We all know the old saying about nothing being certain but
death and taxes. I’d take that one step further – another certainty is that company
leaders can improve efficiency, net income and shareholder value by integrating
tax planning with supply chain planning.
Since supply chain planners determine where products are
sourced and made, along with when and how they are distributed to markets and
what volumes of goods are moved across borders, operational decisions directly
impact a company’s tax obligations. And, frequently, tax planners influence
these same decisions for tax effectiveness reasons.
Tax Effective Supply Chain Management (TESCM) integrates tax planning
with supply chain planning in order to maximize success in both areas.
Corporations that operate internationally can be obligated
to pay over 20 different types of taxes. These include corporate income,
property and real estate, sales and VAT, payroll, customs, assets, and many
others. Cash management, currency conversions, and transfer pricing also impact
taxation. And guess what? Supply chains impact all of these.
Recently, Tompkins Supply Chain Consortium released the Tax-Effective
Supply Chain Management (TESCM) survey report on how companies view
TESCM, as well as their level of comfort and use of TESCM principles in supply
chain decision making. Survey demographics contained large and small
organizations with international and domestic scope.
As an organization extends its global reach, tax
complexities naturally increase. TESCM reduces future risks of increased costs
and taxes while promoting greater supply chain efficiency.
As a whole, TESCM is multi-faceted and complex, and it requires
close collaboration among supply chain operations, tax, finance, sales and
marketing professionals. So how do you begin implementing TESCM in your company?
Learn to speak the same language. Supply chain professionals
talk in terms of operations processes and functions; tax and accounting
professionals discuss transactions, structures and entities. Working together, the
best of both worlds can be combined in your decision making and provide the results
your company needs to succeed in this challenging global economy.
Are you currently using TESCM? If so, are you satisfied with
the results? If not, how do you see it being integrated into your organization
in the near future?
Go!Go!Go!
More Resources
Consortium Report
Globally Expanding Companies Incur Multiple Taxes
Supply Chain Strategy
Photo Credit: John-Morgan