with the paper giant Georgia Pacific, no amount of cross-departmental data-sharing will work if companies don’t have a proactive technology strategy in place to guide them through the regulatory minefield that is global trade.
“The real question is, how do companies anticipate the regulatory changes that will impact them?” says Cottom. “Can they anticipate which changes are going to be on the forefront? Can they anticipate the type of data they need to have? And if these changes are going to require them to change their processes and technology, are they implementing a strategy that will adapt to this variability across different jurisdictions?”
The same is true of issues that fall on the ESG spectrum, such as data privacy, labor standards, health and safety concerns, and environmental impact. For companies to get the information they need, they must “pro-actively engage with their suppliers to make sure everyone is aligned,” Cottom says, adding that because ESG responsibilities cut across different departments, communication within the company needs to be aligned as well.
The ongoing skills gap
A persistent talent gap is another issue that is hampering the ability of some companies to move forward technologically. Finding people with the right technical skills is especially challenging. To compensate, says EY’s Williams, many companies continue to outsource functions like customs clearance (e.g., brokers) and regulatory compliance, as well as some aspects of trade logistics and operations. Unable to find people with the skills they need, companies are also embracing “co-sourcing” (i.e., sharing responsibility with a third-party service provider) and automation, he says.
But Georgia Pacific’s Myesha Cottom counters that companies may not be thinking about the personnel puzzle in the most productive way, and in the process may be short-changing themselves.
“I think it’s important that when leaders are trying to fill these skills gaps that they’re thinking about creating a transformative team—one with diverse skills,” Cottom says. No one person is going to excel at every skill, she says, but a diverse team—one that includes someone with traditional technical trade skills, and someone strong in data analytics, and another with project management expertise—can combine their skills to become a formidable strategic asset.
Such teams could become even more important in the future as new technologies such as blockchain and AI gain more traction in the world of global trade, Cottom and Williams agree.
“Having a true technology and talent management strategy is key,” Cottom says—but so is embracing change. “The new normal isn’t new anymore—it just is,” she says, “so let’s create a real strategy for the future that allows us to adapt, be flexible, embrace change, and transform. We have to look at these challenges as an opportunity, and we have to think about the future today.”