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Firm sees benefits in global trade management SAP xApp

Applied Biosystems chose an SAP xApp to get control of its global trade operations and reduce costs. New features added to SAP Global Trade Services automate credit letter processes and customs warehousing procedures.

Applied Biosystems executives had to look at the company's processes internally before streamlining trade and compliance procedures in its global shipping operations to eliminate manual tasks and ultimately reduce costs.

It's not a system where you can put garbage in and get quality out
Leighton E. Yates,
senior manager in global trade complianceApplied Biosystems

The Foster City, Calif.-based pharmaceutical and biotechnology company ships low volumes of very expensive products, such as robotics, DNA sequencing tools, and lab devices. The company, which is using SAP on Oracle databases, chose SAP Global Trade Services (GTS) software as part of a plan to lower its total cost of compliance by outsourcing some trade activities, according to Leighton E. Yates, a senior manager in global trade compliance with Applied Biosystems.

But cost savings and automation cannot be handled with a single composite application, Yates said. Before implementing any software to automate global trade processes, companies should conduct an audit to understand the weakest and strongest trade areas.

"We had to take a very hard look at ourselves and ask, 'What are we good at, and what are we not good at?' " he said. "You have to recognize that it's not a black box," he said. "It's not a system where you can put garbage in and get quality out."

SAP has been adding features and functionality to its GTS software and has branded it as an xApp composite application. The software vendor's latest update extends GTS to include automation features in credit handling and customs warehousing management.

Applied Biosystems chose SAP GTS because of its very tight integration with trade compliance content providers, Yates said. GTS updates almost in real time on changing global trade rules and foreign entities on the government denial list.

SAP GTS helped the company reduce the number of managers who deal with trade brokers, he said. The software also enabled the company to classify products in one location rather than putting managers in each country to manage classifications.

"Using the SAP tool and leveraging the corporate initiative we were able to standardize activities around the globe," Yates said "Rather than putting people in each country to manage trade activities and product classification, we've been able to keep some of the management of those activities in the United States, reducing labor."

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Risk was also a concern for the company, according to Yates. Many trade transactions historically took place in the company's transportation area, and executives typically didn't look that far down into its operations, he said. Sarbanes-Oxley compliance made it clear, however, that the company needed more oversight of its trade activities.

"By automating, we determined that we're not only getting the specific information needed to customs personnel but we're getting them information that goes through quality-review filters," Yates said. "Before, we had no idea what was being submitted."

The GTS software now includes the capability to create and maintain letters of credit. Some warehousing procedures have also been automated to control duty payments. In addition, the upgraded application supports compliance with the upcoming mandatory Automated Export System filing requirements that will affect exporting companies in the US as well as in Europe.

The challenge for SAP is to get more companies to invest in automating import and export processes, admits Neetin Datar, director of SAP trade and compliance applications. Most firms, he said, may be caught up in the complexities of global trade.

"Even today you can walk into billion-dollar companies and they are still using a lot of manual processes," Datar said. "They're throwing human bodies in as middleware."

Though interest is rising, trade processes are very complex and involve multiple entities, so some firms may think that automating processes involves added risk, Datar said. By automating, however, companies actually reduce risk, he said. "A lot of customers are under a huge amount of pressure to meet compliance requirements," Datar said. "Companies are starting to look at Sarbanes-Oxley as a requirement that goes beyond just financials into other areas of operations."

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