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Gartner Newsletter Amber Road Issue 1 120518.pdf

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Many organizations turn to enterprise maturity models as an input to strategic planning. With an objective assessment of performance across key metrics, organizations can use these maturity models to help define better business practices and to time the purchase of technology solutions to support them. Although most large companies have been global for some time, Global Trade Management (GTM) — planning and executing the steps required to move goods across international borders — has
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  Many organizations turn to enterprise maturity models as an input to strategic planning. With an objective assessment of performance across key metrics, organizations can use these maturity models to help define better business practices and to time the purchase of technology solutions to support them.Although most large companies have been global for some time, Global Trade Management (GTM) — planning and executing the steps required to move goods across international borders — has been largely overlooked. That is to say, compared to other areas within the supply chain, such as warehouse management, transportation management and manufacturing planning, organizations have not invested as much time and energy in optimizing GTM.However, increased scrutiny on supply chain security and more stringent regulatory requirements have brought GTM into focus as a distinct concern. As more organizations expand their global trade presence, GTM solutions are being implemented both for financial gain through increased efficiency and for risk mitigation through automated compliance. Overview Gartner Research has designed a maturity model specifically for organizations engaged in global trade. In this research, Gartner outlines the defining characteristics of companies in each of the four stages of maturity for global trade management (GTM): compliance/logistics, organization, technology, and measurement. With clearly-defined characteristics for each stage of maturity, Gartner makes it possible for organizations to assess where they are today, and to chart a reasonable course for improvement. The following pages contain excerpts from Gartner’s Global Trade Management Maturity Model, as well as examples of how Amber Road’s solutions can assist organizations with driving value at each stage of maturity, and bridge from one stage to the next. 2Gartner Research: Global Trade Management Maturity Model Supports Value Chain Transformation6Taking the First Step in GTM Maturity9 Building on Success:Moving from Cost-Focused to Demand-Driven10 Reaching the Top:Moving from Demand-Driven to Value-Driven15 Turning Recommendations into Reality with Amber Road’s Global Trade Management Solutions 16About Amber Road Featuring research from Issue 1 A Model for Value Chain Transformation: Achieving Global Trade Management Maturity with Amber Road  2 A Model for Value Chain Transformation is published by Amber Road. Editorial supplied by Amber Road is independent of Gartner analysis. All Gartner research is © 2012 by Gartner, Inc. All rights reserved. All Gartner materials are used with Gartner’s permission. The use or publication of Gartner research does not indicate Gartner’s endorsement of Amber Road’s products and/or strategies. Reproduction or distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice. Although Gartner research may include a discussion of related legal issues, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner is a public company, and its shareholders may include firms and funds that have financial interests in entities covered in Gartner research. Gartner’s Board of Directors may include senior managers of these firms or funds. Gartner research is produced independently by its research organization without input or influence from these firms, funds or their managers. For further information on the independence and integrity of Gartner research, see “Guiding Principles on Independence and Objectivity” on its website, http://www.gartner.com/technology/about/ombudsman/omb_guide2.jsp. From the Gartner files Global Trade Management Maturity Model Supports Value Chain Transformation Companies must integrate global trade management and oversight into the overall demand-driven, global logistics strategy. This ensures that desired customer outcomes are met in a cost-effective manner, while reducing complexity and risk. Overview In this research, Gartner outlines the defining characteristics of companies in each of the four stages of maturity for global trade management (GTM). We identify what “good” looks like, as well as what separates the leaders from the pack. Key Findings ã Based on our conversations, most companies are in Stage 1 or Stage 2 GTM maturity. They focus on internal-facing processes, with the goal of lowering costs, rather than focusing on customer outcomes. ã Many rms don’t have the executive oversight or commitment to drive the value chain transformation of GTM into maturity Stages 3 or 4. ã Most companies have a fragmented technology landscape, which inhibits advancement in maturity. Recommendations ã Identify your company’s stage of GTM maturity. ã Establish a global, centralized organization for GTM oversight. Assign overall GTM responsibility to one executive (for example, the CXO or senior VP of supply chain). ã Standardize global processes and technology with regional variations, as compliance and cultural differences dictate. ã Dene common metrics for which all groups and functions are accountable, with the end-customer outcome in mind. ã Use Web-based, cloud-based or software-as-a-service (SaaS) technology platforms to link all parties in the supply chain to real-time logistics, compliance and financial information. Analysis As Gartner outlines in “Stages of Value Chain Transformation, Revisited,” value chain transformation is a journey. Here, we examine this framework as it applies to GTM operations, presenting a maturity model to help companies gauge the sophistication of their GTM processes. Gartner defines GTM as “the processes and technologies used to support the unique logistical, regulatory and financial aspects of the import and export processes.” Constituents include carriers, freight forwarders, customs brokers and shippers. GTM tends to be a very fractured process, since it incorporates roles and responsibilities from various groups: logistics, compliance, finance and sourcing. These groups have typically acted semiautonomously, with no executive pulling them together. Metrics are defined independently, which often leads to conflicting outcomes.  