ORGANIZATIONAL INTELLIGENCE: CLOUDBASED GLOBAL TRADE SOLUTIONS

REPLACE THE FIREWALL

October, 2014
Bob Heaney, Research Director, Supply Chain and Retail Practices
Bryan Ball, Vice President and Group Director, Supply Chain and Operations Practices

Report Highlights
p2
77% of automation
Leaders (companies
with some to high
levels of automation)
embed supply chain
metrics for risk and
global trade into top
management goals /
compensation

p2
Leaders convert
once manual
processes to cloudbased solutions for
trade and visibility building a culture
that embeds true
organizational
intelligence into
their corporate DNA

p6
Leaders are 2.43x as
likely to provide
daily cross-function
cost/metric
reporting to
management or to
involve Finance /
executives in trade
compliance
initiatives

This report will examine the challenges and the capabilities that
automated companies have in place, as they move out from
behind the firewall and convert once manual processes to
cloud-based solutions for trade and visibility. Top performers are
delivering superior results and are more operationally ready for
globalization, building a culture that embeds true organizational
intelligence into their corporate DNA.

p10
By following 6 Key
Process Steps for
Operational
Intelligence,
companies can tie
objectives and
compensation to the
key cross-functional
metrics and instill
readiness

2
77% of leading
companies, with
some to high levels
of automation,
embed supply chain
metrics for risk and
global trade into top
management
goals/compensation.

Organizational
Intelligence
Defined by Aberdeen as, the
intellectual capacity of an entire
organization to act effectively and
proactively. It is the application of
supply chain intelligence
concepts, including learning
mechanisms, analytics, and the
control tower, or the balanced
scorecard, approach.
It fosters and incents crossfunctional alignment between
executive management and
individual/teams/departments
embedding intelligent
organizational cultures and
workflows into corporate DNA.

Organizational Intelligence: Cloud-Based Global Trade Solutions Replace the Firewall

In our recent visibility report, Supply Chain Visibility and

Segmentation: Control Tower Approach, 85% of companies
indicate that they plan to increase their current level of end-toend supply chain visibility. The research also reveals that the
increase in the number of suppliers, customers, carriers, and
countries of trade is changing the importance of collaborative
synchronization between all parties in the multi-tiered global
supply chain. As a result, as Aberdeens research indicates, there
is a growing shift in focus towards collaboration, Global Trade
Management (GTM), and Global Trade Compliance (GTC) with
suppliers and trading partners.
One key area of focus (and continuing evolution in supply chain
intelligence) is on embedding risk and global trade metrics into
the events/cost data. This, in turn, is fostering a culture of
operational readiness and organizational intelligence. For years,
companies have confined all global trade systems to operate
behind the corporate firewall. Today, new secure, cloud-based
global trade solutions have been adopted by top performing
companies to embed balanced metrics at the executive level and
foster organizational intelligence.
Organizational Intelligence is Enabled by Automation
Aberdeen has been researching the relative levels of automation
that are employed by companies for the last 5 plus years. During
this time, solutions have not only become more automated, but
they have also become more collaborative and dynamic. 55% of
all companies have or will implement cloud-based GTM
solutions within the next 12 months (up from 37% only 3 years
ago).
Additionally, we are seeing that the complexity and global
nature of todays trade/transport landscape drives a need to

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Organizational Intelligence: Cloud-Based Global Trade Solutions Replace the Firewall

collaborate with partners and share data and intelligence from

the original source to final delivery.
Figure 1: Automation Enables Organizational Intelligence
Some to High Automation, n=40
Safeguards are in place with screening for
key risk factors embedded into daily process
- 1.75x
Online visibility into in-transit shipment
status - 2.21x
Online visibility into the status of global
supply chain events (e.g. customs clearance
events, trade document status) - 1.90x
GTM Risk Management metrics or KPIs are
included in management objectives and
compensation - 2.41x
Online visibility into international order and
supplier event status - 1.90x
Event Management with better Key
Performance Indicators (KPI) - 2.25x

Mostly Manual, n=35

84%
48%
84%
38%
78%
41%
77%
32%
76%
40%
72%
32%

Classes Defined:
Automation Leaders
(40 companies that claim some to
high automation levels)
96.4% of orders delivered to
customers complete and on
time - outbound
0.5% Decrease in total landed
per unit costs in the past year
Automation Followers
(35 companies that claim mostly
manual automation levels)
86.4% of orders delivered to
customers complete and on
time - outbound
0.8% increase in total landed
per unit costs in the past year
Note: 20 additional companies claim
low to fragmented automation
Supply Chain Visibility and
Segmentation: Control Tower
Approach; August 2014, n=95

0% 25% 50% 75%

Percent of Respondents, n = 95 .
Source: Aberdeen October, 2014

Automated Companies Move Away from Once Manual

Processes - Become Organizationally Intelligent
With figures ranging from 1.75x to 2.25x as likely, it is clear that
automation Leaders are more capable compared to the mostly
manual organizations, as shown in Figure 1 above.

