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10 Steps for Assessing Your Compliance Program Globally

Posted by Michael Bellezza

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5/9/14 12:50 PM

drawingAs regional companies look to grow into multi-nationals in the never-ending search for new markets, an understanding of Global Trade Compliance becomes critical for several reasons.  One of the most obvious reasons is to reduce the risk of running afoul of local laws and regulations. Additionally, maintaining a consistent and reliable supply chain and taking advantage of various government programs such as Free Trade Agreements, Duty Drawback, Security Programs and other initiatives designed to benefit compliant importers and exporters speeds the supply chain and saves money. 

As companies expand into more and more markets, inevitably they reach a critical mass where the need to standardize compliance functions across multiple geographies, business units, and Customs regimes becomes apparent.  By “apparent,” we mean that you have done such a good job that you have been gifted compliance responsibilities for not 1 country, but 108. This is often a daunting task given the labyrinth of varying trade regulations. The first phase to this process is assessing the company’s current state compliance profile on a global basis, then moving to implement global frameworks to bring a level of consistency across the network.  Here are a few simple steps to get you started:

1:  Executive Sponsorship:  A key element in any endeavor of this kind is to have executive support.  Global Assessments will require you to talk with a multitude of business units spanning several geographies and including departments from Transportation to Procurement to Legal.  To ensure you have the level of cooperation necessary for success, make sure you have the proper support.  To get that sponsorship, be prepared to articulate the risks that are out there along with the benefits of a strong regulatory compliance program.

2: Kickoff: At the beginning of the Assessment, have an initial kick-off meeting with the stakeholders to ensure everyone understands the goals of the program, the benefits, its scope, time frames, etc.  If you are utilizing outside assistance, it is a great opportunity to introduce everyone to assist in a smooth process.

3: Surveys and Interviews: Before actually interviewing local personnel, we have found it advantageous to provide an initial questionnaire to get a feel for the functions of a particular business unit, how processes are handled, which lanes and which commodities are relevant, and to review the organizational chart.  We have seen people utilize everything from online survey services to good old excel spreadsheets.  We prefer the latter as the online methods tend to be cumbersome.  After receiving this information, we suggest following up with a conference call to review the questions.  In many cases, in-depth questioning by someone knowledgeable in the intricacies of Trade Regulations will lead to a great deal of revisions to the original answers to your survey. 

4: Process Mapping and Documentation: Based on the information gathered from the surveys, conference calls and existing operational procedures, map out the current customs processes for each business unit and include milestones for new/existing products for import and export, destination procedures, post-importations activities, and training. 

5: Site Visits and Revisions: For some locations, it may be beneficial to arrange for on-site visits.  These visits can typically be done in a half day and allow you and the local staff to review the process diagrams, confirm that processes are fully understood, review their compliance procedural manual, and if possible, meet with their local broker. 

6: Identifying Risks: During the revision process, consolidate the issues obtained from the surveys, conference calls, and on-site meeting to highlight the areas of potential compliance risk.  It often helps to note them in the form of a heat map, noting high, medium and low level risks, along with their potential financial impact. 

7: Metrics and Benchmark Standards: Create a list of benchmark standards for service provider performance in terms of compliance, process controls and reporting and timing as examples. 

8: Framework Compliance Manual: Create a basic framework document for a global customs compliance manual that each geography can tailor to country-specific and product-specific procedures and requirements to ensure compliance locally.  For each section, make sure to include an explanation of what each section should cover.

9: Analyze Information Systems and Trade Data Management: As you set up your processes, make sure you have solid systems to maintain the required information in a product master such as HTS codes, Export Controls, Free Trade Agreement information, Anti-Dumping and Countervailing Duty determination, and restricted party screening to name a few.  Ensure this system can be leveraged across you network, and if possible, create electronic feeds to your service providers for a more streamlined import/export process.

10: Project Panel Review: At the end, don’t forget to assess yourself.  A compliance program is a living, breathing, ever-changing animal.  You’ll need to repeat this process over time, so make sure to discuss internally what worked, and more importantly, what didn’t and how it can be improved. 

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Topics: Export Compliance, Best Practices

Written by Michael Bellezza

Before joining Tradewin in 2010 as Principal of the US Consulting Practice, Michael had worked for Expeditors for 8 years in a wide variety of management positions including Customs Brokerage Operations, Import & Export Compliance, Freight Forwarding, and Supply Chain Analytics. Michael is responsible for all aspects of Tradewin's global consulting practices in North America, Europe, Asia, and the South Pacific. He has a talent for bringing common sense solutions to complex regulatory scenarios. He specializes in building compliance programs, providing educational seminars and workshops, advising risk mitigation, and implementing duty reduction programs. Michael is a U.S. Licensed Customs Broker. He is IATA/FIATA certified and is a member of the International Compliance Professionals Association. He is a graduate of Boston College with a degree in Economics.