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Origin management combines trade intelligence and software to enable better supply chain decisions.
In today's world where global competitiveness is highly associated with effective supply chain management and where Free Trade Agreements (FTAs) are being implemented at a rapid pace, origin management has emerged as a key aspect of strategic sourcing and global trade management. Origin management is the practice of leveraging continuously updated trade data and rules of origin to determine the economic origin and free trade agreement eligibility, while creating detailed documentation of the findings and enabling in-depth scenario analysis. It replaces the largely manual approach to these activities traditionally employed in the past.
Origin management provides companies with the opportunity to combine trade intelligence and trade management software, offering the following benefits:
Obtaining clear insight into all relevant legislation, duty rates, exclusions, and qualifications for a given FTA/product combination.
Reduction of duties by identifying the production location best fit to benefit from the free trade agreements.
Obtaining proper documentation by determining the country of origin in automated fashion.
An origin management program allows companies to use a single platform to collect data from suppliers, determine FTA eligibility for each shipment (if needed), and document and create an audit trail for each item and shipment. These benefits make it easier for companies to comply with local legislation on a shipment-by-shipment basis.
Origin management in Detail
The ideal origin management program consists of four elements:
1. Sourcing
In an origin management setting, sourcing is the key for finding the best location for manufacturing from a duty rate perspective. The company needs to be informed not only about the currently existing FTAs, but also whether the items to be manufactured are included in the FTA. The company also needs to know what new FTAs are likely to be implemented during the life cycle of the products, and what are the current...