It all started with a data breach for Quest Diagnostics.

After that, its 11.9 million patients were affected as an unauthorized user gained access to their financial data and social security numbers. Fast-forward to 3 years later, and the case still is one of the most significant cautionary tales for reminding companies to strictly screen the partners they work with as much as they screen the employees they hire. Your partners’ controls and values do not necessarily reflect the high level of internal controls and ethical standards you practice. Because of this, watch list screening has not only become more stringent and more challenging than ever — but also become even more important.

As the U.S. government continues its highly visible use of denied party lists, it has become imperative that your company screen the vendors, suppliers, and other third-party partners that you might do business with. Screening your third-party partners is a process that must be done with due diligence watch lists, databases, and other resources. By collecting and comparing data about your third parties, your company gets to understand their ownership structure, history, adverse media reports, connections, and past litigations, among others. Listed below are examples of what the data the Chief Compliance Officer and the compliance team must look for:

• Owner’s information — Who owns the company you’re about to work with?
• Personal background checks — Have the managers and owners ever encountered issues with breaking any laws?
• Regulatory enforcement actions — Has the vendor been sanctioned for non-compliance?
• Connected entities and individuals — Is it connected to any sanctioned individual or entity?
• Political ties — Assess probabilities for corruption

Through these data, the CCO and the compliance team can understand and even predict the risks that might ensue from working with that third party — from corruption to money laundering, cybersecurity, terrorism funding, etc.

Watch list screening data, however, is still raw in form. How to assess this data and make sense of it in a strategic manner is the next step in modern corporate compliance.

Screening Data and Its Complexities

Effective modern corporate compliance is more than just having access to a vast amount of data. It also requires interpreting that data to make wise decisions. Here are some steps you must not skip when making sense of your watch list screening data.

Understand the prospective vendors’ risks in relation to your own. Your own company has its own compliance risks as most companies do. You must inherently know these risks so that you can assess possible compliance lapses between you and your prospective vendor. It goes without saying then that you must thoroughly know everything possible about who your third parties are before you formally engage in business activities with them.

Put policies and procedures in place. Upon discovering the risks a specific vendor might pose, you have to make a number of decisions as to whether or not to use that vendor, apply extra precautions like providing extra oversight or approval steps for high risk parties, or cut ties with the party altogether.

Conduct regular audits on your program’s effectiveness. Once you have chosen a vendor, periodic checks must be performed to ensure that the program runs as intended and that it is streamlined to avoid any vendor risks and is aligned with all compliance measures.

While all these processes can be tedious when done manually, companies have the option to hire a screening partner or implement a watch list screening technology that can automate watch list screening.

Automate Watch List Screening with SAP Technology

SAP Watch List Screening is designed to help companies assess potential risks on an exception basis to avoid high-risk businesses, individuals, and entities before you formally engage in business activity with them.

SAP’s restricted party screening software simplifies watch list screening — improving vendor compliance and reducing the cost and effort of third-party due diligence.

The technology uses a SaaS model that simplifies screening, provides instant access to up-to-date watch lists, streamlines uploads, and accelerates time to value. It automates compliance checks across critical sales and procurement processes to improve results and decrease supply chain delays. This helps companies avoid partnerships and relationships with sanctioned individuals and entities and reduce the risk of noncompliance business-wide.

Designed with restricted and denied party screening, the technology allows for real-time compliance checks for order-to-cash and procure-to-pay processes, automated screening of restricted or denied parties with inline process blocking and release, and ad-hoc screening for extended use cases.

Other benefits include:

• Cloud deployment
• Reduced supply chain disruptions and delays
• Improved compliance within business processes
• Simplified IT landscape

Implement SAP Watch List Screening with Ropaar

While implementing SAP solutions might sound like a lot of work, companies like Ropaar can assist and guide you through your journey based on our prior experience in delivering trade compliance and denied party screening solutions.

At Ropaar, we have helped various companies from across different industries to automate their watch list screening processes using SAP technologies. We have helped them assess their unique landscapes and implement cutting-edge SAP solutions to help them comply with stringent standards.

By leveraging Ropaar’s years of experience in watch list screening, you can be confident that your organization can overcome current and future global trade challenges. Contact us to learn more about our solutions and services.

Every country has a different food safety regulation and its perception of risk. These differences in national standards make compliance challenging for exporters and can result in permanent trade frictions and affect food trade.

Compliance-related hurdles can lead to costly delays, higher trade costs, food safety risks, and customer dissatisfaction. Food companies must proactively mitigate compliance risks to ensure frictionless and compliant transactions and faster time-to-value.

