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by Lauren Gibbons Paul, Contributing Editor Posted on Thursday, October 26, 2006 4:37:30 PM   | Abstract: | In the aftermath of 9/11, many manufacturers are struggling with high costs and process disruptions resulting from the need to comply with increasing export regulations. That's especially true of manufacturers like Anritsu Company Inc. that make so-called dual-use products that could potentially be used in terror devices. In order to cut compliance costs, streamline order shipments, and reduce risk, Anritsu has since 2000 been progressively automating its trade management processes. As a result, the company has been able to substantially reduce the number of employees needed to manage trade compliance while reducing risk. |
 For manufacturers that sell goods outside U.S. borders, complying with governmental regulations that prohibit selling to a restricted party or for a restricted use can be a heavy burden. Each company must weigh the risk of violating regulations against the need to have an efficient, globally competitive supply chain. For companies selling products that could be used in weapons of mass destruction, achieving equilibrium is trickier still. If your product should fall into the wrong hands, the outcome could range from simple bad publicity to exorbitant penalties to a terrorist act. These manufacturers must automate the screening of orders and customers to have any hope of surviving the onslaught of regulations created by the U.S. Department of Homeland Security post-9/11. Take electronics test and measurement equipment maker Anritsu Company Inc., for example. Even before the disaster of 9/11, the subsidiary of $776 million, Japan-based Anritsu Corp. was struggling to comply with a growing list of trade regulations. With largely manual trade management processes, the company was forced to hire scores of employees to keep orders moving. Even then, customer shipments were sometimes delayed. In the years that have followed, however, Anritsu has taken a series of steps resulting in increased automation of trade compliance processes. The company now uses an on-demand global trade management system from TradeBeam Inc., which has allowed it to shift the personnel who once handled manual compliance to more value-added functions. More importantly, automating export processes has significantly reduced Anritsu's legal exposure for non-compliance, as governmental agencies tend to view companies that have automated more favorably than those that have not. Beyond limiting liability, export compliance automation reduces the chances that Anritsu's products will get into the wrong hands, which is important to the company, regulations notwithstanding. Vetting the Supply Chain For Anritsu, the need to automate compliance with export regulations became pressing around 2000. At the time, employees in a number of different departments were beginning to spend inordinate amounts of time tediously checking client names and addresses against lists of restricted parties. Although the lists were considerably shorter in those pre-9/11 days, the process was manual and burdensome, as customer names had to be checked against the Bureau of Industry and Security's denied persons lists (DPLs) after an order had been made, just before shipping the order, and again after any delays before delivery. And it was not enough just to make sure the customer's name was not on the DPL. Regulations governing sellers of dual-use commodities (such as the test and measurement equipment made by Anritsu) dictate that companies exporting sensitive goods cannot sell to any company in a restricted party's supply chain. The implications are huge. "It's not just the corporation you're transacting with, but its entire supply chain lineage," says Greg Aimi, director of supply chain research for AMR Research. "If any entity in the supply chain of that company is a denied party, then they're also denied." The compliance assurance process was even more arduous, as the potential use of every order had to be checked as well. The U.S. Bureau of Industry and Security (BIS), which governs the class of products Anritsu makes, requires that any manufacturer of a product deemed for a sensitive use apply for an individual license before an order for that product can go through the system. The BIS oversees the development, implementation, and interpretation of U.S. export control policy for dual-use commodities, software, and technology. Dual-use items subject to BIS regulatory jurisdiction have predominantly commercial uses, but also have military applications. So, Anritsu's staff also had to check the orders for a potential license requirement. Page : 1 2 3 ... NEXT |