In a world where trade is global, ”global trade management” (GTM) sounds a fairly obvious name for what supply chain managers spend most of their time doing. In the world of European IT, however, the GTM label is a comparatively recent phenomenon and while only a few vendors currently describe themselves as GTM specialists, many more argue that their existing supply chain offerings can deliver much of the necessary GTM capability.
So just what does, or should, GTM include? In theory it could be just about everything: from the initial identification and due diligence of potential suppliers and strategic sourcing through contract negotiation to order management, shipping, import management, financial areas such as letters of credit, tracking and visibility, collaboration, domestic logistics and probably much more. In practice much GTM focuses around compliance, regulation, and finance. Aberdeen Research, for example, talks of GTM as focusing on import/export compliance and documentation systems.
Keeping the supply chain moving
Benefits of using such applications, it suggests include: optimising sourcing and selling decisions by determining duties, taxes, and tariff impacts; lowering the cost of goods through origin management; reducing the risk of corporate fines and other penalties for erroneous or incomplete documentation; and keeping the supply chain moving by enabling shipments to cross borders smoothly as well as cutting delays in customs clearance by enabling C-TPAT (Customs-Trade Partnership Against Terrorism) participation.
TradeBeam, for example, offers a raft of modules focused very much in these areas and covering such aspects as import management, origin management, letters of credit, account management, trade content and supply chain visibility on a software-as-a-service (SaaS) model.
The company has been working with Oracle to provide these GTM applications to augment Oracle”s transportation management – largely deriving from its G-Log acquisition. However, Oracle is now in the process of developing is own GTM product: ”You could say we”re in the handover zone,” says David Food, Oracle”s business development director for supply chain applications. ”We”ll be launching our own GTM applications during 2008 to expand our offer.”
Oracle also sees GTM as going beyond this core import/export compliance area: ”The Agile acquisition provided us with a solid product lifecycle management basis,” argues Food. ”GTM starts from strategic sourcing through all the necessary documentation and security to distribution, final execution and, of course, financials. We don”t yet have a standalone GTM solution but ultimately it will link with all the other pieces.”
This wider definition of GTM is something which many supply chain companies are also striving to achieve.
”GTM is a concept born from the need to manage multiple carriers, customs, compliance, documentation and supply chain visibility,” says Steve Smith, senior vp EMEA at Manhattan Associates. ”Five years ago businesses didn”t have to cope with such complexities of global trade as they do today; sourcing products in low cost countries seemed straightforward – but companies now realise they need to add in factors like increased inventory, problems responding quickly to consumer demand, green issues and so on to come up with the optimum sourcing and supply solution. GTM tries to consolidate all these issues to create a single holistic footprint.”
This need for a hybrid approach to sourcing is seen as a key driver for GTM investment: if the entire line is sourced in China then attributes like shipment time and cost of carbon footprint are reasonably constant. Add partial sourcing from Rumania or Turkey to cut lead times and there are plenty more parameters to add into the equations to assess performance, efficiency or actual stock position.
Like other supply chain players, Manhattan Associates has had a number of GTM components in its suite for some time. Extended Enterprise Manager, for example, has been around or about five years and includes customs clearance and freight forwarding functions. Significantly it can be run by small suppliers equipped with little more than a printer and an Internet connection. ”It means that something like a shoe workshop in Vietnam can print out comprehensive packing labels as well as confirm shipment content and despatch which means you have the basic components for order tracking and calculating ETA,” says Smith.
In January, Manhattan launched its SCOPE platform – standing for ”Supply Chain Optimisation Planning through Execution”. This is based on a cross-application optimisation engine linking data, events and workflows in different solutions to give good visibility and communications throughout the supply chain. As well as the central optimisation engine SCOPE includes five supply chain modules covering: planning and forecasting; inventory optimisation; order lifecycle ”Five years ago businesses didn”t have to cope with such complexities of global trade as they do today; sourcing products in low cost countries seemed straightforward”management, transportation lifecycle management, and distribution management.
