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A global wholesale distribution supply chain | Staying compliant

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A global wholesale distribution supply chain | Staying compliant

The distribution sector, a fiercely competitive market where margins are slim, leaves little room for error. Compliance with the latest standards and EU legislation will provide a significant competitive advantage for companies who are experiencing dwell time, or additional assurances to operate Customs’ procedures.

Several UK distributors are still unclear about how to respond to the imminent changes, or are unaware, of the European Union and HMRC legislation for goods received by Customs when operating a global wholesale distribution supply chain, which may have a direct impact on their financials. As the distribution industry is becoming increasingly competitive, it is becoming more important to streamline operations to reduce costs.

Changes to EU legislation which will impact the global wholesale distribution supply chain

The new Union Customs Code (UCC) is applicable from May 1 2016 and is proposed to standardise the movement of goods through EU member states, improving the security and protection of the flow of goods.

For those who do not comply restrictions and financial penalties can be imposed on goods. On the other hand a competitive advantage can be established by having the correct accreditation in place, which is where business management systems such as Microsoft Dynamics NAV can help.

Failure to comply with the UCC and the Authorised Economic Operator (AEO) scheme, could harm vital sectors like logistics and distribution who make combined annual profits of around £860 million and generate approximately £460 million for the exchequer each year.

Depending on where each business sits in the supply chain, their company’s AEO requirement may be different, however the aim should focus on mitigating risk and streamlining Customs’ processes by guaranteeing that standards are met, which can be viewed as an opportunity to establish cost savings.

The benefits for distributors who have Authorised Economic Operator (AEO) status

AEO status is an internationally recognised quality mark indicating that your role in the international supply chain is secure, and that your Customs’ controls and procedures are efficient and compliant. Companies with accreditation get earlier access to some simplified Customs’ procedures and the possibility of the right to ‘fast-track’ goods through several HMRC safety and security procedures.

AEO status will become an important factor for businesses wanting to trade internationally

As well as the financial implications, failure to attain AEO status will cause postponements in the release of goods from a Customs’ procedure. Therefore it is important that those involved in logistics services such as wholesale distributors, manufacturers, warehouse staff etc. are mindful of the implications for them when working with businesses authorised for Customs’ activities.

Successful supply chain management encompasses a variety of concerns; specifically social, environmental and economic and is a balancing act between vendors and customers in aspects of procurement, sourcing, logistics and production.

Business management software helps ensure compliance by optimising your processes and capturing your audit trail via document management, such as the checking recipients and tracking the movement of goods and producing reports. Prodware adjust Wholesale Distribution is business management software powered by Microsoft Dynamics NAV which enables distributors to view full traceability of their product life cycle as well as ensuring compliance procedures are met for international trading. Contact Prodware to find out more.

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