How AI Is Revolutionizing Global Trade with Rathna Sharad

Hello, and welcome to the latest edition of the Textron AI video series. I'm your host, Mike Ra today with Roth Na Sharad, who's the CEO of Flavor Cloud. And we're talking about how to apply AI to navigate commerce in other countries where there's a lot of complexity.

And of course, that's top of mind these days given all the tariff changes that are going on. Ana, welcome to show. Thank you for having me, Mike.

I think everybody's kind of basically familiar with the core challenge. Every time I go to do business in another country, there's a different set of regulations, a different set of customs. Heck, there's even different holidays that I don't even know about.

But, um, you guys have trained some AI capability to help navigate all this. So walk us through how that might work. We, um, are a cross border enablement platform, and what that means is, um, for D two C, um, so e-commerce as well as B2B, uh, which is wholesale, um, we automate the complexities of cross-border, which is shipping, customs and compliance.

Um, as you mentioned, um, you know, each country is different. We ship to 220 plus countries, so essentially every country around the world has a different set of regulations, um, requirements, um, to, uh, essentially bring products into the country. Um, now these regulations, which come in the form of, um, calculation of duties, taxes, tariffs, and fees, um, is one part of it.

Um, and, um, the, it's complex because these, uh, regulations are very fluid. Um, they are commodity based. Um, so it depends on what products are in that parcel or in the shipment.

Um, and, um, depending on the composition where these products are manufactured, uh, you can have different regulations and, uh, trade rules apply as well. Um, so given that level of complexity, you've got countries, you've got carriers, you've got, uh, commodity level restrictions. Um, it is one of those, um, really, um, interesting areas to apply ai.

Um, so applying machine learning and ai, and a lot of these, um, capabilities across shipping, customs compliance is what we do at Flavor Cloud. Uh, one of those interesting problems is, um, identifying commodities in themselves. Um, and that is, um, what we call our flash ai.

Uh, it is a product classification methodology that basically says, uh, we're gonna take this commodity. It's a women's, um, cotton dress. Um, it has a certain six digit commodity code.

Um, and that six digit code is understood for trade, um, through a world trade organization. Everyone around the world understands that it is that commodity. And then there's remaining digits that are in place, um, 10 digits, um, in some countries over 10, um, that determine that are very specific to each country that you're importing into that eventually determine these duties, taxes, tariffs, and compliance requirements.

Um, so we have AI for each of these pieces. Um, so there's AI that does the classification. There's AI that actually determines and guarantees these landed costs, which are duties, tariffs, and fees.

And then we have, uh, customs and compliance related AI as well. Um, so this is a really exciting space and application for ai. Are these tools all flavors of generative ai or are some of them more traditional machine learning algorithms that are predictive?

It's both. Um, it, it depends on the application. Um, so a lot of the machine learning and capabilities we were doing, um, long before OpenAI and a lot of the new tools that, um, have, um, nowadays we have access to so many different models, um, and our rag models, um, enable, um, and have enhanced the accuracy and the capabilities.

So it has made it a lot faster to innovate, um, um, and improve the accuracy because we are dealing with massive amounts of data, um, and, um, complex, uh, data as well. Going back a long time people used to hire manufacturer reps, people who were their agents in different countries. Are those folks still playing a role or will AI agents kind of take over that function?

Uh, it's the latter. So AI agents, um, have already taken over those roles. If you think about, uh, the classification problem, the only way you would solve it is there were these massive books, um, large, um, HS classification books that someone would have to manually go through and classify.

And if you have hundreds, even thousands or hundreds of thousands of SKUs, uh, that is, um, very manual error prone, not scalable. Um, and, um, we essentially have automated brokerage functions. Uh, so what used to be a licensed agent or a customs broker and capabilities can now be done with higher accuracy through automated, um, technology.

Of course, it feels like this whole space has gotten a lot more dynamic lately. There's a lot of negotiations around tariffs. Mm-hmm.

How do you keep up with all the changes? Yeah, it's a great question. Um, I mean, um, there has been a fluidity in trade.

It is very complex and it is something that changes all the time, although we've never seen, uh, the back and forth and, um, the immediacy that, um, you know, uh, we've seen in the, in the past, uh, couple months actually. Um, but, um, the systems that we've built are really, um, designed for this. They're designed for, um, ultimately, um, accuracy, um, and understanding the nuances of, you know, what are these tariffs, what are the fees, when do they apply, uh, when do they not?

And really being able to, uh, make dynamic decisions in the checkout so that it's real time and it's guaranteed, um, as we do, um, as well as, uh, protect margins for our brands because ultimately, uh, a tariff change if done incorrectly means somebody needs to pay, um, that, um, additional amount at the border. Um, and that can be very significant. So accuracy, uh, immediacy of, um, implementing changes is very core to how, how our platform is designed.

It is designed to be, um, real time as well. Um, so, um, as soon as, um, not so much the announcement, but really when it gets implemented, uh, and it's official, uh, it becomes law, um, and compliance is really, um, legal requirements that, um, brands, uh, brands and really shippers have to comply. How much are organizations making their supply chains a lot more dynamic in the sense that, um, I might order from a plant in one country one day and then and another from a, a separate day?

