Connecting to Global Supply Chains

1

What can governments do to connect producers to global

supply chains (SCs)?

Aid for Trade for SPECA10-11 July 2013

Geneva

Maria Teresa PisaniGlobal Trade Solutions Section

Trade Division - UNECE

2

Trade facilitation and the international political agenda

3

- 1 day to export/impo

rt

…..+ 4% international

trade

- 4 days to export/impo

rt

….+ 0.1 % GDP per capita

growth rate

&

Source: WTO 2012, OECD 2012, WB DB Report 2013

Economic growth through exports is a key strategy for developing and transition economies

Trade facilitation is an essential component of such strategy

…What are the trends?

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From tariff barriers to non-tariff barriers

Emergence of global value chains

Need for more efficient, simple and transparent trade transactions and information exchange

kenyaNigeriaRussia

TanzaniaMexicoChinaBrazil

MalaysiaCzech Republic

PolandHungary

JapanSpain

South KoreaUSA

CanadaUK

Netherlands

$- $4.00 $8.00 $12.00

Source: Analysis of OECD Minimum Wage Data

Minimum Wage Cost (hour)

Export growth driving factors in DCs

UNECE’s Work on SCs and Information Exchange

6

Policy Rec.s

Standards

Guidelines, Briefs,

Studies

Capacity B

uilding and Technical Assistance

UNECE Study on international SCs: Objectives

7

Present a model of regulatory, procedural and business processes, and requirements for information flow

Identify the specific opportunities that better information sharing in global supply chains can bring

Elaborate a roadmap for prerequisites and actions that government and businesses should put in place

From National to International SCs

Customs

Customs

Buyer

Shipper

Port

Seller

Port

Haulage

Haulage

National Supply Chain

Customs

Customs

Buyer

Haulage

Seller

Seller

Buyer

Haulage

Haulage

Inter-regional Supply Chain

Shipper

Port

Port

Intra-regional Supply Chain

Good

s

Info

rmati

on

Cash

The step change in the

number of stakeholders +increase in administration

requires standardisation and increased integration for easier participation of SMES

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The complexity of the International SCs: Layers

.

Actors and Processes in the International SC: Export Phase

3) Pay

Pay

Customer’s Bank

Supplier’s Bank

1) Buy

Buy

SupplierCustomer

2) Transport

2.1 Prepare Export Documents

2.2 Arrange Inspection

2.3 Obtain Cargo Insurance

2.4 Provide Customs Declaration

Inspections Agent

Insurance Agent

Customs

Transporter Domestic

Transporter Cross-Border

2.5 Transport to Terminal

2.6 Clear Cargo Through Customs

2.7 Handle Container at Terminal

2.8 Prepare Documents Required by Customer

Terminal Authority

Security Agency

ContractPurchase Order

Packing List Goods Receipt

Letter of CreditCommercial Invoice

Bill of LadingInsurance Certificate

Certificate of OriginCertificate of Inspection

Export DeclarationImport Declaration

The complexity of the international SC: Documents

Data Elements Operational Commercial Control RegulatorySupplier Identification P P P PBuyer Identification P P P PCarrier Identification P P P PPort of Departure P P P PPort of Arrival P P P PProduct List P P P PProduct Classification Information

P P P PPackage List P P P PContainer List P P P PPricing Information P P PValue P P PInsurance Information P PCountry of Origin P P P PCountry of Manufacture P P P PQuality Information P P P PInspection Information P P P PFinancing Information (Letter of credit)

P P PExport License Information P P P PImport License Information P P P PProof of Delivery P P PSales Contract P PFreight Contract P PTerms (Sale, Payment, Delivery)

P P

The complexity of the international SC: Data

The Current Model: Documents and Data Exchange

Security

Customer

BankCustoms

House Agent

InspectionAgency

InsuranceCompany

LogisticsServiceAgent

OtherSupervisingAuthorities

Transporter

TerminalOperator

Customs

Supplier

ShippingLine /Agent

51034

131250

71147

3610

21012

51139

41033

31025

51139

131249

61041

51139

122

Number of documents exchanged by a given stakeholderNumber of stakeholders interacting with a certain stakeholderNumber of interactions of a given stakeholder with all other stakeholders for all documents

