As part of the ASUG portion of the conference, Jessica Hill co-presented with QBP on how a Small/Medium Business (SMB) can take advantage of SAP GTS.  If you weren’t able to attend and would like to learn more about the presentation, please feel free to contact global_trade at entrypointconsulting.com and we’ll be happy set up a web meeting with you.  In other presentations, SAP showed off more new features of GTS 10.1; Cooper Industries told us how much using NAFTA in GTS has helped their business; Microsoft talked about all their non-ECC tenants using the Sanctioned Parties List service; and Hershey gave us an overview of how Compliance plays a very important role in the world of chocolate.

Of course, one of the main benefits of attending Sapphire for a company like ours is getting  to meet with prospective clients.  We hope everyone we met at Sapphire walked away knowing a little more about us and our Global Trade practice.

Did you attend Sapphire/ASUG?  What did you learn new about SAP GTS?  Did you have a favorite booth?

Their kingdoms were at peace most of the time and they even had quite a bit of trade going between them.  However, each king had issued decrees regulating the export of certain items to specific people who lived in other kingdoms.  One realm even restricted people from other kingdoms from even looking at certain tools in order to protect its spiffy ideas for new things.   Each king had a trusted official who managed the application of all these decrees.  Every year, one of the three officers would take turns hosting the other two at a feast to discuss the decrees and determine how any modifications would affect their trade and their work loads as well.  They would advise their kings on the most advantageous approaches to improve trade in the coming year without harming their competitive advantages over the other kingdoms in their respective areas of specialization. These trusted individuals were named Vigo, Migo and Trivinia.

Vigo was the most recent host.  On a fine spring day after a morning round of Gopher Golf the three friends were discussing how they each managed their increasingly complex sets of rules.  They were feasting on a new delight called “PBJ” from a faraway kingdom where it was said that the people ruled themselves and even voted on who would be their king.  Well, even if that is preposterous, that PBJ was delicious.

“And so, Trivinia, I find it necessary to hire more people to work at our border since your kingdom is buying more of our special thingamajigs,” Migo commented as he licked his fingers clean.  ”I am truly happy for the increased trade, but my export management system requires us to review each shipment and then apply the correct license number to each item.  I have I added 10 new reviewers since the last two full moons.”

“Quite so, Migo,” exclaimed Vigo, “I am experiencing the same effect on the border we share with Trivinia.  Since her king approved the purchase of more of our whatchamacallits, I have also seen a spike in the amount of workers required to review each outgoing shipment.”

“What of you, Trivinia?” Migo asked.  ”You must be suffering from the same situation.  Did you not tell Vigo on the 10th hole of Gopher Golf that you had increased the exports of diddly bobbers twofold last year to the land of these PBJ people?”

“That is partially correct,” Trivinia smiled, “the PBJ-ers find our diddly bobbers fascinating and useful, but only the encryptogrammatical kind is truly regulated so we don’t have to stamp each one.”

Migo gasped.  ”What sayest thou, Trivi?  Surely you are not saying that you allow some items to pass through the Sunset gates without stopping and inspecting each shipment.”

“Not just the Sunset gates,” Trivinia replied.  ”We are blessed with a bountiful land and a very clever people.  New items are being made each day and our roving marketers are very successful at securing purchase contracts.  Why, the Dulphonians and the Fundolphians are practically fighting each other to see who can corner the market on those whatsits we make.  So our volume at all our gates has jumped faster than the gopher Vigo struck on hole number five this morning.”

“I truly did not mean to hit the creature,” Vigo said, with remorse. “Who could have guessed that I, of all people, would land a hole-in-one there?”

“I was only poking at your ribs,” Trivinia laughed.  ”My gamekeeper said the little thing was not harmed.  Anyway, I was about to tell you that six moons ago, my king approved the purchase of a new trade system.  We looked at several but finally settled on one called SAP GTS.

