kasetsart university, bangkok - unescap 2.1 trade-process... · maritime pilot’s station customs...

Somnuk Keretho, PhD Director, Institute for IT Innovation..........

Kasetsart University, Bangkok

Module 2.1: Trade Process Analysis

Regional Training of Trainer Workshop Trade Facilitation & Paperless Systems for Agrifood Products

organized by UNESCAP

15-17 December 2014 United Nations Conference Centre, Bangkok

Regional T4T Workshop: TF & Paperless Systems for Agrifood Products, 15 December 2014, Bangkok sk @

Objectives of this module

To briefly introduce how to conduct a BPA project

for analyzing the “as-is” international trade process,

and proposing improvement opportunities [based on the UNNExT Business Process Analysis Guide

to simplify trade procedures].

To discuss some

BPA case studies for

agrifood trade facilitation

improvement.


Topics of this module

What/Why?: Business Process Analysis for TF

Graphical notations: Unified Modeling Language (UML)

Three(3) phases for managing a BPA project

Case examples: Thailand & Cambodia

Conclusions


What is a Business Process?

A Business Process is a collection of

related and structured activities or tasks

that produce a specific service or product.

Example

– Movement process of garment products

from Bangkok Port to Kathmandu

– Applying and Issuing Process for a Certificate of Origin

(e.g. Under a Treaty of Trade between India and Nepal)

– Customs Clearance Process at the Border Point


What is..

..a Business Process Analysis?

An analysis and modelling of business processes

for improvement and automation

Example

– Documenting existing practice in an administration/company

– Describing a “Standard Procedure”

– Identifying quantitative indicators

– Providing a basis to measure time/costs at different steps

– Providing a specification for automation of the process


Why conduct a Business Process Analysis?

Business Process Analysis is a practical study

to understand attributes of business processes, and their relationships

Who involved

Procedures and Documents

required

Related Rules and Regulations

Some quantitative

indicators


What are benefits of Business Process Analysis?


BPA, the first important step, towards Paperless Trade and Single Window Development

BPA is the first technical step in preparing for trade facilitation measures including paperless trade and SW implementation

It provides

– Inventory of processes, documents, data, parties, rules & regulations..

– Description of the processes

– Specifications for harmonizing data and development of electronic documents

– Specifications to develop software for the automation of procedures

– Business Models for operation of SW

– A basis for maintenance and improvement


Data Model and

Digital Documents

Data Analysis and

Simplification

Document

Simplification

Business Process

Analysis and

Simplification

Develop

electronic

documents

Simplify paper

documents

From Paper to Paperless Trade: A Stepwise Approach

Analyse

information in the

documents

Understand and

simplify business

processes


UN/CEFACT Buy-Ship-Pay Model for international trade


Business Process Modeling

What

A technique for documenting a business process and its attributes

– Activities that come in a specific order and decision points

– Actors who perform those activities

– Defined inputs and outputs of each activity

– Criteria for entering and exiting the business process

– Relationships among actors

– Information flow

– Associated rules and regulations

– Quantitative indicators such as number of steps as well as time and cost required to complete a particular business process

Why

To establish a common understanding about a business process that is shared by all relevant parties

To communicate better all aspects of a business process


Unified Modeling Language (UML)

A set of standard graphical notations for

documenting a business process and business

requirements

http://en.wikipedia.org/wiki/Unified_Modeling_Language

Is widely recognized and

used among practitioners in

business community as well

as those in IT and software

industry

Allows business domain

experts to communicate

procedural and documentary

requirements with IT

implementation or software

development team

http://en.wikipedia.org/wiki/Unified_Modeling_Language


UML Diagrams for BPA

Use Case Diagrams

A frame of reference illustrating a high level business process and its associated actors

