Managing Trade Compliance with SAP Global Trade Services (GTS)

Many companies still rely on outdated manual processes and paperwork for international
business. SAP is underlining its web services strategy to help companies become more efficient
in trade compliance. SAP Global Trade Services (GTS) software handles the complex and time-
consuming task of cross-referencing client lists. This software replaces several third-party tools
and manual trade processes and tightens up the companies import/export compliance. SAP GTS
improves the supply chain process and complies with federal and global trade regulations. SAP
GTS helps businesses with international supply chains standardize and streamlines export/import
processes. The SAP Global Trade Services (GTS) helps you streamline customs management
and manage regulatory compliance. Built upon the SAP Net Weaver business process platform,
the SAP GRC Global Trade Services (GTS) enables you to manage global trade activities.

Complying to Compliance Issues:

SAP Compliance Management automates the regulatory compliance process. This would make
small the risk of penalties and fines and maximize your company’s return on global sourcing and
also increasing your overall competitiveness by providing customer satisfaction. SAP GTS
screens your business partners by automating the process of manually checking the company's
customer’s against a list of suspected terrorists and embargoed countries. It blocks the logistics
documents if there is a match between the business partner address and the address of the Denied
Party Lists (DPL). Hence monitoring of blocked documents and releasing those documents can
be done with SAP GTS. Specifically, in the U.S. the Department of Commerce’s Bureau of
Industry and Security publishes the Denied Parties list, the Department of Treasury publishes the
Specially Designated Nationals list, and the Department of State publishes the Debarred Persons
list.

Sanctioned Party List screening features:

1) Avoid doing business with denied parties.
2) Interface to external data providers.
3) Comprehensive screening against multiple lists and all business partners.
4) Screening in Order to Cash and Purchase to Pay scenarios.
5) Checks for one time customers and for address changes in documents as well.
For Example, before the sales order can be created (as for export), some preparatory work has to
be done. You have to create a sanctioned party list, and load the master data. During the transfer
of the customer master data from the feeder system to GTS the customer master records are
checked against the sanctioned party list master data. The Sanctioned Party List master data is
maintained in the SAP GTS system for the SPL check process to be initiated as shown in Figure
1.

Figure 1

Then a sales order is created with SPL check. The sales documents are blocked automatically
when a sanctioned party list is detected. The blocked documents are thereby checked and can be
released as shown in Figure 2.

Figure 2

After the sales orders have been released we can now create the delivery and the billing
document to proceed further in the export process.

Process flow for SPL screening using SAP GTS:

1) A business document is created in the feeder system.
2) The system starts sanctioned party list screening automatically through integration with
SAP GTS. The address data in the business documents is screened against the available
sanctioned party lists in SAP GTS. External data providers provide these lists in XML
format for upload into SAP GTS.
3) The SAP GTS monitoring feature lets you keep track of all screened addresses.
 4) An employee with appropriate authorizations can use the monitoring aspects to release
blocked documents for further processing.
5) Periodic checks can be set up to check the current available master data. In this way all
the master data is checked automatically after every update of the sanctioned party lists.

The enhanced features of SPL are:

1) It is now possible to check changed delivery addresses in purchase orders.
For example a European company orders parts from a Mexican vendor. But the delivery address
is defined as some location in India. In this scenario SAP GTS checks the changed delivery
addresses also. The changed address is not known to the GTS system. As a result this transaction
will be blocked based on SPL screening as shown in the Figure 3 below. This screen appears
when we try to save the PO.

Figure 3
Now it is necessary to check this document in SAP GTS. It is checked in Compliance
management in the GTS cockpit as shown in Figure 4.

Figure 4
The screening results disclose that the new delivery address is not listed in any Sanctioned Party
List and is cleared after saving the result of the screening. Some customization should be done
Before GTS is able to identify a new or a different delivery address in the feeder system. A
partner function of the feeder system should be assigned to the GTS business partner role.
 2) A detailed status check can be performed on all document addresses. The new
functionality enables us to recheck and display all those documents whose addresses are
not changed.
You can customize whether you want to recheck and display:
• Changed addresses
• All addresses
• Un changed addresses
Depending on these settings the results of SPL screening would differ.
This could be done by going into the GTS menu in Compliance management as shown in Figure
5. We can perform this check for one or more documents by entering the GTS or the feeder
system’s document reference numbers.