“The consultant who helped us implement this system reviewed our processes and helped us to see that we do not need to stop each shipment in order to apply the king’s export seal to those documents which require a seal. “

“But how can that be? Migo questioned with astonishment.  ”I also have many items which are not truly controlled by my king’s decrees, but still require someone to manually indicate that in our trade system.  Aren’t you afraid that something will slip through?”  Suddenly his eyes widened.  ”Oh my!  You could lose your head, Trivi!”

“Relax, Migo.  Have some more wine.  We set up our GTS system to examine each line of the shipment information coming from the main system – you know, the one which lists all items our kingdom has sold.  We set up rules in GTS to allow the non-controlled items to pass through with an indicator saying ‘no seal required.’  But the beautiful thing is that our consultant helped us to see that if we set up our rules for the regulated items in the correct way, GTS will also assign the correct seal indicator there as well.  The rules are based on a set of attributes that appear in the type of license that is required!  The consultant called it ‘License Determination’ and it has saved me from having to work on nights and weekends.”

“My compliance system could not possibly make such complex decisions,” Vigo muttered.  “Even with business rules, someone in our group must make the final decision.  What if your SAP GTS system makes a mistake?”

“That is virtually impossible,” Trivinia responded, “because the determination process and the export licenses we maintain in the system reflect exactly what we would have to do in the real world.  In other words, GTS is only making the decisions that I have taught it to make through the business rules.  So, yes, I trust it.  Besides, we tested it thoroughly with all kinds of imaginary scenarios before we actually started using it for real shipments.  If it has insufficient information to make a decision, it simply stops that shipment while continuing to process the others.  So, I only have to review the exceptions, not every shipment.”

“But isn’t it hard to maintain?” Vigo queried.  “There are dozens of different seal codes and some apply differently when exported to certain foreign lands.”

“I admit there was some hard work at the beginning, but that was mostly to really examine all the types of shipments we had.  We made certain all the products are classified correctly, then set up the rules so GTS can make decisions,” Trivinia responded.  “But the time and expense I am saving now has more than covered that extra effort we put forth in the beginning.”

“Remarkable!”  Migo sighed.  “My system is setup to function like a gatekeeper, stopping everything but the shipments of pig slop and requiring one of my staff to manually complete each transaction.  Your GTS system sounds like it could be just another one of your people making decisions they might make.  It seems like a ‘gate opener’.”

“It is truly liberating,” Trivinia almost squealed.  “I’m sure my consultant would be happy to show you a demonstration.  Once you have seen the power of this determination and assignment process, you will not want to return to the old ways.

“We are even exploring the use of our GTS system to process imports too.  But that is a story for another day.”

“Vigo, please pass me another PBJ,” said Migo, “The purple sticky stuff is very pleasing to my tongue.”

“Certainly, my old friend,” Vigo smiled, “and let us drink a toast to our beautiful and brilliant friend who will shown us how to reduce our workloads while improving our throughput.  Why, I might even have enough extra time to work on my Gopher Golf skills.”

Trivinia and Migo both doubled over with laughter.

There are several components to the Export Reform.  At a macro-level, the following are some of the major impacts:

• Some new ECCNs will go into effect — mainly 6A910 and 6A990.
• New USML Category XIX will need to be created.
• Clients exporting under USML VIII(h) will need to reclassify their goods.  Gas turbine engines, parts, and components will get reclassified to Category XIX.  Most other parts will be reclassified to 6A910 or 6A990 under the EAR.
• The STA license exception needs to be configured in your system.  If you need a refresher on STA, check out our previous posts here and there.
• A plan needs to be defined for determining which materials are going to which lists.
• If you have two US regulations in your system (ITAR and EAR), a possible systemic solution needs to be created to “mass unclass” your ITAR parts and then subsequently mass class those parts under the EAR.  Mass class is pretty straightforward, but GTS does not have a native solution for “mass unclass.”
• A cleanup effort needs to occur for your affected DSP licenses.

We know there are more items to consider, but this is a good start to get everyone thinking about the changes that need to be made via business process and systematically.  The good news is that we have 180 days to transition.  The better news is that we (EntryPoint) have a vested interest in this topic.  There is no doubt that we’ll be talking about different ways to address all the new requirements among our team and subsequently passing that information down to our readers in the coming months.

