Beyond Compliance: Driving Cost Savings and Efficiency with Smart Classification in SAP GTS

Classification in SAP Global Trade Services (GTS) is often regarded as another compliance check box to tick off- an unavoidable task meant to ensure adherence to customs regulations and trade agreements. However, the importance of ensuring accurate product classification goes far beyond just staying compliant- it serves as a critical element that optimizes supply chain operations, reduces costs, and enhances decision making.

The Importance of Product Classification

Product classification is the process of assigning standardized codes to goods based on their attributes, intended use, and other qualifications. In global trade, this classification is needed to ensure businesses meet compliance with international regulations, as well as determining the proper taxes and tariffs. Accurate classification helps to ensure unproblematic cross-border transactions, as well as compliance with complex legal requirements that are prone to change. The importance of classification extends much further than just checking off a requirement. Some important factors of proper product classification:

• Risk Mitigation: Identifies products that are restricted or controlled, ensuring compliance with export control regulations
  
• Optimized Trade Agreements and Duty Savings: Ensuring products are classified correctly allows preferential tariffs and duty exemptions in free trade agreements, allowing organizations cost savings.
  
• Enhanced Supply Chain Efficiency: Proper classification allows streamlined customs clearance, reducing shipment delays.

Challenges in Material Classification

Despite its critical importance, classification can often be a major struggle area for organizations. Some challenges of classification:

• Complex Regulations and Frequent Changes: With the constant evolution of trade regulations and tariffs, maintaining up to date classification codes can be overwhelming.
• High Volume and Diversity of Products: Managing classifications for a vast portfolio with varied attributes can not only be time consuming, but also susceptible to errors in classifying products.
  
• Limited Expertise: Organizations often lack team members with extensive knowledge in global trade and classification knowledge, leading to inaccuracies and delays
  

Streamlining Classification with KAI by ArchLynk

Using supervised machine learning, ArchLynk’s KAI leverages a business's historical data while constantly learning and adapting using current data to efficiently and effectively reduce human errors, inefficiencies, and costs. By seamlessly integrating with SAP GTS, KAI reduces manual effort and enhances classification accuracy, helping to ensure compliance.

Key Benefits of KAI

• Automation and Error Reduction: The KAI tool reduces manual classification efforts by up to 75%
• Real-Time Classification: Provides instant, accurate classification suggestions
• Continuous Learning: Uses AI and Machine Learning to improve classification accuracy – essential in today's rapid changing trade world

Conclusion

Product classification can be an expensive and time-consuming process, but it is a critical task—not just to remain compliant, but to reduce risk and uncover cost-saving opportunities. Classification in SAP GTS is more than a regulatory necessity; it is a strategic enabler. By addressing challenges and harnessing the full potential of SAP GTS, organizations can improve operational efficiency, ensure regulatory compliance, and drive smarter decision-making.

With deep expertise in SAP Global Trade Services and supply chain transformation, ArchLynk empowers businesses to streamline classification processes, achieve measurable cost savings, and stay ahead of regulatory changes. Connect with our team to explore how we can help you turn classification into a competitive advantage.