business process analysis for agriculture supply chains ... business process analysis for... · –...

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

Kasetsart University, Bangkok

Business Process Analysis for Agriculture Supply Chains

Improvement

UNNExT Workshop on Promoting Cross-border Agricultural Trade for Sustainable Development

Quality--Food Safety--Sustainability--Business Processes—Markets

28-30 November 2016 United Nations Conference Centre, Bangkok

Objectives of this presentation

To briefly introduce Business Process Analysis, a methodology for analyzing the “as-is” international supply chain processes, and proposing improvement recommendations [based on the UNNExT Business Process Analysis Guide to simplify trade procedures].

To discuss some BPA case studies for agriculture supply chains improvement. BPA guide and online course

are available at unnext.unescap.org

http://www.unescap.org/our-work/trade-investment-innovation/trade-facilitation/bpa-course

Agenda

1. BPA for Analyzing and Proposing International Supply Chain Improvement

2. Introduction into Unified Modeling Language (UML) i.e. two types of diagrams: Use-Case Diagrams & Activity Diagrams

3. Three Phases of a BPA Project

4. Case Studies

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 – Procedures of issuing Phytosanitary Certificates

in Bangladesh

– Export procedures of garments from Dhaka, through port operations & customs clearance at Chittagong Port

– Import Customs clearance procedures at the border check point of Phuentsholing, Bhutan

– Import procedures and documentation of Lentils from Nepal, through Kakarvitta-Panitanki-Fulbari-Banglabandha borders, until the cargo arriving at Dhaka, Bangladesh.

What is a Business Process Analysis (BPA)?

A modeling and analysis of business processes for capturing “as-is” (current) conditions and proposing better “to-be” (target) business processes

For example, it may include... – Documenting existing regulatory procedures in an agency

– Describing a “standard procedure,” e.g. a common case

– Identifying related quantitative indicators, e.g. number of steps

– Collecting information about time and cost at different steps

– Providing a specification for simplification or automation of the process (to be implemented in the future)

Applying BPA for International Supply Chain

BPA can be used to analyse for

The international supply chain of trade facilitation, or

A subset of these supply chain procedures

Buy-Ship-Pay Model

Rice Export BPA (Thailand) (from purchase order until the cargo container leaving the sea port)

21. Master Sea Cargo Manifest(17) 22. House Sea Cargo Manifest (37) 23. Export Declaration (114) 24. Goods Transition Control List (27) 25. Application for Permission to Export Rice

(KP. 2) (24) 26. Sales Report (KP 3) (21) 27. Application for the Collection of the Permit

for the Export of Rice (A. 3) (35) 28. Permit for the Export of Rice (A. 4) (35) 29. Application for Certificate of Standards

of Product (MS. 13/1) (44) 30. Certificate of Analysis (17) 31. Certificate of Product Standards (MS. 24/1) (45) 32. Certificate of Fumigation (21) 33. Application for Phytosanitary Certificate

(PQ. 9) (29) 34. Phytosanitary Certificate (33) 35. Application for Certificate of Origin (42) 36. Certificate of Origin (38)

1. Proforma Invoice (35) 2. Purchase Order (39) 3. Commercial Invoice (51) 4. Application for Letter of Credit (24) 5. Letter of Credit (32) 6. Packing List (25) 7. Cargo Insurance Application Form (20) 8. Cover Note (23) 9. Insurance Policy (24) 10.Booking Request Form

– Border Crossing (25) 11.Booking Confirmation

– Border Crossing (30) 12.Booking Request Form

– Inland Transport (16) 13.Booking Confirmation

– Inland Transport (18) 14.Bill of Lading (42) 15.Empty Container Movement Request

(TKT 305) (20) 16.Request for Port Entry (TKT 308.2) (27) 17.Equipment Interchange Report (EIR) (24) 18.Container Loading List (28) 19.Container List Message (32) 20.Outward Container List (34)

* Number in parenthesis is the no. of data elements

36 Documents involving 15 parties, and 1,140 data elements to be filled in

Regulatory Docs Transport Docs

Commercial/ Financial Docs

16 days are required for Thai Rice export process

Ref: BPA Guide to Simplify Trade Procedures,” UNESCAP/UNECE, 2012

Why we should 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 the benefits of Business Process Analysis?

Why international supply chain procedures in some countries are more difficult, time consuming and expensive?