Just because there have been that many changes in the 24 hour cycle or things aren't available, but how, um, is the supply chain kind of evolving? Yeah, there's, there's a tremendous evolution happening right now. Um, I mean, um, it's a very connected global supply chain, and you kind of are seeing that in motion.

Um, one of the things that is happening in terms of, um, not just the dynamicism in, uh, tariffs, uh, but really what you're seeing is sourcing. So there's, um, you know, alternate sourcing locations, um, often that brands are looking at, or multiple sourcing, really thinking about how do you future proof your supply chain, um, because it's not a question of, uh, you know, um, what is the next, um, you know, uh, vol volatility that you're gonna be, um, faced with because it's coming, it could be in a different form. And so really being prepared in terms of having alternate sourcing options or multiple sourcing options, being able to, um, second look at regional fulfillment is something that, that we are seeing with our brands.

Um, they're looking to have more nearshoring and regional fulfillment in place. Uh, so that means instead of a central point and then shipping to the rest of the world, really thinking about, um, fulfillment, um, location in APAC that services the entire region. And in eu, for example, uh, in Netherlands servicing all of emea.

Um, so these are, um, very, um, uh, fundamental changes to, um, how brands think about global presence. Um, and that's here to stay as well. Um, the other change, the third one we're seeing is a much more nimble B2B, um, wholesale enablement.

Uh, in part it started happening because of the tariffs, um, really, um, differing duties, having better control of, um, uh, you know, the inventory having better visibility. So it's moving towards a much more agile, um, uh, you know, network. Um, the large, uh, ocean drops, you know, twice a year are no longer, um, you know, sustainable consumers are also, um, very fickle, uh, in the sense that they're, they're demanding, um, you know, stuff, um, to be continuously evolving, uh, stuff goes obsolete by the time it hits the shelves.

Um, so it is that cycle. Um, it's, uh, it's, it's here to stay as well. Um, so we're seeing these three things I think, um, are going to drive how, uh, folks think about supply chain.

Well, Let's say I'm a brand and I have AI agents now kinda representing me in these various countries, but in those countries, our suppliers who are also gonna have their own AI agents. So how will they negotiate with each other and what might that look like in the future? Um, so AI agents for neco negotiation, I think is a, is a long way.

Um, it is something that, uh, certainly you need to be able to negotiate with the supplier. Um, I talked about multi, um, sourcing options, if you will, multiple suppliers around the world. I think that is a great way for brands to also think about competition and getting the best pricing.

Um, oftentimes in situations like when tariffs are here, you, you can negotiate, uh, different options to offset tariffs, uh, which a lot of our brands have done. Um, so there's many different strategies. There's also tariff engineering, um, so you could change the composition of a product so that it's less impacted, uh, or not impacted, um, by tariffs.

Um, so these are all very nuanced negotiations, so I think people are going to be doing these negotiations and finding the right source. Based on what you've seen from your customers, what's your best advice to folks about how to kinda start this journey with ai? 'cause I think, uh, everybody kind of understands the core idea, but they're a little overwhelmed and sometimes they don't know where to get started.

Yeah, it is overwhelming. There's a lot of, um, you know, folks suddenly claiming, uh, they know the space as well and giving advice. Um, and really what's important is to step back and think long term, I think, um, be less, um, um, influenced by the short term, uh, changes that we're seeing.

But, um, think about how you can build a resilient, um, and agile supply chain, um, that is going to bode well regardless of what the next, um, disruption might be. Um, and so the advice would be to work with a partner that, um, you know, has a lot of this complexity, um, and understands the complexity, but really removes that complexity, abstracts away and creates, uh, a technology, um, and, uh, and keep platform essentially, that allows you to do all of these things. Um, whether it's B2B automation or it's D two C, understanding, um, regional supply chain, um, really allowing you to plug in, um, and, um, um, ultimately predict, uh, upfront with the accuracy so that you're not impacted when these changes happen, uh, from a bottom line standpoint.

So cost benefit analysis, working with you on, um, how to mitigate that and ultimately, um, you know, um, uh, working with you on improving your margins because there's a lot of, uh, international is one of the fastest growing, um, uh, you know, uh, in e-commerce, but also we're seeing, um, that, uh, international is no longer about just having a global footprint. It, it also impacts your wholesale and your overall strategy for domestic. So really thinking about it as a single, um, you know, uh, supply chain strategy, I think is key.

Folks. Hey, you heard it here. If there's a large amount of data that you're supposed to constantly wade through, but the data is, you know, ultimately relatively static, it may change from day to day, but it certainly doesn't change second to second.

Mm-hmm. Maybe AI is your new best friend. Hey, Ratna, thanks for being on the show.

Thank you. Thank you for having me. All right.

And thank you all for watching the latest episode of the Text Drive AI video series. You can catch this episode, others on our website. We invite you to check them all out until in, we'll see you next time.