Well, we like to think that when we are filling out an import customs filing (i.e., a 7501) that this is essentially filing a tax return.  In fact, for most of our country’s early history, this was the primary way that revenue was generated for the federal government.  Why else would Customs have been placed within the Treasury department?  In many countries, the customs filing is still treated as a tax return and is administered by the taxing authority.  It’s no coincidence that terminology translates between the tax and customs world.  The Customs Value on your Commercial/Export Invoice is the same as the Adjusted Gross Income on your 1040.  They are both subject to certain adjustments.  The duty rate is essentially the same as the tax rate being applied.  Claiming duty preference to result in a lowered or duty free rate is much like claiming a deduction.  And, in the same way we have to substantiate all of our deductions in our tax return and keep records on file to substantiate our claims in case of a future IRS audit, we also have a lot of documentation to generate, in order to substantiate the items on our customs filings to CBP.

For compliance purposes, GTS offers ways for you to manage the substantiation of each of the items on your customs filings.  So when the tax authorities come knocking you have the necessary support to show that you exercised reasonable care in the handling of your customs filings.  To ensure that the right tax rates are applied you can manage your classifications within GTS.  To ensure the right taxable base is used, GTS can help you track any additions and deductions to the customs value.  To support any reductions in your tax liability through the use of duty preference programs, GTS offers ways to track the preference status on the product master and qualification support either through vendor declarations or BOM determination.

We trade experts may not want to think of ourselves as tax experts, but in our little way we are.  Just don’t ask us to determine whether you can deduct that alpaca purchase as a trade or business expense.  Frankly, we don’t know.

So what is changing?

1) The biggest change is around Value.  Because Census and BIS/State Department have different definitions of value, there has been an ongoing battle between the Traffic/Operations folks and Export Compliance groups regarding which value to declare on an AES transmission.  Census currently requires the license value PLUS inland freight costs.  As a result, AES was over-decrementing the license value in D-TRADE.  Or, AES filers were not declaring the inland freight costs, in order to not deplete the license earlier than necessary.  The new change will now have a specific field for License Value and another field for Inland Freight Costs!

2) Ultimate Consignee Type will now be required.  A new solution will need to be defined that captures whether the Ultimate Consignee is a seller, reseller, etc.

3) When shipping Household Goods, filing is required, no matter what the value.  Currently, must only file “HH” goods if over $2500.  This shouldn’t impact too many clients as very few are actually moving entire households of goods.

4) For those fortunate enough to have Option 4 filing, the departure day is reducing from 10 days to 5 days.  There is also discussion that some data elements will need to be reported as pre-filing and the remainder as post-filing.

5) Self propelled vehicles must be filed 72 hours in advance rather than 24 hours.

6) Equipment/Seal will be entirely optional for all shipment types.

7) A few more minor changes will be in store that most likely will not impact your solution.

For those users that are filing directly from GTS with the use of Seeburger, Seeburger is aware of the changes and will work with SAP on a solution for making the appropriate updates.  Most likely, the changes will be delivered via an OSS Note and then you may need to update some of your processes and possibly some mapping on your side to accomodate the additional fields and/or logic.

We will continue to post updates here periodically on the progress.  Again, we have 300 days from when the final ruling is published so there is still plenty of time ahead of us.  However, you may just want to give a heads up to the powers that be in your organization that changes are forthcoming and a small testing cycle will be required.