Activity Diagrams

A detailed elaboration of a use case diagram

A graphical representation of a business process and its attributes

– Activities that come in a specific order and decision points

– Actors who perform those activities

– Defined inputs and outputs of each activity

– Criteria for entering and exiting the business process

– Relationships among actors

– Information flow

Buy - Conclude

sales contract and

trade terms Exporter or

Representative Importer

Quote price

and term of trade

Confirm the

intent to purchase

Proforma Invoice

Purchase Order

Not acceptable

Acceptable

Cancel

Prepare the shipment

of goods

Exporter or

Representative Importer


UML Notations for Use Case Diagram

Notation Description

Actor

Represents a role in a particular business process

Is labeled with a role name

Use Case

Represents a business process

Is labeled with a descriptive verb phrase

Relationship Association

Link actors with business processes that they participate in

Subject Boundary

Represents a process area

Includes the name of a subject boundary on top

Boundary

Actor/Role

Use case


Exercise – Read the Use Case Diagram (Exporting frozen shrimpts from Thailand)


UML Notations for Activity Diagram


Initial State

Represents the beginning of a set of activities

Final Activity State

Indicates the completion of the business process

Final Flow State

Indicates that further activities cannot be pursued

Transition Line

Indicates a sequential flow of actions and information

in an activity diagram

Fork (Splitting of Control)

Visualizes a set of parallel or concurrent flow of

actions

Join (Synchronization of Control)

Indicates the end of parallel or concurrent flow of

activities

Object

Represents a document or information that flows from

one activity to another activity (labeled with the name of

a document)


Swimlane

Is used to break up individual actions

to individuals/ agencies that are

responsible for executing their actions

Is labeled with the name of the

responsible individual or agency

Activity

Represents a non-decomposable

piece of behavior

Is labeled with a name that 1) begins

with a verb and ends with a noun; and 2)

is short yet contain enough information

for readers to comprehend

Decision

Represents the point where a

decision has to be made given specific

conditions

Attached with labels addressing the

condition on each transition line that

comes out of an activities and connects

to a decision point or vice versa

Process Participant 1

Process Participant 2

Process Participant n


Exercise – Read the Activity Diagram


Three Phases of a BPA Project

Project

Sponsor

Project Manager/

Project Leader

Process

Analysts

Process Participants/

Business Domain Experts

1) Define a

project scope

2) Develop a

detailed plan and

secure resources

3) Acquire

background

information

4) Conduct

interviews and document

captured data

5) Analyze the “as-is”

process and identify

bottlenecks

6) Develop and

propose

recommendations

Phase I

Phase II

Phase III


Three Phases in a BPA Project

I. Scope setting – Specify a scope of processes to be analyzed

– e.g. import and/or export processes of a specified product,

through a certain mode of transportation (trucks, trains, ships or airplanes)

II. Data collection and process documentation – Define and

document a sequence of steps in actual practices and their

attributes

– Who involved (stakeholders/actors)

– Procedures and documents required (input to/output from)

– Related rules and regulation

III. Process analysis – Locate bottlenecks, examine what causes

them, and develop measurable and quantitative process

indicators (e.g. the number of steps, time and costs required to fulfill those

processes)

Recommendation development – Determine how to eliminate

each bottleneck and prioritize improvement actions


Outputs of a BPA project

Step Deliverable

Step 1: Define project

scope

Use case diagram illustrating business domain, process areas, process participants, and key

business processes

Step 2: Develop a detailed

plan and secure resources

Detailed project plan including an estimation of human resources required, schedules, and

software supported tools

A list of potential interviewees and their contact information

Step 3: Acquire background

information

A folder of background information about the business processes under the investigation

A list of guiding questions for the interview

Step4: Conduct interview

and document captured

data

A set of activity diagrams illustrating activities that come in a specific order and decision points,

actors who perform those activities, defined inputs and outputs of each activity, criteria for entering

and exiting the business process, relationships among actors, and information flow

A set of business process descriptions that describes activity diagram and lists all related rules

and regulations

Activity diagram illustrating integrated processes in the business domain

Time-Procedure chart displaying time required to complete each business process

Step 5: Analyze the “as-is”

processes and identify

bottlenecks

A set of observations of the as-is business processes that have the potential for improvement

Step 6: Develop and

propose recommendations

Final report with recommendations which may include diagrams of “to-be” business processes

Ph

ase

I P

has

e II

Ph

ase

III

A BPA Case Study Thailand Sea Importation of Standardized Cargoes


Phase I: Scope Setting

Example:

