Latest / Rittener Reflections / 3:The Dept. of KNOW
Transcript
- the_dept_of_know === Jeff Rittener: [00:00:00] Welcome back to this third episode of Rittner Reflections. Today, I offer my reflections about this incredibly challenging moment in our history regarding cross border trade. And then I will share with you an amazing conversation I had with someone who I admire and 40 years immersed in the ever changing world of global trade. Jeff Rittener: But first, let me go back to the last episode published on the eve of the U. S. presidential inauguration. Over the last two weeks, we have witnessed the President take swift and sweeping actions that he promised during his campaign. Some of which include issuing hundreds of executive orders, deporting thousands of [00:01:00] undocumented individuals, dismissing hundreds of government employees from their current role or job. Jeff Rittener: and impacting millions of dollars from cross border trade by imposing tariffs on Canada, China, Colombia, and Mexico. I am still trying to keep up with the relentless pace of change, grasp the significance of each action, and manage my overwhelming sense of uncertainty for the future. Like so many of you, I am bracing myself for the tariff wars. Jeff Rittener: which have begun in earnest this past weekend. I have seen this movie before, but not on this scale. I offer my initial thoughts today and, uh, plan to devote an entire episode soon. During the first Trump administration, I was leading our global trade organization and [00:02:00] suddenly forced to shift the team's focus from not only compliance, product movement across borders, but to finance. Jeff Rittener: and supply chain mitigation. The duties levied against China under Section 301 had significant impact on our global supply chain operations and the bottom line. The first challenge was to determine the potential monetary impact. Up to this point, most products we brought back into the United States from China were duty free. Jeff Rittener: and supply chain decisions were made accordingly. With this sudden change, we embarked on a journey to scrutinize every part of our business involving China to better understand the financial implications to a supply chain that was developed under a zero duty environment. After [00:03:00] a challenging period of discovery, we moved into mitigation strategies. Jeff Rittener: We identified pertinent solutions. and pursued them in parallel. First, with dollars at stake, we performed a detailed review of our HTS classification to ensure accuracy. Second, where possible, we submitted tariff exclusion requests. Third, we performed a comprehensive analysis of potential supply chain changes. Jeff Rittener: And finally, we created foreign trade zones where applicable. I am painfully aware of what you may be going through at this time. And I encourage you to be patient, vigilant, leave no stone unturned, and be mindful that you will find opportunities to improve your [00:04:00] business through this unexpected Moving on, I remind you that one of the things that you can be certain of in 2025 is a re energized and focused enforcement of regulations and trade compliance programs. Jeff Rittener: This will lead to more scrutiny. potential fines and penalties, and requires traders to assess their compliance programs. You can no longer cut corners and rely on old practices, but must prioritize compliance across the entire organization. As such, I am devoting the remainder of this episode to unpacking this certainty as it carries significant risk for trade organizations. Jeff Rittener: Without robust and effective compliance programs, you could create potential [00:05:00] hardship and negative publicity for you or your company. Consequently, I am extremely excited to share with you an enjoyable conversation I recorded earlier today. with Karen Murphy, who has more than 40 years experience effectively managing compliance programs across a wide range of companies in the technology industry. Jeff Rittener: Thank you for joining me today for Rittner Reflections. I am visiting with Karen Murphy on a very beautiful day here in Discovery Bay, California. Karen is an expert in the field of global trade operations. Currently, she is advising companies on reducing risks in global trade processes, developing organizations to support a complex regulatory environment, and analyzing automation solutions to transform the global trade function. Jeff Rittener: She previously was the vice president of business consulting services at Archlink, [00:06:00] where she bridged the communications between IT and global trade. Prior to that, she was vice president at Flextronics, and before that, she spent time at Applied She is a past member of the President's Export Council's Subcommittee on Export Administration, PECSIA, and is a current member of the Regulations and Procedures Technical Advisory Committee, RAPTAC, for the Bureau of Industry and Security, where we both serve. Jeff Rittener: Welcome to Rittner Reflections. Thank you for joining me today. I wanted to start by sharing with our listeners the fact that you and I have known each other for an extraordinarily