The primary regulating bodies are the following United States entities
and their overseas correlaries:
US Customs and Border Protection (CBP): A component of the US Treasury,
CBP governs which goods can enter the country, as well as the form and
quantities in which they can enter. Particular attention is paid to
goods from countries with restricted trade agreements and those
suspected of dumping practices. Customs can detain indefinitely any
shipments that they feel require inspection for compliance. Customs
also keeps track of unfinished goods that enter the country for further
processing and re-export in a more finished form.
US Food and Drug Administration (FDA): Controls foods (except for
certain meats and poultry products), drugs (human, animal and
biological), cosmetics, medical devices and radiation emitting devices,
etc., offered for entry into the United States through U.S. Customs.
Food Safety and Inspection Service (FSIS) www.usda.gov: Part of the
USDA, FSIS is responsible for assuring that U.S. imported meat, poultry
and egg products are safe, wholesome, unadulterated, and properly
labeled and packaged. They have explict rules and regulations regarding
inspections, quarantines, reinspections, labeling and much more on the
USDA site.
Federal Maritime Commission www.fmc.gov: Regulates ocean
transportation, particularly rate tariffs and service contracts between
shippers, carriers and nvoccs.
Federal Aviation Administration www.faa.gov: Deals primarily with air
safety, e.g. hazardous materials, as well as homeland security.
Compliance requirements impact the Logistics Management Lifecycle in two
main areas -- Information Reporting and Operational Processes
Information Reporting
The specific information requirements to comply with each of the above
entities can fill volumes. The main thing to understand is that the
requirements are mandatory and strictly enforced -- especially in light
of September 11, 2001 and the resultant heightened premium on security.
Thus, it is imperative to integrate compliance as much as possible with
normal day to day operations in order maintain efficiency.
A prime example of this is submission of Import entries to US Customs.
Long a manual, paper based process, today the vast majority of entries
are submitted and cleared "paperless" via the Automated Broker Interface
(ABI). Most import brokers have automated data feeds from their
operational systems into ABI that eliminate the need for duplicate
effort.
ABI has been around for many years. On the export side, the Automated
Export System (AES) debuted in 1999-2000 for submitting export
declarations to the Treasury Department.
Complying with FMC regulations is not such an easy matter. While the
FMC has a web interface called ServCon for filing service contracts,
ServCon is not designed for automated data exchange. Rather, it is more
like a vault that Carriers and NVOCCs can open with a password to place
their contracts inside. The contracts can be in virtually any
electronic data format, from spreadsheets to word documents or pdf
files. This design makes it difficult to automatically file contracts,
even for those who have them in a database. However, their are now web
based solutions emerging from leading providers that tackle this problem
by filing contracts directly from the on-line rate database as soon as
they are created.
The FMC also requires tariff rates to be published. Many Carriers and
NVOCCs pay third party publishing houses significant sums to perform
this function. As with service contracts, there are now web based
systems that house published tariff rates in a database that is made
accessible to the FMC. These systems are very cost effective compared
to paying a publishing company by the Tariff Line Item (TLI).
Operational Processes
Unlike reporting, this deals with the impact of regulatory compliance on
the very process of moving goods through the supply chain. More
specifically, we are talking about visibility, monitoring and control of
goods in transit. We will get into this area in more depth in the next
installment of this series, but it is prudent to mention some key points
here.
While it will keep you on the right side of the law, proper reporting
does not necessarily mean an effective and efficient supply chain. As a
simple example, customs documents can be properly submitted and the
containers still held for inspection. If the importer does not have
visibility to this delay, then it may improperly plan dock labor or
production schedules in anticipation of goods that do not arrive as
scheduled. As enterprises run leaner and leaner supply chains, real
time tracking and event driven alerts become more imperative.
For importers dealing with goods regulated by the FDA or USDA, this type
of monitoring and control is vital because the probability of inspection
related delays is much higher. Fortunately, there are technology
neutral, web-based tools available to automate this process while fully
integrating with virtually any logistics operations systems and ERPs.
Some look upon regulatory compliance as a necessary evil in the world of
global commerce. But the mandatory nature means everyone is in the same
boat. So with the proper tools and processes to do the job more
effectively and efficiently than your competition, you can turn what is
a necessary evil for others into a competitive advantage for you.