Mr. Thomas Nöbel, IT-coordination Expert for the central sector taxes and tariffs (CTC-IN) at BSH Hausgeräte GmbH about the introduction of MIC CCS for central and standardised customs tariff and export control classification.
BSH Hausgeräte - the company
BSH Hausgeräte GmbH is one of the biggest manufacturers of household appliances in Europe and one of the leading companies in the sector worldwide. The group was founded in 1967 as a joint venture between Robert Bosch GmbH (Stuttgart) and Siemens AG (Munich). Since January 2015 BSH belongs to Bosch Group exclusively. In 2014 BSH generated a turnover of about 11.4 billion Euro. Today, BSH operates 43 factories in 13 countries in Europe, the US, Latin America and Asia. Including a network of sales and customer service subsidiaries, nearly 80 companies with approx. 53,000 employees in 50 countries work for BSH.
The product portfolio spans the entire spectrum of modern household appliances. It ranges from stoves, ovens and extractor hoods to dishwashers, washing machines, dryers, fridges and freezers and to small household appliances (consumer products) such as vacuum cleaners, coffee machines, electric kettles, irons and hairdryers.
A number of systems, separate processes and the resulting challenges at BSH
The determination and standardised use of correct customs tariff and export control classification are the most fundamental and often the most difficult tasks in international trade. Both are significant parts of the company's compliance and decisive key factors for the calculation of customs duties as well as for adherence to the compliance rules in the global supply chain.
It is, however, a fact that on a daily basis many people in various sectors of a company make decisions with regards to customs tariff and export control classification, often leading to an increased workload and inconsistency regarding the same products in customs tariff and export control classification.
At BSH the situation was similar. The necessary customs tariff and export control classification of the numerous products were carried out on different ERP-systems (SAP) and by different people. The tools for customs tariff & export control classification developed BSH internally in the SAP-system did not solve the problem in the long run either.
Irrespective of this problem, BSH already worked on a global trade strategy with the aim to introduce central and standardised processes for international trade on a group wide basis. The central sector of taxes and tariffs at BSH now was faced with the task of choosing the right software provider for the implementation of the global trade strategy.
Why BSH opted for MIC
The focus of BSH's search was on finding a global partner, not just a software provider. Someone offering the opportunity for further development with regards to functionality as well as geographic coverage. In this context it was important to BSH to not simply receive "a box containing software" but to jointly configure an IT-supported solution that would meet the requirements resulting from the business processes.
Mr. Thomas Nöbel, expert for IT-coordination for the central sector of taxes and tariffs (CTC-IN) at BSH, mentions: "MIC already had a ready-made solution for customs tariff and export control classification with installations in many countries. It was essential that it was possible to carry out customs tariff classification and export control classification, building on one another, in the same system worldwide, that there is no disruption in processing which could therefore be carried out promptly by one person in one system. In the distribution process this means for us that information regarding both aspects is evident as soon as possible (i.e. initiating business deals) and always up-to-date. This gives us a lot of time to act. In this respect, MIC presented the most convincing concept."
Thomas Nöbel adds: "In addition, MIC offers the entire spectrum of GTM solutions on a single IT platform and thus enables us to introduce further solutions used for foreign trade (i.e. for the execution of import and export, origin of goods and preferences) in future and to centralise and standardise them in accordance with our global trade strategy. MIC was simply the provider with the highest degree of integration of the different foreign trade topics on one platform, the widest internationality by means of country coverage and offering the necessary flexibility for further developments within BSH."
BSH's experience with MIC
The quality of the underlying documentation of customer requirements and the implementation into project planning that is on time and feasible, is a key factor for the success of a project. Here, BSH and MIC complemented each other perfectly, both had a very pragmatic approach to the project with excellent discussion and project group atmosphere as well as readiness to be very flexible.
"Everything that was supposed to work, worked at the intended time. MIC was not just on time, but also within budget and quality," Thomas Nöbel notes and explains further: "The solution installed by MIC was already used in the test operation to carry out data cleansing in the run up to regular operation and to improve the quality of the master data. At the same time, it was possible to extend and improve the set of classification rulings. This was good training for our employees without being live but still receiving productive usable work results. The processes could already be optimized even though that was not planned, but MIC was very flexible and able to deal with this almost real life situation."
