Awareness Of What's Going On Internally And The Associated Risks

Dear Import/Export Compliance Manager,

I am having a difficult time knowing what is going on at my company that could cause import/export compliance problems.  What do you suggest as a strategy for truly knowing what is going on?

Blinded in Boise

Dear Blinded,

One of the keys to crafting an import/export compliance program is to have visibility to all current or potential operations that could have an adverse effect on your company’s ability to remain compliant with import/export regulations or unnecessarily raise the cost of importing or exporting.  Although it is impossible to be all-seeing and all-knowing, as the person responsible for import/export compliance, you need to be as close to it as you can.

In the quest to be omniscient and omnipresent, you will find or have found that good processes are your friends.  The Import/Export Compliance Manager likes to think of processes in terms of funnels.  For example, one particular area that needs to be focused on is the development of new products.  Think of all of the engineers in R&D at a typical manufacturing company.  Regardless of where they are located, what their job title is or what project they are working on, they must get a new product through development to manufacturing.  Hopefully your company has a New Product Development/Introduction (NPD/NPI) process whereby a Project Manager must guide her product through all steps of the process, checking off all the boxes and getting all of the approvals needed.  Bingo, you have a funnel!  Insert the import/export compliance into that funnel by requiring a review by the Import/export compliance Department for, at a minimum, import and export classifications.  If you want to be really awesome, determine the import and export codes for all countries where your company wants to sell the product along with the applicable duty rates.  Presto!  You now have some deliverables the Project Manager must obtain before proceeding to the next step of the NPD process. 

Other funnels that you probably should use in your quest to achieve omniscience (and thus save money, help ensure efficiency and keep people out of jail) are:

• The Shipment Request Process – unless every single shipment your company makes goes through import/export compliance checks in your ERP system, you need to be monitoring this process.  If the process doesn’t exist, your life will be easier if you create one and own it.

  
  

• Acquisition Due Diligence Process – two words: successor liability.  You buy a company, you become liable for all of its, um, problems from the pre-acquisition days.

  
  

• Confidential Disclosure Agreements (CDAs) – these are the main, or perhaps only, way that a company should ever disclose ‘controlled technology’.  Insert import/export compliance-related questions on the CDA Request Form.  If your company doesn’t have a CDA Request Form, well, it should. 

  
  

• Engineering Change Orders (ECOs) for when a new part number is created – these are particularly important if you are trying to classify every single part number your company has in its system or at least the finished goods.  Make it so that a part number cannot be created without Import/Export Compliance approving or at least being notified.

Look for other funnels by starting at the end process, the actual shipments, and work backwards.  You may be surprised at a) the number of ways an item can get a part number in order to ship out of your company’s ERP system or b) the weird stuff the creative and innovative people at your company are shipping out.  It pays to be paranoid.

The Import/Export Compliance Manager prefers to put all of these funnels together into a flow chart of sorts showing all the steps in the development/selection-to-ship process, highlighting the ones that have processes that Import/Export Compliance can elbow into and the ones that don’t.  Remember that the further upstream you can find out about something, the better able you will be to prevent everything from minor delays (What do you mean I can’t ship this out?!!!!  C’mon, it’s 4:30 on a Friday afternoon!!!!) to major catastrophes (Um, yeah, we can’t ship this to China anymore).

And for any of you who think you are omniscient enough to know everything that’s going on at your company, well, the Import/Export Compliance Manager would wager that you are not paranoid enough.  As former Intel CEO Andy Grove wrote (though he might not have meant import/export compliance professionals when he said it), “Success breeds complacency.  Complacency breeds failure.  Only the paranoid survive.”

Go forth and seek (but never believe you can obtain) omniscience!