The Four Stages of Maturity The first step is to identify your company’s stage in the maturity model. Incorrectly assessing your position will lead to flawed approaches. For example, employing automation and technology too early will only automate flawed processes, which won’t drive transformation. Another example is if global processes are put in place, but the proper organizational structure and executive commitment aren’t, then enforcement becomes a problem. Here, we outline the four stages of maturity and the defining characteristics of companies at each stage (see Figure 1).  3   3 Stage 1: Market-Focused In this stage, companies are top-line-driven and usually organized by business unit, with local, functional priorities. For example, sales might take an order for 30,000 items and promise delivery without interacting with manufacturing or logistics. Supply chain and logistics are prioritized to enable and support local market growth. Logistics, compliance, finance, sourcing and product design typically act independently. Global operations are often disconnected from the domestic supply chain. Incentive measurements are functional and not optimized. Demand is an assumption. The company uses diverse, disconnected systems and manual processes. Logistics contracting and auditing — that is, if there is any — are handled in spreadsheets. There’s no risk or cost analysis of compliance processes. Leadership isn’t driving an end-to-end, companywide and systematic process to become more customer-driven and outcome-based. Stage 2: Cost-Focused Companies realize that opportunities for greater scale and efficiency exist if there’s consolidation of logistics, compliance and technology processes. However, the culture is still largely internally focused and aimed at large, visible costs within departments or business units, not cross-functionally. Metrics focus on transactional waste, efficiency, costs and, to a degree, basic risk management. Projects are measured on cost-reducing metrics, not customer satisfaction or total cost-to-serve (CTS) measurements. Companies begin to improve, update, and consolidate technology and connections with third-party logistics (3PLs) and suppliers, but information sharing is typically one-way or cost-focused. Logistics outsourcing initiatives are predominant at this stage. Typically, there’s still little or no connection between these cost-reducing efforts and a greater transformational change strategy. Source: Gartner ( March 2011 ) FIGURE 1 Value Chain Transformation/Change Maturity Stage 3: Demand-Driven As companies and leadership mature, they realize that an integrated, customer-focused supply chain is the priority. This integration and early-stage process focus supports initial collaboration with trading partners to fulfill customer needs. These changes drive new thinking on metrics. The focus shifts from costs and compliance to risk and outcomes. GTM becomes part of sales and operations planning (S&OP), which enables the conscious trade-offs required to deliver profitable, perfect orders. Transformational processes across the value network are organizationally driven versus functionally led, with the scope extended to incorporate external customers and suppliers. Stage 4: Value-Driven Organizations in Stage 4 are focused on sensing and translating value, as well as working with end-to-end, internal and external networks. This focus includes creating value with trading partners through strong, strategic alignment and collaboration processes supported by win-win, trust-based cultural characteristics. This amplified alignment and change leadership across the extended network are focused on profitable supply/demand synchronization, as well as increased and sustainable business performance. All network partners in this stage are orchestrating the network and adding value collaboratively, while making balanced, profitable trade-offs. Logistics, compliance, finance, 3PLs, banks and suppliers all contribute to the desired outcomes.We include more details on the defining organizational structure, technology footprint and metrics commonly exhibited at each stage in the transformation in Table 1.  4 Market-FocusedCost-FocusedDemand-DrivenValue-DrivenGTM (Compliance and Logistics) ã Complete reliance on broker/ forwarder ã Decentralized, separate groups by role and geography ã Manual document creation and transfer ã Little global visibilityã Centralized function; global contracts ã Automated document creation ã Landed-cost considerationsã Automate compliance functions ã Technology consolidationã Integrated planning and execution ã Close involvement with regulatory decision makers ã C-TPAT and other certifications ã Reclassication opportunitiesã Performance diagnosticsã Education and trainingã Build portable processes for use by third parties ã Free trade zones and incentives modeled ã Risk management considerations ã Global, centralized oversightã Logistics, compliance, finance, risk, 3PLs and supply collaborate to develop supply strategy ã Compliance mandates analyzed for current and future opportunities for savings, and to reduce risk  ã Collaborative network design to meet customer service levels, while reducing risk  ã Global, adaptive, Web- based technology system Organization  ã Stand-alone departmentsã Functional independenceã Separate metricsã In-ghting ã Nonspecialized staff ã No growth programs; limited training ã No alignment to business objectives ã Beginning connections between functions ã Development of internal metrics and systems ã Standardization of global processes established ã Focus on reducing “self- inflicted wounds” ã Incentive programs tied to departmental objectives ã Leadership established over cross-functional processes ã Global, centralized functionsã Well-managed relationships with third parties ã Organization pursuing collaborative opportunities with customers and suppliers ã Incentives tied to overall business objectives ã Integrating logistics with customer service ã Specialized education and training programs ã Cross-functional group advising on logistics, compliance, sourcing and customer service issues ã Organization viewed as strategic differentiator ã Team of highly specialized logistics and compliance professionals ã Continuous improvement culture ã Tightly integrated into technology and innovation activities Table 1. GTM Maturity Defining Characteristics
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