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Organizational Intelligence: Cloud-Based Global Trade Solutions Replace the Firewall

Automation Leaders
Coordinate
Externally
It is not surprising that when it
comes to strategic actions, the 40
automation Leaders exhibit
higher levels of control and
coordination with the external
parties that they are dependent
on.
Automation Leaders are:

1.65x more likely "to

consolidate or redesign
sourcing geographies across
multi-tier points"

1.69x more likely to

outsource, optimize, and
manage logistics services
providers

84% have safeguards in place, with daily screenings

for key risk factors. This is up 30 percentage points and
is now equal to online visibility, also now at 84%. Three
years ago, safeguards were only at 54% (for companies
with some to high levels of automation), while online
visibility into in-transit status was at 58%. This is
important since todays supply chain is more global and
complex and the trade environment is unforgiving. Lack
of trade compliance can mean delays and fines in
customs and even the loss of import/export licenses.
77% have online visibility and KPIs/compensation
linked via automation. Online visibility into status,
including customs status and trade documentation, is
now at 77%, up from 45% in 2011. This is further
enhanced today by correlated increases in the
automated linkage of metrics and KPI with management
objectives and compensation. Of special note: with

respect to organizational intelligence, we see a definite

correlation between level of automation and the
capability to incorporate GTM Risk Management KPIs into
compensation -with automated companies being 2.41
times as likely to link these KPIs into compensation.
Aligning KPIs to compensation instills awareness and
accountability into systemic and out-of-tolerance
conditions. Better focus from management on balanced
metrics, drives and incentives improved workflows and
processes.
76% have online visibility into international order and
event status. Now 76% of companies have automation
in place, versus 48% in 2011. Indeed now 72% of
automated companies are capable of Event
Management with KPI integration, and are 2.25x as likely

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Organizational Intelligence: Cloud-Based Global Trade Solutions Replace the Firewall

as their mostly manual counterparts to integrate events

and KPIs.
The general trend in the statistics we recap above is the uptick in
automation, not just of statuses but also in the linkage of KPIs
and organizational intelligence across risk and cost metrics. The
linkage of event data to these added risk and cost metrics, builds
intelligence into the process. Events by themselves are just data,
but when we attach costs and risks, particularly those that stray
from typical norms, we can perform corrective actions and
deliver improvements in daily and periodic metrics. Overall, the
automation Leaders outpace their peers in both cost and service
metrics.
Automation Advantage- Linking Events and Organizational
Groups/Disciplines
We now look at some of the specific advantages of automation,
related to how to use the intelligent linkages of event, KPI, risk,
and financial data to support much higher levels of collaboration
and integration throughout the organization (see Figure 2 on
page 7). We see that automation Leaders are:
2.43x as likely to provide daily cross-function
cost/metric reporting to management and, likewise, to
involve finance/executives in trade compliance
initiatives. Linkage to the finance/executive organization,
now at 90% up from the 50% we saw three years ago, is
also 2.43x as likely to be automated by automation
Leaders than the mostly manual Followers. Here we see
the strengthening of automated linkage of risk/financial
metrics to management compensation. This constitutes a
shift from risk assessment that was manually audited
(after the fact), to key risk factors embedded into the
daily process. This level of automation at the daily level is

Deploy a solution
that provides
integrated
workflows and
collaboration
with all parties in
your demand-tofulfill network and
across each
inventory and
fulfill/deliver
stream. A best
practice is to
provide internal
as well as
"outside in"
orchestration.
Read the full
report, The
Outside-in
Approach to
Order Fulfillment"

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6
Areas of potential
benefits are trade
and lane
consolidations and
rate negotiations,
foreign trade zones
(FTZs), backhauls,
continuous moves,
and prepaid-tocollect conversion
/convergence

