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Confronting Core Global Trade Problems: Order, Shipment, and Financial Settlement

Written By: Predrag Jakovljevic
Published On: June 7 2005

More Examples of TradeBeam's GTM Solution Blueprints

To reach its aspirations of creating an end-to-end global trade management (GTM) solution, TradeBeam, a leading provider of global trade solutions, has designed several so-called "solution blueprints" for solving specific global trade issues. Solutions range from providing import shipment visibility and trade compliance to eliminating financial discrepancies while managing letters of credit (LC). TradeBeam's Solution Blueprints begin with the key pain points of global trade and identify tools and strategies available to corporations seeking the advantages of optimized GTM. They include a non-prescriptive set of GTM applications that, individually, may add significant value to a user corporation while solving specific export management problems. The idea is to align strategies with finance and logistics organizations and to establish a beachhead with a relatively quick proof of concept that starts automating a defined set of processes and provides payback in several months. Given that the GTM market is still relatively new, TradeBeam has done an impressive job establishing itself as a pioneer.

Part Four of the TradeBeam Keeps on Rounding Out Its GTM Set series.

To broaden its offering, TradeBeam has embarked on a series of careful acquisitions. Its acquisition of SupplySolution has helped TradeBeam produce its collaborative inventory management (CIM) solution blueprint, which shares and communicate parts levels, shipment data, and forecast to anticipate and manage shortages and schedule changes through event driven alerts. In doing so, the solution solves business problems like poor inventory visibility through the networked supply chain, excessive buffer inventories, and costly impact of shortages and schedule changes. TradeBeam also has other acquisitions bundled with its in-house, organic development.. Export management, import management, trade finance, legalization, global trade content, insurance and claims management, letter of credit, and supply chain electronic management are other solution blueprints that TradeBeam has developed or is in the process of releasing. TradeBeam's Letter of Credit Solution Blueprint and SCEM Solution Blueprint are two that are particularly noteworthy because both their core functionality came from acquisitions and lead to significant advances in the field of global trade settlement solutions

TradeBeam Letter of Credit Solution Blueprint

TradeBeam aimed to reduce discrepancies and improve efficiencies in the financial supply chain through automated document preparation and collections, managed LC creation, and issuance expiry and draws. Thus it acquired LC Express in 2003, IFR, and eTime Capital in 2002, which has allowed TradeBeam to develop its impressive LC methodology. The transactions were stock and cash deals, where TradeBeam acquired the companies out of bankruptcy. eTime Capital had spent over $45 million (USD) developing solutions for its customers to helped them optimize their cash flow cycle by applying a groundbreaking technology and a differentiated capability linking financial settlement to the global trade logistics business processes through reconciliation, exception management and real-time reporting. These capabilities have meanwhile provided an excellent complement to TradeBeam's global trade business process and document management solution. Automating the overall letters of credit (LC) process to ensure accuracy and reduce the discrepancy rate is not simply a matter of automating LC issuance. The process if far more complicated because automation is a necessary precursor to integrating the entire supply chain. LC are one of the most important payment and financing vehicles for international trade, because they offer security and risk mitigation. However, in exchange for this security, there are additional costs and challenges. For example, up to 70 percent of all LC documents submitted to the bank for payment are rejected upon first presentation because the documentation has been issued incorrectly. This leads to payment delays, additional fees, and in some cases, non-payment of the drawing. Other LC-related challenges are complicated and lengthy application process, delays in conducting the transaction due to the long issuance process, the strict and often complex documentary requirements, associated secondary and penalty fees, and the high susceptibility to errors because multiple parties must produce documentation.

The result was TradeBeam's Letter of Credit Solution Blueprint, which manages existing LC use and relationships for over one hundred and fifty corporate clients. It synchronizes payment terms and critical supporting documents to enable both electronic LC creation and bank presentation. Part of the secret to TradeBeam's success lies in its document management and reconciliation capability that generates documents based on the LC terms, making use of business partner profiles, electronic data transmission, and templates to minimize data entry. Paper and electronic distribution of LC documentation can be made to banks, trading partners, or any service provider. All documents created and managed by TradeBeam are compliant with Uniform Customs and Practice for Documentary Credits (UCP500) and Electronic Uniform Customs and Practice (eUCP).