long time, as we have often crossed paths on our own trade journeys. However, the other day, as we prepared for this conversation, we discovered some new things that we have in common. Jeff Rittener: For example, both you and I grew up in Cupertino, California, back when a majority of Cupertino [00:07:00] were fruit orchards. This was before the creation of a fruit company that we all know. We also went to different high schools, but we live no more than two miles apart. And we both started our trade careers working for companies that made floppy disks back when they were export controlled. Jeff Rittener: So much has happened since then having both lived our entire lives. Uh, in the Silicon Valley, we were able to witness amazing transformation from what was known as a farming agricultural community to the center of tech innovation. As for you, Karen, um, could you maybe share with us a little bit about yourself? Jeff Rittener: How did you get started in global trade and why? And any career highlights or memorable moments that you would like to share with the audience? Karen Murphy: Thanks, Jeff, for inviting me to your reflections. When I was first listening to the first two, I thought, Oh, this could be really [00:08:00] fun. So, um, I'm excited to be here today and to host you at my home. Karen Murphy: The, um, so I started out way back, um, where my father came, is a civil engineer in the Bay Area, and he did a lot of work for some very famous clients. One of them included Steve Jobs. And my dad told me you should get a job at this kid's company. So I had taken a course on how to fill out an export license. Karen Murphy: And from there, it's kind of history. Um, I then went on to work at a, um, customs broker, freight forwarder up at the airport, where I handled all different types of products and projects, including major rock concerts in the day. Posters, t shirts. All that kind of stuff. So, it's been a lot of fun. And, uh, just looking forward to figuring out what, yes, the next [00:09:00] four years, but maybe even smaller than that, the next year is going to be in partnering with companies to get through the, um, the complexity. Jeff Rittener: I wanted to share with you a story of when I first met you. I don't think I've ever told you this one before, but I remember the day very well. As it was my birthday and I was in transition between jobs. The floppy disk company that I worked for was acquired. It was consolidated and my job was eliminated. Jeff Rittener: So I was looking for work and I was supposed to go out for dinner that evening for my birthday. And someone told me that there was a P A E I end of the year holiday party. It was probably the second or third annual, uh, uh, party. Um, PAEI just for those to know is the professional associations of exporter and importers. Jeff Rittener: And I, I went there because I was told that they often advertise jobs. [00:10:00] So I should go. So I went and, um, apart from meeting Cindy Shoalakey, who I think was the founder, uh, I met you. And George Tuttle, the younger junior and you two are up on the stage and you were in charge. You guys had such a great program and it left such an impression on me. Jeff Rittener: I was just so impressed. And the good news is they announced two positions at Intel, one of which I interviewed for. And within a week I got the job, which started my 34 year career at Intel. So Karen, thank you for the hosting that. Wow, I Karen Murphy: didn't know that you were also one of my flowers. I have several People in the industry where I've told them to go to a meeting, go to a presentation, work the room. Karen Murphy: And in fact, I believe that your team, your, your team at Intel had hired two or three of my flowers due to going to a women in international trade meeting, a [00:11:00] PAI meeting or something where I said, just go get out of your house and meet people. And so I didn't know how to add you to my list. It's Jeff Rittener: good to be one of your flowers. Karen Murphy: Yes. Jeff Rittener: So, um, so let's talk, um, a little bit about compliance and enforcement. You know, we are, we are entering a period, uh, and maybe we're already there of incredible uncertainty. And I am just amazed at what has already happened in the last two weeks. And amid this uncertainty, I have shared with listeners that there are some things that are certain. Jeff Rittener: And when it comes to cross border trade and one of those is the certainty that governments will step up their enforcement efforts on trade Looking at you know compliance to regulations and there will be more scrutiny on compliance programs. So with that in mind, um, you know, could you Where do you see the biggest risk? Jeff Rittener: for enforcement actions and what areas of compliance programs do you think governments are gonna Karen Murphy: [00:12:00] Yeah, so recently i've seen a trend to delay or block shipments in or out of China, whether it's coming in and they're looking at forced labor pot, you know, potential, um, involvement in a particular import, or it's an export to China of what the customs authorities who administer the export regulations believe that