Global Trade Management (GTM) and Best Practices · Global Trade Management (GTM) and Best...

Global Trade Management (GTM) and Best Practices Jerry Peck, Vice President Global Trade and TransportationMay 8, 2019

Safe HarborGlobal Trade Management (GTM) and Best Practices

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This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to significant risks and uncertainties. Actual results and events may differ materially from those set forth in these forward-looking statements. These risks and uncertainties are detailed in QAD’s SEC filings, including its latest Annual Report on Form 10-K and in particular the section titled “Risk Factors” therein and other periodic reports subsequently filed by QAD with the Securities and Exchange Commission.

This presentation contains references to certain financial measures that have been adjusted to exclude certain expenses and other specified items. These financial measures differ from comparable measures calculated and presented in accordance with accountingprinciples generally accepted in the United States of America (“GAAP”) in that they exclude unusual or non-recurring charges, losses, credits or gains. Management believes that financial presentations excluding the impact of these items provide useful supplemental information that is important to a proper understanding of the Company’s results. These presentations should not be viewed as a substitute for results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP financial measures presented by other companies.

This presentation is intended to outline QAD’s general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, functional capabilities, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functional capabilities described for QAD’s products remains at the sole discretion of QAD.

QAD undertakes no obligation to update forward-looking statements.

IntroductionGlobal Trade Management (GTM) and Best Practices

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Jerry PeckVP, Global Trade & Transportation

QAD Precision

AgendaGlobal Trade Management (GTM) and Best Practices

• Defining “Global Trade Management”

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• Trending Issues:- China Tariffs- “Disruptive” Technologies

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• Trending Issues:- China Tariffs- “Disruptive” Technologies

• Best Practices: Trade Compliance and Trade Optimization

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Defining Global Trade ManagementGlobal Trade Management (GTM) and Best Practices

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Defining GTMGlobal Trade Management (GTM) and Best Practices

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“The practice of streamlining the entire lifecycle of global trade across order, logistics, and settlement activities to

significantly improve operating efficiencies and cash flow . . .”

Source: AMR Research, Cognizant 20-20 Insights, “Optimizing the Global Trade Management Solution Evaluation and Selection Process”

Key GTM TasksGlobal Trade Management (GTM) and Best Practices

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PRODUCTION PLANNING

ORDER MANAGEMENT

SUPPLY CHAINMANAGEMENT

CARRIER SELECTION

CUSTOMS CLEARANCE

SHIPMENT DELIVERY

ORDER SETTLEMENT

Defining GTMGlobal Trade Management (GTM) and Best Practices

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“The practice of streamlining the entire lifecycle of global trade across order, logistics, and settlement activities to

significantly improve operating efficiencies and cash flow . . .”

Source: AMR Research, Cognizant 20-20 Insights, “Optimizing the Global Trade Management Solution Evaluation and Selection Process”

“. . . The key objective of any GTM package is to manage import and export functions . . .”

QAD Precision: A Complete End-to-End SolutionGlobal Trade Management (GTM) and Best Practices

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PRODUCTION PLANNING

ORDER MANAGEMENT


CARRIER SELECTION

CUSTOMS CLEARANCE

SHIPMENT DELIVERY

ORDER SETTLEMENT

ITEM MASTERDATABASE

LICENSEMANAGEMENT

TRADE DOCUMENTS

COMPLIANCE CHECKS

DATA ANALYTICS

BUYER SCREENING

Global Trade Management (GTM) and Best Practices

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QAD Delivers True End-to-End GTM

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Demand So

urce

Manufacture

Orders

Schedules

Pricing and Billing

EDI

QAD Supplier PortalShop Floor

Orders

Schedules

Pricing and Billing

EDI

Customer Self Service

QAD DynaSys DSCP

QAD Precision GTE

QAD CEBOS QMS

Export Import

Current Events Impacting GTMGlobal Trade Management (GTM) and Best Practices

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Current Events: China TariffsGlobal Trade Management (GTM) and Best Practices