This is Part Four of a five-part note.

Part One discussed TradeBeam and GTM.

Part Two presented TradeBeam's background.

Part Three covered TradeBeam's tackling of the supply chain.

Part Five will cover competition, challenges, and make user recommendations.

Qiva Acquisition and TradeBeam's SCEM Solution Blueprint

Another acquisition helped TradeBeam further expand its solution offering. In mid 2003, TradeBeam acquired certain assets of Qiva Inc., which had previously spent over $50 million (USD) developing solutions to help customers manage global logistics and compliance activities. Qiva's customers were predominantly in the hi-tech and retail markets, and the vendor, which had originally only sold transportation and supply chain electronic management (SCEM) software acquired Capstan in 2002 to strengthen its ability to handle import and export compliance, landed cost calculations, and trade document generation. Qiva's solution capabilities have enhanced TradeBeam's existing GTM application suite in terms of transportation event management.

Like virtually all global supply chain execution (SCE) and logistics systems, Qiva has a SCEM function that detects disruptions, delays and other exceptions across the supply chain (see SCP and SCE Need to Collaborate for Better Fulfillment). In addition to managing time-related exceptions, Qiva's SCEM tool would look for other anomalies. For example, if a shipment weighed 1,000 kilograms when it left the factory, but weighs 2,000 kilograms at the pier, a security alert would be issued because contraband could have been introduced into the shipment. The system would look for tolerances at the service level, as well as from a security perspective in terms of weights and measures and descriptions of products. Also, Qiva's trade compliance engine screens against prohibited parties and other rules to comply with government regulations, like most ITL applications, but this same rules engine also flag companies that have been refused credit or for other reasons are considered poor risks. If a new sales person takes an order from one of these buyers, the system would catch it before the user enterprise engages in a trade and produces the product for a problematic customer.

As a result of the Qiva's functional contribution, TradeBeam will soon release the latest version of TradeBeam SCEM Solution Blueprint. This new release will reportedly bring important new features to existing customers, so that supply chain and treasury professionals will now have greater control and visibility to both the physical and financial supply chains. Invoices, letters of credit, and trade finance requests will be tied directly to orders and transportation documents such as transport orders, shipping notifications, and physical supply chain events. This will create a unified view of all global trading activity from one central dashboard.

With the application's increased configurability, customers will supposedly be able to tailor more comprehensive event plans that automatically detail all expected activity associated with a global transaction across the order, shipment, and settlement functions. The application should also allow alerts if there is unusual activity, if key deadlines are being missed, or if items need further attention. With the security model, customers can extend participation to suppliers, forwarders, and other third parties critical to the trading process and address issues interactively with supply chain partners via a Web-based user interface (UI). This purports to further remedy the high costs to maintain unnecessarily high inventory (buffer stocks) and the problems of insufficient warnings to shipment problems.

TradeBeam SCEM Solution Blueprint solution includes an OnDemand set of GTM applications that individually contribute to adding significant value to a corporation while solving specific event management problems. This supply chain monitoring system enables businesses to proactively monitor their supply chain performance by automatically alerting users to exceptions in the order fulfillment process. TradeBeam harnesses data to provide integrated decision support giving managers the best response to out-of-tolerance situations pertaining to order execution and fulfillment. TradeBeam provides near real time monitoring, measuring, and visibility of order and shipment tracking across the entire global supply chain. Solution capabilities include shipment; order and finance tracking; measurement of supply chain; and proactive notification. The solution is also RFID enabled and provides real time visibility of goods in transit through integration with EPC- and RFID-based technology. It combines with TradeBeam's Event Management Blueprint to provide alerts and to monitors the flow of goods through RFID and GPS systems. Another feature is the solution's configuration and integration flexibility. Here event management can be implemented as a component of an entire solution or used stand alone for supply chain monitoring and measurement. When integrated with the rest of the TradeBeam Product Suite, the user can plan, monitor, and execute supply chain activity and compare against the planned activity and measure actual versus planned results. The system can interface with trading partners through an array of communication capabilities including EDI, XML, middleware technologies, or simple e-mail and fax alerts.

