Achieving a significant productivity increase while streamlining the importation process through teamwork with Cisco Customer Service.
Background-- With more than 30 years of experience providing worldwide telecommunications via satellite, COMSAT offers integrated space and ground services to meet the satellite transmission and digital networking requirements of customers worldwide.
Challenge-- COMSAT Argentina needed an invoice tailored to their customs requirements to minimize the assessment of import taxes and penalties, as well as one with the applicable international commerce terms.
Solution-- Cisco Customer Service incorporates feedback from COMSAT Argentina to create a rolled-up invoice to ease customs clearance requirements.
Results-- COMSAT Argentina no longer pays unnecessary import taxes, excessive penalties, or substantial warehousing fees for the networking equipment imported into Argentina. In addition, productivity has increased multifold for key COMSAT Argentina professionals previously engaged in lengthy talks with Argentinean customs officials.
Cisco Solution Helps COMSAT Argentina Meet Critical Customer Networking Deadlines
COMSAT Corporation, headquartered in Bethesda, Md., is a global provider of satellite services and digital networking services, products, and technology. The corporation is divided into three separate but integrated businesses: COMSAT Satellite Services, COMSAT International, and COMSAT Laboratories.
COMSAT Argentina, a subsidiary of COMSAT International, faced a number of challenges when importing Cisco products into Argentina. When ordering Cisco networking equipment, COMSAT Argentina received an invoice that itemized the various components of the product, with a breakdown of the prices for each one. For example, a router invoice would include separate lines for network cards and the operating system software. Argentinean Customs officials placed these components into different tax classifications, which resulted in a substantially higher overall import tax.
COMSAT Argentina also faced penalties equal to twice the difference between the tax declared on the router and the tax assessed on individual components. According to Gabriel Morano, Trade Manager at COMSAT Argentina, "Customs did not understand that cables, boards, and software were not separate products but part of the router configuration."
Another issue involved the terms used to designate freight charges. "The World Trade Organization and World Customs Organization generated specific terms to be used in international commerce transactions," explains Morano. "According to Argentine Customs regulations, the appropriate freight charge designation had to be clearly placed on all invoices." He notes, however, that the Cisco invoices did not include the applicable international commerce terms. As a result, COMSAT Argentina had to spend considerable time and resources providing acceptable explanations to customs officials regarding the invoice formats.
Cisco Team Generates Viable Invoicing Solution for COMSAT ARGENTINA
To resolve these problems, Morano met with Sandra Souza, a Cisco Customer Service Project Manager handling issues in South America, and Alejandro Engler, a Cisco International Trade Manager working in Buenos Aires. Engler's suggestion that Cisco generate a rolled-up invoice tailored to Argentine customs requirements was quickly relayed to Cisco headquarters in San Jose, Calif. The new invoice shows all products as parts of one major product configuration, with one unit price and one extended price for multiple orders of the same configuration. "This format works well for COMSAT Argentina, as well as other companies located in Argentina and in other parts of the world," says Engler.
To remedy the situation involving freight terms, Engler proposed that Cisco include a space on the invoice labeled "Freight Terms/Incoterms," the later refering to the international commerce terms established in Brussels by the International Trade Organizations. "We now have accurate freight forwarding charge designations that are consistent across countries," comments Engler. For example, "FOB" or free-on-board, the most recognized incoterm, indicates that the price of a piece of Cisco networking equipment, such as a router, includes all transportation charges, warehousing fees, and documentation costs through its departure from the origination airport. The importer then pays the international freight.
COMSAT Argentina Substantially Reduces Importation-Related Expenses
The solution provided by Cisco substantially reduces import taxes for COMSAT Argentina, while greatly streamlining the importation process. Morano notes that importers do not pay unnecessary taxes and that COMSAT Argentina is no longer exposed to huge penalty fines for failure to declare taxes on individual product components.
The rolled-up invoice also eliminates the significant expenses associated with warehousing the networking equipment during the customs process. "A typical shipment of Cisco products costs $32 a day in storage fees," comments Engler. "Prior to the new invoice, our clients were paying warehousing costs, as well as excessive import taxes and fines."
In addition, COMSAT Argentina no longer has to devote huge amounts of time and resources to resolving conflicts with customs officials. "We normally used a third-party customs broker manager, as well as our own international commerce manager, to engage in long, strenuous explanations with customs relating to the invoices," emphasizes Morano. "Both can now turn their attention to more important tasks." He notes that the outside manager negotiates the most favorable freight charges and other rates for COMSAT Argentina and also processes all papers required for Customs clearance. The COMSAT Argentina manager can now focus on order tracking and fulfillment. As a result, productivity has increased multifold for these key professionals.
The streamlined import process also enables COMSAT Argentina to meet its customers' critical networking needs quickly and efficiently. "We have a contract with our customers to deliver products by a specific date," explains Morano. Cisco's assistance in generating the new invoice has helped in our ability to satisfy our customers' tight deadlines."
Engler emphasizes that the synergy among the different members of the Cisco team is a primary factor contributing to COMSAT Argentina's success in dealing with difficult customs issues. "The Customer Service organization plays a pivotal role in helping us satisfy our customers' requirements," Engler says. Morano agrees that the Cisco team has been particularly helpful and responsive. He is especially impressed with the dedication and helpful attitude displayed by Customer Service. "Doing business with Cisco illustrates the benefits of partnership," concludes Morano. "I really appreciate the Customer Service organization's receptivity to our issues."