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“We do not deal with Customs!”

4 steps checklist for procurement teams regarding import process into the EU

I. Procurement and Customs

Customs is not a typical “beloved” sector neither in international trade nor in supply chain: it is often an overhead, even so there is rarely a scenario without Customs aspects in global trade. However the relevance of the Customs is well-known, it is possible though that companies, distributors, manufacturers etc. do not consider this segment carefully. One of the reasons is, what we often hear from companies who are importing into the EU: “we do not deal with Customs, our Customs broker does it”. Nevertheless this is a false statement. If your Company is the Import of Record in the EU, you are fully responsible for the data and information which have been given at the Customs clearances. In addition, there are many other Customs aspects which can lead to different types of consequences (both benefits and disadvantages) for your company. A few of them are substantial already in the procurement process.

Purchasing products in a non-EU country and planning to import them into the EU means legal, compliance as well financial aspects and results. There is also a new factor nowadays which shall be considered more frequently: sustainability. According to these facts it is highly recommended to create an applicable procurement strategy or plan concerning all these conditions.

In our checklist we are focusing exclusively on the typical import-relevant factors (regardless of any specified product) which are generally considerable in the procurement process.

If your company is planning to purchase physical products in a third country (outside of the EU) regardless of the type of the product – like raw material, semi-finished or finished goods – after supplier and source identification there is also a need for landed cost calculation (e.g. Customs duties) and compliance consideration (e.g. import restrictions).

II. How can AI technology help?

According to the World Customs Organisation (WCO) vision, the digitalization of Customs aims to replace paper-based Customs procedures with electronic operations, thus creating a more efficient and modern Customs environment in tune with global developments. This vision confirms the necessary support of AI technology in the supply chain.

Determining and regularly applying the correct Customs tariff number of a product is the most basic and one of the most difficult tasks in global trade. Most of the companies use the Customs tariff numbers of different suppliers in their export/import processes, which often leads to inconsistencies. Applying incorrect Customs tariff numbers can cause financial and administrative results. Moreover (too) many types of open-source databases exist which are designed to support the classification processes, nevertheless they are not sufficient enough to support batch classification, mainly designed to single classification query i.e. they are supporting only manual classification.

Counter to the original purpose of the Customs tariff nomenclatures, which were intended to use only for a few product groups in the past, the reality and practice shows, that according to the huge amount of product movements, fast product development and accelerated product flow nowadays in global trade does not allow to spend more days with customs classification of a product. In order to enable rapid Customs classification processes effectively, the AI technology support is a “must”.

III. Improve your procurement management and Customs classification process and have developed this helpful checklist to support you to optimise your procurement- and customs classification process regarding importation into the EU.

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