could be a risk to national security. Karen Murphy: Um, I'm not going to even talk about international traffic in arms or anything, but traditional shipments of very legitimate commercial products going in or out of the U. S., in or out of China are definitely, um, being looked at. And I think that companies have to really focus their compliance policies, procedures. Karen Murphy: around [00:13:00] Prevention of that happening to them and how do they do that? It can be automating everything else and Focusing on what could be a high chance of delay or disruption in their supply chain and Having the trade professionals work on those kinds of activities with supply chain with manufacturing that's Where I would put my most effort is, is shipments in or out of China. Karen Murphy: Most high tech companies have pretty much divested with Russia. So, and Belarus, those sanctions have been going on slowly but surely, uh, for several years. But I think China has really hit us all very hard because a huge part of the supply chain is China. Jeff Rittener: That is true. That is very true. So with that in mind, uh, many of the focus areas that I recall [00:14:00] in trade was around knowing your customer. Jeff Rittener: And can you, can you offer any thoughts on how companies in this kind of environment should focus on? Knowing your customer. Karen Murphy: It should be noted that the entity list is just a list of companies that have not been convicted of any crime, nor any detailed investigation brought forth the allegations that these are a high risk customer. Karen Murphy: So what do companies end up doing, they're doing a lot of the work to analyze their business partners. And it is a major focus area because each entity that's listed has different restrictions around what can or cannot be done. I know that a lot of compliance programs say, in their policy that they won't do business with any entity or any business partner who is on any government sanction [00:15:00] list. Karen Murphy: That's probably something that companies need to look at. And maybe change it to say the company will comply with the requirements of any government who is controlling technology to certain business partners for specific reasons. Because there is some flexibility on what you can or cannot do with the entities on all of the U. Karen Murphy: S. government lists, but it's getting more and more complex. Jeff Rittener: I think that's, uh, probably the, the word of the day is complex. Because if you look at the last three or four years and the number of rules that have been published, whether they're rules on technology that can be transferred, whether they're rules on who you can do business, where, it's just becoming more and more complex. Jeff Rittener: One of the things that I, uh, I often promoted at my, was to take our compliance program [00:16:00] and rather than it being a, you know, the minimum necessary to comply, to turn it into a, a strategic, um, force, if you will. And so I don't know if, do you have any thoughts or experience on how to turn your compliance program from, you know, this sort of, but we have to do this to really how it becomes beneficial to the company. Karen Murphy: Yes. I think. You know, the team needs to be known as a business enabler, not a roadblock, or not like a necessary evil. Companies talk about the tax department in a similar genre. We won't pay any taxes. But, you know, global trade needs to really come forth with ideas and problem solving, not be the department of no. Karen Murphy: No, N O, but be the department of no, K N O W. That's the key to really becoming a function [00:17:00] that's looked at as a business partner within the company. Jeff Rittener: No, I love that. I love that point and that story. I'll tell one, speaking of tax, we used to for 20 some odd years report to the tax department. And when I would go to meet with the CFO on trade issues, um, she would look at me and say, I don't want to see the hand. Jeff Rittener: You know, and she goes, I like working with you because you get shit done. And so I think that's a really good point you make as we think about, you know, good compliance programs. Um, can you share any stories from your, your experience where you have actually had to present your compliance program to the enforcement community? Jeff Rittener: Whether that was OEE or CVP. Karen Murphy: Yeah. I think again, whenever there's a question from an authority, I don't even use, I don't even want to use the term like investigation. I'd rather call it more of a question. [00:18:00] Um, partnering and providing the information and explaining what maybe their concerns are and not being confrontational, not lawyering up, you know, with like all different external lawyers and all that. Karen Murphy: Um, I think you still need their advice and help. But to understand what the risk was that a government agency is perceiving is at your company, you might learn something, too. Um, I've had to pay fines and penalties before at different companies. Um, I've had to, I haven't had anything severe like a suspension or revocation, but, um, sometimes having that different lens on a process or a