Supply Chain & Logistics

How to Drive Efficiency and Compliance to Your Supply Chain

November 22, 2013

The importing and exporting of refrigerated and frozen foods requires the most efficient supply chain, not only in terms of technology and know-how, but also in Sri Ramadas Netwin Solutions headshotterms of timely delivery. The global rise of food demand will no doubt continue to put pressures on supply chains, making it even more challenging to import and export refrigerated foods. In this changing regulatory landscape, it’s imperative that companies pay close attention to importing and exporting requirements in order to prevent supply chain snags.

Here are some things to note to help drive efficiency, while maintaining the quality of your supply chain.

Be in control of your supply chain
Your supply chain is mainly comprised of your partners. By knowing your partners and the region in which your imports originate, you get better control of your supply chain. One of the ways to do this is by becoming a part of the C-TPAT or Customs-Trade Partnership against Terrorism (C-TPAT) initiative. Launched in 2001, C-TPAT helps manage and effectively monitor the movement of goods and reduce the possibilities of unknown elements accessing the shipper’s containers and shipments. Nearly 5 million shipments that are potential targets for terrorists and smugglers move through and across the United States. C-TPAT helps reduce these risks. Some of the ways that C-TPAT helps you get better control of your supply chain are by establishing systems, processes and procedures over your partners and the movement of your goods.

Choose a secure business partner. Your foreign manufacturers and partners should demonstrate C-TPAT security criteria via written/electronic confirmation.

Container and trailer security and inspection. All containers and trailers require security and inspection procedures, including ensuring proper sealing, reliability of locking mechanisms and doors; and reporting and resolving unauthorized entry into containers/trailers or container/trailer storage areas.

Personnel security. Implement an employee identification system, as well as regular detailed background checks for new and current employees.

Secure procedures. Make sure security measures and procedures are in place to track and manage cargo transportation, handling and storage.

Documentation control. All cargo documents must be legible and accurate. Incoming and outgoing cargo must also be verified against purchase and delivery orders, and all drivers must be positively identified.

Facility security. All cargo and storage facilities must have physical barriers and deterrents, including fences, gates, secured parking, alarm systems, proper lighting, locking systems and video surveillance.

Information technology security. Create and implement IT security procedures and policies, such as password protection and employee training.

Security training and threat awareness. Create a threat awareness program for employees, so they can identify possible threats posed by terrorists and contraband smugglers.

Though it may seem like a significant undertaking, getting C-TPAT certified can be a source of tremendous time and financial savings for companies in the long run—from reducing the likelihood of audits and accompanying fines and lowering scrutiny from the U.S. Customs and Border Protection to reducing a company’s personal liability and speeding up the time to get goods.

Stay on top of government regulations and requirements
The food industry has some of the highest government agency regulations and notification requirements, including the FDA and other government agencies.

The key is to be able to stay on top of all these regulations and requirements, so that you are not in violation. This can be challenging, considering all of the constant updates happening to food products affected by the government regulations and requirements.

One of the effective ways is to use technology to maintain and manage a database of all the parts/products dealt with, including its HTSUS classification and all the associated attributes, FDA/OGA regulations and notification requirements.

Invest in a foreign trade zone to help save money on imports and exports
Foreign trade zones (FTZ) enable companies to defer, pay lower duty rates (inverted tariff) or even avoid customs duties, taxes and fees. When operating from an FTZ, you only pay duty when the goods leave the zone for commerce and not when the shipment arrives. This provides you duty deferral benefits, which can greatly help with much-needed cash flow management.

With an FTZ, companies can avoid paying duties on imported goods that are later exported directly out of that zone, and can even eliminate duties on waste, scrap and rejected or defective parts. Food imported, processed and packaged in a zone for ready consumption and exporting is a good example of where duties can be avoided.

When the end product enjoys a lower duty rate than the raw materials, by processing the food in a zone, you only pay the lower duty. This is called inverted tariff. By using an FTZ, U.S. refrigerated and frozen foods importers can take advantage of the inverted tariff duty rate, which could result in substantial savings based on the commodities. Instead of doing customs entries for each shipment, the zone operator can file a single customs entry for all transactions in a week. This can result in significant savings based on the value of the shipments.

Some of the other benefits of FTZ are improved inventory management, automated record-keeping and document storage, increased visibility of the supply chain, improved cash flow and enhanced company compliance.

Smart organizations are always trying to find new and more efficient ways to identify, prioritize and quantify risks and opportunities in their supply chains while staying on top of government regulations and managing requirements for different food-related products. These are the companies that stay one step ahead of their competitors and boost their bottom lines.

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