which means the company often has to bring in parts it has
never used before. Each time that happens, it has to start
from scratch to determine the item’s classification from a list
of more than 17,000 unique 10-digit numbers.
Although Tognum America often consulted with its cus-
toms broker on classification matters, it couldn’t just hand
off that responsibility to an outside party. Nor did it want to,
says Christin Gleissner, the company’s manager of logistics
and customs compliance. “We work closely with our broker,
but we decide what’s the tariff code,” she says. “The importer
of record carries the responsibility to classify the goods accu-
rately according to the Harmonized Tariff Schedule.”
The other part of the problem is that as a supplier of
engines and spare parts for military vehicles, Tognum
The task is more daunting than it
might sound. There are thousands of
names on the list, and the lineup
changes daily. Although Tognum America
hired an outside firm to help with the screen-
ing, compliance remained an ever-present worry.
“If you’re non-compliant, you could lose the ability to
sell military products,” Gleissner explains.
What brought the problem to a head was a surge in volume. Despite the global economic downturn, Tognum
America has seen sales soar in recent years. “Our business is
booming,” says Gleissner. “The mining, oil, and gas industries are doing well.” While that was great for the bottom
line, it was putting strain on the staffers who were preparing all the trade documents manually. Clearly, it was time
for the company to rethink that part of the operation.
Today, the entire documentation process is automated.
For imports, the trade management software stores all of
the assigned HTS codes in its system. When an order is
entered, the software can swiftly determine which items
have already been classified and which require attention.
“You can focus on those parts that have not come in
before,” says Gleissner.
Once the items have been classified, Tognum America
passes that information on to its customs broker, which, in
turn, transmits the requisite electronic “paperwork” to U.S.
Customs and Border Protection for clearance of the goods
prior to their arrival at the port. “When the shipment
arrives, the goods are 95 percent cleared,” says Gleissner.
As for exports, the software has automated the labor-intensive buyer screening process to help ensure compliance with export regulations. The company
has purchased a denied party database and
feeds daily updates into the trade management system. When an order is
placed, the software checks the sanctioned parties list and determines
whether any of the shipments will
require a special export control
license. It also conducts a second
check on the delivery address before
a product gets shipped. “If an address
in Cuba comes up, it would block the
shipment immediately,” says Gleissner.
AN END TO MANUAL PROCESSES
Given the situation, it’s no surprise that when the company
had a chance to acquire trade management software as part
of an enterprisewide systems upgrade, it didn’t hesitate.
Two and a half years ago, Tognum America made the decision to go with an SAP system as its corporate IT backbone.
As part of the project, it installed SAP’s trade management
module, BusinessObjects Global Trade Services. Among
other functions, the app is designed to cut costs, reduce the
user’s risk of trade penalties and fines, and help it clear both
inbound and outbound shipments through customs faster.
It has also allowed Tognum America to systematize trade
documentation processes throughout the company.
LOWER COSTS, BETTER COMPLIANCE
As for how the software has worked out to date,
In addition to risk mitigation, the trade management system has improved reconciliation of orders with shipments.
In fact, the software has reduced potential invoicing mistakes by 80 percent. That’s because the system keeps tabs on
exports and imports, facilitating the matching of shipments
with invoices. “Before the goods leave, we already know
what purchase order they are related to,” says Gleissner.
Tognum America is also saving money on compliance-related matters. With the software in place, it no longer has
to pay a third party to cross check the names of buyers
against the U.S. government’s embargoed list.
But the biggest gain of all for the engine manufacturer
has come in the area of enhanced regulatory compliance.
SAP reports that since installing the software, Tognum
America has achieved a compliance rating with U.S.
Customs of over 95 percent. ;