Figure 5
3) SAP GTS allows us to select, filter and display business partners according to
administrative information. The report of checked and blocked business partners can be
refined by administrative criteria such as :
• Creation date
• User who created the BP
• Change date
• User who change BP
• Date of previous SPL screening

Catering to Embargo Policies:

The SAP GTS system also checks whether the shipments are subjected to embargoes. Firstly you
have to enter all the countries with which you do business in the embargo service. You require
the legal regulation combined with the country of departure and destination information for an
embargo check that SAP Global Trade Services performs on documents and business partners.
We create a sales order with embargo check activated. Sales documents are blocked
automatically if the customer is in a country subject to an embargo by your country. The
documents can be monitored and released from the SAP GTS system as shown in figure 6.
 Figure 6
Figure 7 shows how a blocked document can be released with respect to embargo policies.

Figure 7
Process Flow:
1) Embargo checks can be performed based on legal regulation and country of
departure/destination.
2) The function of embargo in SAP GTS is same on import and export sides.
3) When we create a purchase order or a sales order, the embargo service checks whether
we can import from or export to a particular business partner in a particular country.
4) The documents are blocked if there is an embargo on any country where you have your
business partner located at.
5) These blocked documents are further processed and released in SAP GTS. Blocked
documents should be released manually.

Legal Control Compliance:

Process Flow:
1) A business document is created in the feeder system.
2) The system starts legal control in SAP GTS. SAP GTS checks whether an export license
is required to export a product. These checks are performed based on customizing
settings.
3) If a license is needed then the system automatically assigns a license to the business
transaction.
 4) The export license contains information regarding the values or quantities of allowed
exports. Export control is based on ECCN, Country of Destination, Country groups,
Quantities and Values.
If the system detects that the license master is missing in order to export a certain product, the
document is blocked automatically and you have to assign a license to the sales order as per US
export administration regulations (EAR) and then release the blocked documents in GTS. Figure
8 shows a blocked sales order because of License Determination.

Figure 8
In this regard SAP GTS helps you classify your products and upload export list numbers to your
products as shown in Figure 9.

Figure 9

The blocked documents can be monitored for further processing as shown in Figure 10.

Figure 10
The licenses can be issued or maintained through SAP GTS system as shown in figure 11.

Figure 11

With SAP GTS it is also possible to adhere to US ITAR regulations. This enables us to use
licenses limited by value for goods of military or nuclear programs. To check Licenses and
Business partners on military/civil use and classification it is necessary to both define a partner
grouping and to customize a license. We then have to define a License type. The License type
determines the usage and shows for which usage the licenses assigned to this license type are
allowed as shown in Figure 12.

Figure 12
Features of License Determination:

1) If feeder system’s master data is missing in SAP GTS then detailed information is
displayed to enable fast transfer. If for example a Business partner has not been
transferred into GTS the document will be blocked due to incompleteness. Now the log
data not only contains the information that a business partner has not been transferred but
which partner of the feeder document is not known in SAP GTS.

2) If incomplete documents are saved e-mail messages can be sent to inform the person
responsible for completion.

3) External identification information like the business partner number is now displayed in
the license determination document log. Previously the business partner number of SAP
GTS used to be displayed in license determination log. Now the external business partner
number is also displayed.
 4) With SAP GTS we can maintain information on the country of final consumption or end
use. This is displayed in the “Control data maintenance” transaction.

Advantages of SAP GTS for Export/Import Processes:

§ Ensure vigilant compliance with trade regulations.

§ Mitigate the risks of huge penalties and fines.
§ Avoid costly shipment delays at borders and customs and ensuring faster customs
clearance.
§ Reduce time by accelerating shipment times by the automation of Compliance
management and streamlining electronic communications.
§ Relatively lower IT maintenance costs.
§ Maintains complete documentation for audits.