Reduce Logistics Costs, Duties, Fees and Taxes

Bill of Material Qualification

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Issues and Challenges

Exporters are responsible for providing complete and accurate origin information to their customers for compliance purposes and free trade agreement (FTA) eligibility. For those exporters that manufacture finished goods, this can be particularly complex, since raw materials may come from numerous suppliers worldwide.

The rules of origin of each FTA determine preferential treatment eligibility, so each product must be analyzed for its conformance to those rules. To perform the analysis, it is necessary to break down a product into parts or ingredients - more commonly known as a bill of materials (BOM). The BOM gives a complete and hierarchical listing of any raw materials, sub-assemblies, components, or ingredients and the quantities and costs used in the product.

Challenges include:

  • Entering complex BOMs that may contain thousands of components into a qualification system
  • Understanding and applying the complex rules of origin to BOM line items for each FTA of interest
  • Determining whether the product qualifies for duty preference using several evaluation methods per FTA and HS

 

How Amber Road Can Help

Amber Road speeds up the BOM analysis process by enabling direct import of these complex documents from the manufacturer's BOM management system (potentially an ERP, engineering, or other specialized system) or via XML or Excel.

Amber Road's Trade Agreement Management solution helps exporters automate the analysis of BOMs. It does this by applying the relevant rules of origin and automatically assessing tariff shift, wholly obtained checks, several variations of regional value content, cumulation logic, and de minimis. Amber Road analyzes each line item of the BOM to determine whether the product satisfies the rule criteria. The outcome is a summary qualification report for the finished good, and a detailed account of how each component fared against the rule. The results are then posted to the Global Product Master where trade agreements can be managed centrally.

The qualification system is scalable and supports multiple trade agreements. A content plugin for each target FTA contains the claim details, documents and rules of origin for each target agreement. These rules are constantly updated and maintained in our Global Knowledge® database. Once the framework is in place, additional plugins can be added seamlessly.

Qualification results are tied back into the product record for a complete, centralized view of each item.

 

Features Benefits

Bill of Materials Management

Direct import of multi-level BOMs from ERP, manufacturing, and WMS systems
Automatic calculations and analysis for multiple trade preference programs simultaneously

Multiple Qualification Rules

Rules of origin for numerous free trade agreements
Tariff shift
Various regional value content (RVC) methods
Cumulation or double substantial transformation
De minimis
Archive and Audit Storage and retention of BOM analysis results

Duty Management

Free trade agreements such as NAFTA, CAFTA and others represent an attractive opportunity for exporters to grow their business overseas by making their products more affordable in growing markets. And for importers, FTAs allow them to dramatically lower the duties and taxes they pay.

Today there are more than 500 free or preferential agreements around the world for companies to use.

Customer Testimonial: Benjamin Moore

Peter Shea, Senior Manager, Customs Import/Export Compliance at Benjamin Moore, discusses how they have automated the NAFTA qualification process with Amber Road.

Benjamin Moore achieved more progress in four months than in the past 15 years, making a huge impact on their business and impressing the COO. Interested in achieving those same results? Learn more about saving on duties through free trade agreements.

 

KEY CUSTOMERS

DonaldsonHayworthMary KayNCRXylem

“By automating the NAFTA qualification process, generating accurate trade documentation to maintain export compliance, and taking advantage of preferential duties, we save $1.2 million in duties and taxes.”

 

Project Manager Global Logistics, Trade and Compliance
Haworth, Inc.

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