transaction. Karen Murphy: is, can be a positive experience, but [00:19:00] the minute either party gets confrontational, it never ends well. Jeff Rittener: And how, in those situations, how did you manage upward to your superiors? Karen Murphy: So the big thing that the superiors want to know is what is the financial risk? How much should we reserve for? What is, you know, how much are we going to pay? Karen Murphy: And a lot of times, you know, you can write a check and then everybody goes away. But on the other hand, in more serious situations, you're going to have to. Compliance program and processes. You might have to do some different automation solutions to be able to prevent the particular, um, event from occurring again. Karen Murphy: So I think that, um, working upwards, you've got to be ready with those answers that they're going to expect. And then the financial folks can decide if there really is a risk of that [00:20:00] magnitude. They can disclose it during earnings calls if they feel they need to. But for them to have the information is the most important. Jeff Rittener: Yeah, that's been my experience as well. The, the dollar impact is that, is that bullet they want to see. And we as compliance professionals tend to want to give them all the details of how we got there. But what they really care about, as you said, was what's the bottom line, what's that impact. Karen Murphy: And just one more thought on that. Karen Murphy: Um, if it's something to do with customs and you didn't pay the right duty. That was what was due anyway. Right? You should have just, you should have paid it correctly the first time. Then there's fines and penalties, which can be added to that, but realistically that number is not necessarily huge as people tend to, um, over exaggerate sometimes to scare people. Karen Murphy: Right. And I, I don't believe in that either. Be honest. Jeff Rittener: That's a good perspective. [00:21:00] I'll share with you very quickly. Um, since we both were in the floppy floppy disk business and for those on the audience that may not know what a floppy disk is, it's a small little piece of media that you used to put in a mainframe computer and uh, to store all your, your data. Jeff Rittener: But anyway, I remember working for this company. Uh, when I arrived, they had filed a voluntary self disclosure. And if you can imagine the millions and billions of discs that went around the world and they were tracking all those on IVLs. on individual licenses. And so they overshipped, they didn't keep accurate records. Jeff Rittener: And so they filed a disclosure. Well, it languished at the Department of Commerce for five years. And one month before the statute of limitations, they decided to look at it. So I got a call and from the office of export enforcement and the enforcement agent said, I'm going to come out. I'd like to go look at your files. Jeff Rittener: Will you be willing to meet with me next week? I said, sure. So next week I was already, I was sweating. I was, so he's coming, he comes in, it's his [00:22:00] first case. He's from Texas and he comes in and he sits down on the table and he pulls his gun out and puts it on the table and says, Okay, let's look at those files. Jeff Rittener: And this is on floppy disks. Anyway, that's my first engagement with the Office of Export Enforcement. Okay, let's um, let's shift gears a little bit because both of us, um, I think when we think of compliance, we know how important a good system is. Is and can you describe your experience with trade systems? Jeff Rittener: It sounds like in your background you've worked a lot with IT and trade systems. Karen Murphy: Yeah, so I've seen a lot of different things going way back to one of the first solutions which was on floppy disk. EMS 2000. And, uh, then moving into what I kind of call the big systems like Oracle, global trade management, SAP, global trade system or solution. Karen Murphy: But there's a lot in [00:23:00] between, uh, EDA Open or Amber Road, MCI. There's many different ways that companies can address some of the compliance processes in a more automated way. Um, I don't really have a. favorite or recommendation for anyone who might be listening. It's more, what is your volume? How complex are your customers and your products? Karen Murphy: And even more importantly, can the system eloquently get the data in or out of the ERP? the warehouse and transportation. Those are the real questions. All of the systems can be configured and built to produce an export declaration, uh, invoice, all the paperwork that you need and do the screening. Um, again, the screening algorithm needs to be looked at all the time. Karen Murphy: And the license decision process has to be looked at consistently, especially in the wake [00:24:00] of all these new regulations that depending on the company, depending on the address of the company, you can do certain things and you can't do certain things. That is going to be a big challenge for these systems to be configured correctly to come up with the answer. Karen Murphy: Nothing is lights out anymore. You're gonna have to have supervised either the use of, you