Like a baseball pitcher protecting a no-hitter, a single mistake on the part of a trade compliance professional can undo years of letter-perfect compliance.
After spending five years in India, I often get asked by people in the United States to explain the difference between cricket and baseball.
There are many similarities, I tell people, but one key difference. In baseball, all the pressure is on the pitcher. One mistake can undo three hours and 100 pitches worth of excellence.
In cricket, the opposite is the case. The batter, or batsman as they are called, is the one under pressure to keep batting as long as possible. The pitcher, called the bowler, is the one doing the attacking and can live with small mistakes as long as the goal of getting the batsman out is accomplished.
It seems like a subtle nuance between two games where one person tries to hit a ball thrown by another person, but it’s really a major conceptual difference.
I recently thought of this comparison in the context of logistics and trade compliance. I spend my professional life dissecting these two intersecting fields, especially as it relates to how technology is impacting them both.
Sitting through two days of sessions at the American Association of Exporters and Importers’ (AAEI) annual conference in Austin in late June, it dawned on me. Trade compliance professionals are baseball pitchers and logistics professionals are cricket bowlers.
conference in late June,
it dawned on me: Trade
compliance professionals
are baseball pitchers
and logistics professionals
are cricket bowlers.
Trade compliance is all about organization, fastidiousness, attention to detail. Practitioners need to understand dozens, if not hundreds of regulations, codes and statutes.
They need to know the law and also be commercially-minded enough to understand that what they do impacts broad, multinational supply chains.
But more than anything, they can’t make mistakes. No one is perfect, but a single compliance violation could overshadow years of letter-perfect compliance for a company. And a violation, whether it results in fines, a hit to brand reputation, or potentially even criminal penalties, is the looming threat.
Juxtapose that with logistics practitioners. Now, I’m not suggesting at all that these people aren’t also under pressure to perform at the highest level every day, like a baseball batter who will be revered as an all-time great for getting a hit in one out of every three at bats. What I am saying is that a wonky decision in logistics doesn’t necessarily result in repercussions that reverberate around the rest of the company.
Say a vice president of international transportation for a shipper made the decision in spring 2016 to commit some volume to Hanjin Shipping. When the carrier went under in August, that would likely have left the shipper with some serious problems to unravel—containers stuck at sea or in a terminal, at the very least.
The question is, “Would that decision have doomed the company for years upon end? Would it have forever ruined upstream supplier or downstream retailer relationships? Would the brand suffer long-term damage if it was unable to stock product on shelves during a critical selling season?”
As grave as the Hanjin situation was, and as much heartache as it caused logistics professionals, I’m not sure even that event alone was unrecoverable. Logistics professionals are accustomed to dealing with messes, and this just happened to be a really big one.
If that was a worst case scenario on the logistics side, now think about if a major brand had a serious violation on the trade compliance side. A multi-million dollar fine for violating sanctions, or a violation of the foreign corrupt practices act?
Those types of violations don’t just disrupt supply chains for a short period, they can prevent companies from ever accessing a given market, or even shipping internationally at all, not to mention the direct effects they have on bottom lines and brand equity.
Both jobs are exceedingly difficult, but they also have different expectation levels. And that’s because logistics is more like art, while trade compliance is more like science. Or for foodies, logistics is like cooking and trade compliance is like baking.
From a technology perspective, this dichotomy makes the relative lack of investment in global trade management automation software all the more head-scratching. Nowhere is it more necessary to have tools to take human error further out of the equation, systems that drive data accuracy and efficiency and let people focus on fixing the mistakes, not making them.
But the size of the global trade management (GTM) software market remains tiny compared to that of other supply chain management markets. It is growing, but is still a less than $1 billion market, according to analysts.
And this is during the halcyon days of trade and logistics software, with venture capital and private equity groups pumping money into startups and established providers like never before.
Maybe the investment will come when C-level decision makers start understanding that their trade compliance resources are like baseball pitchers, vulnerable to a single mistake, while logistics resources are more like cricket bowlers, able to overcome small disruptions in the name of a bigger prize.
Both are equally important disciplines, but they have very different pressures on them. And that’s probably the only time you’ll hear cricket compared to logistics.