Leveraging HS Codes for a Resilient Supply Chain
-
Freya Jane
- Director of Customer's Success
Over the years, the supply chain has been facing multiple challenges, including the interruption in the production, flow, and distribution of goods, particularly across international borders. A resilient supply chain is crucial to maintaining the consistent flow of your goods from start to end.
Global supply chains are essential for stimulating economic growth and enabling cross-border trade in today’s connected world. However, given the wide range of goods traded internationally, a standardised system for classifying goods is imperative. This is where Harmonised System (HS) codes come into play.
What are HS codes in the supply chain?
The Harmonised System, or HS codes, is a numerical code system used to classify and categorise goods traded between countries. The World Customs Organisation (WCO) created these codes, which are used by customs authorities all over the world.
HS codes ensure uniformity in product classification, expedite supply chain operations, and provide a common language for enterprises, governments, and regulatory organisations.
Want to learn more about HS codes for importers & exporters? Click here!
Common supply chain disruptions effects
Disruptions in the supply chain can have severe impacts on businesses, which may lead to:
Increased cost: Results in increased storage costs, transportation costs, and potential penalties.
Delays: Leads to delays in production, flow, and delivery of the goods.
Reputational damage: Sales losses and delays erode a company’s trust, damaging its brand name and reputation in the market.
Significance of HS code in international supply chain
The importance of HS codes in the global supply chain can not be denied for the following reasons:
They assist customs officials in verifying and identifying the products during import and export. It streamlines the supply chain by ensuring the accuracy of trade statistics, customs duties, and taxes.
HS codes help international and governmental organisations to collect, analyse, and report data efficiently and quickly, saving time and resources.
These codes speed up customs clearance and reduce administrative burdens on enterprises by simplifying documentation requirements.
How does misclassification disturb the supply chain?
Inaccurate classification of goods can pose several risks to the supply chain, including:
Delays: Errors in goods classification can cause customs authorities to hold your goods for reclassification, leading to increased costs and delays.
Financial implications: Inaccurate HS code classification can lead to higher duties, tariffs, and fines, impacting the business’s economy and profitability.
Trade restrictions: Wrong classification of goods can make goods subject to trade restrictions, which limit their market access.
Minimising supply chain disruption with technology
HS code misclassification can be avoided by utilising an AI-driven HS code lookup tool. Leveraging HS code technology can benefit businesses in the following ways:
Improved speed and accuracy: Accurate HS code eliminates the risk of delays and errors caused by manual processes, expediting the customs clearance procedure.
Reduced lead time: Automated HS code classification can expedite the process of customs clearance, shortening lead times and enhancing supply chain effectiveness.
Boost compliance: Accurate HS codes assist businesses in adhering to intricate trade laws, helping them stay out of trouble and avoid fines.
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What role do HS codes play in ensuring supply chain resilience?
HS codes play a crucial role in the effectiveness of the global supply chain; they contribute to the resilience of the supply chain in the following ways:
Facilitating trade
Accurate HS codes avoid unnecessary delays and complications, which reduces time and costs, ensuring smooth customs clearance. Besides this, it eliminates disputes and misunderstandings between trading partners by providing a standardised language. All of this contributes to transparent and fair trade practices among countries.
Risk mitigation
Wrong goods classification can cause significant financial penalties to businesses, which they can avoid by ensuring HS code accuracy. HS codes are also used to prevent trade restrictions on the goods, which can be
Improving visibility
HS codes improve the visibility of goods in transit by enabling businesses to track them. It reduces the risk of damaged or lost goods, improving the transparency of operations.
The bottom line
Using technology for HS code classification is critical for establishing a resilient supply chain. Businesses can enhance precision, decrease mistakes, and minimise disturbances by automating procedures and leveraging artificial intelligence and machine learning.
Businesses are able to improve the competitiveness and efficiency of their supply chains by selecting the appropriate technology and incorporating it into their systems.
Experience hassle-free HS code identification and reduce the risk of penalties with iClassification!
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Streamline Product Classification
Uncover iClassification for precise Global Trade, Delivering Time-Saving Accuracy.