This article summarizes a new Thomson Reuters whitepaper — "The Future of Global Trade Technology" — which can be downloaded below.
As the pace of international trade accelerates, so does the cost of complying with trade-related regulations — an expense which grew to an estimated $1.8 trillion for multinational corporations in 2018. Of course, as any supply chain manager will tell you, the only thing more expensive than getting it right is getting it wrong.
On the positive side, emerging technologies are streamlining trade management by delivering critical information, insights, and operational improvements to companies that seize this competitive advantage.
Teams that manage the movement of goods for companies need this help as they navigate unprecedented political uncertainty, operational complexity, and regulatory change that magnify the potential for mistakes that could result in financial and reputational harm.
The $10 billion global trade in cut flowers exemplifies the complexity of buying and selling across borders when timeliness is critical to success. For a single shipment of flowers to move from farm to customer, there can be 30 organizations involved in certification, more than 200 communications, 36 original documents, 240 copies, and 27 hand-offs. The entire process can take a month, and any delay can be catastrophic.
You can download the new Thomson Reuters whitepaper, The Future of Global Trade Technology here
Technologies including artificial intelligence, machine learning, and blockchain are making it easier for companies to navigate these requirements, avoid mistakes and pitfalls, secure data and documents, and automate operations in order to routinely “get it right.”
The application of artificial intelligence (AI) can improve supply chain efficiency and reduce costs and risks by:
- reducing the need for large teams of specialists to manage analytics;
- extracting more value from the management of unstructured data;
- managing the classification of goods, order management, and other tasks; and
- forecasting customer demand and predicting potential supply chain disruptions based on the analysis of historical data.
While AI turns information into insight, machine learning transforms insights into lessons to be applied in the future. Together, they can strengthen companies’ trade operations in several ways, such as:
- spotting fraud faster by identifying suspicious transactions and parties in time for stakeholders and regulators to take action;
- learning from mistakes and failures and ensuring this hard-earned wisdom informs the next iteration of operational methodologies; and
- making data-driven decisions based on predictive analytics that see what’s coming around the corner.
Blockchain delivers an immutable system that distributes both record management and security across a peer-to-peer network. For global trade management, this delivers value by:
- automating the registration of transactions and assets;
- reducing administrative burdens;
- facilitating the creation of authenticated documents and the flow of data; and
- enabling all stakeholders — shippers, transporters, suppliers — to interface with trust and transparency because everyone can see every file update in real time.
Putting the pieces together
Of course, global trade management (GTM) is about more than information technology. IT solutions are a critical element, but they must augment state-of-the-art best practices and controls. Technology doesn’t always lead, but it can light the way.
When it comes to putting the pieces together to establish a unified global trade management platform, three overlapping value propositions are emerging. They are similar facets of the same promise: precise tactical execution amid acceleration.
- Compliance: A company’s specific compliance profile is dictated by everything from its industry and line of business to geography. Companies need more than just applications. They need all the elements necessary to comply with all relevant rules and regulations in every country they operate in.
- Content: From manufacturing through settlement, calculation and regulatory reporting are buffeted by constantly changing rates and rules. A global trade platform should be updated continuously with the latest relevant information.
- Connectivity: A GTM platform brings systems and stakeholders together, enabling them to engage and interface in a customized fashion. There is no one-size-fits-all solution.
Every organization moves at its own pace, but corporations’ trade teams need to navigate a complex, capricious regulatory environment, avoid duplicative work, inefficiency, and human error in a way that gets optimal value from the adoption of emerging technologies.