know, people are touting AI to do some of the activities. Um, but you really have to have a professional, a trade person who understands both business partners and the products. to be able to help get this, the shipment out. Jeff Rittener: Right. So, in your experience in, in, in the various roles that you've played, um, how did you work with IT? Was IT part of the trade organization? Was it separate? How did you manage that? Karen Murphy: So, depending where I was, we had like, [00:25:00] um, at my current engagement right now, we have a, a couple technical people that when there's a request to make a system. Karen Murphy: They, they do that work. Um, and they work with the trade subject matter experts to test it and implement whatever fix might be needed. Um, at other companies we had to, we were using like a cloud provider, so we had to put in a ticket to that company and they had to make the change at their location. And then some of the global trade folks would test it and make sure it did what we needed to be done. Karen Murphy: So it's kind of been all over the board, um, working with different solutions to achieve specific goals. Again, depending on the complexity and the risk at the companies. Right. Jeff Rittener: I see. So given we've talked a lot about how complex regulations are becoming. And I think both you and I know that when it comes to systems, um, you know, they're big, they're complex as [00:26:00] well, and they're hard sometimes to, to adjust and to, you know, to enhance. Jeff Rittener: So can you, can you help us understand how, how did you work within the company to ensure that the system stayed current? With all the changing rules and regulations, were there certain things that you did to, did you have to move to manual processes? Did you, were you able to adjust those in the system? Jeff Rittener: I'm just curious how you manage the, this kind of situation. Yeah. Karen Murphy: So I think that, um, you have to kind of look at the risk analysis and set a goal of like, I used to constantly measure how many parts we had classified, for example, against. What was being ordered and demanded coming in but then at the same time we would be Eliminating products or retiring them. Karen Murphy: So I never got above like 70 percent of the bucket. Jeff Rittener: Yeah Karen Murphy: was classified [00:27:00] so I think you have to do the same thing with the complexity of the regulations you have to Kind of hit, pick a target with respect to the amount of transactions and business partners and anything else that needs to be done and decide what is your goal for automation. Karen Murphy: And then everything else might be a hybrid. It might be that you block certain transactions and work on them manually. And then once they're able to go through this system, then they get pushed over manually. There's a lot going on right now in with the regulations. And I think you have to set your goals for automation and then start working towards them, but not. Karen Murphy: Risk compliance, Jeff Rittener: and that's a big challenge to balance that as you said, um, you know today Everybody is talking about AI there is AI Everybody's advertising they have AI on everything. So let's talk about AI and compliance. [00:28:00] How how do you think? Um, we can use AI to improve our compliance program and our systems. Jeff Rittener: Yes. So when I was Karen Murphy: at ArchLink, we had a tool that was, um, available to our clients to use to manage their classifications and for all sorts of data points, not just HTS and ECCNs. In my mind, again, you set the goal of what can AI give a reasonable. confidence level too. And maybe you go ahead and let those products go. Karen Murphy: Like we had a customer who manufactured, um, sticky notes and, but they kept having challenges with different colors, different sizes. And once we figured out the algorithm, the AI could definitely classify with a 90 percent 95 percent confidence. There's no need for a person to [00:29:00] look at that again. But then, on the other hand, you could have kits and sets and things that require a little bit more training of an algorithm. Karen Murphy: So you have to really look at AI as being another team member and using it as a tool in your toolbox, but then constantly monitoring the recommendations that the AI gives you and where it may have gone wrong or may, where it may have. If you want to do that, you have to learn something, but you can't just lights out trade, especially around export classifications and even customs classifications, depending on, well, now everything's duty able, so. Jeff Rittener: Well, that's interesting because we, we had a person who was an IT person that specialized in AI. And so we hired him into the team and so he could go look at our systems and figure out where we could take advantage of it. and what What we ran into was the [00:30:00] resistance from the compliance people to, you know, automating these tasks. Jeff Rittener: Have you seen that? And if so, how, how did it, how did, how did that get addressed? Karen Murphy: Yeah, the big, well, so the reason that compliance people get upset is because. And the