THE KPIs of UCC – Time to get serious about customs
How do you measure the success of your customs handling? How do you explore improvements and try to eliminate unnecessary costs? How does your approach to customs affect the overall strategic goals of your company? And especially the bottom line?
If you don’t have any hard data on this you could be risking a lot more than you think. And you’ll certainly be unaware of the opportunities that could transform your business. Risks and rewards that only increase with the new Union Customs Code (UCC) legislation being introduced.
With the implementation of UCC, there is no better time to get serious about customs and ensure there are proper KPIs linked to your company’s vision, strategy and bottom line. And if you need help to get the full picture and understand what is possible, consult a trusted, experienced customs broker like KGH Customs.
Day-to-day costs: “What do our customs declarations really cost?”
In addition to paying customs duty, handling customs issues costs time and money. There are also hidden costs in dealing with mistakes. For a detailed picture of these costs and even the strategic value, you can take a look here.
For many companies, simpler, safer customs routines that avoid mistakes plus a greater understanding of favourable terms can lead to significant savings. To determine effective KPIs in this area, you just need to explore the direct and indirect costs and see what is reasonable.
For many companies, simpler, safer customs routines that avoid mistakes plus a greater understanding of favourable terms can lead to significant savings. Effective KPIs in this area can be as follows:
- Cost per declaration (including broker cost, systems, personnel involved in information gathering process)
- Cost of extra work per declaration (additional time to handle mistakes, legal and consulting support to clear up problems)
- Cost of fines
- Number of declarations/order line per FTE
- Number of declarations that have been re-submitted to customs
- Number of archived customs files vs number of imports
- Number of people educated and the total education hours used to achieve the stated competency goal
- Number of audits/control progress compared to set annual plan
- % or number of suppliers on board with complete origin information and supporting documentation to enable free trade opportunities
Remove the risk: “Are we really in control of compliance?”
How compliant are you? How will you be affected by UCC? Are you aware of restrictions? How much do compliance issues interrupt your business? Answers to these questions can indicate unnecessary costs but also reveal extreme risks. Compliance errors can greatly damage your business relationships with suppliers and customers and even directly to a loss of income. And in a worst case can lead to senior management becoming personally liable and facing criminal prosecution. A KPI that looks to lower the amount and scale of compliance errors might end up being worth everything to you and your business.
The value of knowledge and routines: “A new way to boost our business?
By cutting cross-border costs and reducing risk, and pushing this approach throughout your supply chain (suppliers, production sites, logistics, all the way to your distributors, retailers and end-customers), you could potentially transform your company’s bottom line at existing trade levels. But on top of that you may even be able to increase the value of your goods. For example, through quicker, more trusted delivery or better quality raw materials. And how about attracting more customers in new markets? Or a pricing model your competitors will struggle to match? The potential depends on the nature of your business, the new opportunities that emerge and finally just how creative you want to be.
And just to repeat, if you want guidance to explore the potential and uncover some exciting opportunities, we’re always here to help.