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  • Foreign Trade Management: What to do while the whole world is waiting to see what happens next?

    The stakes are high as there is an escalation of trade tension. In companies worldwide, business functions from procurement to manufacturing to supply chain depends the on deft trade and supply chain management to underpin everything from global expansion to promises to customers.

    The risk of breakdowns in supply chain and failures in compliance are greater when international trade managers — due to political and regulatory distrust — can’t decently predict what changes are coming around the corner. Here are steps one can take, to alleviate strategic, operational, and reputational risks and take a move to gain competitive advantage and maintain a status quo.

    How can a manager be ready for anything?

    The key is ongoing scenario analysis and contingency planning, including:

    1. Observing regulatory and trade-related political activity;
    2. Assessing which proposals, if implemented, could not create gaps in your supply chain or not adversely affect costs; and
    3. Implementing alternatives — sources, suppliers, and strategies —whenever you need them.

    Exploring Areas

    As there is bombardment of tariffs, continuously changing trade policies, and overall environment of uncertainty, a company can evaluate and adjust how to move goods in to control costs, maintain quality, and ensure operational continuity.

    Some areas that need exploration:

    • Identify alternative sources of supply so you’re prepared to get away with the disruption and higher costs that tariff increases cause. Depending on single supply may be riskier so you should have a multiple supply source in pipeline even before they are needed. In this way, you will be ready to act quickly when change requires it and can ensuring reliability and quality, minimal disruption, acceptable working conditions.
    • Identify and analyze alternate manufacturing locations. You can opt for some developing or least developing economies where there are lot many opportunities like cheap labor, low cost raw material, liberal Government norms etc. In this way, you can manufacture a better quality product that too at lesser cost as compared to competitors and can get competitive edge.
    • To avoid new or anticipated tariffs while sourcing, you should assess whether it will impact your company’s ability to qualify for Free Trade Agreements (FTAs) or preference programs.
    • Assess whether you have a potential to avoid duties through Free Trade Zones (FTZs) and FTAs or to recover duty through duty drawback.
    • If you are into light manufacturing then you should consider the impact of proposed protectionist measures like tariffs or anti-dumping duties. Will they change the classification and Country of Origin of the goods?
    • Evaluate your logistics operations for opportunities to avoid, reduce, or minimize costs by moving manufacturing, distribution, and storage to bonded warehouses, FTZs, or processing zones.

    Caution

    The key to operate efficiently and effectively is scenario planning and exception-based management — using software to evaluate your company’s logistics data and identify areas in which you might have opportunities for change or where you are not in compliance with regulations and policies. This ability to run reports, audit the information, and identify outliers saves time that can be used to strategically prepare for tomorrow’s challenges.

    All of this, of course, requires time and technology to map and monitor the logistics and supply chain operations, create audit trails, evaluate FTA and FTZ options, review regulatory compliance, and automate filing for drawback and other programs. Trade teams have no chance of anticipating and preparing for whatever may come next in this volatile environment as they are burdened with manual processes and data sequestered in disparate systems.

    By proceeding and operating in the manner suggested, you can somehow manage the risk which will creep in time to time and can come up strongly against the problems.

    With reference to this, IIMR, among top institute in Madhya Pradesh, has designed its management program in such a way that students should get deep understanding as well as exposure to the latest global scenario and trends in this field. Skill-based program helps students learn about foreign trade procedure and Documentation, Logistics and Material Handling, export- import management which is the need of the hour. Join management program at IIMR to become a successful businessman operating globally.

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