When long-time automaker Renault, in alliance with Nissan, wanted to develop a low-cost car called the “Logan,” managers knew they would be sourcing for materials and parts worldwide, handling early assembly in Romania and the final assembly in Morocco for shipment to emerging markets—all of which meant accruing an enormous number of duties, taxes, and tariffs.

To meet a target price of 5,000 euros (about US$7,500 based on early March ’08 exchange rates), Renault realized quickly it had to overhaul its existing procedure of handing compliance charges—all part of landed costs. Previously, company officials say they had managed landed costs from country to country; now they wanted to integrate that process so all parties to the sourcing, manufacturing and import/export, as well as shipping process, could to have access to the same information. A second  important objective was to have an integrated data base that would allow for valuable cost reports to be developed on the front-end rather than deploy guesstimates, which would lead to cost overruns down the line.

This task would have been almost unimaginable even a few years ago. But with the advent of Web-based platforms and Software-as-a-Service (Saas)—also known as on-demand software delivery—multiple parties can participate in the shipping/compliance process at any given time. So when a company announces it is utilizing solutions from a relatively new company to automate global processes for an entire new car line, and with Web-based software, that’s news!

Which was the case when San Mateo, California-based TradeBeam (http://tradebeam.com) got the assignment to address Renault’s challenge. Rather than entering Renault’s facilities to work on a lengthy deployment, TradeBeam serves up its software via a platform where customers can either have software downloaded and then integrated into their system, or in some cases can actually conduct their business in the platform environment.

Renault chose an on-demand solution that would “enable the company to handle imports and exports from many countries to many countries with little disruption to local operations and resources,” report TradeBeam officials, who explain that the vendor operates “an open environment that allows easy access for users from local joint ventures and suppliers, as well as for transportation and logistics partners.”

Operating from a common database, all parties to the Logan’s manufacture and sale are able to work via the Web and have access to the same data. This way, say TradeBeam officials, they are able to “comply with trade regulations, accurately calculate duty rates, and efficiently create and submit customs documentation. Because all activity is generated off of one global trade database, the system enforces proper consistency and minimizes the stress of managing the many cross-border shipments involved with the Logan production process.”

TradeBeam is hardly alone in the SaaS field as it pertains to global sourcing and compliance. In fact, SaaS is penetrating the global trade space faster than ethanol plants in the Midwest, or so it seems.

For example, QuestaWeb (www.questaweb.com), a global trade management software developer located in Westfield, N.J., just announced a new letter of credit feature that reportedly provides integrated global trade management for import and export modules, again as an on-demand feature. According to Felix Pekar, QuestaWeb CEO, because this is a module of a Web-based suite, key customers such as banks “can access the associated document binder at a company’s discretion or utilize electronic data interchange (EDI), eliminating the need for paper document exchange.”

And Mach 1 (www.mach1air.com), a large domestic forwarder based in Phoenix, Arizona, recently switched to CargoWise’s Saas-based ERP solution to avoid “a large investment in technical staff and hardware,” said Cris Arens, CargoWise president, based in Mount Prospect, Ill. CargoWise (www.cargowise.com) a provider of solutions and services for the freight forwarding, international trade and trucking industries.

Then there’s the Information & Telecommunication System Group of global electronics giant Hitachi Ltd., based in Tokyo, Japan, which recently announced it was networking its standardized logistics practices with group and partner companies thanks to a SaaS-based suite from Descartes Systems Groups (www.descartes.com), based in Waterloo, Ontario. Of particular concern, say Hitachi officials, is improving visibility to all logistics partners.

Descartes, a key provider of SaaS logistics solutions, says it hosts its many trade-related solutions on a “multi-modal network—the Descartes Global Logistics Network—with component-based ‘nano-sized’ applications to provide messaging services between logistics trading partners, shipment management services to help manage third-party carriers, and private fleet management services for organizations of all sizes,” according to company officials.

In particular, Hitachi says it selected Descartes’ Visibility solution to help improve logistics efficiency and visibility across multiple transportation modes to avoid of potential order failures. Hitachi’s trading partners are able to share data (such as purchase order, advanced shipment notices, and shipment status messages), and monitor the order process with this technology, says Kenji Yasuda, Director at the Information & Telecommunication Systems of Hitachi Ltd.

How do you loop thousands of suppliers worldwide into a Web-based system? Alex Thompson, TradeBeam Vice President of Product Management, says the vendors have a vested interest in complying with a top customer. So, in essence, the manufacturer customarily sells the SaaS approach to its suppliers, shippers, and international trade partners. There are times TradeBeam has to drum up support for this relatively new approach, he admits, but adds that the efficiency and effectiveness of the on-demand approach is a key selling point.