Organizational Intelligence: Cloud-Based Global Trade Solutions Replace the Firewall

a key enabler for enhanced organizational intelligence

and operational readiness.
98% link and classify SKUs and document filings to
certify internal management processes. While this is a
very basic capability, the sheer volume of shipment and
event statuses is massive and automation is needed to
alert personnel to trends and out-of-tolerance situations.
This is discussed in more detail in the related report
Supply Chain Visibility and Segmentation: Control Tower
Approach.
Linkage to the cross-functional strategy teams is now
at 86%, up from just 43% three years ago. Automated
companies are 2.15x as likely to utilize cross-functional
teams across purchasing, supply chain, and finance into
GTM oversight/strategy. It is important that all key
stakeholders have visibility into event data and are
accountable to the aligned metrics that their behaviors
provide.
Linkage of cross-functional cost/metric reporting in
the form of regular/automated intelligence to
management, up to 73% from just 37% three years
ago. The advanced levels of organizational intelligence
that this provides is further enhanced by the increased
linkage/automation of cost and risk data, along with
status information on a regular daily basis, which we
commented on regarding Figure 1. These advanced
capabilities are further enablers for the superior cost and
service metrics of the automation Leaders.

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Organizational Intelligence: Cloud-Based Global Trade Solutions Replace the Firewall

Figure 2: Organizational and Cross-Functional Management

Advantages of Automation
Some to High Automation, n=40

Mostly Manual, n=35

Ability to efficiently and properly classify SKUs /

regulations and document filings to certify internal
trade compliance / management processes - 1.44x
Finance/Executive organization involved in trade
compliance initiatives - 2.43x
Cross-functional team of purchasing, supply chain,
and finance overseeing GTM strategies - 2.15x
Ability to provide up-to-date staff training and
certifications on critical compliance / management
processes or procedures - 2.00x
Cross-functional cost and metrics and reporting
provided to management on a regular basis 2.43x
Trade compliance management data is shared or
centralized at the enterprise level - 1.54x

98%
68%
90%
37%
86%
40%
76%
38%
73%
30%
63%
41%
0% 25% 50% 75% 100%

Percent of Respondents, n = 95 .
Source: Aberdeen October, 2014

And finally, Leaders are:

1.54x as likely to cite compliance shared and
centralized at the enterprise. This is one statistic that
has not seen quite as much change, as it is now
automated at 63% of companies, up from 55% three
years ago. However, now up to 55% of all companies are
considering the advantages of moving out from behind
the company firewall for global trade solutions. This, in
turn, will serve to increase the level of centralized, yet

Companies face a growing

challenge posed by any
Cost-to-Serve (CTS) or
segmentation strategy how to link financial costs
and logistics activities
together, in order to enable
proper allocations to
products, customers, and
channels. This challenge is
further compounded as
these metrics drive new
requirements for
operational intelligence.

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Organizational Intelligence: Cloud-Based Global Trade Solutions Replace the Firewall

secure, data sharing and collaboration for enhanced

organizational intelligence.
Summary and Recommendations
Across the broad spectrum of key capabilities found in Figures 1
and 2, we see that the likelihood of a company utilizing each
capability is highest once the organization links the intelligence
it is harvesting and embeds it into the very fiber of people and
process throughout the organization. At this level, we are looking
beyond just collecting big data and are moving to focus on how
to automate and internalize it into supply chain organizational
intelligence.
We have discussed in several recent reports, the need to harness
the big data we are all collecting today at the shipment,
customer, and event level and turn it into actionable
intelligence. Top performers are using this intelligence to
perform cost-to-serve analysis and segmentation (see side bar
page 7), or to calculate landed cost advantages under trade and
transport lane restructuring.

Read the full

report, Supply
Chain Visibility and
Segmentation:
Control Tower
Approach

6 Key Steps to Building Organizational Intelligence in Your

Company
Taking the concept a step further, beyond rate, cost, and event
intelligence, there is the requirement to evolve our people and
organization and develop supply chain organizational
intelligence. In the section that follows, we summarize
recommendations and key learnings in 6 key process steps:

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Organizational Intelligence: Cloud-Based Global Trade Solutions Replace the Firewall

Step 1: Understand the need to collaborate for supply chain

data and intelligence
This should work together with the goal of developing key
metrics and intelligence across the entire organization and the
extended multi-party supply chain.