Here are the top 3 foreign trade compliance risks that food companies must manage effectively to avoid poor results.

1. Changing regulations

Regulatory bodies across the globe are constantly modifying and updating standards and protocols to meet present demands. Some of the recent changes include:

Latest FDA rules

The Food and Drug Administration (FDA) announces new regulatory updates — including changes to its definition of “healthy,” FDA Standards of Identity, labeling clarity on animal cell technology, and cannabinoids regulation.

GACC Order No. 248

The General Administration of Customs of China (GACC) Order No. 248 sets out new requirements for the registration of qualified foreign food products exporters to China, effective starting January 1, 2022.

2. Supply Chain Risks

Compliance with food safety protocols requires ensuring that the products are of high quality from farm to fork. Here are three key factors that need to be effectively managed and monitored:

• Suppliers

How do your suppliers manage compliance?

• Ingredients

What are the inherent risks posed by the ingredient you use?

• Use of Ingredients

How do you ensure that your staff uses the product safely and compliantly?

3. Innovation and Sustainability Concerns

To meet today’s demand, food companies integrate modern technologies and approaches into their processes. Recent advances include:

• CRISPR-Edited Agriculture, a gene-editing technology for introducing commercially desirable traits in crops·
• Alternative meats from plant-based proteins·
• New food freezing concepts

Implementation of these innovations requires the backing of regulatory bodies to ensure compliance and address concerns such as:

• Environmental and ethical issues
• Labeling issues
• Food safety concerns

Proactively manage foreign trade compliance risks

At Ropaar, we have helped various global food companies to overcome and adapt to ever-changing global trade compliance risks and challenges. We helped them assess their unique landscape and implement cutting-edge SAP global trade solutions to empower them to execute in the new normal.

By leveraging SAP Global Trade Services (GTS), food companies can confidently trade globally with:

• Next-generation export and import management
• Simplified trade preference management
• Adaptive customs management
• Data-driven restricted party screening

Contact our team of SAP experts to learn more.

The COVID-19 pandemic caused various shifts in the already ever-changing and volatile international trade, spurring companies to seriously rethink their global trade management strategies. Aside from dealing with the current impact and implications of the health crisis for their foreign trade processes, businesses should also fortify their enterprise for the aftermath of the pandemic. This requires knowing what lies ahead and what measures can proactively be implemented to thrive during the pandemic and beyond.

Here are the top post-Covid foreign trade challenges businesses should prime themselves for.

1. Global value chain reconfiguration.
   • China has been a major player in the global value chain, and this is why the outbreak in Wuhan — where the virus has allegedly originated — has dramatically changed the game. Back-shoring, nearshoring, and regionalization have become a major discussion in the global arena. Many global companies had to consider having both local and international suppliers just to ensure resiliency and reliability
   • Although some experts say that regionalization will not happen overnight or might take a decade to materialize, this gradual shift will still have a direct and indirect impact on companies playing in the international arena. To minimize the impact of the global restructuring, companies need to be steps ahead and start innovating their processes to prime the entire enterprise for this foreign trade shift.
2. Logistics and transportation disruptions.
   • During the pandemic, the container shipping sector was “severely affected” by social restrictions and lockdowns. Ports became more congested due to stricter health protocols and reduced manpower, leading to costly delays. Shipping intermediaries such as logistics providers and freight forwarders also suffered reduced business hours.
   • Experts, however, say that post-Covid, airlines will increase dedicated air cargo capacity to help address the problem. But heightened cargo inspections and cross-border control protocols will remain a bottleneck going forward. Global players that wish to minimize its impact on their company need to optimize cargo visibility, transparency, and traceability to help streamline the process and curb the risk for costly delays.
3. New trade restrictions and agreements.
   • According to the World Bank, “COVID-19 has spawned new trade restrictions and threatens to widen old trade divisions.” Modern trade agreements (deep trade agreements) will cover not merely trade but also a range of policy areas — including protection of the environment and intellectual property rights.
   • Export bans due to safety concerns could become a long-term challenge as well, particularly on food exports. According to APEC, “the food security situation is stronger now compared to the 2007–2008 global food crisis.”
   • Companies that trade globally should be fully aware of these new trade agreements and restrictions (both country- and industry-specific as well as international) to avoid compliance and other risks that can affect the entire business. Automation and standardization of global trade compliance, document creation and filing, and other foreign trade processes can help companies ensure they are always on the right track.
4. New sustainability issues.
   • Experts foresee that in the near term, nations will implement their individual emissions pricing systems according to their border adjustment mechanisms. A lack of consensus among nations will result in “differently designed CBAMs” or emissions pricing systems that vary from country to country, requiring global players to conscientiously comply with each pricing system imposed by the countries they transact with. Aside from the complexity, this change could also hamper businesses’ efforts to mitigate climate change.
   • Finding the right balance between sustainability, cost, and customer experience has never been easy. But armed with new-age foreign trade solutions, companies can at least minimize the impact of issues such as this.
5. Digital trade implications.
   • As more and more forward-thinking companies are leaning toward adopting digital trade, new foreign trade issues that could lead to diplomatic friction arise. This includes data privacy, integrity, and transparency issues. Experts suggest that new-generation trade agreements should include rules governing data processing to avoid compromise of online sales of goods and services.
   • At the enterprise level, companies can help address the issue by automating and standardizing data processing and document management to avoid manual procedures that often lead to data privacy, integrity, and transparency issues.

