Slowdowns, Ahoy!

SAP, others build tools to navigate port security rules.

Heightened anti-terrorism security has many companies with international supply chains facing new rules and policies governing the movement of goods into and out of U.S. ports.

Some of them are turning to software solutions from companies such as SAP AG to help navigate the proliferation of new rules and speed the collection of data necessary to make imports and exports possible.

"Is there a heightened level of security? Without question," said Jimmy Howell, vice president of transportation and logistics at high-end retailer Neiman Marcus Group Inc. "Weve seen intense scrutiny from ports, much higher than we ever saw before; weve seen ocean containers slow down because of inspections."

SAP, of Walldorf, Germany, is readying an extension to its GTS (Global Trade Services) software that officials said will improve compliance with changing regulations from the U.S. Customs Service and other regulatory agencies. The SAP Customs Management offering, due this fall, will automate such tasks as the creation of a cargo manifest that ships must send to a U.S. port 24 hours before entry.

SAPs GTS already provides a license management capability, which automates the completion of forms a company must file to show it has a license to export goods to particular foreign destinations. GTS also has a list management capability that keeps track of lists from federal agencies—such as the State or Commerce Department—of individuals or companies to which it is illegal to export goods.

Technology vendor Adaptec Inc. uses GTS to keep up with the watch lists. When a list is changed, a third-party data provider alerts James Arthur, business systems analyst at Adaptec, who then downloads an XML file with the new list information and uploads it into his local instance of GTS.

The software then applies the new lists to the information in Adaptecs SAP R/3 enterprise system. GTS is not directly tied to R/3 so it can import data from, and export data to, non-SAP systems.

"It has saved time, but it is hard to say how much," said Arthur, in Milpitas, Calif. "It certainly improves our assuredness that were following the required process because it has made it systematic."

Adaptec is also using the capability to scan lists of undesirables to screen candidates for jobs at the company, Arthur said.

Importers face challenges as well. Companies must file a 7501 form declaring exactly what is in a shipment coming into a U.S. port. They also need to classify each item in a shipment in line with official tariff codes, which can be complex and time-consuming. Neiman Marcus, based in Longview, Texas, uses Qiva Inc.s Global Logistics Trade Solutions software to preclassify merchandise before it is shipped and then to generate the 7501 declaration.

Although San Francisco-based Qiva last week acknowledged that it was looking for another company to buy its assets, Howell said Neiman Marcus will continue to use the software because of the time it saves by keeping goods moving through U.S. Customs at ports.

"In our business, time is the most important thing we deal with. If we can get something a couple hours early, it means we can get it to that truck or plane [earlier and] get it into the stores quicker," Howell said. "That means that a customer in a Neiman Marcus store sees it before he sees it at the competition."

New rules covering movement of goods through U.S. ports are still in the works, as agencies such as the Department of Homeland Security gather information on how best to tighten security without slowing down commerce. Once those rules are clear, IT departments and software vendors say, it should be clear how the new rules can be turned into business rules that can be automated.

The rules "are still being molded," Adaptecs Arthur said. "I gather that once [federal regulators] make their decision, theyll expect compliance almost immediately."