Procedures and documents handling remain largely paper dependent. Missing and incorrect documentation slows progress through

the supply chain Keeping documents & freight in sync is complex and costly Multiple parties capturing the same data is inefficient and

error prone We acknowledge other factors that makes trade in developing countries

more difficult, including infrastructure, lack of adequate laboratory facilities, corruption, land-locked, … (but these are not the main scope of discussion in this workshop)

BPA to understand the current trade processes, and then propose improvement.

BPA is the first technical step in preparing for trade facilitation measures including process simplification and automation. 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 the operation of Single Window

environment – A basis for maintenance and improvement

Several UN Recommendations for International Supply Chains Improvement

Establishment of Single Window and Paperless Trading

Environment

Document Simplification and Data Harmonization

Business Process Simplification

Business Process Analysis (BPA)

UN/CEFACT Recommendation No. 33

•Manual for the Design of Aligned Trade Forms •UN Trade Document Toolkit

•Draft APEC Handbook for Data Harmonization and Core-Component

Based Electronic Message Development •UN/CEFACT Core-Component Library

UN/CEFACT Recommendation No. 18

Business Process Analysis Guide to Simplify Trade Procedures

13

Agenda


2. Introduction into Unified Modeling Language (UML) i.e. two types of diagrams Use-Case Diagrams & Activity Diagrams


4. Case Studies

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 Diagram (What) A frame of reference illustrating a high

level business process and its associated actors

Activity Diagram (How) 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 2) Ship

1) Buy

3) Pay

2.4) Apply for cargo insurance

2.2) Arrange transport

2.3) Prepare export permit

2.5) Prepare and submit customs

declaration

2.1) Have product sampled

and examined

2.7) Clear goods through customs

2.8) Handle Container and stow

it on vessel

2.9) Prepare documents required

by importers

2.6) Stuff container and transfer to port of

departure


Importer

Exporter’s Bank

Importer’s Bank

Customs

Department of Foreign Trade

The Central Islamic Committee Office Thailand

Port Authority

Department of Consular Affairs

Insurance Company

Carrier (Shipping Line)

Inland Haulage

Department of Fisheries

Authorized Private Inspector

Customs’ Bank

Thailand Export Process of Frozen Shrimp

UML Notations for Activity Diagram

Notation Description 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)

Notation Description 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

Exporter (or Representative) Department of Fisheries (DoF)

Authorized Private Inspector 2.1) Have

product sampled and examined Exporter or

Representative Department

of Fisheries (DoF)


Collect sample

Examine sample

Record the result of examination

Test Report

Deliver sample

Collect Test Report

Additional examination required

Additional examination not required Schedule the

sampling date

Record result of examination

Examine sample

Collect Test Report Test Report

Have product ready for sampling

Notify the date for sample collection

Submit Request for Sampling

Record sampling result

Request for Sampling

Collect sample

Agenda




4. Case Studies

BPA should be conducted as a project [A BPA Project in Three Phases]

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

– e.g. Phytosanitary Certificate issuance (export) procedures, or Phytosanitary Certificate import procedures at a particular sea port.

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

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

Outputs of BPA 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

Phas

e I

Phas

e II

Phas

e III

Tips & Techniques for Process Analysis & Improvement Recommendation

Identify any bottlenecks, redundancies, and non-value-added activities in procedural and documentary requirements Make those procedures & documentary requirements transparent

and easy for stakeholders to access to Merge some procedures, and/or documents(forms) Eliminate redundant procedures and unnecessary documentary

requirements Automate procedures and promote the sharing of trade and

transport data among relevant stakeholders Modify related laws and regulations to facilitate the operation of

the newly designed business processes Reform the regulatory-related organizational structures

Example: Identify Bottlenecks and Redundancies (the as-is process)


Office of Commodity Standards

Customs Exporter or Representative

Prepare documents for submitting to

Customs at port of exit

Permit for the Export of Rice (A.4) with actual

quantity exported

Certificate of Standards of Products (MS. 24) with actual quantity exported

Record the actual quantity exported and released date

Acknowledge the provided information

Prepare documents to declare the actual

amount exported


quantity exported


Evidence of Sales (Purchase Order or

Sales Contract) Acknowledge the provided information

Example of redundant procedural and documentary requirements


Department of Foreign Trade Verify the

accuracy/authenticity of exported cargo


Customs


Thailand’s Export Process of Jasmine Rice


Customs Exporter or Representative

Prepare documents for submitting to

Customs at port of exit

Record the actual quantity exported and released date



quantity exported



Sales Contract)



