Supplier declarations allow the use of preferential tariff rates – which is good for the customer, as he can save money and good for the exporter, because his products also become more attractive to the third country. In addition, the importance of supplier declarations is growing by the day: markets are demanding more and more product transparency and, at the same time, the number of non-EU countries where supplier declarations are playing out their advantages when exporting is growing. As you know, trade agreements between the EU with Japan, Singapore and Vietnam are pending. For an internationally active trading group such as BayWa AG (323 holdings, 3000 locations in 41 countries, 17,500 employees), this means that a great deal of attention must be paid to the topic of supplier declarations.
The company benefits from a fundamentally redesigned process for handling around 17,000 supplier declarations in 2014. Instead of managing the documents as they once were decentrally offline, they are now managed digitally by a central unit. All operations have been digitized with a few exceptions, they are logged and archived in a legally secure manner. Hundreds of colleagues in the side job no longer take care of the topic, but there are currently two specialists in the central supplier declaration management at the plant, who handle the topic with high level of expertise and thus completely correct and efficient.
BayWa AG and selected investments benefit from this shift, as the quality in terms of supplier declarations has taken a leap. And above all, because the many former clerks in the area are now freed from this topic and the many thousands of suppliers are provided with an efficient, easy-to-use process that enables them to devote themselves to their actual tasks.
The project
In 2014, the BayWa Group introduced a central supplier declaration management system with the dbh Software Advantage Compliance Präferenzmanagement, which has been continuously expanded ever since.
Advantages:
- Completeness
- Transparency
- less effort and
- more yield, including for suppliers.
Problem: Many internal stakeholders involved in supplier declarations
The initial situation regarding supplier declarations and long-term supplier declarations (LE/LEE) before 2014 at BayWa was similarly heterogeneous as it may be found in many other large companies: Many internal stakeholders (purchasing, sales, locations) from different divisions communicated with suppliers regarding supplier declarations.
At BayWa, manual handling of supplier declarations generated a lot of effort. The suppliers rightly complained that they were repeatedly approached by several areas on the same topic and thus had multiple efforts. In addition, the archiving of LE/LEEs within BayWa was very broad and assigned to the individual business areas.
With a sober look at the current status, it was clear to BayWa at the time that there was a need for optimization on this topic. Especially since the digitization of essential business processes is a declared strategic goal of the Group.
New insights thanks to dbh software support
In the search for a solution partner for this challenge, BayWa chose the advantage preference product from dbh Logistics IT AG. Alessandro Herke, Head of Customs and Export Control at the listed company, says of the cooperation: “dbh not only brought the right solution with the software product, but was able to score points with a high level of expertise on customs and foreign trade issues in the first discussions. We had uncomplicated and good communication from the very beginning. In addition, dbh proves a high IT competence not only in its own products. And from the very beginning, they were very open to new ideas and joint developments.”
The dbh-Software Advantage Compliance Präferenzmanagement is ideal for a trading company like BayWa, because a large assortment and many suppliers, among others, can provide a very good overview of all supplier declarations. For example, a glance at the article refers to business partners, and it is easy to determine who delivers these items across the company. At the same time, a glance at the supplier will quickly tell you which items are provided by him. This is information that the company was previously only able to determine with effort and which is very valuable today.
Advantage Compliance Präferenzmanagement has been providing BayWa with centralized management of all incoming and outgoing supplier declarations from a single system since 2014. For example, outgoing supplier declarations can be generated from incoming supplier declarations with just a few mouse clicks.
BayWa can rely on the fact that each declaration is 100 percent legally secure and contains the text specified by customs. The standard form contains all countries that are relevant for supplier declarations. Status overviews, dunning functions and, for example, the printing of movement certificates complete the range of functions. The system can also be used for all parts of the company and shareholdings. Design and texts can be customized.
Paper expenditure reduced
Central innovation in the digital process: Communication in terms of LEs is digital, paper communication is reduced to the maximum.
However, an abrupt switch to digital is not possible for legal reasons. In order for BayWa to obtain an electronic declaration, the supplier must first sign a corresponding declaration. BayWa has therefore developed a process in which the initial contact with the supplier is still made in paper form with the supplier declaration in the original. For this purpose, a starter package is sent. This includes a personalised cover letter, the pre-filled supplier declaration, a statement of goods, the undertaking and an addressed reply letter. The supplier declaration as well as the goods list are provided with a bar code for simple assignment in the system. Thus, when the supplier returns, the incoming LLE can be digitally assigned immediately after the content review. Suppliers who have to postpone the undertaking offline at the time of initial shipment are able to confirm future declarations online or by fax from this date. At the same time, the retail group reduces the burden on the supplier and thus significantly reduces paper consumption.
Joint development
However, simply installing the software product was not enough. BayWa, with its numerous and diverse suppliers, had its own requirements. In the course of the cooperation, dbh and BayWa created several joint developments.
For example, BayWa industrial customers can make their supplier declarations in a protected web portal. In order to minimize the time required for suppliers, a web link solution was also developed. The supplier receives an e-mail and can automatically confirm his supplier declarations by clicking on the link contained therein without having to fill in anything.
From BayWa’s point of view, these further developments are small but essential functions that also increase usability for the customer/supplier side. If a supplier does not want to be reached electronically, an offline procedure is still available to him. He receives the supplier declaration by post, including an illustrated filling instructions and a pre-printed response. Thus, today’s solution is a real multi-channel process that covers all the requirements of the heterogeneous supplier landscape.
Taking suppliers with you
When converting the LE process, it was important for BayWa to take the suppliers with it and win them over to the new process. Especially since suppliers have not yet dealt with the subject more intensively and do not necessarily intend to do so. The redesign of supplier declaration management therefore included extensive change management.
On the one hand, there was a briefing for all internal employees with supplier contact, so that they can answer all the questions that arise. BayWa has also produced several means of communication, including an explanatory video that presents the basic topic and visualizes the advantages of the new solution very well. These measures have succeeded in quickly achieving a high level of acceptance of the new procedure. Cooperation with suppliers has been significantly improved and simplified on this issue and has therefore been able to provide relief on both sides.
BayWa Supplier Declaration Management is affiliated to the Corporate Compliance division as part of the Customs + Export Control Department. Two of the eight employees working in the Customs + Export Control Department are centrally responsible for BayWa as well as various investments. To the obvious quality gain, there are significant reliefs for many employees in the area who used to take care of the topic in addition to your main task. And because BayWa can use all preferential tariffs during export thanks to a complete LE documentation, it is possible for customers to save cash. This means that BayWa remains an interesting trading partner, which ultimately also benefits suppliers.
Stronger SAP integration
BayWa does not want to stop at the current status when it comes to process optimization. The dbh product Advantage Compliance Präferenzmanagement is now installed on premise at the BayWa headquarters in Munich and runs as a stand-alone solution. however, dbh also offers a simple connection to the ERP system via so-called SAP plug-ins.
And it is precisely this stronger link with the SAP system that is planned. For example, when goods are delivered in the SAP system, it is to be checked whether a long-term supplier declaration already exists. If there is no valid long-term supplier declaration, the creation is initiated automatically.
With this integration into the SAP processes, BayWa is climbing another level of quality in terms of supplier declaration management.
About BayWa AG
BayWa has 323 holdings, 3000 locations in 41 countries on all continents and employs 17,500 people. the Munich-based company works in the fields of agriculture, energy and construction, as well as in the development segment Innovation & Digitization