Differentiating TradeBeam

Consequently, TradeBeam has been striving to distinguish itself from peers and competitors by offering more than the mere ability to track orders and shipments. It seeks to improve all three groups of activities that make up a global trade—order, shipment, and financial settlement. The outline of the full-fledged GTM platform took place at the end of 2002, when TradeBeam announced the release of TradeBeam 2.0, promising to reduce costs associated with ensuring the order, shipment, and settlement aspects of global trade flow smoothly across the multiple players, multiple systems, regulatory, and documentary requirements inherent when doing business on a global scale. Designed for implementation on a modular basis, TradeBeam 2.0 solution aimed at providing a lower cost of entry to enable customers to focus on key areas, such as global order management, logistics, and settlement activities. It was also designed to help customers achieve short-cycle return on investment (ROI). The solution also enabled customers to continue building and expanding global supply chain capabilities over time by adding new modules and global trade services.

The current release, TradeBeam 2.5, includes OnDemand applications to manage global orders, control global shipments, and optimize global finance. TradeBeam's Manage Global Orders suite supports the processes associated with preparing an order for global trade. Hence, it helps process the order, arrange for insurance, and makes certain that the shipment complies with government regulations, including customs requirements. Capabilities include order management, import trade compliance, and export trade compliance. Its global parts function manages all parts information relevant to global trade, and includes basic, extended, and parametric search capabilities, and standard and reverse bill of material (BOM) and product kits searches. The suite also manages cross-border legal and commercial documentation to coordinate with certifying authorities and to synchronize and reconcile commercial documentation. Product flow from the distribution center or warehouse is managed through collaborative inventory management.

TradeBeam's Control Global Shipments suite facilitates the fulfillment of international orders by helping arrange for transportation, creating trade documents, tracking the shipment, clearing customs, and confirming delivery. The module allows key order data to be setup as shipments and then managed through the international shipping process, from creation through to customs clearance. Its capabilities include multimode shipment execution to manage shipment and booking information; event management to manage event visibility and track and trace information; delivery management to track the completion of a global shipment through to its final destination. The insurance and claims management automate cargo insurance and claims management for exporters shipping under LC or documentary collection transactions. It creates on-line certificates, allows the integration of electronic insurance providers, and accommodates claims tracking and processing. Control Global Shipments also has document management functions and manages all formal and informal shipping document requirements and generates flexible, business rules based document sets. It also permits "on-the-fly" editing of critical document attributes and supports over 200 out-of-the-box documents.

Finally, TradeBeam's Optimize Global Finance/Settle suite completes the global trade process by providing a suite of capabilities that see the trade through to the final payment event. This includes processing, LCs, reconciliation, and payment. Its capabilities include invoice management to manage entire life cycle of global trade invoices; and LC management. Reconciliation manages the identification of data discrepancies. Additional features include remittance and payment management to coordinate payment information. It tracks payments by invoice and invoice line item, allows real time views of payment status, and can directly integrate with banks or enterprise resource planning (ERP) financial applications for remittance notification. The trade financing feature manages the financing of global trade on-line, including approval to pay virtual letter of credit payment for products and allows trade factoring and forfeiting. Another feature is dispute management, which manages trade data issues with trading partners and can collaboratively resolve exceptions on-line with third parties. It also gives proactive notification of disputes on individual documents and provides an audit trail of all steps to resolve disputed items.

Figure 1 depicts the functional scope and architectural blueprint of the forthcoming TradeBeam 3.0 release that will feature several new sub-modules within major three modules.


Figure 1: Scope of TradeBeam 3.0

This concludes Part Four of a five-part note.

Part One discussed TradeBeam and GTM.

Part Two presented TradeBeam's background.

Part Three covered TradeBeam's tackling of the supply chain.

Part Five will cover competition, challenges, and make user recommendations.

 
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