data, the core data that the algorithm is looking at is probably not reliable. A lot of companies I worked with classify it once, forget it. Karen Murphy: You know, they, then some companies say, Oh yeah, every two years we run a scrub of our data to try to see if we misclassified something or rules changed or the tariff numbers changed. It's a very difficult project to undertake or process to, so bad data. Or unreliable data might be a better description. Karen Murphy: Um, is the number one reason that compliance professionals do not trust AI or some of the automation solutions to [00:31:00] be as compliant as they would be. Because they can physically see the anomaly in the data versus a system that's out there doing things without them supervising it. I think that's the problem. Jeff Rittener: I think that makes a lot of sense, and I've seen that over and over. Um, you know, you and I have talked a lot about this, and you know how enthusiastic I am about digitalization of trade functions. And I'm just, uh, curious, do you think that this digitalization of trade is a dream, or do you think there is a path to reach this nirvana? Karen Murphy: I think it's a hybrid of that question. Um, I think that Again, if companies focus on the data and they focus on reducing the number of systems that they have within their companies, all those interfaces, all the language, the languages, all the regulations in different countries and [00:32:00] getting all that together. Karen Murphy: Um, is a challenge. And so I really believe that you automate where possible. You set a goal of the transactions that can go through. And that's your story to management. And then everything else you use your experienced people for. Jeff Rittener: I see. Yeah. Yeah, I kind of feel like the other, I think the other part of the equation to reach that sort of nirvana, if you will, is the government. Jeff Rittener: Because if the governments, if the governments aren't, um, capable. Or willing, then it's hard to have a handshake, if you will. Karen Murphy: No, totally, totally agree there. Um, I was also working on another project with a company that we were trying to work. Um, and actually Intel was a big part of it, uh, to, to do some blockchain work. Karen Murphy: To be able to get documents for cross border transactions in and out of various countries. And the number one challenge were the governments. [00:33:00] Um, and their capabilities and their interest in doing this as well. It's just not there. Jeff Rittener: What do you think it would take to get them there? Karen Murphy: I think, um, yeah, I just, I don't know. Karen Murphy: I haven't thought of that. Um, how do we get there? And I'm a person that usually doesn't have that hesitation because it's, it's a, it's a very huge task. And so again, I'm a. Make a sandwich type person, you know, you pick the things that you can do focus. I mean the UK and Some other parts of Europe might be even might be very capable I know that Intel had a project in Vietnam, I believe And, um, but I don't know whatever happened to that project, if it's, if it's continued or it was just a proof of concept. Karen Murphy: It Jeff Rittener: was a proof of concept and it's probably still somewhat ongoing, but I think the challenge with governments is [00:34:00] most of the Western countries, Europe, U. S., Canada, have systems that work quite well, as you've described. I think the opportunity probably is going into places that are not as Robust places around the world, like in Latin America or Africa and places where you might be able to come in and get governments to see the value of starting from this from the beginning with digital solutions. Jeff Rittener: So anyway, it's something something I will have to continue to look at. Yes, there you go. So Karen to avoid enforcement challenges. We both agree. with the importance of effective compliance programs, automated systems, and good talent. What about the organization itself? In your experience, is there an optimal place in the company for the trade group to report? Karen Murphy: So it just depends on, again, the company and the complexity. Um, my team's thrived. The best when we were under [00:35:00] tax or finance, because those are the teams that typically know what's going on in the company before the legal department does with respect to opportunities for new products. Opportunities for new locations. Karen Murphy: Everybody goes to tax first. How much is this going to cost me? So then just being there in the tax department, we would get the similar questions. What are the challenges, importing and exporting? What free trade agreements are available? Questions like that. That when I worked in a legal department, it was more the reaction. Karen Murphy: We set up in Vietnam or we set up in Costa Rica, but everything's stuck at the border. We didn't know that we needed to file a business permit to do this activity or we didn't understand the ASEAN free trade agreement or that we have to get approval from the Malaysian government. before we can, um, implement a cross border [00:36:00] manufacturing program. Karen Murphy: You know, people, they, they knew what