Trade is the exchange of capital, goods, or services across any two or more organizations in exchange for money. When this procedure is initiated between two or more parties that originate from different countries then it is known as International Trade.
The most common commodities that are a part of international trade are mineral fuels and oils, electrical and electronic machinery, automobiles, medical products, food products, medicines like vaccines and pharmaceutical products, chemicals, metals, armaments, stones, pearls, diamonds, coins, etc. The various countries import and export commodities based on their requirements.
Why do Countries Trade?
There are two reasons why countries trade: division of labour and specialization.
The first reason, division of labour means work is divided among the different organizations that are necessary to bring one product into the marketplace. For example, consider a pharmaceutical company. For one drug to come into the market, its preparation needs machinery, ingredients for the drug (active drug and additives), sterilized conditions, etc. In this preparation, one country may supply the active drug, one country may supply the machinery and so on. This is how work is divided among the countries to yield the final result.
The second reason, specialization, means that every country is specialized with one type of product. India specializes in diamonds, refined petroleum, rice, aluminum, raw sugar, etc. Every country has its specialization and no other country can duplicate it, so the countries must trade with one another.
What is Global Trade Management?
Global Trade Management is the process of streamlining trade across various international borders and territories. It streamlines the entire lifecycle of global trade and logistics and all other significant activities.
Why Global Trade Management:
The trades occurring between the different organizations are increasing day by day because of the increase in human needs and requirements. Several imports and exports occur every day and every trade must take place in an organized manner. GTM monitors all these activities taking place among the various organizations of all sectors.
Global Trade Management refers to the management of global trades in an automated manner. Companies or organizations that lack GTM may experience intense stress concerning costs. The GTM of an organization or the company can be achieved with the help of a software system and a company having a GTM system enjoys the various benefits of cost reduction, tax imposition, management of compliances, and auditing processes. Otherwise, they may experience consequences like errors in these calculations, missing out on the benefits of reduced taxes.
The Objective of Global Trade Management:
The main objective of GTM is to handle all the exports and imports that are occurring worldwide, and to automate all the trade activities. The objective is to streamline trade across the world and to streamline the cash flows. GTM manages the compliances and costs, provides quality customer service, sets benchmarks with quality products and the delivery of goods on time to meet the requirements and necessities of the people.
Why is Global Trade Management Needed?
Here are some of the various benefits that the company gets through having GTM system:
Streamlined exports is one of the top advantages of GTM. Companies that do not have a GTM software system, require intense efforts concerning screening of all the sales and orders from every international customer. They will have to track every detail of the customer like an export license manually which is a time consuming process.
Manual tracking could affect the functioning of the company like delayed customer service which can affect the cash flow of the company. Those companies that have a GTM software system need not worry about the orders or sales as it prevents the manual tracking of that percentage of sales. An organization having GTM will experience a great turnaround.
Quick customer service:
The Global Trade Management software system enables the company to deliver the products quickly unlike those without the GTM software system. The process of delivery of order is never delayed. Once the order is ready for shipping, the processes like documentation are done quickly and accurately. GTM enables quick delivery of products, thereby improving customer service and creating satisfied customers.
Landed cost is the total cost of the product, i.e. all the costs incurred from manufacturing to the shipping of the product. Landed calculations should not be done manually because that may lead to errors and is also a time-consuming process. For an international trade, it is difficult to obtain the landed costs, but GTM takes care of calculating landed costs, thereby enabling the company to make the right decisions. Automated landed costs can bring great profits to the company.
The right paperwork is mandatory for international trade. Lack of the correct paperwork may result in consequences like the loss of customers or delays in the delivery of the products. If the organization continues to face delays, for this reason, it may result in the downfall and shutdown of the company.
It is important and necessary that every organization that participates in international trade consider having a GTM system as it provides an opportunity to enhance their sales, as well as all the benefits stated above. It is not only good for the company, but also for the trade market as a whole.
- Posted by admin
- On April 1, 2020