Supply chain management has become more complicated in the last several years. While we live in a global economy, recent trade policies around the world are having a cooling effect on many of our global partnerships. Uncertainty, as a result of tariffs and other economic policies, has brought global trade management (GTM) to the forefront of supply chain management. Effective GTM is critical for optimizing supply chain performance, managing risk, ensuring compliance, and remaining competitive.
According to the UN Trade and Development:
As trade uncertainty grows, global cooperation and balanced policies remain critical. While China’s stimulus measures and lower inflation in some regions could support trade, protectionism and shifting policies in major economies remain key risks. The challenge in 2025 is to prevent global fragmentation – where nations form isolated trade blocs – while managing policy shifts without undermining long-term growth. The actions taken now by governments and businesses will shape trade resilience for years to come.
GTM Strategies for Smarter, Smoother, and More Compliant Operations
Global trade management is the strategic coordination and execution of everything involved in the movement of goods, services, and information internationally. It ensures that global trade activities are performed efficiently, cost-effectively, and in full compliance with global regulations. GTM helps companies manage the complexities of trading across borders. This includes:
- Trade compliance: Ensuring goods are classified correctly, licenses are in place, and all regulatory requirements are met across multiple countries.
- Customs management: Preparing and submitting the correct import and export documentation, such as commercial invoices, packing lists, and certificates of origin.
- Duty and tariff optimization: Taking advantage of trade agreements and duty deferral programs, to reduce landed costs.
- Risk management: Identifying and mitigating risks related to trade restrictions, sanctions, and geopolitical instability.
- Technology integration: Using specialized GTM software that links with enterprise resource planning (ERP), transportation management systems (TMS), and other supply chain systems, to automate and streamline trade processes.
In essence, GTM bridges the gap between a company’s internal operations and the external global trade environment. These strategies are critical for ensuring that goods move smoothly, legal obligations are met, and companies remain competitive in global markets.
GTM’s Relationship with Supply Chain Management
GTM is a vital extension of supply chain management, especially for companies operating globally. While traditional supply chain systems focus on the flow of goods from suppliers to customers, as well as associated information and finances, global trade management is more focused on the regulatory and compliance challenges that occur when goods cross borders.
Here’s how GTM and supply chain management connect:
- Visibility and control: GTM enhances supply chain visibility by managing trade regulations, duties, and documentation, ensuring shipments aren’t delayed due to compliance issues.
- Efficiency and cost savings: GTM helps optimize routing and customs clearance, reducing lead times and landed costs.
- Risk mitigation: GTM anticipates and manages risks, such as denied party violations, embargoes, or incorrect classifications – issues that traditional supply chain management systems may not handle.
GTM Matters in Modern Supply Chains
Modern supply chains face more uncertainty and volatility than ever before. Global trade management, however, is a function through which companies are able to manage the uncertainty of regulatory changes, geopolitical risks, sanctions, and duties. GTM becomes even more important when managing multiple locations with conflicting requirements, seemingly overnight changes in policy, and unexpected risks. Some of the top risks, according to S&P Global, include:
- Climate change
- Energy disruptions
- The rise of nationalism
- Supply chain cyberattacks
- Geopolitical risks, including the Russia-Ukraine and Israel-Hamas conflicts
- Food security
Because of these risks, companies need more transparency and visibility across their extended supply chain, and global trade management is a huge part of that for many companies.
Key Components of an Effective GTM Strategy
There are several components of an effective GTM strategy:
Compliance Management
Effective global trade management begins with robust compliance management. This involves automating regulatory compliance checks, to ensure that all trade activities adhere to the relevant laws and regulations. Avoid penalties and ensure smooth operations by staying up to date with trade regulations and restricted party lists. By leveraging technology, companies can streamline compliance processes and reduce the risk of non-compliance.
Classification and Documentation
Accurate classification and documentation are essential for avoiding delays with customs clearance. Ensuring Harmonized Tariff Schedule (HTS) and Export Control Classification Number (ECCN) accuracy helps with correctly identifying goods and determining applicable duties and restrictions. Proper documentation, including commercial invoices, packing lists, and certificates of origin, is vital for facilitating the movement of goods across borders.
Duty and Tariff Optimization
Making use of trade agreements like the United States-Mexico-Canada Agreement (USMCA) and the EU-Japan Economic Partnership Agreement (EU-Japan EPA) can significantly reduce landed costs. Duty deferral programs and bonded warehouses offer additional opportunities for optimizing tariffs and minimizing expenses. By strategically managing duties and tariffs, companies can enhance their competitiveness in the global market.
Risk Management
Effective risk management is crucial for navigating the complexities of global trade. Scenario planning and supplier diversification help in mitigating risks associated with trade restrictions, sanctions, and geopolitical instability. Political risk assessment enables companies to anticipate and respond to changes in the political landscape that may impact trade activities. By proactively managing risks, companies can ensure continuity and resilience in their global operations.
Technology and Integration
Integrating GTM software, such as SAP Global Trade Services and Oracle Global Trade Management, with ERP, TMS, warehouse management systems (WMS), and product lifecycle management (PLM) systems is essential for streamlining trade processes. Technology integration enhances visibility, automates workflows, and improves efficiency, enabling companies to manage their global trade activities more effectively.
These key components collectively contribute to a comprehensive and effective GTM strategy, ensuring compliance, optimizing costs, managing risks, and leveraging technology for seamless integration and enhanced performance.
Future Trends in Global Trade and GTM
The future of GTM is shaped by several key trends that are transforming the landscape of global trade:
- Increasing trade fragmentation and protectionism are driving companies to navigate complex regulatory environments and adapt to shifting trade policies.
- ESG (environmental, social, and governance) and ethical sourcing considerations are becoming more critical as companies strive to meet sustainability goals and ensure responsible supply chain practices.
- The digitization of customs processes, including e-invoicing and blockchain pilots, is revolutionizing the way trade documentation is managed, enhancing transparency and efficiency.
- AI-driven trade intelligence provides companies with advanced insights and predictive analytics, to optimize trade strategies and mitigate risks.
Additionally, as companies nearshore or diversify suppliers, there is a greater need for robust GTM solutions that manage the complexities of multi-sourcing and ensure compliance across diverse markets. These trends collectively highlight the evolving nature of GTM and underscore its importance for enabling companies to remain agile, compliant, and competitive in the global trade environment.
Global trade management is no longer a luxury; it’s a necessity in our complex global supply environment. As you pursue an antifragile supply chain, consider implementing global trade management and GTM technology. Assess your current GTM capabilities and invest in tools and partnerships that strengthen your global trade strategy.