they had, that they had to do it, but they didn't know what it would cost if they didn't. So I think that we thrived, I thrived personally in a tax or a finance reporting to like chief financial officer, where again, we would see the projects before, proactive. In legal, I felt, and I've reported to legal twice in my career. Karen Murphy: And, um, in both cases it was more reaction. We've got a shipment stuck, get it out. Or, you know, we're in, uh, Vietnam, how do we get a bonded manufacturing program going? So, anyway, I know people can't see my face, but I just Like cringed at having to clean up rather than be proactive Jeff Rittener: is how Karen Murphy: I feel in a legal department. Karen Murphy: I'm being honest That's why we're here, right? Jeff Rittener: Right. No, I really appreciate those thoughts because I spent 25 years in finance and tax And then we were moved into the legal department [00:37:00] and then we were moved in the government affairs So I've seen the dynamics across all three of those for example, and I agree with you There are my conclusion I think was that I don't know if it Ultimately matters because whether you're at legal or government affairs or finance, you have to compensate for what you're missing, as you said, so if I'm in finance, I've got to go figure out the legal piece or the government affairs, how to engage if I'm in government affairs, I got to connect with finance. Jeff Rittener: So I think at the end of the day, having close relationships with all parties in the company and I think as a trade organization, you have to Wherever you sit, you know, over my career at Intel, I had the opportunity to build four different trade teams. And one of the struggles I had trying to figure out the, you know, the best option was, you know, how do I best organize the resources? Jeff Rittener: So, for example, is a centralized team better or is it better to align the resources according to the local leadership? Um, do you have experience in [00:38:00] either of those and any lessons that we can share? Karen Murphy: Yeah, so I have a couple different organizations that I've built in my career and one that I'm seeing more often now is Global trade being a service provider. Karen Murphy: Um, setting up the IT solution, uh, providing the classification data, interpreting the regulations and developing policy, and even some high level process with the business and operations. That is sort of a trend I'm seeing as more and more global trade functions report to legal. That was, it's kind of a way to, to do that. Karen Murphy: Um, trying to get team members in global trade to volunteer for cross functional projects or to even seek them out, um, participate in, like I used to have one of my team members. was involved very heavily in what was called like the Engineering Advisory [00:39:00] Board at Applied Materials. And we would have a little booth at the engineering, um, conference about global trade. Karen Murphy: And then at Flex one time, we set up our own pop ups. And we had products that Flex was building in various jurisdictions. And we had a little quiz about how much the duty was if you made that like a curling iron. In one country and shipped it to another or we made Nespresso machines and you know, what were the, some of the trade considerations there, like marking requirements. Karen Murphy: I mean, different things. We did a little pop up and if people came with, they got like a cookie or a churro, you know, and it was. You know, just getting us out there was a big, um, part of my kind of DNA. Jeff Rittener: Um, I've seen, uh, models where trade employees, um, do both customs and export. And then I've seen others where they're segregated by their, their expertise or their functions. Jeff Rittener: Have you seen those models and what are your [00:40:00] thoughts on them? A Karen Murphy: lot of companies are set up very siloed between export and customs. I used to be in that business model. At one point I was. But I went back and forth. So one of my jobs I started as export manager. Another job I started as customs manager. Karen Murphy: And then I said, why are we doing this? My export is your import. So I believe that again, the team members thrive if they're doing, they're capable of doing both and analyzing both and delivering both. Um, so there's also another choice, which is regional. So having a regional structure where you have a leader, maybe for Europe, Asia, the Americas, and then you might have an administrative function that does some of that service. Karen Murphy: Like I said, the it and classifications for everyone. So there's a lot of different ways that global trade can be set up to achieve the business goals. You just have to figure out what model fits. Jeff Rittener: Right. Yeah. I think that's kind of in my [00:41:00] experience as well. Um, it depends on your business, depends on how you're, how you're organized around the world. Karen Murphy: I just thought of something though, when you talk about separating customs and exports. Typically, a lot of companies, the customs function will report and stay in tax because it's considered an indirect tax. Then