Department of Foreign Trade Verify the

accuracy/authenticity of exported cargo


Customs


Example: Remove Redundancies (the proposed to-be process)

Thailand’s Export Process of Jasmine Rice

Agenda




4. Case Studies

Case Study 1 Describe the meaning of

the following Use Case Diagram and Activity Diagrams

1) Buy

3) Pay Exporter or

Representative

Importer

Exporter’s Bank

Importer’s Bank

Customs

Thai Chamber of Commerce

Port Authority

Insurance Company

Carrier (Shipping Line)

Inland Haulage



Department of Agriculture

Board of Trade of Thailand

Department of Consular Affairs

Department of Disease Control


2) Ship

2.1) Obtain Export Permit

2.4) Obtain cargo insurance

2.2) Arrange transport

2.7) Transfer to port of departure

2.8) Clear goods through

customs

2.5) Provide customs

declaration

2.9) Handle cargo and stow

on vessel

2.10) Prepare documents required

by importer

2.6) Stuff a container or

a lighter

2.3) Arrange the inspection and

fumigation

2.11) Verify the accuracy/authenticity

of exported cargo

A Use Case Diagram: Showing main procedures for exporting Rice from Thailand (through a sea port)

32



Prepare documents for the application

of export permit

Verify submitted information

Sign and authenticate A. 4

Correct

Incorrect

Collect A. 4 Permit for the Export of Rice (A. 4)

2.1) Obtain export permit

Application for Permission to Export Rice (KP. 2)


Sales Contract)

Draft Permit for the Export of Rice (A. 4)

Sales Report (KP 3)

Application for the Collection of the Permit

for the Export of Rice (A. 3)

An Activity Diagram: Showing detailed procedures and document requirements

for obtaining a Rice Export Permit

An Activity Diagram describing the “2.3) Arrange Inspection and Fumigation” Process

A BPA Case Study II

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.

A BPA Case Study III

Thailand BPA

Inter-agency As-Is Process

Traders

สาแดงเอกสารใบอนญาต (กรณหนวยงานยงไมเชอมตอ

กบระบบ NSW)

ขอมลใบขน

สนคา

/พธ

การศ

ลกาก

ร

ขอมล

ใบอน

ญาต

Application forms (electronically on Web, or manual) to Agency

2

e-Permit & e-Cert

Permit/ Cert

Issuing Agency 1

Permit/ Cert

Issuing Agency 2

Customs Decalration/

ขอมลผานพธการศลกากร

Paper-based Flow Electronic Information Flow

Application forms (electronically on Web, or manual) to Agency 1

กยท.

Problems: Traders submit multiple/duplicated electronic data

several times, or with physical papers.

1

2 3

Traders ข อมล

ใบขน

สนค า

/พธ

การศ

ลกาก

ร

ข อมล

ใบอน

ญาต

E-Permit/e-Cert

Permit/ Cert

Issuing Agency 1

Permit/ Cert

Issuing Agency 2

Customs Declaration

ขอมลผานพธการศลกากร

กยท.

Traders could submit each data element once at a Single Entry Service – and the appropriate e-Form

will be sent to each Agency accordingly.

Information for Permit/Cert Applications

คาสงซอ (Invoice)

E-Application

Inter-agency To-Be Process (After inter-agency BPA)

Paper-based Flow Electronic Information Flow

Export (13 Laws

and Regulatio

ns)

Inter-agency BPA : Sugar Export

Process Reduction

37%

Paper Reduction 100%

Time Reduction 55%

Cost Reduction 96%

5 Government

Agencies

4 Business Entities

• MOC : Dept of Foreign Trade • MOAC: Dept of Agriculture • MOI: Sugar and Sugar Cane Commission • MOF: Customs Dept • MOST: Institute of National Nuclear Technology • Business: Thai Chamber of Commerce, Thai Chamber of

Industry, Sugar Factory, Surveyor.

As-Is To-Be

Process 17 17

Steps 154-156 92

As-Is To-Be

Form

21 0

Docs

52 0

As-Is To-Be

Days 67 30

As-Is

To-Be

Transport Cost

5,260

200

Paper cost

58 0

(บาท/ครง)

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.

UNNExT Workshop on Promoting Cross-border Agricultural Trade for Sustainable Development

Quality--Food Safety--Sustainability--Business Processes—Markets

28-30 November 2016 United Nations Conference Centre, Bangkok