Why not just used hosted software that’s downloaded from the Web—also known as ASP (short for application service providers)?

Thompson and other vendors point out that ASP involves taking licensed software and hosting it for one entity, only, which leads to a lots of individual server stacks that don’t necessarily cross-communicate—sort of like a field of flowers without any bees. He says the “excitement” of SaaS isn’t just that it allows for multiple collaboration partners, but it means that all parties to a project or shipment have access to the same software upgrade. That’s not always the case with ERP, when the different worldwide offices in a networked company may be working on different generations of software.

“With SaaS everyone is on the same version, whether they are trading partners or the individual corporations and their entities,” he explained.

This ease of operation becomes really crucial when dealing with multiple countries with varied trade regulations. It means that for the first time a manufacturer may be able to actually calculate landed costs—or what it really costs to manufacture and ship goods globally—rather than make an educated guess, adds GT Nexus Vice President Greg Johnsen.

GT Nexus (www.gtnexus.com) has also turned to SaaS delivery for a wide variety of its software suites. Johnsen believes that SaaS now provides the ability to calculate landed costs thanks to the flexibility, data integration, and search capabilities that this method provides. And that’s a major milestone when you consider being able to “integrate and process all that data across all those shipments with hundreds of line-item details across hundreds of partners.”

With their Web-based platform and SaaS delivery, observes Johnsen, GT Nexus can provide “integration of partners and their systems for data across the whole supply chain. By standardizing costing items we give the importer the real-time view of any item for any stage of the supply chain at any time so that the assumption of total cost can be checked and rechecked continuously to ensure profitability and decisions.”

Although he lauds other shipping platforms that provide services for carriers and their customers, Art Mesher, Descartes Systems CEO, says they don’t offer sufficient integration. “Think of 100 key forwarders in North America who all need bookings the same day. Mode-specific portals help solve specific shipping problems, but not the issue of how these forwarders can work together,” he explained.

For example, a customer may need an ocean carrier, trucker, and even an airline to get shipments from one end of the earth to the other. And that means “logistics companies need to cooperate. We’ve set up a logistics platform for all modes so international trade professionals can work together.”

Then there are compliance issues, and again, SaaS being downloaded from large-scale networks is the way to go, says Mesher. “In order to comply (with regulations worldwide) companies need a collaborative, synchronized process. You can do one country and one trading partner at a time or subscribe to a service that has most of your trading partners on it.”

Where is SaaS heading?

Arens sees customers moving away from proprietary software development to the SaaS, platform model every day. “If the management of these companies haven’t forced their IT departments to stop in-house legacy software development in 2008, they are considering it. Our customers just want to move freight; they don’t want to be IT companies,” he said. “SaaS is expected to be a high growth area for our business over the next couple of years.” wt

Sidebar: Renault Turns Trade Management into Competitive Advantage

Automotive manufacturer Renault boasts more than 100 years of successful operation, and continues to expand internationally with Dacia, Renault Samsung Motors, and an alliance with Nissan.

To capture market share in emerging markets, Renault created a corporate mandate for a low-cost car called Logan. The company knew that duties, taxes, and tariffs would need to be managed very efficiently to meet a target list price for Logan of 5,000 euros. However, Renault’s existing procedures for managing export and import processes for each country separately prohibited the realization of the necessary trade efficiencies.

Renault sought a technology solution that could support its import and export management activities around the world with a single, centralized trade database.

In 2004, Renault chose TradeBeam because TradeBeam’s solution:

•            Has deep trade content with the ability to handle imports and exports from many countries to many countries;

•            Is an on-demand solution that would enable the company to bring up countries on the system with little disruption to local operations and resources;

•            Has an open environment that allows easy access for users from local joint ventures and suppliers as well as for transportation and logistics partners; and

•            Proved to be very scalable and reliable.

Using TradeBeam, Renault’s local customs managers can readily comply with trade regulations, accurately calculate duty rates, and efficiently create and submit customs documentation. Because all activity is generated off of one global trade database, the system enforces proper consistency and minimizes the stress of managing the many cross-border shipments involved with the Logan production process.

The following key ‘wins’ and business benefits have been achieved:

•            Lower-cost car by having capability to take full advantage of trade agreements in product design and sourcing;

•            Assurance of lowest-cost and most accurate product classification management across the company and broker partners;

•            Lower compliance and documentation costs by automatically reapplying electronic data to different parts of the import/export process; and

•            Global cost visibility to provide an understanding of where and how to focus efforts to reduce costs even further.