Step 2: Use new technologies and the control tower approach

to harness big data and develop operational intelligence and
readiness
We define the control tower approach, which allows one to
analyze big data and manage by exception, in our related report.

Cost Components for Accrued

Total Landed Cost:

Step 3: Understand the value of automation and cloud-based

solutions for multi-party data and process interoperability
For too long, companies have relegated GTM/GTC processes to
only operate behind the company firewall. Over the past 3 years,
leading companies have moved beyond the limitations of the
firewall and found secure cloud-based solutions to address their
GTM/GTC requirements. By using automation and cloud-based
solutions, they are gaining supply chain and organization
intelligence. Benefits include rate and lane consolidations and
trade and tariff reductions though duty deferral provisions like
FTZs.

Step 4: Use new technologies, analytics, and the control

tower approach to harness big data and develop operational
intelligence and readiness
The automation Leaders are 1.54x as likely to have the capability
to track actual total landed costs as shipment progresses. For
segmentation/modeling, this capability accumulates costs at the
product level plus aggregates logistic, trade and transport costs
as they occur on the inbound and outbound side. These costs
would be direct product and shipment costs, indirect variable

Direct product cost inclusive of material and

manufacturing
Variable transaction
level costs - direct and
indirect trade/transport
and logistics costs
attributable to each
product and inbound
plus outbound shipment.
Fixed indirect and
overhead costs allocated by virtue of
allocated overhead
costing. Costs of order
selection, fulfillment,
inventory holding, and
storage, as well as
general and
administrative costs.
Accrued total costs Aggregated from each of
the above cost categories
by applying costs
attributed to each
product and shipment, as
orders are tendered for
specific customers and
channels and flow
outbound for final
delivery.

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Organizational Intelligence: Cloud-Based Global Trade Solutions Replace the Firewall

costs, and various fixed overhead and carrying costs (see

sidebar).
Key Optimization Features:
Automation Leaders versus
Followers

Step 5: Develop supply chain organizational intelligence and

embed new process and automation tools into the daily
cross-functional fabric

Develop these by role and employee across purchasing, finance,

compliance, supply chain, and other functions. Leading
companies are up to 2.43x as likely to demonstrate heightened
levels of organizational intelligence (Figures 1 and 2). This, in
turn, leads to superior cost and service performance in todays
competitive landscape and has resulted in double digit savings
in total landed cost per unit shipped.

9.67x as likely to
automate Trade planning
or Supply chain redesign
tool automation
(optimize sourcing /
distribution decisions)
4.29x as likely to
automate
Communication /
document exchange with
other government
agencies (FDA, Consumer
Safety)
2.24x as likely to
automate Item level
updates and validations
to-from HS
Classifications and global
Harmonization Code
Matrix database

Step 6: Top performing companies are embedding

operational intelligence into the very DNA of the executive
organization
By tying objectives and compensation to the key crossfunctional metrics these Leaders incent and reward behaviors
consistent with a balanced set of goals and strategies. Make sure
that you incorporate GTC/GTM risk and other key metrics (such
as sustainability goals) into your incentive/compensation
formulas and ensure alignment to overall corporate scorecards
and balanced strategies.
In conclusion, although most companies and supply chain
leaders recognize the importance of effective trade compliance
to reduce fines, penalties, and overall risk, few have understood
the true value of GTM and GTC in reducing end-to-end costs.
Fewer still have taken the steps to develop a level of operational
intelligence within their organizations. 77% of automation
Leaders embed supply chain metrics for risk and global trade
into top management goals/compensation - further embedding

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Organizational Intelligence: Cloud-Based Global Trade Solutions Replace the Firewall

these concepts into their corporate DNA. The 6 key process steps
we recommend above should help all companies on their
journey toward operational intelligence, and to achieve Leader
status.

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12

Organizational Intelligence: Cloud-Based Global Trade Solutions Replace the Firewall

For more information on this or other research topics, please visit www.aberdeen.com.
Related Research

Supply Chain Visibility and Segmentation:

Control Tower Approach; August 2014

Advancing Global Trade: Foreign Trade Zone

Solutions; August 2014

Answering the Call: 5 Best Practice Process

Steps for B2B and B2C Demand-to-Fulfillment
Convergence; August 2014

China Trade Operations: Trends and

Advancements; May 2014

Authors: Bob Heaney, Research Director, Retail and Supply Chain Execution,
([email protected])
Bryan Ball, Vice President and Group Director, Supply Chain and Operations,
([email protected])
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