A simple three-step process can make product jurisdiction and classification an easier project for many compliance organizations.
If your organization is like many, the focus is on selling first, handling issues second, and planning for future sales third. Simple planning can ease the compliance efforts associated with these business-related tasks.
Here is a simple three-step process.
Step 1 – Segmentation
Segmentation is the dividing of a broad product offering into subsets that have similar attributes for the purpose of determining product jurisdiction and classification.
Segment your set of sellable final products into appropriate subsets.
We will call these various subsets – a “technology” grouping since similar products are grouped by similar “technology” attributes.
Generally, companies have 4-5 different attribute levels for a “technology” group.
My company sells floor cleaning technologies.
Attribute 1 (Type) – We have two product types:
Mops or Brooms
Attribute 2 (Material) – The material utilized for the cleaning contact area is significant:
Sponge or Synthetic or Natural
Attribute 3 (Handle Type) – The handle design is significant:
Curved or Straight
Although, handle lengths, handle material (metal or wood) and handle / cleaning contact material color are additional attributes, they add little distinction to the subset or “technology” group.
This would give us 8 possible technology groupings:
Attribute 1 possibility (2) times Attribute 2 possibilities (3) times Attribute 3 possibilities (2)
2*3*2 = 8
Most likely not all 8 groupings may exist. For example, brooms may NOT use sponge materials – giving us 7 groupings.
Give each subset or technology grouping a label (even if it is Group A, Group B…).
• Sales organizations are trained to focus on a customer or market segment. Sales may look at mops and brooms as the same thing.
• Engineers create technology attributes so quickly that you have a 1-1 relationship with your technology groups and product catalog.
• Keep future technology groups in consideration. There may be other attribute values or attributes coming down the new product development pipeline not currently being offered by your organization.
Step 2 – Analyze
To analyze is to study something in order to understand it or discover more about it for structure.
Taking the technology groupings from Step 1, match individual products within a grouping to previous (past 5 years at least) sales. The sales should account for customer, end-use, end-user (if different from customer), quantity, and sales dollars. This matching provides keen insight into product jurisdiction. Although military customers do purchase commercial goods and commercial customers do purchase military goods, this sales matching can identify products with more potential for ITAR designation.
Although other potential areas for matching technology groupings are important, sales history and end-user/use have a dominate nature on product jurisdiction.
Other potential areas for matching include:
• Design Origin of Product
• Special military characteristics found outside “normal” commercial use.
One of the most significant challenges is obtaining end-user/use, if not previously done for past sales.
However, if the end-user/use is not readily known, most sales groups have quality insight into this area.
Keep future sales and business development efforts in consideration. There may be future sales or end-user/uses that previous sales history does not identify for the technology grouping.
Step 3 – Target
Target means to select as a product of attention.
The key to targeting is to pick likely product candidate(s) that can represent the functional nature of the entire technology grouping. These targeted products can become the basis for a singular Commodity Jurisdiction (CJ) submission to the Directorate of Defense Trade Controls (DDTC) or for a Commodity Classification Request (CCR) to the Bureau of Industry and Security (BIS). Just remember that all CCR requests come with an initial implication as being Non-ITAR, which if incorrect can have serious consequences.
The outcomes for CJ or CCR submissions can become your foundation for future product self-analyzed jurisdiction and classification determinations.