Importers' requests to software vendors provide window on 10+2 compliance
For an idea of how 10+2 compliance has been going, you only have to look at the requests importers are making of their trade management software vendors.
By Toby Gooley
In the 1980s, then-U.S. Customs Commissioner William von Raab warned importers, customs brokers, and other international traders they'd have to "automate or perish." Those words may be on many people's minds these days as they struggle to comply with the Importer Security Filing (ISF) rule established by U.S. Customs and Border Protection (CBP).
The ISF rule, which is intended to help CBP screen incoming ocean containers for security risks, is popularly known as "10+2"—a name derived from the number of data elements importers (10) and ocean carriers (2) must provide to CBP before a U.S.-bound container is loaded on board a ship. To comply with the rule, which CBP began enforcing in January, importers have been forced to make a number of procedural changes. They must collect more data than before—often from different parties than in the past—and report it to CBP much earlier and in a different format than they used to.
Global trade management (GTM) software vendors say they can help. They have modified their existing products or developed new ones to help customers gather, verify, format, and file ISF-required data. They're also soliciting feedback from ISF filers to find out what problems the filers may be experiencing so they can come up with fixes.
To get an idea of how 10+2 has been going so far, we asked several software vendors what kinds of changes their customers have been asking for, and why.
Each of the following global trade management software firms has developed an Importer Security Filing (ISF) product. Some have also devoted sections of their websites to compliance with ISF, popularly known as the "10+2" rule.
Working with overseas suppliers
One of the biggest challenges for importers and their filing agents (usually customs brokers) is getting the required information about the sources and intermediate handling of an imported product. Import transactions often involve a complex chain of unrelated businesses; sometimes shipments are even resold while en route. Even when accurate information exists, it's not always available as early as CBP wants.
Another challenge is that many U.S. imports originate in regions where access to technology may be limited, export/import processes are fairly informal, and buyers must depend on intermediaries to bridge language and cultural gaps.
For QuestaWeb Inc., a GTM software provider in Westfield, N.J., one of the most common requests from customers is for help accommodating inadequate technology or Internet access at overseas supply chain points. CEO Leon Turetsky says a number of large, international clients have asked the company to develop simplified data formats and even Excel-based data entry options for use by their suppliers.
Because CBP's filing timetables are based on vessels' loading and departure dates, some of QuestaWeb's customers have also asked that vessel sailing schedules be incorporated into the vendor's ISF module to warn them of missing data when deadlines approach, Turetsky says. Customers have also asked that notifications of incomplete, misfiled, and erroneous data be automatically distributed to the originating and related parties as well as to a central ISF unit.
To collect as much of the required information as early as possible—and see what's missing—filers say they must be able to gather data from multiple sources here and abroad. That led one software developer, Charlotte, N.C.-based Integration Point, to develop a program that allows "any commercially available electronic data [to] be mapped directly into filings, in any combination," says Melissa Irmen, the company's senior vice president-products and strategy. Irmen says that capability makes it easy for "customers [to] focus on the highlighted gaps in the data."
But it's not enough to pull in data from multiple sources; importers are finding they also need a means of sharing it with supply chain partners. "[Using software to develop] a centralized repository for product classification that allows for data, including updates, to be shared automatically with the entire supply chain ensures that everyone is using the same database for item classifications," says Irmen. With tight deadlines to meet, having standardized information readily available helps supply chain partners process information quickly and accurately and makes for more timely ISF filings, she adds.
Automate and integrate
Software vendors report that three other requests are on almost every ISF filer's wish list. Kevin Gavin, vice president of supply chain services for Midland Park, N.J.-based IES Ltd., sums them up: "Our customers have been continuously seeking new and more sophisticated reporting features. They are seeking event-generated, automated messages. And, of course, they are seeking additional automation and EDI integration." Most of the engineering IES is currently engaged in, he adds, relates to automation requests via XML (extensible markup language) and EDI (electronic data interchange), such as integrating purchase-order data into the ISF.
It's no surprise that these are top priorities. Analytical and management reports highlight both good performance and bad, and they allow users to proactively address problem areas. Event-generated automated messages bring the user into the picture only when an exception occurs, eliminating the need to babysit every transaction.
Process automation and integration with other systems is a huge productivity booster, says Nathan Pieri, senior vice president, marketing and product management for Management Dynamics Inc. of East Rutherford, N.J. "By integrating the ISF data with a trade compliance or supply chain visibility solution, you can eliminate the manual entry of many of the data and transmit the ISF via EDI or XML to your broker or directly to customs," he says.
Integrating data with other systems is the best way to increase productivity without sacrificing compliance, says Alan Rosenblatt, ISF product manager for Kewill Inc. in Chelmsford, Mass. Using data interchange between two or more trading partners, he says, can in some instances cut the time needed to create an ISF by 90 percent. There are three paths to reaching that goal, he explains: more integration via EDI with trading partners; improvements to the Web user interface, which speeds up the filing process; and making sure the right information is in the right hands at the right time.
Importers are realizing some unexpected side benefits from ISF automation. In Rosenblatt's experience, companies are achieving process improvements across the import supply chain because ISF drives more information toward the front end of the cycle. Attendees at Integration Point's annual user conference in June reported that the exercise had spurred automation of other logistics processes and provided better visibility into their supply chain activities. One importer that created an ISF data integrity team is now using that approach in other areas where data integrity is important.
What comes next?
In the past few months, CBP has been revising some of its requirements to address difficulties filers have encountered. In response, software developers are working on appropriate modifications to their systems. For example, CBP's announcement that it will compare ISF filings with import entries (which may be filed weeks apart) prompted Integration Point to develop tools that let customers compare the documents automatically, on a single platform, says Irmen.
Pieri adds that once CBP's enhanced cargo-manifest query function is ready, importers and brokers will be able to use software to determine the proper bill of lading number for their ISF filings—and do it much sooner than they can now.
Technology is a necessary partner in ISF compliance, but it's not the only key to success, says Judith S. Wynne, systems administrator for customs broker and Kewill customer J.F. Moran Co. Inc. of Providence, R.I. "ISF success is as much about understanding what data is needed and the various sources of the ISF data—who has it and when is it available to the ISF filer—as it is about the technological ability to transmit the ISF data accurately and [quickly]," she says. "Of course, having a robust and functional ISF software tool ... is essential because you are dead in the water without one."
About the Author
Before joining DC VELOCITY and its sister publication, CSCMP's Supply Chain Quarterly, where she serves as Editor, Toby Gooley spent 20 years at Logistics Management covering international trade and transportation as Senior Editor and Managing Editor. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.
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