• July 2018 – retaliatory tariffs of 10% to 25% on US $250 billion worth of Chinese products

• Exposed risk for companies that- Single-sourced strategic goods- Lacked advanced visibility and/or

contingency planning

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Current Events: Emerging TechGlobal Trade Management (GTM) and Best Practices

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“A disruptive innovation is one that disrupts an existing market and value network, displacing established market-leading firms, products, and alliances”

Source: Wikipedia

Potential “Disruptive” technologies


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Potential “Disruptors” to GTM1. Artificial intelligence: machine learning2. Artificial intelligence: expert systems


• Perfect for a “smart” classification system- Knowledge of product attributes

replaces knowledge of classification

- Could facilitate product classification to move ‘upstream’ to Designers, R&D, or Procurement (with oversight)

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2) AI Expert Systems (Rules-based)

Artificial IntelligenceGlobal Trade Management (GTM) and Best Practices

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Dr. Kai-Fu-Lee– Artificial intelligence expert – Previous President of Google China


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Potential “Disruptors” to GTM1. Artificial intelligence: machine learning2. Artificial intelligence: expert systems3. Robotics4. Big data: business analytics5. Industrial internet of things (“IIoT”)6. Additive manufacturing7. Blockchain


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Blockchain holds promise for tracing physical assets such as food, drugs, aerospace and conflict minerals, but…

– Doesn’t ensure accuracy of original data– How do you stamp a cryptographic key

on a tomato? (potential for substitution)– Requires participation of all parties in your

supply-chain– May still require third-party auditing

Current Events: Emerging TechnologiesGlobal Trade Management (GTM) and Best Practices

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“Which is the most exciting new

technology...?”

Source: American Shipper, Dec-2018 Technology Benchmarking Study

31% Blockchain


• Form a committee to study potential business benefits- Become your department’s subject-matter expert - It could have applications no one has thought of

• Join a relevant business organization- Blockchain will require operating standards- Ensure that your company’s interests

are covered

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Best Practices: Trade Compliance and Trade Optimization


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First: it’s the law• Engaging in international trade is a

privilege, not a right• Penalties estimated at 8x greater than IRS

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Importance of Trade Compliance

Trade and Customs Best PracticesGlobal Trade Management (GTM) and Best Practices

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Denied Party/Embargo Country Screening• Perform first screen at time of order

receipt- Include all parties in the end-to-end

supply chain - Perform second screen prior to release

• Companies now also screening against “watch lists”- Includes financial, ethical, criminal


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Civil and criminal penalties reaching $100Ks of dollars per violation; possible seizure of articles and denial of export privileges

PayPal: $7.7M for 486 violations JPMorgan Chase Bank: $5.26M DHL: $9.44M multiple violationsExxonMobile: $2M Ukraine sanctions Alcon Pharmaceuticals Ltd: $7.6MAmazon: Currently under investigation

QAD Precision Cloud CustomersGlobal Trade Management (GTM) and Best Practices

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Over 200 million screenings a year!


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Importance of Trade Compliance

First: it’s the law• Engaging in international trade is a

privilege, not a right• Penalties estimated at 8x greater than IRS

Second: Remains a largely untapped area for reducing time, cost and riskfrom international supply chains


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• Traditionally considered ‘luggage’ by U.S. Customs

• Dutiable at 20% of declared value


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• Incorporated enough ‘play value’ to qualify as a toy

• New tariff code qualified for duty free entry from Mexico (NAFTA)

• Saved Mattel 7 figure＄ in import duties

• “Tariff Engineering”

Lessons Learned: Best PracticesGlobal Trade Management (GTM) and Best Practices

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Why not incorporate Trade and Customs considerations at the earliest stages of product design planning decisions?