Regulatory and business requirements

related to the operation and management

of port before, upon, and after the import

and export of containerized ordinary

cargoes through all modes of

transportations (road, rail, air, and sea)

– Carrier scheduling for port use

– Cargo handling

Import

– Starting point: when a carrier enters port

– Ending point: when cargo is picked up and

transferred to an importer

Export

– Starting point: when cargo arrives port

– Ending point: when cargo is on board and ready to

be transferred to the country of importer

•Airport (Chiengmai)

•Sea Port (Chiengsan)

•Dry Port (Maesai)

•Dry Port (Mukdahan)

•Dry Port (Nongkai)

•Train Station

•Dry Port

•ICD (Ladkrabang)

•Suvannabhumi Airport

•Sea Port (Unithai)

•Etc. •Sea Port

(Lamchabang)

- Site Visited

No. of Interviews = 45

- Phone & email interviews

No. of Interviews = 16


Phase I: Scope Setting Example: Importation by Sea

• Vessel Agent

• Maritime Pilot’s Station

• Marine Department

• Port Operator

• Customs

• Other Government Agencies

• Importer or Representative

• Terminal Operator

• Haulage/Truck

Example: Capturing the

Stakeholders involved in

importation by sea

Draw a use case diagram to

illustrate the business domain

with process areas and

high-level business processes

as well as stakeholders

associated with each of them

Vessel Agent

Port Operator

Marine

Department

Terminal

Operator

Haulage/Truck

Maritime Pilot’s

Station

Customs

Importer

or Representative

Other Government

Agencies

Business Processes

Actor

Enter a seaport

Report cargo

manifest

Unload cargo

Clear goods

through customs

Arrange the

transport for the

pick-up of goods

Handle cargo at

the terminal

Prepare to

enter a seaport

Prepare documents

for import

Pay for goods Bank


25

Phase II: Data Collection and Process Documentation Example: Prepare to Enter a Seaport Process

For each process, draw an

activity diagram that describes

activities and associated

documentary requirements Vessel Agent

Port Operator

Marine

Department

Maritime Pilot’s

Station Prepare to

enter a seaport

Maritime Pilot’s Station Marine Department Port Operator Vessel Agent

Prepare

documents

Request for

Maritime Pilotage

General

Declaration

Application for

Vessel Entering

Port Area

Prepare the

allocation of

equipments

Assign pilot officer Receive

Receive

Receive


Phase II: Data Collection and Process Documentation Example: Activity Diagram of Prepare to Enter a Seaport Process


Prepare

documents

Request for

Maritime Pilotage

General

Declaration

Application for

Vessel Entering

Port Area

Prepare the

allocation of

equipments


Receive

Receive

Sequence of

actions carried

out to achieve

a specific goal

Swimlane shows a boundary of activities

to be carried out by a responsible actor.

Document associated

with each action

Initial State shows the starting

point for the sequence of

activities.

Final State shows where the sequence of activities reaches its end.


Phase III-1: Process Analysis Example: Prepare to Enter a Seaport Process (Existing Process)


Prepare

documents

Request for

Maritime Pilotage

General

Declaration

Application for

Vessel Entering

Port Area

Prepare the

allocation of

equipments


Receive

Receive

Duplicated data submission:

Three documents with

almost identical data are

handed-in to different

receivers.

Problems :

- Duplicated Information

- High Cost and Time for sending and receiving documents

- Data Inconsistency


Phase III-2: Recommendation Development Example: Prepare to Enter a Seaport Process


Prepare

documents

Request for

Maritime Pilotage

General

Declaration

Application for

Vessel Entering

Port Area

Prepare the

allocation of

equipments


Receive

Receive

Process simplification

Single submission

(electronic means)

Proposed Recommendations :

- Remove unnecessary data requirements

- Harmonize and standardize data requirements

- Automate “prepare to enter a seaport” process


29

Phase III-2: Recommendation Development Example: Prepare to Enter a Seaport Process (Proposed New Process)

Vessel Agents send

electronic documents to

Marine Dept through NSW

Exchange

Maritime

Pilot’s Station

Port Operator Marine Dept.