Successfully Navigate Post-Covid Foreign Trade Challenges

To avoid unnecessary costs and risks due to changes in the foreign trade arena, companies should look to industry experts who can help them implement new-age solutions. At Ropaar, we have helped various companies from across different industries to prime their enterprise for the next normal. We helped them assess their unique landscape and implement cutting-edge SAP global trade solutions to help them execute in the new normal.

By leveraging Ropaar’s years of experience in foreign trade, you can be confident that your organization can overcome current and future global trade challenges. Contact us to learn more about our solutions and services.

Who you are doing business with can greatly affect your enterprise. If your organization transacts with a restricted entity, individual, or enterprise, it will be subject to sanction violations with penalties of up to $1,000,000 per transaction and 20 years imprisonment.

Regularly screening parties, however, is not an easy task. It requires thorough entity investigation, laborious data processing, and keen monitoring of all transactions the party makes. Doing all this manually can be extremely overwhelming.

You can automate the screening process using a cutting-edge solutions. SAP offers different tools under its Governance, Risk, Compliance (GRC), and Cybersecurity suite — including SAP Business Integrity Screening (formerly SAP Fraud Management), SAP Global Trade Services Sanctioned Party List Screening (SAP GTS SPL), and SAP Watch List Screening.

Each SAP screening tool has its competitive advantages and limitations. So which do you think can best cater to the unique needs of your enterprise? Here are some key factors to consider:

Software deployment

SAP Business Integrity Screening can be deployed either on-premise (client-hosted – perpetual license) or via Cloud (SAP hosted – subscription license). SAP GTS SPL can be run in the cloud, alongside SAP S/4HANA, or using a traditional database. SAP Watch List Screening, on the other hand, is cloud-native. It is available as Software-as-a-Service or as an added capability within SAP S/4HANA.

Control over screening algorithm

SAP Business Integrity Screening lets you use a pre-made detection strategy, create a new one, and refine and calibrate the strategy to simulate what-if scenarios. You may integrate it with SAP Predictive Analytics to detect suspicious behaviors and patterns not covered by existing rules going beyond simply screening business partners against denied entities list.

SAP GTS SPL and SAP Watch List Screening offer fully automated screening. But they also allow for manual input of parameters and ad-hoc screenings for extended use cases. Both solutions let compliance associates do further investigation to determine false positives and decide whether to confirm blocking or releasing the item. SAP Watch List Screening leverages embedded intelligence to minimize repetitive decisions on matches for more streamlined screening. However, SAP Watchlist Screening is delivered with a pre-set screening algorithm that applies to all subscribers, on the other hand SAP GTS SPL solution being a single tenant/on-prem solution allows for tweaking the algorithm and controlling match percentages to better reflect the risk appetite of the customer.

Denied party content selection

SAP Business Integrity Screening comes with pre-delivered content. It allows you to use external lists provided by the government and international agencies and create your internal list for ad-hoc screening.

SAP GTS SPL lets you import denied party lists from various external sources using the XML interface and create internal sanctioned party lists in SAP GTS. It enables you to choose which list to use during a screening process. It also lets you create legal regulations in SAP GTS to determine which sanctioned party lists are relevant for a particular screening process.The mature ecosystem of denied party content providers that service the SAP GTS solution ensures if there is a particular list that poses a specific risk to your enterprise, you can rest assured there is a content provider that aggregates and supplies that data.

SAP Watch List Screening simplifies content-related decisions by providing you with a single predefined content provider (Mendel-Verlag). It also provides Excel integration for uploading a list of trade partners that you want to screen. It remembers and uses the result to automatically block or release an item the next time you make a transaction.

Licensing cost and flexibility

Unlike SAP Business Integrity Screening and SAP Watch List Screening, SAP GTS SPL is not a stand-alone solution from a licensing standpoint. If you want to leverage SAP GTS SPL, you will need to license the export or import modules or the entire bundle of the SAP GTS suite. This can be a wiser move if you are looking to take advantage of a holistic solution for global trade compliance with denied party screening being a component of that need.