Here’s 50 of my favorite GTS tables (some lesser known just to spice it up a bit)

1. /SAPSLL/TSPL – this is the “header” table that stores the SPL master data that your company likely procures from a third party. This includes the SPL ID and the SPL list type.
2. /SAPSLL/TSPLN – the names of the SPL entities are here and…
3. /SAPSLL/TSPLA – the SPL entity addresses (if they exist) are stored here.
4. /SAPSLL/CUHD – this table is the customs document header table. One of the biggest tables in GTS.
5. /SAPSLL/CUIT – customs document item level detail is stored here.
6. /SAPSLL/T606 – this is the license type assignment to legal regulation table.
7. /SAPSLL/T606T – the text descriptions for the license types above, stored by language key
8. /SAPSLL/CTYGP – GTS country group configuration is found here.
9. /SAPSLL/CTYGPA- all of the countries that are assigned to those country groups above in #6.
10. /SAPSLL/PNTBP – this is a good table to see all partners by logical system group, including the external ID from the feeder system.
11. /SAPSLL/T606G – the legal regulation table – it includes the legal code and the legal regulation origin country code.
12. /SAPSLL/CUCPTY – this is the table that stores the GTS packaging materials, assigned to customs procedures. If you’re passing packaging materials from ECC into GTS, this is important for you.
13. /SAPSLL/CMPE – if you’re excluding texts from SPL screening, this is where GTS stores those terms.
14. /SAPSLL/CMPA – likewise, if you’ve defined JEFF = GEOFFREY, you’ll store that record in this alias table.
15. /SAPSLL/TSPLR – the web URL references for your SPL bad guys are parked in this GTS table. It’s hard to find since you must display using “ALV Grid Display” in SE16. If you use the “SE16 Standard List” as your user parameter, you won’t see it.
16. BUT020 – business partner ID’s are linked to their GTS address numbers in this table. Join them with table…
17. ADRC – to see their address details including name, street, country, email, etc. Everyone’s favorite table join is BUT020 with ADRC.
18. T005S – region assignment to country codes are stored in this table.
19. /SAPSLL/CTSNUM – both import and export classification codes are all stored in this table. They are categorized by numbering scheme
20. /SAPSLL/CTSNUMT – if you’re looking for the texts that are associated with the classification codes in #17, you’ll need to use this text table in a query join.
21. USR04 – GTS user name and associated security profiles are stored in this table. You can link this table with…
22. ADRP  – to see address details of your users (if you’ve maintained them).
23. T005 – To see if your GTS configurators have added country code “SS” for South Sudan, you can look in this table. This is all-important country code table.
24. /SAPSLL/TCOINC – all of the configured INCOterms are located in this table.
25. /SAPSLL/TCOINCT – if you’ve maintained alternate languages for your INCOterms , this is the table where you can see the translations.

25 more to follow soon….

But are subject matter experts really your best friend(s) forever (BFF)? You need many kinds of
“friends” for a successful GTS project yet you should still pay close attention to your Compliance SME’s.

If you define GTS project success as delivering solutions to improve business processes, increase ROI, and improve compliance, then your SME needs to become your best friend. If you only want a new technical tool that may or may not improve business operations, then your SME can be your worst friend (would that be a WFF?).

Compliance SME’s are critical to GTS projects because they:

• Know the full compliance business process
• Communicate meaningful requirements that apply to their specific operations
• Focus on business problems they face and keep the GTS team from operating in a “technical vacuum” (a tip: pay attention to SME’s who fall asleep in your meetings when you start talking about IDOCS, ABAP, PI Basis, etc. – make sure the team listens to their business inputs and takes them seriously)
• Ask the “why” questions when we say a requirement is out of scope (we need to have a good answer and guide them towards complementary solutions or work arounds)
• Are local experts on their specific country’s legal requirements; they know which regulations apply to their specific business model
• Look at the entire compliance world developing both “hard” and “soft” requirements; the GTS team can develop hard requirements and learn from the soft ones

The best SME’s are client employees based in their local country. However, smaller companies make good use of in-country brokers, agents, freight forwarders, and 3PL’s/third party logistics providers (had to get another acronym in!).

An important note: there are many external “experts” in the Compliance field who advise clients how to change/improve processes and answer point specific technical questions – and these are useful services. However, true business process improvement only occurs when Compliance people make point specific changes in the way they do their job – and GTS project teams (with their SME’s active participation) help achieve this goal.