Stakeholders :

1) Vessel

2) Value Added Service

3) NSW Exchange

4) Marine Dept.

5) Port Operator

6) Maritime Pilot’s Station

Vessel Agent

Prepare

Update Status

Update Log

Update Log

Update Log

Application for

Vessel Entering

The Port Area

Pilot

Request Form

General

Declaration

NSW Exchange Value-added

Service

Provider

Marine Dept.


Phase III-2: Recommendation Development Example: Time – Procedure Chart of Importation by Sea

9 Main processes

1. Prepare documents for import

2. Prepare to enter a seaport (Vessel)

3. Enter a seaport (Vessel)

4. Report cargo manifest

5. Unload cargo

6. Clear goods through customs

7. Arrange the transport for the pick-up of goods

8. Handle cargo at the terminal

9. Pay for goods

1 2 3 4 5 6 7 8 9

Days

Process

20

10

0

5

15 1 days

1 day

3

8

6

1 day 1 day 4

7

2 day

1

10 day

9

4 day

1

2 3 4 5 6

7

8

9

20 days

12 days 2

2 day 1 day

5

As-Is

To-Be

A BPA Case Study

Cambodia BPA


Cambodia BPA (since 2010)

The analysis of the Cambodia BPA was initiated by H.E. Dr. Hang Chuon

Naron, Permanent Vice Chairman of the Supreme National Economic

Council (SNEC) in mid 2010 following the holding of a National Workshop

on Advancing Trade Facilitation under a thematic “Business Process

Analysis for Trade Facilitation: Operationalising the Rectangular

Strategy for Growth” on 1-2 June 2010 in Phnom Penh.


Cambodia BPA (since 2010)

The workshop was organized jointly by the General Department of

Customs and Excise, the Ministry of Commerce, and SNEC and

supported by the UNESCAP and UNECE.

The workshop laid the foundation for ESCAP’s support, a tailored

Business Process Analysis (BPA) ‘training of analysts’ course followed

by application of BPA techniques to four key import and export products

identified under Cambodia’s economic diversification strategy.

– BPA on rice, cashew, silk and pharmaceuticals


A Case of Rice Export prior to the launch of the Rice Export National Policy in August 2010

To export rice below 200 ton, the Private Sector needs to write a letter

to ask for permission from MoC and GDCE (General Department of

Customs and Excise). However, even though the MoC agrees, the Private

Sector still needs to negotiate with the GDCE. This takes time and the

buyer contract time is limited i.e. from 3-4 weeks only.

Exporting more than 200 ton of rice is even more difficult and

expensive. For example: the Private Sector (PS) need to go to Green

Trade (GT) which has the monopoly to export rice; ask them to write a

letter to MoC and then the MoC writes another letter to GDCE to ask for

facilitation on this export operation. At each stage, the concerned

authorities can create difficulties, delay unless the PS agrees to pay

informal fees. Expenses occurred are as follows: (i) 50$ for CO, 0.1 % for

export tax, (official); (ii) 170$ for export permit from GDCE; (iii) GDCE

charges 55$ per container for checking and so does the CAMCONTROL;

(iv) Ministry of Agriculture, Forestry and Fisheries (MAFF) charge 24$ to

check a container; (v) When loading merchandises into the container,

the MoC charge 40$ per container.


A Case of Rice Export prior to the launch of the Rice Export National Policy in August 2010 (cont.)

Moreover, to transport rice from PS to Sihanouk Ville Port

costs 40$ per ton which include 5$ charged by the trucking

company. The exporter needs to top 50$ on the price of rice

(for example buying the farmer 375$/ton and selling to buyer

425$) to be able to cover the export and transport charges

and keep 10$/ton of gross margin. The PS also raises that

the PS can not load the rice into container directly from the

millers in various places. They have to bring the rice to PP

and load into the container. This cost double price.

This is a barrier that we cannot export rice in large amount.


Cambodia BPA recommendations for improvement

One-Stop Shop: a special service for processing the export and import of

agricultural products. This office will be in charge of issuing all the necessary

permits and ensure: (i) transparent fee, and (2) time limit in 5 working days.

