Back to List
Breezing through Customs with Paperless Imports for Global Logistics Operations
The Intelligent Document Gateway Solution Suite can enable efficient paperless import processes with real-time visibility, exception handling and even help you to negotiate better rates with your customs broker.
Import operations into the United States is a complex logistics process with a lot of compliance requirements that have received heightened focus after 9/11. Accurately declaring of all the information associated with a shipment to various government agencies is mandatory. The previous process at IBM within its own $40 billion supply chain was fairly manual and paper intensive leading to several errors that were corrected "post entry" (after the shipment crosses the United States border). The goal of a the transformation solution for import compliance, described here, was and is to streamline IBM's global logistics operations by providing visibility into the global import process.
Government agencies in each country have established requirements in the form of laws, regulations, and procedures which govern importation of goods such as products, parts, and supplies. Failure to comply with these requirements, prohibitions, or restrictions may result in civil or criminal penalties, or the loss of IBM's right to import. These requirements apply to goods from both IBM and non-IBM sources of supply into the United States.
IBM's Global Logistics, part of the Integrated Supply Chain (ISC) manages the movement of goods to and from 160 countries, totaling $8 billion in imports into the United States annually. In spite of all the systems, checks and balances in place, about 10% of the shipments involving high-end and mid-range servers and low-end workstations, experienced exceptions that required the importer to retrieve and present original documentation to customs authorities. Prior to this project, many of these documents are frequently lost or rendered too damaged to be legible, which posed a major problem in clearing customs resulting in delays and heavy holding fees incurred. ten percent on the scale of the imports that IBM imports annually translates into a huge cost of these holdups. Also, complying with the export policies for 160 different countries with different regulations is a complex process. While the transactional data flows electronically via EDI integration, the document handling is entirely manual. The documents and information about the shipments is sent to various participants via telephone, emails or faxes. Physical paper is handled during the entire import compliance process, and the paper is digitized at the end of the post-entry process primarily for archival and records retention. The coordination of transactional data with the supporting documents is essential in global logistics operations. Documents such as supplier invoices, shipping instructions and packaging lists related to a global supply chain operation must be managed at the ports to provide visibility into the shipment to clear customs and other shipment related processes.
Frequently, hard copies of these documents must accompany the goods during transportation. For world wide logistics operations across several modes dealing with different brokers, this process entails data duplication, relaying of information from documents into disconnected document repositories, manual reconciliation of logistics operations with accounting systems and poor visibility into the global supply chain operation.
An efficient import process that can significantly improve efficiency and reduce transaction costs, however is being developed; how IBM is transforming its import lanes using technology developed in-house at its research and development lab at IBM's Almaden Research Center in San Jose, CA. This technology, called the Intelligent Document Gateway Solution Suite (IDGSS) for global logistics processes, can enable an efficient paperless import process with real-time visibility, exception handling, reduced transaction times and ability to negotiate better rates with customs brokers.
Building a paperless import entry process with the Intelligent Document Gateway
The current practice for a specific manufacturing lane in a supply chain is used as an example for this business scenario. In this lane, goods originate at IBM, Mexico, and are trailer-driven into the U.S. at Laredo, Texas. Here, the U.S. customs broker clears the shipment through customs, then ships the goods via a freight broker to the customer and mails hard-copy documents associated with the shipment to IBM Boulder for archiving. Figure 1 details the old process and supporting systems.
Because there is a lack of electronic documentation, this process involves data-entry duplication, multi-generation document copies and faxes, extensive handling of paper documents, and poor visibility into the incoming shipments. Thus, the process suffers from several operational inefficiencies and problems:
Figure 2 shows the transformed process, which has three parallel coordinated flows. At each location, IBM Mexico, the U.S. customs broker, and IBM Boulder, an Intelligent Document Gateway installation serves as an on-ramp to the content management infrastructure by capturing the document image, whether from paper, a desktop computer, or application-generated documents at the source. The content management infrastructure serves as the paperless document workbasket which is also shown in Figure 2.
The transformed solution attempts to coordinate the movement of transactional data with the corresponding documents so that all participants in the process have visibility to the information as well as, the documents needed to efficiently handle the import compliance process. The transformed process works as follows: IBM, Mexico creates and adds invoices associated with each trailer into the shared document workbasket in real time via the Intelligent Document Gateway which sends email alerts related to the shipment with a URL to the U.S. custom broker and IBM, Boulder. The invoices are sent to the shared document workbasket using the Intelligent Document Gateway which prompts the user for the relevant metadata required to support the entry process, such as invoice and trailer numbers. Even before the shipment reaches the U.S. border, the U.S. customs broker can use a web-based interface to query the document workbasket and then prepare the entry form by obtaining the appropriate codes for clearing customs. IBM, Boulder can also query the document repository and work with the U.S. customs broker to obtain all relevant information. Once the U.S. customs broker prepares the entry clearance form, it is scanned into the shared workbasket and linked with the shipment created by IBM Mexico. Now IBM, Boulder has access to all entry information prior to the goods being shipped to the customer, which significantly reduces the entry rework. Equipping each three participants in the process with a document gateway server that can add documents to the shared document workbasket in real time provides global visibility to all steps in the import and customs clearance process. The document workbasket web interface supports querying and retrieval documents based on a powerful data model that captures the full process semantics.
Transformed import process with measured results
The transformation of the import entry business process demonstrated high value and success. Qualitatively, the solution eliminated the number of missing invoices, improved the relationship with the customs at the port of entry, aided in document retention, reduced risk of audit exposure, and would allow for reduction in the amount of person hours required to administrate the process. Furthermore, there can be large implicit cost reductions because of the reduction in interruption to the supply chain and on customer satisfaction. The quantitative results of this scenario are detailed in Figure 3. This all adds up to a solution that has a demonstrated and significant potential for return on investment.
The success of this pilot had led to a production deployment of this system on IBM Global Logistics' Ireland import lane. IBM plans to replicate the deployment to multiple import lanes to achieve multiples of savings and efficiency derived from the deployment on the Ireland lane.
The Intelligent Document Gateway Solution Suite
The technology deployed in the solution is composed of four components: the Gateway Server, the Gateway Architect, the Gateway Console, and the Gateway Dashboard.
On-ramping to the business process is simple as there is support for accepting documents and metadata from scanners, multi-function devices, and desktop applications via an Intelligent Document Gateway virtual driver. In addition, the Gateway server can handle documents from an enterprise messaging bus such as IBM WebSphere MQ. Once the data is input to the Gateway Server, business process logic is enabled through an advanced business rules engine, validation workflow support, notification support, transactional robustness, exception management and report generation. Special processing tasks such as document classification, compression, or encryption are possible by writing specific plug-ins.
The configuration of the Intelligent Document Gateway Server for specific domains is made easy through the use of the Gateway Architect configuration tool. This tool is an Eclipse based, open standards plug-in that provides a business analyst interface to define gateway processes and manage updates and deployment.
A powerful suite of utilities that assist managing the gateway during production are included in the Gateway Console. These include utilities for business rule validation, business process XML schema validation, and document management system credential administration. Process and Business Activity Monitoring at runtime is enabled through use of the Gateway Dashboard.
Extending the solution to transform other import logistics processes
The components of this solution are architected for flexibility and configurability. This enables the solution to be easily extended to transform other logistics processes. This includes transformation of the post-release process, the cargo release process, and coordination of the bill of lading and shipping instructions and other processes. Based on the success of these internal deployments, IBM's ISC has announced that it will offer this solution and related services to external clients under its Business Transformation Outsourcing (BTO) program.