Importation requires everyone involved in the process to understand supply chain management, from the importer to the suppliers and logistics facilitator.
It’s only with understanding that they can provide the best experience to customers with the lowest costs possible.
However, that has not always been the case. Even some customs authorities do not have any relationships with logistics partners. And if they do, the relationships are ineffective in contributing to an integrated supply chain management.
Such a situation calls for the importer of record’s intervention in promoting cohesive, effective, integrated supply chain management.
But what are the roles and responsibilities of the importer of record in the supply chain management?
Not to worry, this article discusses the roles of an importer of record in supply chain management. You will also learn the supply chain process of importing, why it is essential and its significance in international shipping.
What is supply chain management in importing?
Supply chain management in importing involves leveraging technology and third-party companies to help companies that manage imports successfully move goods across borders.
These third-party companies include 3PLs and suppliers, facilitating four different importation forms.
- Commercial importation: This involves importing goods intended to generate revenue for a business through retail or wholesale.
- Importation of samples: Importation of product specimens by individuals, companies, research institutes, laboratories, etc., for customer familiarization or appreciation. The samples are shipped as a part of a foreign manufacturer’s baggage or by port courier.
- Personal imports: Involves an individual directly ordering foreign goods from overseas retailers or manufacturers for personal use. The goods can be shipped by international mail or courier or carried in baggage.
- Import of goods for resale: With reselling, the importer is not the end user. Instead, the importer buys foreign goods to sell them at their set profit margins. All the associated risks are on the importer.
Supply chain management involves handling all expenses and requirements and acquiring and delivering goods to end users. This involves customs and documentation requirements, logistics management and cost implications.
Understanding the different types of importations helps streamline supply chain management. This includes the procedures for sourcing and delivering the goods from the suppliers to end users.
Besides, the various types of imports have varied customs procedures and document requirements, including licensing (if applicable).
Hence, understanding the type of your importation helps in cost management (tariffs, duties and taxes), regulatory compliance, and risk assessment.
What are the steps in the import supply chain process?
The global supply chain is lengthy, with thousands of procedures that can prove impossible to fulfill for new importers. However, a closer look into it unveils a few yet intensive processes.
Two Stanford University professors (Hausman and Lee) defined the global supply chain scope in four distinct processes:
1. Pre-export procedures
Pre-export involves initiating the global trade process with potential importers researching and screening new markets.
On finding the intended market and the receiver of the goods, they negotiate prices, draft contracts and agree on the payment terms.
The importer then drafts purchase and trade orders and thoroughly scrutinizes the buyer’s identity to ensure they are not blacklisted parties.
2. Arranging for transport and export declaration
Considering the nature of the goods, how long they can safely be on transport and how they should be packaged, the importer arranges a means of transportation.
The importer also establishes any requirements attached to the goods, including licensing and documentation requirements. Once identified, the importer makes customs declarations and seeks approval from inspection agencies.
For the customs declaration, the importer requires the following documentation:
- EORI Number
- Importation invoice
- Commodity code (HS Code)
- Authorization licenses (if any)
- Certificate of origin
- Authorization to present missing documents (if any)
3. Transport and import declaration
Goods must undergo customs clearance before moving to the customer. At this stage, the importer presents packing slips, commercial invoices and shipping labels for customs clearance.
The customs office examines the import paperwork and the applicable duties and taxes. Once customs cleared, the courier services transport the goods to the end user destination.
4. Post-import customs clearance and payment
On the receiving end, the buyer confirms inland delivery of the goods from the border. A foreign exchange verification and tax refund (if applicable) are filed, and payment of the forwarder and broker (if applicable) is also settled.
At a glance, these are the processes involved in the import supply chain management:
- Researching potential market and buyer screening
- Harmonized Tariff Schedule (HTS) classification of goods
- Establishing a relationship with customs and government authorities
- Filing of import declaration
- Ensuring compliance with local regulations and customs requirements
- Ensuring the security of imported goods
- Import documentation submission
- Ensuring trade compliance
- Logistics management for imported goods
- Settling the payments for all the people involved, plus duties and taxes
The role of Importer of record in supply chain management
Successfully navigating all the procedures involved in importing can be challenging. This is because some countries have strict and unpredictable regulations that can lead to delayed delivery or seizing your goods.
Some importers hire a licensed customs broker to help with customs clearance in the import destination.
However, a customs broker has limited control over the shipment, and dealing with complex licensing requirements and any issues arising from the shipment can be challenging. And that’s where an importer of record comes into play.
So, what role does the importer of record play in supply chain management?
An importer of record (IOR) links all the parties involved in an import transaction, ensuring a successful importation with the lowest costs possible.
The IOR achieves the mandate by effectively managing the three flows of a successful import transaction:
1. Information flow
The importer of record understands what data should move where and when. This involves understanding any licensing requirements, accurate assignment of classification code for your goods, and valuation of the import.
By understanding the requirements for the shipment, the IOR ensures that the required paperwork and documentation are submitted on time. This facilitates timely customs clearance and movement of goods from customs to the buyer.
Additionally, the importer of record ensures effective communication between the involved parties so they can handle any issues as they arise.
Providing accurate information and ensuring compliance eliminates overcharged duties and taxes, delayed delivery, and non-compliance penalties.
2. Fiscal flow
An importer of record knows who needs to be paid when they should be paid, and how they should be paid.
All the parties involved in the movement of a shipment from source to destination (suppliers, customs, tax authorities, 3PLs and packers) ought to be paid. Delayed payment can lead to delayed delivery or even loss of your shipment.
Also, having independent people handling the shipment can be costly. To ensure cost efficiency, established IORs have logistics partners and go-to service providers who offer premium yet affordable services.
3. Physical flow
Handling your shipment requires accurate packaging with the safest means of transportation.
It also involves knowing who should handle your goods and how to handle them to avoid damage and additional costs during unloading or inspection.
An importer of record knows how, where, and how your goods should be stored, moved and handled. IORs also know the cost implications for the chosen carrier and packing, ensuring cost efficiency with packing and shipping best practices.
Why is the supply chain important in international trade?
Supply chain management provides an opportunity for businesses to expand their profit margins.
Here are the three key aspects that make supply chain management essential:
- Freight forwarding: Freight forwarders offer coordinated documentation, customs clearance, and transportation. Goods seamlessly from customs to the end user with forward stocking and mini forward stocking services.
- Risk management: logistics service providers manage various uncertainties, including supply chain interruptions, political instability and unstable regulations. They always have alternative routes in case of route disruptions.
- Technology integration: modern global logistics incorporates technology, including real-time inventory management, GPS tracking, and data analytics.
This informs the choice of transportation means and optimizes logistics operations.
Looking for an IOR to manage your supply chain seamlessly?
As discussed, an importer of record is invaluable in ensuring efficient supply chain management. They ensure an integrated and cost-efficient supply chain management.
However, the effectiveness of the management heavily relies on the scope of the IOR’s services. You want an IOR representing you in varied global destinations, from handling compliance to logistics management.
If you are looking for an IOR who can offer all the benefits discussed here, you can explore our global supply chain services. We offer global IT companies secure, reliable and compliant door-to-door delivery to all their desired import destinations.
