cigars and cigarillos are enjoyed around the world by traditional smokers and
urban tobacco connoisseurs alike. What began in 1888 as a small cigarmaker in
Switzerland now produces more than 1.5 billion cigars and cigarillos a year. A
portion of these are made in the plant in Waldshut-Tiengen, which is owned by
the company’s German subsidiary. Every month, Villiger Söhne GmbH sends out
some 4,000 shipments from its finished goods warehouses to retailers,
discounters, and tobacco shops in Germany, Europe, and around the world.
Shipping tobacco goods: anything but
tobacco products means following quite a few special rules. “Our cigars and
cigarillos are subject to excise duties,” explains Andreas Lehmann, Head of
Supply Chain Management at Villiger. This means that since 2011, the company
has been required to manage the movement of its goods through Germany or the EU
under suspension of excise duty using the Excise Movement and Control System,
or EMCS (see below).
duty-free movement of non-EU goods is also subject to special regulations. One
example is if cigars from the company headquarters in Switzerland are brought
to Germany and stored temporarily in the bonded warehouse in Waldshut-Tiengen.
To manage its shipping needs efficiently, including special customs provisions,
Villiger Söhne GmbH works with software developer AEB – a partnership that goes
all the way back to 1999.
time, the company was just looking for software to help its employees manage
packing lists and delivery notes. Over the years, the role of the software grew
to include Import Filing,
bonded warehouse, Excise Duty Filing, and Compliance Screening. “Our goal was to use software that required as few
interfaces as possible while still fulfilling all the special requirements
inherent in the tobacco industry,” Lehmann adds.
In-house IT overburdened
2015 brought more change: migrating the software to the AEB data center. Until
then, Villiger had run the AEB software solutions from
its own data center. “But we came to a point where my employees could barely
keep up with the workload for support services,” explains Bernd Finkenzeller,
Head of IT at Villiger. After all, users needed to know that they could count
on the system being available around the clock on business days.
more, customs software is subject to frequent changes driven by outside forces
– such as laws and regulations that impact Customs Management and Export Management. The mandatory restricted party lists are constantly
changing, for example, and the ATLAS e-customs system by German Customs is also
updated on a regular basis. Keeping the software running and installing the
regular updates was just one more burden on Villiger’s IT resources.
Better safe than sorry
decision-makers at Villiger had looked at the situation more closely, the
benefits of a software migration to the AEB data center became clear. “We
recognized that moving the solution to the cloud makes sense for us. This
allowed us to focus on those areas of IT that truly create value for us rather
than spending our time with maintenance and support tasks that could be more
efficiently and effectively handled by the solution provider,” Lehmann
privacy and data security considerations were also front and center in the
decision to move to the cloud, of course. Villiger asked to tour AEB’s ISO
27001–certified data center in Stuttgart and reviewed the data protection
guidelines, certificates, and security programs. The results were positive, and
no cause for concern was found. Villiger’s data privacy officer also gave a
thumbs-up. “But what sealed the deal in the end was the trust we had in AEB
through our many years of working together,” adds Lehmann.
Migrating to the cloud
step was for AEB and Villiger to define a project roadmap for the migration –
including a timeline and testing schedule. “We made a conscious decision to
schedule the migration during the week and accepted the risk of downtime,
because we wanted to test how Customs Management in the cloud worked under real-life conditions,” Lehmann
explains. Using the project roadmap, both companies began making detailed preparations.
provided a copy of its current application, including the database. AEB used
this to set up a test environment in the data center, which Villiger then put
through rigorous testing. Meanwhile, AEB worked to set up the production system
that would later be used. July 8, 2015, was the big day: Villiger completed its
shipping activities by 11:00 a.m., then it suspended operations in its own data
center while the data was migrated. Tests were run starting at 8:00 the next
morning, and by noon, Villiger was able to go live again. Lehmann sums up the
experience: “AEB did an excellent job of preparing the migration. Everything
came off as planned and went very smoothly.”
Smiles all around
Finkenzeller’s IT team has been grateful for a much lighter workload since the AEB software solutions were moved to the cloud, because AEB is now responsible
for maintaining and supporting the software. “The move to the AEB data center
means that we now finally have more time for what’s important,” concludes
Lehmann. The users are happy, too. “Now we have round-the-clock IT support and
don’t need to take the extra step of reaching out to our own IT people,”
relates Brigitte Amann, who works in Supply Chain Management at Villiger.
“Users all keep the AEB hotline number handy and just call them directly
whenever questions or problems arise.”