Reduce informal fees: To be competitive with neighboring markets which

are market leaders, we need to reduce the sales prices of rice meaning we

need to limit unofficial fees for both export and import procedure.

Export of rice: ensure free and fair competition by removing monopolies

such as Greentrade. Thus enabling companies to export freely.

Intervention in transport and transfer of merchandises: The MoC can

influence other relevant entities such as dry ports to lower the cost for

entering container from 20 USD to 3-5 USD. Or else the Royal Government of

Cambodia (RGC) can provide a location for transferring merchandises without

charging any fee. The RGC should establish or provide land for establishing

of transferring center for huge amount of merchandises so that Cambodia can

be a big rice supplier in Asia. There should be a website to promote rice in

Cambodia or have an association of exporters of rice like in Thailand.


Cambodia BPA: as-is rice export process (documents & agencies to be visited)


Actors & main procedures for Cambodia rice export


Cost involved in Cambodia rice export


Time involved for Cambodia rice export


Trade facilitation measures in Cambodia

Cambodia BPAs have identified bottlenecks, and proposed

several specific improvement measures.

Action 1: Tackling Capacity building issues, e.g.

capacity building for exporting firms on export procedures, and

capacity building on market access conditions.

Action 2: Mobilizing of private sector rice actors

Action 3: Enhancing trade facilitation, reducing informal fees

and eliminating illegal check points

Action 4: Identifying key legal and institutional gaps


Trade facilitation measures in Cambodia

Cambodia BPAs provide strategic input and become the

National Rice Export Policy endorsed by

the Cambodia Government

Measure 1: MEF/General Department of Customs and Excise (GDCE), MAFF

and MoC/General Department of CAMCONTROL and relevant agencies shall:

develop a specific strategy to identify and streamline export processing procedures

including inspection, documentation requirements, fees and time required to process

export applications; define clear and publicly transparent division of responsibilities

among export regulating ministries/agencies; consider milled rice export as a top

priority in order to reduce to a minimum informal payments and time required to

export by extending “special treatment” similar to the garment sector.

Measure 2: Implement a single-stop service for export processing: MEF/GDCE,

MAFF and MoC/CAMCONTROL and relevant agencies shall set up a Single Stop

Service for export processing and issuing certificates for SPS, fumigation, grading

and quality, quantity and weight, and customs declaration.


Conclusions of Cambodia rice BPA

The rice sector holds a huge potential economic growth for Cambodia.

If rice export could reach 3 million tons, the total export value would

amount to USD 2.1 billion (approximately 20% of GDP).

According to rice BPA study, high trade facilitation and internal

transportation costs, in particular, are cited as having a significant impact

on smaller rice traders’ ability to effectively export.

The BPA on rice export was instrumental in highlighting actual

uncompetitive trade facilitation practices as well as identifying helpful

suggestions in improving trade facilitation procedures and processes at

the national level.

Overall positive effects of the Rice Export Policy: There has been

some improvement in the export process after the launching of the

new policy of paddy production and rice export. Many government

agencies along the institutional value chain to support the implementation

of the rice export policy. There are visible impr ovements in reduction of

government-related transaction costs related to Customs, Camcontrol,

and Commerce.


Lessons learned from Implementing BPA

Get Buy-in from the high-level policy decision makers

Secure adequate resources

Clear roles and responsibilities of the project

stakeholders

Choose a Champion

Start small, and then evolve

Profit from experience

Invest in training

Performance measurement


Conclusions

It is strongly recommended for the country (and also

for each government department) to conduct

detailed BPA study for the national strategic

products (or for its internal process within the

department) since it is a significant assessment tool

for analysing the as-is and proposing specific trade

facilitation measures for the country (or for the

department).

Graphical notations based on a modeling language,

UML, is introduced.

Step-by-step BPA project management is proposed.

Somnuk Keretho, PhD Director, Institute for IT Innovation..........

Kasetsart University, Bangkok

Q & A Thank You.

Regional Training of Trainer Workshop Trade Facilitation & Paperless Systems for Agrifood Products

organized by UNESCAP

15-17 December 2014 United Nations Conference Centre, Bangkok