So to summarize: PATYGTSSME-TJMBYBFF (pay attention to your GTS SME – they just might become your best friend forever)…

However, several clients are using GTS to manage regulations unrelated to the Commerce/State Department.  For example, if you do not have automated imports yet, but you need a way to control inbound shipments under the Lacey Act, you can do that with your existing Compliance module.  Companies are managing exports into specific countries via GTS when hazardous goods are relevant for REACH/TSCA regulations.  Another regulation we are seeing popping up in GTS in the Consumer Product Safety Improvement Act.  In the same manner that you can block an export from leaving your warehouse doors without an ECCN, you can block an import from being received if the proper certificate of conformance  is not on file.  The other big hitter is the healthcare regulations and controlling the classification and movement for those products in addition to the ECCN/tariff.

Some companies have great controls and processes in place to monitor these movements today.  However, if managing all of these regulations requires a lot of human glue and tribal knowledge at your company, consider utilizing GTS Compliance functionality to control those movements.   Of course, we do advise you to proceed with caution.  Because we all know what happened to Bobby Brady when he became the Safety Monitor.

After almost 10 years of dealing with this, we figured it couldn’t hurt to write a little piece to shine the light into this dark corner of the world’s most powerful GTM software.  Yes, we are speaking about GTS.

First question in this examination is, “How many countries of origin can one product have?”  Our answer:  all of them.   In order to have a competitive supply chain, most companies choose to source from multiple countries.  In addition, this is a type of “virtual” safety stock strategy in which we can protect our production lines from sudden failures in a supplier’s ability to supply by getting the same part from multiple suppliers.

The next question we are most amazed at is why we don’t store the country of origin on the product master in GTS.  Again, GTS cannot accurately store the country of origin at a material level, when that material can be sourced from multiple countries.  Perhaps your company may only choose to source  product from one country and storing it at the material master in ECC and then copying that to GTS would work for you.  However, for reasons stated above, this is not a complete solution and it is not applicable to companies that dual source their inventory.

Who should manage “Country of Origin” values in a company?  Our answer:  those people who receive and put products into inventory. Why?  Because that is the most efficient point at which to capture the real COO information, assuming it is printed on the cartons of things brought into your plants and warehouses.  Some of us have encountered companies where the country of origin was simply assumed based on the country of the provider’s headquarters and taken from the purchasing contract.  Others capture it from the packing list or some other document.  But nothing beats actually looking at the stuff when it comes through the doors of the warehouse.

If “Country of Origin” can be different, how can we record it in our ERP system?  Our answer:  There seems to be only one real solution; the ERP system must employ a method of storing separate batches from a single country in multiple storage locations within the warehouse or plant where the goods are received.  When the Country of Origin is stored on the batch, it auto-populates onto the transaction in GTS (not the product).  This solution allows the ERP and GTS system to communicate that the material which is being exported or imported for this specific transaction came from this specific country.  And when that same material is exported or imported again, it’s possible that batch came from a different country, in which GTS will reflect the alternate Country of Origin on the transaction, which ultimately feeds to accurate reporting of Country of Origin on your automated import and export filings to Customs and Census.

A quick update to let our readers know EPC will be out and about over the next few months.

This week, Robert Waldrop and several other members of the Management Team are riding gondolas at the Las Vegas Venetian.  It’s SAP’s annual Field Kickoff Meeting (FKOM).  This year’s theme is all about building partnerships!

On January 31, at 2pm EST, Greg Futrelle will be hosting a webinar for ICPA on GTS Tips ‘N Tricks.  Watch your ICPA emails for registration info.

Feb 25-26, Jessica Hill will be attending the BIS West Export Control Forum in Southern CA.

March 16-20, both Robert and Jessica will be learning how to hula dance at ICPA’s annual conference.  EntryPoint will be co-hosting an event with Customs Info, MK Data, and Vigilant.  Stay tuned for more details.

If you will also be at any of these upcoming events, please stop by to say hi and/or learn more about us!

BTW…if you happen to be a Carmen Sandiego fan, rumor has it that J. Lo will be producing and starring as Carmen Sandiego in an upcoming children’s movie.