Executing a Global Customs Duty Management Strategy

Driven by the finance department, a textile fashion conglomerate wanted to initiate a comprehensive review of its customs duty optimisations to ensure compliance, centralize management, and identify new savings. Our experts managed the entirety of this significant project with massive impacts, implementing a protocol for the ongoing identification of potential savings using the AI Duty Savings Detection System created by DOJÖ, now part of Customs Support Group.

Fragmented Duty Optimisation Landscape and Hidden Risks

The company faced a chaotic landscape of decentralised duty optimisation practices, including First Sale for Export in the US, Inward Processing Relief in various EU sites, Free Trade Zone (MEA), and Preferential Origin in +15 countries. While these measures were in place, they lacked visibility and integration, presenting a shadowy puzzle to the finance department and raising significant compliance risks. Furthermore, The situation did not allow for making informed decisions, highlighting the work done by the trade compliance teams.

Building a Centralized, Data-Driven Duty Management Strategy

CSG’s approach to transforming the company’s duty management strategy was structured around three pivotal steps:

• Assessment of the Current Landscape: the initial phase focused on a thorough evaluation of the company’s existing duty exposure and the efficiency of duty reduction schemes already in place. This step was crucial in understanding the breadth and depth of the company’s duty management practices and identifying any compliance risks that could jeopardise its operations. This phase took 2 months.
• Establishment and deployment of a Global Duty Management Program: with a clear understanding of the current state, CSG embarked on setting up an all-encompassing Global Duty Management Program. Recognising the value of outsourcing, the company opted to delegate the execution of this program to CSG’s team of experts. A sophisticated duty management dashboard was introduced to provide a global overview of duty mitigation schemes and annual duty exposure by country, offering unprecedented clarity and control to the finance department.
• Deployment of the CSG AI Duty Savings Detection System: To ensure the ongoing identification of new duty savings opportunities, an automated procedure has been implemented to collect and analyze the client’s customs data files on a monthly basis. The CSG AI Duty Savings Detection System enables the identification of duty savings opportunities and is complemented by the review of duty optimisation experts. In practice, a report is sent to the client each month, followed by a follow-up call to initiate the identified optimisations.

Delivering Visibility, Compliance, and Significant Cost Savings

The implementation of the Global Duty Management Program marked a significant turning point for the textile fashion conglomerate. The once fragmented and opaque duty management practices were transformed into a streamlined, transparent system that empowered the company with:

• A comprehensive understanding of its duty obligations and optimisation strategies across all operational regions.
• Enhanced compliance posture, mitigating the risks associated with decentralised management and ensuring adherence to international trade regulations.
• Operational efficiencies and cost savings, derived from the strategic centralisation of duty management activities and the exploration of new duty reduction opportunities.
• The implementation of a protocol for the ongoing identification of potential or unclaimed savings.
• Improved financial visibility and strategic decision-making, facilitated by the duty management dashboard which offered real-time insights into duty exposures and savings (4 millions of duty reduction in the first following financial year).

Enabling Scalable, Sustainable Duty Optimisation

By partnering with Customs Support Group to revamp its duty management strategy, the textile fashion conglomerate not only secured its compliance and financial performance but also laid a strong foundation for sustainable growth and profitability. An agile and scalable process was deployed for managing all the duty optimisations, without the need to recruit or assign additional tasks to the internal teams.

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Disclaimer:

We take our clients’ confidentiality very seriously. While we have changed their names, the results are real. All our case studies are derived from real cases. Feel free to contact our experts to obtain referrals from our clients about the value creation of our services. You will then be able to see the results firsthand.

Article originally published by DOJO Consulting Group on www.welcometodojo.com, now part of Customs Support Group.