Pradheep Sampath, director of B2B integration and supply chain management with GXS sees GTM as going even further: ”It really has three legs,” he says. ”First you need an infrastructure to support the trading community so that you can communicate with your suppliers no matter their size or geography. Then you need applications that automate the process and take away the paper so that all exchanges are electronic with clear visibility. Finally you need the rules – the content providing the information about tariffs, regulations and so on. We provide the first two of these GTM “legs”.”
Interest in GTM, he adds is growing and GXS is starting to look seriously at that third ”leg”. ”Over the next six to eight months we”ll certainly be looking at this area and may perhaps start working with partners to provide sector specific solutions here,” says Sampath. ”It”s something we”re already having preliminary discussions about.”
One company which certainly focuses on this area is Management Dynamics – arguably a leader in the GTM space with more than a decade of experience. ”When we started working in this area in 1990 the term GTM didn”t even exist,” says Jim Preuninger, founder and ceo. ”Today it”s a major growth areas – a real red hot space – as all companies face up to the complexities of international trade. We”re seeing 50 per cent year-on-year growth rates and a growing number of players with the likes of SAP and Oracle entering the market.”
Management Dynamics acquired NextLinx, a developer of international trade compliance technology and content, in 2005. The combination gives one of the most powerful GTM content bases available. Every day Management Dynamics monitors the rules and regulations for cross border trade in 122 countries and every day all the changes are incorporated into the core system. ”This information is normalised and translated and incorporated into the database,” he says, ”we”re not just posting out pdfs. The amount of information covering the rules and regulations for 122 countries would be equivalent to a municipal library. Software is important but GTM is not just about software – it”s not good enough just to automate the activity: you have to have the content or what we call “global knowledge”.”
In Management Dynamics” model, this ”global knowledge” sits at the heart of its GTM suite with applications covering trade finance, trade compliance, global supply and global logistics supporting supply chain networking services to link trading communities and deliver supply chain visibility – a structure delivering Pradheep Sampath”s ”three legs”. Small wonder that Preuninger claims: ”We have the most complete GTM suite in the marketplace – that is one of our competitive advantages.”
While Oracle acquired G-Log and Management Dynamics NextLinx other GTM specialists have been takeover targets in recent years. Vastera, founded in 1991, was acquired by JP Morgan Chase in 2005 and now forms part of its global supply chain services offering. TradePoint was bought by Kewill in 2004, while Arzoon by SSA Global – itself later bought by Infor – also in 2004. Precision Software, with is TRAXi3 suite was acquired by QAD in 2006.
Alongside TradeBeam, independent specialist GTM survivors today include GT Nexus (which in January acquired Metaship to spearhead its expansion into Europe), and TradeCard – selected earlier this year by Levi Strauss.
”TradeCard will complement the existing sourcing landscape at Levi”s to provide better control over the movement of product and money outside the four walls of the organisation and into the extended supply chain,” says Kurt Cavan, TradeCard”s ceo. ”It will allow Levi”s to truly extend visibility into manufacturing processes and all partners involved.”
The system is due to go live early this year. Like Management Dynamics, TradeCard is also seeing massive growth in is operations – the Levi order was one of several which helped to boost revenues last year by 65 per cent. ”We”re settling more than half of a billion dollars in transactions per month on our platform and we believe that number will continue to grow rapidly as companies that source recognise the benefits of automation and visibility in the extended supply chain,” says Cavan.
Like the majority of vendors in this space, TradeCard”s GTM system is delivered on an SaaS model. At Levi Strauss, this on-demand platform will connect the company”s back-office with key partners in the supply chain, including vendors, buyers, customs agents and financial institutions, as well as link with its SAP Apparel and Footwear Solution (AFS).
Kewill also includes an SaaS option for its offerings: like other players in this market it too came from an original base in EDI and supply chain community although now, four years on from its TradePoint acquisition, it sees itself as very much in the GTM space.
”GTM is everything to do with execution, movement and reconciliation of the entire supply chain process which involves crossing international borders,” says Evan Puzey, vp global product management at Kewill. ”It goes from sourcing and import order management right through to the physical movement of goods and financial settlement – such as letters of credit, reconciliation of charges or connection to insurers, and we can cover most of these attributes from our own solution set.”
Kewill”s product suite has long included, order and shipping management, international trade logistics and supply chain visibility software which can now largely be combined under the GTM banner. ”We have an integration layer so all our applications can talk to each other as well as other IT systems,” adds Puzey.
