Mitigating mid-market risk
By Geoff Whiting
Global trade management systems (GTM) were originally designed to address how goods crossed borders and required large shipment quantities to be worth the cost, but these restrictions have slowly been torn down thanks to Internet-based technologies, allowing vendors to target midsized players with expansive GTM offerings.
“Traditionally our sweet spot has been very large global manufacturers and retailers because these are companies that had to deal with global trade compliance and logistics requirements from the get go. But, increasingly mid-market companies — anyone south of $750 million in revenue — are becoming just as global and need the same solutions as the Fortune 500s,” said Scott Byrnes, vice president of marketing for GTM service provider Amber Road.
Amber Road, formerly Management Dynamics, is conforming its global reach to a local scale. Byrnes said GTM has evolved to span management of the entire supply chain and transportation management (TM) companies are turning to GTM to ease their growth. “Collectively this whole space is attempting to expand its footprint and become more relevant to the business and the end-to-end supply chain,” he said.
One approach GTM vendors are taking to target mid-market companies is offering tools for necessary functions at lower costs or free versions with usage restrictions, hoping that midsized outfits will dip in a toe and find the water to their liking.
In January, Amber Road launched a free version of its toolset at TradeWizards.com. The Website is a streamlined version of its existing Trade Wizards product and offers free restricted party screenings, product classification, and landed cost calculations.
The paid toolset removes volume ceilings on these three modules, while adding in import/export compliance tools and a tool that determines what types of documents are needed for the move being calculated. The document determination tool will also note applicable regulations and required licenses for the international move. These tools are among the most heavily used because their actions are compulsory for global trade.
“Very soon you’ll see us offer mid-market solutions for more operations, allowing companies to import product master lists into a database format and do screenings based on that,” Byrnes said. “We’ll release many of these on a trial basis where companies can get in, try them, and get comfortable with them.”
Byrnes said it can get a bit tricky targeting these mid-market companies with some tools because they often can’t afford to or don’t know they need to do things like denied-party screenings. Byrnes said “The vast majority of companies in the mid-market don’t know they need to screen and don’t have trade compliance systems in place.”
While mid-market companies are more often thought of as risk averse, they may be inherently more risky since they simply aren’t aware of some rules in the first place.
Byrnes called this a scary proposition because of how much liability and trouble these companies are opening themselves up to, but it also means the market is ripe for the picking for GTM vendors.
One way vendors will approach this sector is to present statistics or services that are both impressive and daunting. Amber Road, for instance, monitors 200 sanctioned party lists and delivers hands-off updates for the lists. Monitoring all of those lists can be an intimidating task, allowing Amber Road to position its GTM as a relief.
“We notify customers that an update has been made to their system so they can be aware of it, but it automatically takes effect in the database and they don’t have to do anything. That is what’s a little different about us, we automate soup to nuts,” Byrnes said.
Amber Road is rounding out the platform for midsized companies by adding manufacturers and suppliers to its clientele, and by making it easy for everyone to integrate and automate the trade data they need.
“It’s not part of a global manufacturer’s core competency to track and update all of these trade regulations, and for most companies it’s not economically feasible to do so,” Byrnes said.
Ultimately, the goal is to provide a backbone for the global management of these goods and moves by improving its offerings and replacing the patchwork point solutions potential customers are operating.
“The vision is to have one centralized but localized solution that’s capable of automating country-specific nuances all in one place,” he said.
To create this centralized vision, companies must build out GTM solutions to cover more regions and modes.
One area Amber Road is pursuing to secure more transportation business is in over-the-road management.
“Increasingly we’re adding in partnership and discussions with over-the-road domestic transportation management companies,” Byrnes said. “To a small degree we manage some domestic TM functions on a global move but it’s nothing as comprehensive as domestic routing, rating, or TM optimization.”
Byrnes said these road-TM companies previously approached Amber Road when they wanted to add in ocean or air for customers, but now they need assistance responding to customer demand for support of over-the-road moves in countries like Brazil, China, and in parts of Europe.
“Tying all this together is a big trend, and in the U.S. a lot of these transportation management companies are being pressured by their customers to go global. That’s really precipitated their outreach to us,” Byrnes said.
The company doubled its sales force in Europe over the last 12 months, and Byrnes gave some credit for the expansion to a rise in mid-market companies that have begun to expand their reach.
The future for GTM vendors looks two-fold: they must bring smaller players to the table while expanding their solutions to meet more transport requirements, and the best looking inroads still involve mitigating risk for major moves.