Get control of your border-crossing flows
Embargos and restrictions are continuing challenges when shipping goods and materials cross border. The war in Ukraine and the following sanctions against Russia and its allies has emphasized the importance of having full control of shipped goods and materials in the whole supply chain. The pressure on organisations in international trade increases and even organisations only dealing with domestic trade of goods and materials must increase their monitoring to comply to increasing requirements of control of the full supply chain.
In the past businesses could be defined as “completely civil” i.e. not supplying military goods or materials. But the change in how technology is developed challenges this today. The pacing of civil industry through military developments is ceasing. And apparently the military use of civil designs increases. Drones, AI and IoT are just some examples of technologies shifting from full civil use to even military use. These components are what is defined as “dual use” – civil equipment even adaptable to military use
For governments the change means that regulations from military equipment being introduced to dual use equipment. But this is a larger change than it seems. Military manufacturers have a long tradition and experience in complying whereas other industries are not used to these complex requirements. The consequences of the changes is that supply chains has to be reevaluated to detect exposal’s and to assure compliance.
For manufacturers and traders of military goods and supplies compliance is business as usual but with dual use equipment the situation is getting more complex. Complex and long supply chains increase the risk of violating regulations and laws. Sanction lists not only include countries but even organisations, legal entities and specific individual persons.
The consequences of non-compliance could be disastrous for the business. Non-compliance could result in sanctions, sanctioning taxes and logistical restrictions limiting buying and selling of material and affecting the core business.
If dual use is an issue in your business you are probably already monitoring. If you are monitoring with your ERP system, you could already comply. To comply you should have materials with current codes and registration should include actual status of involved countries, companies and even involved personnel. The monitoring should include both the supply chains and the financial chains. This is complex and challenging and increasing risks.
If you are not sure about the current status, you’d better start today defining where your processes are challenged and what information you would need. The way to compliance is a long complex travel and probably the challenges will only increase in future business where compliance requirements grow even more complex and include other business types than already today involved.