Supply Chain & Logistics Technology: Discovering real value in GTM

We examine the key drivers of global trade management (GTM) software growth and why more shippers will need to put it to work in the near future.

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Primarily focused on maintaining updated regulatory trade data; screening for denied parties, restricted products, and embargoed countries; determining product eligibility for free trade zones; maintaining product classification databases; and helping shippers comply with programs like C-TPAT, PIP, and AEO, GTM is slowly replacing age-old approaches to import and export trade compliance.

According to William McNeill, research director at Gartner, GTM adoption is currently hovering around 25% and has been increasing at an annual pace of about 9% to 10%. McNeill expects that trend to continue and even pick up as more companies move away from manual, spreadsheet-based trade management and as regulatory compliance becomes an even bigger burden for shippers of all sizes.

Over the next few pages we’ll look at the key forces that are currently driving GTM adoption, examine what’s holding the market back from implementing these solutions, and hear how a marine engine manufacturer relies on a GTM solution for Foreign Trade Zone (FTZ) management.

Trade expansion = complexities and challenges
Ongoing international trade expansion, combined with the introduction of new trade agreements, should push more GTM adoption over the next year or two.

Concurrently, a growing number of customs and compliance audits are driving more shippers to develop established, controlled processes for addressing global custom and compliance requirements. Finally, the fact that more companies are using GTM and talking publicly about the software’s impact is helping to drive more shippers to consider GTM implementations.

Two major trade agreements are expected to make an impact on global trade in 2016 and 2017: The Trans-Pacific Partnership (TPP) in the U.S., and the Trans-Atlantic Trade and Investment Partnership (TTIP) in the U.S. and in the European Union (EU). According to the Office of the U.S. Trade Representative, the TPP writes the rules for global trade—rules that will help increase American-made exports, grow the U.S. economy, support well-paying jobs, and strengthen the middle class.

The TTIP is a comprehensive and high-standard trade and investment agreement that’s currently being negotiated between the U.S. and the EU. Should the agreement come to fruition, it will also provide increased access to European markets for American-made goods and services and help to promote U.S. international competitiveness, jobs and growth, according to the Office of U.S. Trade Representative.

Shanton Wilcox, vice president of supply chain management for Capgemini Consulting, sees TPP and TTIP as potential drivers of the GTM market over the next few years. “When the TPP gets ratified, it will introduce a whole new level of trading opportunity and sophistication to the global trade management process,” says Wilcox. “At this point, the aggregate agreement is expected to be larger than the North American Free Trade Agreement [NAFTA], so that alone will drive more shippers to consider GTM.”

Add TTIP to the mix, says Wilcox, and it won’t be long before shippers find themselves involved with a larger volume of global trade than they’ve ever managed in the past. A company that’s always worked with traditional, established trade partners was probably able to orchestrate the importing or exporting with manual processes and spreadsheets. That could change if and when TPP and TTIP become realities. “It’ll take global trade management requirements to new levels,” says Wilcox.

Integrating new functionalities
As the world’s nations hammer out the details of their new joint trade agreements, shippers are taking a closer look at the features and benefits of using an automated global trade management platform.

Offered up in a traditional licensed format, in the cloud, or as a “hybrid model” that incorporates some online and some offline functionalities, this software streamlines and optimizes the business processes associated with cross-border trade. Developed by companies like Amber Road, Integration Point, GT Nexus, Kewill Technologies, SAP, and Oracle, among others, GTM continues to evolve along with the shippers that use it. 

“I’ve received more phone calls from customers about global trade compliance than I ever have.”
— William McNeill, research director at Gartner

According to Wilcox, some GTM vendors have integrated “total landed cost analysis” into their software offerings to help shippers better understand the total price of a product once it has arrived at a customer’s door. Changing cost structures on the transportation side—in many cases driven by merger and acquisition activity within the carrier industry—are helping to drive demand for such functionalities.

“The economics of transportation are changing right along with the new agreements, cost structures, and requirements,” says Wilcox. “By integrating total landed cost into the picture, shippers can better manage the operational aspects of global trade.”

But even with those added functionalities coming to market, Wilcox says that many shippers remain uncertain about the value that GTM will provide for their operations. From an internal perspective, many companies are simply uncertain about the necessity of a full-blown global trade management solution.

“It’s one of those solutions that fulfills a specific niche between traditional business functions,” Wilcox points out. “It sits at an intersection point for a number of corporate functions [transportation, logistics and finance], so it just doesn’t get as much attention.”

Discovering GTM’s true value
Noting that GTM solutions tend to “keep in line with overall growth within other supply chain management software sectors,” McNeill says that interest in the former is definitely rising. “I’ve received more phone calls from customers about global trade compliance than I ever have,” he says. “Right now, a lot of organizations are rethinking their compliance departments and how to support them with software. That level of investigation and interest is definitely increasing.”

McNeill expects that momentum to continue to be driven not only by changing regulatory and compliance requirements, but also by the fact that many GTM solutions are now available in the cloud. He points to vendors like Amber Road, Integration Point, and SAP as three that are making progress with their cloud-based or hybrid options. “Shippers are able to do more and access more information now than they were able to in the past,” he says, “whether it’s information on compliance, logistics, or risk.”

Getting companies to forgo their traditional, manual global trade management methods may still take some time, adds McNeill, mainly because proving the hard-dollar return on investment (ROI) on GTM can be difficult. “I don’t think companies should be asking their compliance analysts to come up with an ROI plan. Instead, they should be looking at the risk management and business protection associated with GTM. That’s where they’ll find the real value.”

About the Author

Bridget McCrea, Editor
Bridget McCrea is a Contributing Editor for Logistics Management based in Clearwater, Fla. She has covered the transportation and supply chain space since 1996, and has covered all aspects of the industry for Logistics Management and Supply Chain Management Review. She can be reached at [email protected]

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