Speaking the language of trade

When an American consumer buys a pair of running shoes as a holiday gift, the simple act of clicking a few boxes on an e-commerce site sets in motion a flurry of actions around the globe.

The order may cascade from a retail Web pOréal in the U.S. to a fulfillment center, carrier, freight forwarder, and customs broker scattered across various countries, each with its own language, currency, tariffs, and import/export laws and regulations. Coordinating this type of multileg shipment and staying in compliance with the various rules and regulations may sound like a headache and a half, but it's not the nightmare it once was. Today's shippers have a tool that helps make sense of the process: global trade management (GTM) software.

In a nutshell, GTM software is a tool that businesses use to manage their import and export transactions and to track the complex and ever-changing symphony of details that—incredibly—result in the delivery of a pair of athletic shoes in the right size, color, and style to the buyer's doorstep.

If that sounds like a challenge, it is. To lace all those pieces together, GTM vendors must track dozens of bits of data for every purchase, combining information in many formats and languages and delivering the data just in time for each logistics partner to run the next leg in the relay. But before they can do this, they must first create a single, consistent database of international trade details from a huge variety of laws in a variety of languages.

The stakes are high—global trade demands rapid handoffs of goods and data between multiple players. "If you're moving something a long distance, you know you will be working with a large number of partners. You want to be sure the right paperwork and information is in the right place so your partners aren't delayed," said Simon Ellis, global practice director for IDC Manufacturing Insights' Supply Chain Strategies Practice.

For GTM software developers, translating terminology, interpreting thick legal documents, and pulling data from massive enterprise resource planning (ERP) platforms is just the half of it. They also must find a way to combine diverse streams of information into a single pool. That challenge is compounded by the proliferation of new rules and regulations in our increasingly globalized economy—what Thomas Friedman described as a rapidly "flattening" world in his 2005 book The World Is Flat.

"As the world becomes flatter, trade has become more complicated rather than less. Regulatory requirements don't ever seem to get less complex, only more," Ellis said. This constant ratcheting up of regulatory trade hurdles inspired one industry wag to coin a list of the "Four Ws" of supply chain disruption: weather, war, workers, and "wegulation."

The regulatory headaches are particularly acute for companies doing business in emerging markets, Ellis said. "The biggest trend is the rise of emerging economies, and the youngest ones have enormous regulatory complexity. Doing business in Brazil or China is a nightmare because they have different regulations in all their different fiefdoms," he said. To stay abreast of this constant change, major GTM players like Oracle, SAP, Amber Road, GT Nexus, and Integration Point often end up assembling virtual armies of in-house experts.

In addition to constant change, one of the obvious challenges associated with international trade is language—or to be precise, lack of a common language. How do you keep trade partners from all corners of the world on the same linguistic page when it comes to complex issues like denied-party screening and harmonized tariff schedules?

There's no single answer to that. Some GTM vendors try to provide something for everyone, offering customized versions of their platforms in 10, 12, or even 24 different languages, Ellis said.

Others, like Amber Road, have taken a more simplified approach. Amber Road has found that most members of the international trade community are fluent in English, rendering it unnecessary to provide software customized to each country in a far-flung global supply chain, said Gary Barraco, the company's director of global product marketing. The firm's GTM application translates only the field names—such as "name" or "date"—into local languages and relies on users to provide their responses in English. That strategy allows Amber Road to offer most of its software applications in just three languages—English, simplified Chinese (both Cantonese and Mandarin), and Cantonese.

Companies that want to customize the software with additional languages can request a software development kit that allows them to translate the field names on their own, he said. Customers have used the tool to translate the GTM field names into Italian, Spanish, and French, he added. Amber Road also creates a consistent database by limiting the choices users have when completing trade documents. Instead of asking open-ended questions, the software standardizes many fields by using pull-down menus with preset options.

Amber Road is not alone in its views on the primacy of English. Cloud-based software provider Descartes Systems Group has also found that most clients want trade-related information in English, according to Cara Strohack, the company's director of marketing communications. When it comes to complex and highly technical legal rulings and trade regulations, however, Descartes considers the original document—in its original language—to be the most authoritative source. So the company captures information with a preference for the original text, followed by official translations, with third-party translations as a last resort (often provided on a "just for information" basis).

In addition to grappling with the challenges of multilingual data entry, GTM providers also have to master the complex language of global trade.

For instance, every five years, the World Customs Organization (WCO) updates its "Harmonized Commodity Description and Coding System," a standardized system for classifying products moving in global commerce for the purpose of determining tariff rates. (The classification system covers about 5,000 commodity groups, each identified by a six-digit code.) The latest update takes effect Jan. 1, 2017, and its impact will be enormous, with 1,159 modifications recommended by the U.S. International Trade Commission for this country alone.

The changes will affect nearly every aspect of global commerce, ranging from the duty rates used to calculate landed costs to the controls that determine whether you can legally complete your transaction, according to Amber Road. Furthermore, a vast number of products will be affected. The 2017 WCO changes include 233 sets of amendments, divided among the agricultural (85), chemical (45), wood (13), textile (15), base metal (6), machinery (25), transport (18), and "other" sectors (26).

Given that a major GTM developer can cover as many as 150 countries, an event like the WCO update represents a virtual tsunami for the industry. As for how GTM developers stay up to date, their approaches vary. Some go it alone, using in-house resources to gather, interpret, and update information. Others rely on a partner like Descartes to do the legwork for them. Descartes provides content on topics like trade regulations, classification processes, and e-commerce solutions to a number of GTM clients, including Oracle and SAP, through its Descartes Customs Info product.

Somewhere in the encyclopedic table of global products, a single code identifies the fancy running shoes that our U.S. consumer ordered for a gift. The act of delivering those Saucony, Reebok, or Nike sneakers to an address anywhere in the world depends on GTM software that powers the engines of international trade, but remains invisible to the typical shopper.