With the current uncertainty regarding tariffs, free trade agreements (FTAs) and foreign trade zones (FTZs) provide companies with the tools to help mitigate unexpected increases in their cost structure. However, both FTAs and FTZs require specialized knowledge and clear control of your information and products. Creating the infrastructure to manage or even understand what it takes to manage these programs is important, because if done wrong, it could wreak havoc on your supply chain. However, if done right, it can provide significant savings while improving the flow and speed of your supply chain.
Although the general concept of managing FTAs is not new, the importance of having a platform that already has the rules of multiple trade agreements and allows you to manage all of your agreements on one platform is more important than ever. You need as much flexibility as possible to leverage different trade agreements for different regions and products. Some companies shy away from fully leveraging FTAs due to lack of familiarity, but that is not necessary as there are consulting and managed services firms that specialize in setting up and managing FTAs around the world. With the right technology and familiarity of the industry, substantial benefits can be reaped.
FTZs have been around for quite some time and are an ideal tool for managing uncertainty; however, the technology now exists to help companies maximize savings across the entire supply chain, not just one distribution center or manufacturing facility.
Blockchain is the technology that I believe has been overhyped for the near future. I do believe there are principles that will be adopted and benefit supply chains greatly over time; however, at times there is a lack of appreciation of what it takes to implement across supply chains and an exaggerated expectation of the short-term benefits.