SME Industrial Manufacturer taking a LEAN approach to Customs Submissions to HMRC
An SME manufacturer of industrial products approached Falsum to develop a trade compliance strategy for the UK’s exit from the EU. The client imports primary products from the EU, processes, then re-exports to the EU. The client brief required a proposal to minimise costs of trade, including; tariffs, human resource, customs broker fees & technology.
The Challenge
Falsum was engaged by a medium-sized industrial products manufacturer, based in the UK, to develop a trade strategy in response to the UK’s exit from the EU. The client imports raw products from the European Union (EU), processes them across two sites in the UK and then re-export the finished goods to the EU. Prior to engaging Falsum, the business had no experience or expertise in customs or international trade compliance.
The client brief required a proposal to mirror the client’s LEAN production principles; minimising costs & improving outputs with process improvements.
The business key cost exposure was the high-frequency, low-value import model that would dictate significant costs from customs agents/brokers. The relatively low-margin products would become increasingly uncompetitive in the EU market should those costs need to be passed on to consumers. It was, therefore, Falsum’s task to mitigate the brokerage costs with an innovative trade automation strategy.
The Falsum Solution
Falsum proposed that the client look to move their customs declarations & trade compliance ‘in-house’. The Falsum model was to utilise the existing data within the business, across 3 separate systems, to create and supply the correct documentation for Customs Authorities & logistics partners.
The implementation of the programme rested upon the successful integration of a Trade Software package that integrated with the Client’s existing ERP system. The flow of data mirrored the Purchase Orders (POs) & sales invoices, verified by the Supply Chain & logistics data. Second, the upskilling of existing staff to understand the trade compliance process, implement controls on this process & streamline the workflows. This was done through on-site workshops & in-role modular continuous learning.
Third, to ease the transition Falsum provided an online ‘Knowledge Base’ for the business – a dedicated online platform, specific to the business with quick answers to complex trade issues. Additionally, the Knowledge Base has paired with the deployment of a dedicated external helpdesk to manage reactive queries.
In the longer term, the Client will look to pursue & implement an ‘Inward Processing’ customs procedure to mitigate against tariff duties on import & export.
The Result
Aligning the import & export customs processes to an internal ERP system has made costs of trade compliance plannable & manageable by volume. The advantage is that the Client no longer needs to hire, train & retain customs-specific personnel to provide manual data entry. Second, the Client avoided the high per-transaction fees of customs brokers in the UK.
The client has built new trade compliance functions into existing roles, without being over-burdensome. It is an important element for the client’s trade compliance model to utilise Falsum’s ‘Customs Knowledge Base’ & ‘Customs Safety Net’, for immediate & reactive support at Port. A contact person from the Falsum team is always available.
Great importance in the IT implementation is placed on the tax accuracy and legal compliance in import/export processing – minimising risks for the Client.