But if you are already operating in SAP S/4HANA, using SAP S/4HANA International Trade Management, or just want to take advantage of SaaS, then SAP Watch List Screening can be a great option to consider. Unlike on-premise and cloud deployments of SAP GTS and SAP Business Integrity Screening, an SAP Watch List Screening implementation is relatively faster and simpler — saving you enormous resources. You can even check out the software straight from the SAP store and ask for some integration help from a trusted partner like Ropaar to maximize its capabilities, which points us to the last point.

Integration

SAP Business Integrity Screening has built-in integration with SAP Analytics. It can be integrated with other GRC solutions for enhanced control and automated audit. SAP GTS, on the other hand, can be integrated with SAP S/4HANA, SAP ERP, other SAP solutions (such as SAP Transportation Management) out of the box, while non-SAP integration is supported via robust set of web services exposed from the SAP GTS’s denied party screening capability.

SAP Watch List Screening, on the other hand, is engineered for extensibility and integration with existing SAP and non-SAP systems. It comes with out-of-the-box integration with SAP S4/HANA and provides published APIs that can be integrated with other systems.

Regardless of what solution you choose, the success of your SAP project depends on your implementation team.

Using its TradeBlazers Approach, Ropaar can help your team overcome the complexities of selecting the right denied party screening solution, implementing and integrating it with other systems, and ensuring a high adoption rate. To get started, feel free to contact us.

According to the United Nations Conference on Trade and Development (UNCTAD), the global trade in goods hit its all-time quarterly high of $5.6 trillion in 2021 amidst the COVID-19 pandemic. Global trade, which is characterized by shipments of goods between countries, is a crucial aspect of supply chain management. Companies participating in international trade are usually under trade agreements and are subject to customs regulations to track and trace their shipments, as well as monitor the status of goods and maintain trade limitations.

Trade agreements define the tariffs and duties that countries impose on imports and exports. Tariffs or customs duties can be reduced or zero-rated if companies participate in Free Trade Agreements (FTAs). FTAs are instrumental in promoting cross-border trade between countries. It also deals with any issues that may hinder the flow of goods and services like behind-the-border barriers.

To take advantage of FTAs, several conditions must be met. First, the agreement should specify the eligible products for which the preferential duty rate is provided. Second, the agreement should indicate specific conditions about production processes and transport routes. And third, the proof of preferential origin of the goods must be accurately documented. These conditions can be complicated and time-consuming when done manually, especially for products that contain multiple components and raw materials and are outsourced from different countries.

Trade Preference Management

Companies are required to provide specific preference documents when delivering products to their customers. Usually, preference determination entails manual collection of supplier declarations, elaborate analyses of product-content origin, and complex value calculations using Bill of Materials (BOM) data. This process is risky, error-prone, and costly.

SAP Global Trade Services (GTS) provides comprehensive functionality for trade preference management. It automates the process of trade preference determination by utilizing content-based rules of origin to find out which products are eligible for reduced import duty rates. The process includes:

1. Requesting and managing vendor declarations
   • Collect relevant purchase orders and material documents
   • Empower suppliers to maintain the origin of materials with self-service functionality
2. Calculating product origin and preference eligibility
   • Calculate product origin for products using official trade agreement rules
   • Determine preference eligibility using different methods such as sales documents, invoices, and bill of materials
3. Enhancing preference processing at a level beyond product ID
   • Maintain preference origins at a more detailed level e.g., batch level
   • Conduct compliant calculation of preferential origin based on production/process orders
   • Integrate identity-based preference eligibility in issuing vendor declaration information
4. Generating declarations for customers
   • Automatically generate and manage declarations for customers receiving your products
   • Issue and reissue declarations in the event of a change in preferential eligibility
   • Integrate with sales and distribution processing in the SAP ERP application and customs management in SAP GTS

With SAP GTS, your organization can benefit from simplified trade preference management. Furthermore, utilizing SAP GTS add-on Identity-Based Preference Processing (IBPP) can maximize your preference determination by leveraging more granular data. This works by calculating only the components or raw materials that are used during the production process. SAP GTS IBPP offers a more precise result since preference processing is done via specific batches and so, preference status is stored at the batch level. Now, you can pick directly from those eligible batches for customer shipments.

Ropaar is a trusted “TRADEblazing Partner” for SAP GTS project implementations. Let Ropaar help you strategically leverage free trade agreements, maximize eligible products through preference determination, and efficiently manage vendor declarations. Request your demo today!