Cloud-based bonded warehouse
day-to-day operations at the Waldshut-Tiengen site have changed very little
since the migration. AEB software continues
to support bonded warehouse operations from the cloud, keeping an eye on all
the goods coming in and going out. Precise documentation is extremely
important, since every movement of goods into and out of the bonded warehouse
is recorded in Villiger’s ERP system and by the authorities. “If there is any
discrepancy between our data and the customs office records, we are accountable
for the duties,” Lehmann explains. The software helps correctly document all
the bonded warehouse transactions. This helps save customs duties, because if
Villiger stores goods from outside the EU in the customs-free area and sells
part of that stock to a buyer outside the EU, no duties are owed.
Smooth and secure exports
Villiger receives an order requiring goods to be shipped from the bonded
warehouse in Waldshut-Tiengen, the goods are picked and then packaged according
to the specifications of the country where the customer is located. For a
duty-free shipment of non-EU goods within the EU, the company must submit a T1
transit procedure. To ship the goods to a non-EU country, an export accompanying
document is also needed. AEB’s Customs Management provides smart support to facilitate this process. The
software ensures a smooth process and quick communications with the authorities
by extracting the necessary data from Villiger’s SAP® system and transmitting
it to the ATLAS system of the German customs office. Integrated checks and
alerts ensure that the data is complete and plausible – a real competitive advantage
for Villiger, because incomplete or erroneous customs declarations can lead to
software then passes all the relevant data to the customs office, which decides
whether the goods must be examined by customs or the shipment can be approved.
Once Villiger has received the approval, its employees seal up the goods. This
ensures that the goods reach the recipient in an unaltered state and can be
identified with certainty. The seal that Villiger uses is documented in AEB’s Customs Management, making it possible to track this data at any time during
transport. The customs solution also automatically generates the appropriate
documents to accompany the goods. Once the customer confirms receipt of the
goods online, the duty-free transport is complete.
Efficient excise duty filing with AEB
“AEB’s Customs Management also has our back when it comes to paying excise duties,”
says Lehmann. “The Excise Duty Filing software makes it easy to initiate and monitor the EMCS
process.” Before Villiger began using the AEB solution in 2011, managing excise
duty shipments was a purely manual, time-consuming process. Employees had to
fill out each accompanying document individually – and often, they had to make
a trip to the customs office to get a shipment approved.
Villiger uses AEB’s Excise Duty Filing to generate an electronic administrative document to be
submitted to the customs office for each shipment. If the authorities accept
the validity of the document, Villiger can ship the goods. For the tobacco
company, smooth excise duty processes and documentation are not just important
– they’re essential. “The burden of proof lies with us. We need to be able to
show at any time that all goods leaving our tax warehouse had the proper
follow-up documentation,” Lehmann explains. The software enables centralized
management and transparency of all movements of excise goods under suspension
of duties, including their current status. This supports our business
operations, but it also enables better customer service and ensures compliance
with customs regulations – both of which give Villiger a critical edge.
Reliable export controls
addition to customs and excise tax regulations, Villiger must also ensure
compliance with all bans and licensing requirements under export control
regulations. “Every night, AEB’s Compliance Screening screens about 20,550 customer datasets against the
relevant restricted party lists,” Lehmann explains. “And every morning, we
automatically get an overview of the results.” If anything amiss is identified,
Villiger can stop the shipment before it’s too late. This early intervention
helps the tobacco company avoid export control violations and the penalties
that would ensue.
Bottom line: better compliance and smoother
software support from AEB lets Villiger bring automation, efficiency, and
transparency to its customs-related processes, reduce its tax burden, and
ensure compliance in all its transports. The solution eliminates the need for
many time-consuming manual tasks that Villiger’s workforce would otherwise have
to perform. The IT team is among the beneficiaries since the solution was
migrated to the AEB cloud. Now they have time for their own value-adding IT
tasks. “Our experience in working with AEB over the years has been excellent,”
Lehmann concludes. “And we will continue to rely on AEB in the future.” The
next step in this partnership is already being implemented: a warehouse
management solution for Villiger’s finished goods warehouse.
Background: What is EMCS?
EMCS (Excise Movement and Control System) is an IT system used within the EU to
monitor transports of excise goods for which no excise tax has yet been paid.
The goal is to prevent fraud and loss of tax revenues, especially for alcohol
and tobacco products. The introduction of EMCS in 2011 replaced the old paper
forms with electronic messaging and introduced the electronic administrative
document for monitoring transports.
Starting on January 1,
2011, EMCS has been mandatory for all transports of excise goods under
suspension of excise duty between EU member states. This requirement affects
not only breweries, liquor sellers, manufacturers of tobacco- or
petroleum-based products, and those who trade in excise goods – it also affects
any company in the food or pharmaceutical industry that uses alcohol in the
creation of its products.