Case Study

How Atotech refined its export controls

The export-driven provider of chemical products and equipment has risen to the challenge of regulation across its vast product lines by streamlining the process with a automated strategy built on AEB software.

Axel Tuengerthal is not easily satisfied. “No way does not exist for us,” is the kind of thing you might hear from the Head of Equipment Logistics at Atotech’s plant in Feucht, outside Nuremberg. 

Tuengerthal and his team are in fact relentless in their quest to explore potential optimizations and improve processes in their area of responsibility, which is not exactly small. It transcends traditional areas of logistics such as packaging, shipping, just-in-time transports, storage, and documentation to encompass customs clearance and export controls. 

That’s not surprising, since Atotech’s business – developing and manufacturing chemicals and equipment used in everything from the coating on circuit boards to the surface finishing of auto parts – is heavily focused on exports, especially in the equipment segment. “Some 90 percent of the equipment we manufacture is sold abroad, mostly in Asia,” Tuengerthal explains.

atotech
atotech

Classifying more than 1,000 new products each month

Export controls in particular presents a truly herculean task for Atotech’s supply chain specialists. In the equipment segment alone, Atotech has some 160,000 products in its material master, and another 1,000 to 1,200 are added each month. About two percent of those are classified under EU export control regulations as dual-use items – those with both civilian and military applications. 

This means that these goods can only be exported with a license. The licensing authority in Germany is the Federal Office of Economics and Export Control (BAFA). For Tuengerthal and his export control specialist Reinhold Thomae, that means every item must be checked to see whether it’s on BAFA’s export control lists and, if so, whether the company has an appropriate export license. And this in turn means first ensuring that each item is correctly classified. Once the correct commodity code is assigned, it’s used to check whether the item is on BAFA's export control list.

Until recently, Tuengerthal had outsourced this challenging task to a global trade consultant. Each week, the consultant received an Excel spreadsheet with all the new products, which he then classified and checked for export licensing requirements. The consultant saved this information to a permanent master list. 

Following the checks, the Excel file of updated material data was sent back to Atotech and imported into the ERP system. The consultant was also assigned with the annual check for changes to the Harmonized System, Combined Nomenclature, and Foreign Trade and Payments Ordinance.

“The process worked, but there were a few disadvantages,” Tuengerthal recalls. This included waiting for classification, during which time the item in question remained blocked in the material master and could not be shipped. 

The process was also relatively time-consuming for the consultant and expensive for Atotech. Another downside was the need to share data, some of it sensitive, with an outside party. And while Atotech could outsource the work, it ultimately retained the legal liability for export control errors.

Axel Tuengerthal
Axel Tuengerthal

Bringing export controls back home

Tuengerthal decided to end this fragmentation by insourcing the process again – and largely automating it at the same time. In the end, he chose a solution by Stuttgart-based software company AEB, with whom Atotech had already completed a series of successful projects in the areas of freight management, customs management, and compliance screening. 

“This gave the solution proposed by AEB the added advantage of integrating well into our existing system environment,” Tuengerthal emphasizes.

The implemented solution combines AEB’s Product Classification and Export Controls. The Product Classification software makes it possible to automate the entire classification process, while Export Controls allows automated screening of business events against international embargo lists and license requirements.

Fully digitizing a cumbersome process

The process developed jointly by Atotech and AEB digitized the cumbersome, time-sensitive process from start to finish. New material is first defined in Atotech’s SAP system, as before. If the new material is designated for sale, it is passed to Product Classification. 

The newly defined product is compared to previously classified material and assigned the appropriate commodity code based on matching attributes. The software also checks whether the commodity code is already in the mapping directory, which flags it as a dual-use item. If so, then Product Classification also identifies the export control number.

Atotech employees only need to intervene manually if the system does not have enough indicators to assign a reliable classification. When this happens, the responsible employees receive an auto-generated email and can initiate the necessary steps, such as obtaining more information from the technology department.

atotech
atotech

Automatic notifications of critical cases

When classification is complete, the material and its export control data are synced with the SAP® system. Daily document checks are automated in AEB Export Controls. 

The system runs in the background, automatically checking whether materials that require a license or have not yet been definitively classified should be shipped. If not, the person in charge is automatically notified and can clarify the technical questions. The system helps the user decide which of the available licenses can be used. The material is then released for export.

“Classification and clarification take only a fraction of the time that the process required before we implemented this software,” remarks Reinhold Thomae. The customer also benefits thanks to quicker deliveries of critical goods.

Mission accomplished: faster and more reliable – at an affordable price

“We achieved what we set out to do,” emphasizes Axel Tuengerthal. “We’ve accelerated our classification and screening, and all our data stays within the company. We also managed to integrate everything into our existing system environment. And the bottom line is positive: Despite insourcing, we did not increase our personnel expenses in export controls. The company is also less reliant on individual specialists. Last but not least: AEB software also supports Atotech when there are changes to the law.”

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