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PRODUCTION PLANNING

ORDER MANAGEMENT


CARRIER SELECTION

CUSTOMS CLEARANCE

SHIPMENT DELIVERY

ORDER SETTLEMENT

ITEM MASTERDATABASE

BUYER SCREENING

LICENSEMANAGEMENT

TRADE DOCUMENTS

COMPLIANCE CHECKS

DATA ANALYTICS

TRADE & CUSTOMS PLANNING


• Perform full landed-cost comparisons (Product cost plus)- Export fees and delivery to port- International freight- Customs clearance fees- Import duty/tax and final delivery- Time and risk

• Identify regulatory issues- Is my export controlled?- My foreign customer wants DDP incoterms- Any Import admissibility requirements?

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PRODUCTION PLANNING

TRADE & CUSTOMS PLANNING

＋


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The “3Cs” of trade optimization: compliance, cost and/or cycle-time COMPLIANCE

CYCLE-TIMECOST

Whether an issue was regulatory or economic, an improvement in one generally led to related improvements within another…

Optimization


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Other Cost Saving Strategies1. ‘Direct-Ship’

2. Foreign Trade Zones (FTZ)/Customs Bonded Warehouses

3. Duty Drawback

4. Free Trade Agreements (FTA)

Trade and Customs Best Practices

Free Trade Agreements (FTA)Global Trade Management (GTM) and Best Practices

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“Companies leveraging FTA as part of an overall GTM project average a 500% ROI after 3 years.”

- Ernst & Young

Free Trade Agreements (FTA)Global Trade Management (GTM) and Best Practices

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Complexity of Rules of Origin

Lack of internal expertise

Lack of personnel to manage 28%

31%

41%

Globally, organizations miss out on 70% of the Free Trade Agreements

available to them

Source: 2015 Thomson Reuters & KPMG FTA White Paper

The QAD Precision FTA SolutionGlobal Trade Management (GTM) and Best Practices

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• Complies with FTA requirements for all 459WTO trade agreements

• Automatically prepares Certificates of Origin and declaration statements

• Automatically solicits and manages supplier Certificates of Origin

• Provides archiving and full audit support

• Performs “what if” bill-of-material modeling for FTA qualification

New IMPORT Trade SolutionGlobal Trade Management (GTM) and Best Practices

• Seamless ERP-export-import-transportation technology stack

- Product HTS look-up tool and classification worksheet

- Item Master product database- Duty modeling and FTA qualification - Supplier denied party screening- Workflow dashboards and compliance

checks- ABI-compatible data for automated filing

• Early adopter: September 201940

IMPORT

Workflow Dashboards

Generate Import Documents

Record Keeping

Regulatory Checks

File Customs Entry

Supplier Screening

Import HTS Classification

Item Master Data Base

Landed-Cost Modeling

Next StepsGlobal Trade Management (GTM) and Best Practices

Opportunities for enhancing your company’s GTM process?• Compliance

- Do we incorporate Trade and Customs considerations into our business planning?

- Are we conducting adequate screening?- Who classifies our products?

• Optimization - Are we taking advantage of duty avoidance/minimization strategies? - Do we know if we’re leaving money on the table?- Have we automated our GTM process?

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Highlighted SessionsGlobal Trade Management (GTM) and Best Practices

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Streamlining Finance Operations with QAD

eInvoicing

Carlos Garcia, QADWednesday, 1:30 PM-2:30 PMRhythms 1

The Next Generation of Demand Planning:

Intelligent and Real-Time

Shaun Phillips, QADWednesday, 3:00PM - 4:00 PMRhythms 1

Platform Analytics Update

Alban Bentein, QADThursday, 11:00 AM-12:00 PMWaterbury Ballroom

Questions and AnswersGlobal Trade Management (GTM) and Best Practices

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Jerry [email protected]

+1 469.400.5402

mailto:[email protected]

Breakout Session SurveyGlobal Trade Management (GTM) and Best Practices

Remember to take the breakout session survey for every session you attend,

for a chance to win an iPad each day of Explore.

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https://explore.qad.com/contests

https://explore.qad.com/contests

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