Almost no other industry has supply chains as complex as those in the chemical
industry. There are many reasons for this: The production and supply networks
are global in nature. The products must meet the utmost standards of quality
and safety during manufacturing, transport, and storage. And then there is the abundance
of laws to comply with – hazardous goods regulations, for example, but also
export controls. The international character of the supplier relationships in
the chemical industry and the variety of potential uses for chemical products
means that managers really need to stay alert when it comes to compliance and export
controls.
Tosoh Europe B.V., based in Amsterdam, takes these responsibilities
seriously. “Compliance is a top priority at Tosoh. This creates a strong need
for transparency and visibility,” emphasizes Lars J.T. Droog, Manager of Supply
Chain & General Affairs at Tosoh Europe. Tosoh Europe B.V. is the European
subsidiary of the Tosoh Group, a global chemical giant based in Japan with
12,000 employees. Tosoh has a broad presence in the chemical industry, manufacturing
and selling everything from basic and specialty chemicals to diagnostic systems
and materials for the semiconductor industry. “You can actually find our
products everywhere,” says Droog.
Special challenges for export controls
There is a significant difference between Tosoh Europe and the parent company.
Whereas the parent company accounts for a large share of the value added, Tosoh
Europe outsources heavily to service providers for processes such as customs clearance,
warehousing, and transport. The relatively small core staff at Tosoh Europe
focuses on the core processes and on managing the business. Tosoh also has
production sites in Europe, including in Greece and the Netherlands.
But most
of the products that Tosoh Europe sells come from plants outside the European
Union. The chemicals are either shipped directly to the customers or put temporarily
into hazardous goods storage (bonded or non-bonded) in Tosoh’s EDC in the
Netherlands or other regional warehouses in EMEA before being packed and
shipped as needed to fulfill customer requirements. Droog explains the distribution
channels: “We sell a lot in the EU, of course. But we also have customers in
other European countries such as Russia, as well as in Africa and the Middle
East.
Tosoh‘s goal is full compliance
This complex web means that Tosoh Europe has foreign trade compliance obligations
that go beyond merely screening against EU and US sanctions lists of entities
and individuals. When shipping outside the EU, Tosoh also has to check the US and
EU’s product lists and embargo lists. Chemicals that were previously imported
from the US are also subject to US re-export law. Last but not least: As the
subsidiary of a Japanese company, Tosoh Europe also screens against Japanese
lists. “Our goal is full compliance,” Droog stresses.
Tosoh Europe was equally thorough in selecting an IT solution for Export Controls and sanctions list Compliance Screening. The goal of the project was to automate the
extensive export control checks and integrate them efficiently into the overall
process. That’s why Droog and his team wanted more than just software with a
powerful screening algorithm. They wanted a centralized solution that also
includes the content – the current versions of the various sanctions lists and
always be compliant with export control regulations.
One more requirement: The compliance software also needed to integrate easily into the SAP® system that Tosoh Europe introduced in 2013. Following a
selection process involving multiple solutions, Tosoh Europe decided on
Compliance Screening and Export Controls from AEB. The solution satisfied all
the technical specifications, and AEB was also able to provide the necessary content
in the form of a data service that keeps the lists up to date at all times.
Another advantage of AEB' Compliance Screening and Export Controls: The solution
integrates directly into SAP® through a standard plug-in. This means that the
screening runs in the background – and employees can work in their familiar SAP®
environment without switching back and forth between two systems.
AEB scored high marks in another area as well: “The sales cycle was
especially customer-friendly. The AEB sales representatives personally
presented their system in great detail and went above and beyond to accommodate
our needs,” says Droog with satisfaction. The decision to go with Compliance Screening and Export Controls integrated in SAP® was followed by a two-month project
phase that included deployment of the solution, training of the personnel, and
extensive testing. Checking the customer master data against the screening
lists before the actual go-live in January 2017 turned out to be a good idea.
That made it possible to clear up apparent matches outside of the pressures of
day-to-day operations.
Every order is routinely screened
Tosoh repeats this check of the complete customer master data on a regular
basis. In addition, every order and every shipment is routinely screened. The
same applies to direct shipments to customers from the overseas plants that
Tosoh Europe manages and to shipments from the warehouses or the European production
sites.
The product classifications such as the export control classification
number (ECCN) that are needed for automatic screening are stored directly in
the material master data of the SAP® system. Saving or modifying an order in
the SAP® system triggers the control process. The screening runs in the
background, so users don’t normally notice it at all. “It was very important to
us that nothing compromise the efficiency of our processes. Our experience so
far has been positive,” says Droog. The workflow is interrupted only where required
by law: if a transaction requires a special procedure or verification under
export control law. Only then will the screening solution present his findings
to the user in SAP®.
Automatic notification by e-mail
If such a “match” occurs, those responsible for export controls are notified
by e-mail. The experts check whether the restriction actually applies, whether
it’s necessary to obtain a license from the authorities, or whether the match
is a “false positive” (due to a similarity of names, for example). The
transaction remains locked until the matter is clarified and the transaction
can be approved by the appropriate persons.
For Lars J.T. Droog, the end result has been positive: “We are very
pleased with the solution, but also with the support that AEB provided during
and after the project phase. We have complete visibility of all business transactions
subject to screening and export controls and can document this in the system.”