While the total offer covers many perceived GTM functions, Kewill finds that many customers seeking to improve global supply efficiencies are more interested in the company”s customs and compliance tools such as CustomsXchange. ”Companies already have many supply chain systems and point solutions,” he says, ”so they don”t really want to buy into a total new solution, so easy integration and SaaS are important – especially for compliance.”
Compliance is certainly a hot potato at present with very real concerns over fines or even gaol sentences for failure to meet the growing list of rules and regulations. Well over 50 countries now issue ”restricted party lists” for example, detailing with whom companies in their geographies must not trade. Checking orders against these lists is an imperative that without GTM”s content or ”global knowledge” can be time consuming and difficult.
While an over-all GTM solution can neatly solve these sorts of problems, stitching the relevant ”content” into existing global supply chain systems can be more difficult. Many of the point solutions required for total GTM are extremely esoteric: systems to handle ocean rates, import duties for 140 countries or more, and a raft of regulatory requirements often provided by a handful of small highly niche operators. ”It really is more about content management than software applications,” says Lorne Jones, global industry executive for logistics and distribution at Sterling Commerce. ”ERP systems were never designed to support distributed operations but that is what global trade demands and to do that you need a strong underlying infrastructure. We”re now part of AT&T so we have that in place.”
Jones suggests that any purchase from overseas typically involves 13 separate participants in getting the goods from source to shelf and from purchase to pay. ”Each stage includes documentation and event tracking – so you”re talking about maybe 200 documents for each transaction,” he calculates.
As in Steve Smith”s Vietnamese shoe workshop example, Jones argues for Internet-based communications – in Sterling”s case its Webform technology – to enable these links which can then deliver visibility while applications must be SaaS to meet the needs of a large number of constantly changing players. Sterling has just launched an on demand offering for its supply chain visibility product. ”It”s all about managing the long tail,” says Josh Hardy, senior product marketing manager. ”If only 20 per cent of your supplier base is linked electronically you don”t have supply chain visibility.”
Sterling has just completed a study with AMR research which found that 70 per cent of those questioned want to improve collaboration with the ”long tail” in their supply base while some 44 per cent of companies do not have a regular core group of suppliers with whom they trade so ”fixed” EDI-style linkages are extremely difficult to achieve. The study findings – due to be published shortly – also reinforce the importance of the community or networking aspects of GTM.
”I very much doubt if all global supply chain issues can be addressed in one package. The level of IT sophistication across the world makes it difficult to have a single solution in all geographies”So is a total on-stop GTM solution a reality? The ERP vendors appear to think so SAP, QAD, Infor and Oracle have all committed to the space with buy or build solutions in recent years. As John Fontanella, vice president, research at AMR Research said when Oracle announced its plans to build a GTM product a year ago: ”When software companies of any size commit development resources to creating a new product, it signals that they see a great market opportunity that fits within their strategic frameworks. Oracle, through a series of acquisitions, has greatly strengthened its portfolio of supply chain applications. More than that, though, it is an indication of the importance the company sees in letting its customers manage global supply chains in the future.”
But as those already active in GTM argue, applications are not enough: community and content are even more important. Management Dynamics argues it is already delivering this totality, others are moving in the same directions but many remain unconvinced: Steve Smith at Manhattan is among the sceptics: ”I very much doubt if all global supply chain issues can be addressed in one package,” he says. ”We”re certainly striving to address gaps in our suite that meet specific customer needs but the level of IT sophistication across the world makes it difficult to have a single solution in all geographies. No one organisation has a total GTM solution. No-one has the silver bullet. GTM has the potential to deliver huge savings across the supply chain, but it is a very fragmented market and we may well see more consolidation in future.”
GTM starts from strategic sourcing through all the necessary documentation and security to distribution, execution and financials. We don”t yet have a standalone GTM solution but ultimately it will link with other pieces.
[Purchases from overseas] Each stage includes documentation and event tracking – so you”re talking about maybe 200 documents for each transaction
GTM is everything to do with execution, movement and reconciliation of the entire supply chain process across borders
First you need an infrastructure to support the trading community so that you can communicate with your suppliers