From risk (management) to opportunity
Since its introduction, AEO has mainly focused on risk management. A good management system starts with a risk analysis. This is also the case for AEO monitoring. Once you have identified the risks, you take measures to limit these risks. Examples of such control measures include procedures, work instructions and internal controls. If a risk does occur unexpectedly, you can identify it and then take measures to correct a particular situation. The aim is to prevent the risk from recurring. In this way, you have a risk management system that is based on the so-called PDCA cycle ("plan-do-check-act").
AEOs often carry out this cycle routinely, but sometimes without really looking at the underlying reasons. This is where the opportunity lies to realize the opportunities that AEO and monitoring offer.
Security in the logistics chain
The AEO system originated from the need for supply chain security after the September 11 attacks on the Twin Towers in New York. Governments around the world felt compelled to carry out a security screening of parties in the logistics chain in advance. By offering advantages (financial and operational) to screened and known parties, the enforcers gained and continue to gain control over these "approved" parties. This form of horizontal supervision has only increased in recent years. Trade facilitation is only possible for proven reliable companies with an AEO authorisation. If a company does not have an AEO authorisation, this will lead to controls that intervene more in logistics. Delays in the logistics process are an obvious result. Besides that applies that certain specific simplifications are also reserved for companies with an AEO authorisation. In short, AEO and mandatory monitoring are a must.
The opportunities
The foregoing also hides opportunities. By complying with the monitoring requirements, you can (with the proverbial push of a button) show the enforcer that you are in control and thus pass a Customs-initiated audit. Having and maintaining an AEO authorisation ensures that there will be less logistical disruption. This is also something that your chain partners will demand and that you can offer them: a logistics chain without delays and the same (undoubtedly high) level of service.
In this way, you can also distinguish yourself from companies that do not have an AEO authorisation or have lost their AEO authorisation due to poor monitoring.
For the internal organization, AEO monitoring is also an opportunity. It is not unlikely that you will periodically have to search for documentation and information in order to meet the requirements that are set when Customs audit.
It usually takes companies a lot of time to meet the requirements that Customs sets when carrying out its cyclical supervision. In this form of supervision, all companies that have a UCC authorisation (including the AEO authorisation) are periodically checked for risk management.
If you set up a monitoring system that actually works, you will continuously comply with the requirements that Customs sets, also in the context of risk management.
With a closed control cycle, you only have to run a report annually and you meet the requirements set by Customs. After all, your company is in control. Your customs department can focus on its work and monitor the AEO requirements during the year. When Customs asks for it, this department provides the report to Customs without interrupting normal work.
Companies often already have quality management systems. Maintaining the AEO authorisation and steering, controlling and, if necessary, correcting processes is in fact nothing more or less than quality management. If possible, it is wise to link up with the existing quality management methodology. This also ensures that all relevant departments are involved in AEO monitoring. After all, AEO is not just a customs matter.
Knowledge and expertise
Every AEO authorisation holder is obliged to meet the education requirement. The law does not clearly define what this requirement exactly entails. With a monitoring system, your (customs) employees will in any case be a lot further than they are now. The employee is "forced" to become proficient in the requirements that are set for AEO. There are even systems developed with an e-learning solution.
In practice, monitoring also means that the customs manager will get his department and the activities within the company more "in the picture". If the customs department was previously an unknown and - often - disliked department for the rest of the company, with the introduction of a monitoring system, the activities of the department become clear. With the right reporting tool, the management can be presented with a dashboard showing the financial risks and what they relate to. More importantly, this tool can be used to make it clear where the saving opportunities are and whether or not these are being achieved on a monthly basis.
In logistics, it is the smart, automated solutions that make the difference with the competition. And that competition is fierce. You can fully automate AEO monitoring. For example, by using an AEO control framework. Monitoring at the push of a button, where all departments can provide the desired input and where employees also have a training module at their disposal. At the end of a monitoring period, the management and/or Customs can be provided with a report. In this way, the company remains in control and is also one step ahead of the competition.
Conclusion and more Information
AEO and the associated monitoring are a necessity for managing customs processes. However, there are more than enough reasons to see monitoring not as a 'necessary evil' but rather as an opportunity for your company. A well-designed monitoring model can provide a strong competitive advantage for a company that is active in the logistics chain.
Customs Knowledge is happy to advise you on compliance, AEO and monitoring. For questions or comments on this topic, please contact one of our experts.