Thomas Nöbel stresses in particular: "MIC gave thought to BSH's issues and delivered solutions; the success depended on that. The communication mainly takes place via the business processes, i.e. we have a requirement as a result of a business process and there is detailed business process documentation by BSH and on the basis of this documentation MIC delivers or adapts an IT-solution. We rarely actually discussed software but mainly processes, whether they can be presented and under what conditions. From my point of view, this is very important, as ideally the result can cover the business process 1:1 and the users "operate" in business processes in everyday business and not in software. Ultimately these challenges were not discussed for a long time, instead decisions were taken how to solve them. The fact that MIC endeavoured to only have one contact for BSH, responsible for the status of the entire project, was also a huge advantage. MIC maintained this "one face to the customer" principle right to the end; this was also extremely satisfactory."
What has changed at BSH as a result of the introduction of the MIC solution, what are the benefits?
BSH currently relies on the following MIC solution for central, standardised and efficient customs tariff and export control classification:
- MIC CCS | CTC for Customs Tariff Classification and MIC CCS | ECC for Export Control Classification
- Both modules are live for Germany, and a project start for Poland has begun
- The solution was implemented as a 'software as a service' model with interfaces to the SAP system at BSH, including return interfaces for the articles classified in MIC CCS. In detail, this means that there are incoming article interfaces and outgoing article return interfaces, returning the data enriched in MIC CCS to the BSH SAP-system.
- A specialty is the newly available and self-learning customs tariff classification engine, making customs tariff classification suggestions for articles on the basis of already previously classified products.
- Selection rules are in use in the event the above mentioned matching engine does not deliver appropriate results. During customs tariff classification this means on the one hand the direct allocation of customs tariff numbers to articles, or the exclusion from the automated customs tariff classification. These 'exclude' or exclusion instructions apply to articles that must be manually classified.
- The logic of the selection rules is also applied with regards to export control classification of articles in order to pre-select articles relevant for export control and to designate articles that potentially require further examination.
"By means of MIC's central customs tariff and export control classification system we are in a position to support worldwide the correct assignment of customs tariff and export control classifications to our products," Thomas Nöbel points out and continues: "This way we have a technical and professional central group solution with a high level of transparency, and, in particular, standardized, automated and controlled processes."
From an organisational point of view, MIC's solution concept fully supports BSH's global trade strategy. BSH's approximately 750,000 articles can thus be classified with little effort via a central foreign trade service center (FTSC) in Poland for Germany and the EU.
Thomas Nöbel explains: "The FTSC PL delivers concrete customs tariff and export control classifications for Germany and selected EU-countries, for the other countries within the EU customs tariff and export control classification suggestions are made to BSH's country organisations, the country organisations then make the final decisions. The increased level of automation facilitates processes significantly for us, improves our compliance and makes us fit for audits by the authorities." In this respect, BSH uses the cross-country-classification functionality developed by MIC that enables the customs tariff and export control classification for a new country on the basis of the customs tariff and export control classification already carried out for another country.
"And the solution has another side effect:" Thomas Nöbel highlights, "this solution was presented in the framework of our global trade organisation, generally these rollouts from the central sectors are subject to critical scrutiny by the local organisations, in our case we are flooded with 'customers', every local organisation wants to be part of this, this speaks for itself!"
What comes next?
We are already working on the rollout of the existing MIC CCS solution for customs tariff and export control classification in further countries. Specifically, MIC CCS is being rolled out to Poland, followed by a planned rollout for the entire EU. A rollout for entities outside the EU, worldwide, is also under discussion.
It has not been mentioned yet that a version of OCS SCS (supply chain solicitation) is already in use at BSH. OCS SCS supports BSH in collecting long-term supplier declarations that are a significant building block for correct preferential origin calculation in a further step.
With regards to the use of further MIC modules Thomas Nöbel concludes: "The high degree of flexibility of the MIC modules and their broad professional coverage (GTM suite) have huge potential for the global expansion of an extensive foreign trade service center at BSH."