A PROCESS ANALYSIS OF GLOBAL TRADE MANAGEMENT: AN INDUCTIVE APPROACH

Authors


  • Acknowledgments: We gratefully acknowledge generous research support from TradeBeam, Inc. We also acknowledge valuable research assistance provided by Yan (Tracy) Liu of TradeBeam. We also thank David Wortman, formerly at Neiman Marcus Corporation, Ed Feitzinger, formerly at Golden Gate Logistics, Richard Gervais and team from Axxess International Forwarders, Ross Stores, Redcats USA, Pottery Barn, Simon Oxley, Integrated Distribution Services, K.L. Lee of Esquel, Tom Haugen of Li & Fung Limited, Frank Reynolds of International Projects Inc., Wachovia Global Trade Services and the many individuals from TradeBeam in the United States and China who provided much of the data input for our models. We also acknowledge very beneficial comments from several referees and the associate editor and the co-editor-in-chief on an earlier version of the paper.

  • *Like all invited papers and invited notes, the original version of this manuscript underwent a double-blind review process.

Abstract

This paper describes a new, detailed process model for Global Trade Management (GTM) that contains sufficient detail on cross-border trade processes to estimate the benefits of Information Technology-Enabled Global Trade Management (IT-GTM). Our methodology combines a grounded theory approach with data analysis and analytical modeling. GTM describes the processes required to support cross-border transactions between importers, exporters, their trading partners and governments. IT-GTM is the set of information technologies and software solutions that can be used by companies to carry out their global trading processes in a streamlined manner. We collect data on time reductions for individual trade process steps using IT-GTM and use Critical Path Analysis to calculate the resulting improvements in key metrics such as the Manufacture to Invoice Cycle and Days Sales Outstanding for exporters, and the Order to Receipt Cycle for importers. Under reasonably conservative scenarios the gross savings from IT-GTM amount to 1.7 percent and 0.6 percent of annual sales for exporters and importers, respectively.

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