Economic imperatives drive key trends in International SC…

Trends in International Supply ChainOrganization of Production Spatial Organization Patterns of Product FlowPostponement Spatial Concentration of

ProductionNomination of Day and Time of Deliveries

Vertical Disintegration of Production

Spatial Concentration of Inventory

Direct Deliveries

Application of Time Compression Principles

Wider Geographical Sourcing and Distribution

Reverse Logistics

Rationalization of Supply Base

Development of Break Bulk / Transshipment CapabilitiesDevelopment of Hub-satellite systemsConcentration of International Trade on Hub Ports and Airports

Internet enabled applications allow greater data sharing and collaboration

Towards a collaborative SC model…

Importance of behaviour Importance of the commercial model

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Future ApplicationsExisting Emerging Future

Internal

ERP Web Enabled Shared Applications

Contract Management Web Enabled Shared Applications

Document Management Web Enabled Shared ApplicationsData ExchangePoint to Point EDI EDI + Web Enabled Peer to Peer

Data Exchange Communal

Standards DatabaseSingle WindowPort Community System

Data Exchange Collaborative

Stakeholder PortalsCloud Computing

Shared Applications Contract Management Document Management Event Management

Functional

Barcode Barcode (3D)RFIDSensor TechnologyGPS TechnologyGMS Technology

Cargo Scanning

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The Roadmap

Plan Development Plan Implementation

Info

rmati

on E

xcha

nge

Low

High

Time

Plan Finalisation

Target State of Information

Exchange

Current State of Information

ExchangeWhere Assess Current State

(Where are we?)

What Determine the Vision(What we want to Achieve?)

How Define Actions(How will we achieve it?)

Who Assign Responsibilities(Who will do what?)

When Develop the time plan(When will it be done?)

Maturity Grids

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Technical Capabilit

yBehaviou

r

Policy and

Regulations

Commercial

Construct

Maturity Grid: Behaviour

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Absent Basic Good Advanced Leading Edge

1. Relationship maturity

Transactional Relationship

Contractual RelationshipCompetitive

Strategic relationship based on enlightened self interest

Strategic relationship based on shared interests

Strategic relationship based on maximizing market opportunities

2. Trust No Basis for Trust

Minimal level of trust based on contract enforcement

Trust based on shared economic interests

High level of trust based on shared economic interests

High level of trust based on shared economic interest and understanding of opportunity to extend benefits

3. Transparency No Transparency

Sharing of minimal operational and technical information

Open sharing of planning and capacity information

Joint planning of demand and capacity by key stakeholders. Development of shared plan

Shared Strategic Plan based on shared goals and long term development of shared interests

Maturity Grid: Policies

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Absent Basic Good Advanced Leading Edge

1. Import Export Processes

Stand alone manual processes Streamlined integrated processes

Streamlined integrated web enabled processes

Streamlined integrated web enabled real time processes

2. Trade Documentation

Stand alone documents for different agencies

Minimize number of documents

Shared documents between related agencies

Single Administrative Document Shared across regulatory agencies within one jurisdiction

Shared Single Administrative Document across trading partners

3. Capacity Building

Stand alone programmes across multiple agencies

Single development agency Stand alone programmes

Single development agency Integrated programmes

Single agency Client Directed Integrated programmes

4. Integration of Regulatory Bodies

Multiple independent regulatory agencies

Minimize number of agencies based on functional areas

Single Regulatory agency operating multiple processes

Single regulatory agency operating integrated processes

Key Findings

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Inefficiencies associated with fragmentation

The risks of errors, delays and additional costs

The importance of behavioral prerequisites

The impact of the commercial model

Highlights

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Governments can:

Streamline processes and

procedures

Support advanced logistics

platforms

Support effective

stakeholders engagement

IT solutions can:

Enhance efficiency and effectiveness

of ISCs

Enable collaborative SC models

Facilitate the participation

of SMEs

Agri-food SCs in CIS countries

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Mixture of small scale and large scale farming

Attractive market for retailers and food processors

Issues of quality and safety, distrust, obsolete business models

...But evidence of spill-over effects through FDI

Thank you!

For more see:www.unece.org

http://www.unece.org/tradewelcome/capacity-building-for-trade-facilitation/

joint-unrcs-approach-to-trade-facilitation.htmlContact:

serguei-kouzmine@unece.orgmaria-teresa.pisani@unece.org

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