export because there's a lot of regulatory, there's lists, there's licenses, things like that. Karen Murphy: Then the export function and sanctions gets moved over to legal. And so that is something that can be done as well. And several companies have been that way forever. Um, and, but I'm more of a hands on type of a practitioner. So I like having all the transactions available and. Figure out the solution. Jeff Rittener: You are currently an executive advisor and in previous roles. Jeff Rittener: You've shared that you were a vice president Thinking about those [00:42:00] who are working in trade. Can you share? How did this come about? How did you get to those levels? What does it take any any advice for folks that are getting started? Karen Murphy: Yeah, so I think number one You have to decide your brand. Um, you and I've talked about this before. Karen Murphy: We are known for getting things done. Um, that we have a very similar brand that. Anyone who employs us or asks us to help out knows that they'll give us a problem statement. We'll analyze it and we'll figure out a path to solving it. The other thing I think people have to think about is what is the return on a company investing in you? Karen Murphy: You know, they're going to offer you, you know, you're going to make a salary. What value will they get out of it? And a good example, you know, I see a lot of people telling, putting in their resume they manage the drawback program. But I don't see a number. Like how much money are you [00:43:00] getting from the drawback program? Karen Murphy: Or you're managing a foreign trade zone. How much money are you mitigating due to that process? But in both programs, there is a cost. It's, you know, running a foreign trade zone is very expensive, but compared to the amount of duties that you're mitigating, that's the number, not the pure duty savings number, but what is the real ROI to a company? Karen Murphy: And one thing I always avoid is. that I avoided sanctions and penalties. Um, because that really is what you're supposed to be thinking about. But going back to what is the return on the investment, whether it's bonded manufacturing programs, I had a huge Maquiladora program that I worked with our partners in flex in Mexico. Karen Murphy: Um, and the China ebook process, just different programs [00:44:00] that really brought value for my whole team as a ROI to the company. Jeff Rittener: And that's music to my ears cause I basically operated the same sort of a program at Intel. Um, I, as a fact, in fact, when I left Intel, one of my pieces of advice that I gave the team was as long as you deliver concrete value, you will continue to be, you will continue to have that C suite visibility. Jeff Rittener: As soon as you don't, you will become irrelevant. And I think that's just, it's so important that we were not just there to adhere to the rules, but we're there to actually help the company grow. So, um, well, Karen, this has been just a wonderful conversation. Is there anything else you would like to discuss or anything else about compliance or enforcement that you want to share with the listeners? Karen Murphy: Yes. I just have one final. challenge to your audience, Jeff, and that [00:45:00] is to really think about AI and other automation solutions that can really help move the majority of transactions along. And if folks have any thoughts about. sanction party screening classification or even the creation of some of the documentation that's required what is their nirvana with respect to reducing the bureaucracy of the trade function. Jeff Rittener: Yeah, I think that's a great challenge, Karen. I think, um, you know, every one of our listeners, uh, should pay attention to that, uh, challenge because, uh, at the end of the day, trade is still operating the way it was for the last 50 to a hundred years, uh, very paper intensive. And there's an opportunity with the technology we have today to really make a huge difference. Jeff Rittener: to streamline, make it more cost effective and more efficient. So I think that's a [00:46:00] spot on challenge for our listeners. Karen Murphy: Yes. I hope they contact you. Jeff Rittener: Yes. Well, I, you've given me an idea for maybe a podcast to focus on that. And I have a few people in mind that could really provide some, some good input on, on this topic. Jeff Rittener: So Karen Murphy: perfect. This has been fun. Jeff Rittener: Yeah. Thank you once again for joining me and for your thoughts and your, your wise advice and appreciate it very much. Thank you. Okay. Well I hope everyone enjoyed listening to that conversation I had with Karen as much as I did. Uh, it was wonderful just to get so many good thoughts and ideas from Karen from her many years of experience. Jeff Rittener: I also appreciate her challenge to all of you to bring to me any thoughts and ideas you have about digitizing trade. I'm very passionate about that topic. And so if you'd like to reach out to me, you can at Jeff at rittnerreflections. com. Again, jeff at written and reflections. com and so hope to hear [00:47:00] from any of you and we'll be talking to you again soon Thank you very much