Business Process Analysis Guide to Simplify Trade Procedures

The secretariat of the Economic and Social Commission for Asia and the Pacific (ESCAP) is the regional development arm of the United Nations and serves as the main economic and social development centre for the United Nations in Asia and the Pacific. Its mandate is to foster cooperation between its 53 members and 9 associate members. It provides the strategic link between global and country-level programmes and issues. It supports Governments of countries in the region in consolidating regional positions and advocates regional approaches to meeting the region’s unique socio-economic challenges in a globalizing world. The ESCAP secretariat is located in Bangkok, Thailand. Please visit the ESCAP website at www.unescap.org for further information.

The shaded areas of the map indicate ESCAP members and associate members. UNITED NATIONS NETWORK OF EXPERTS FOR PAPERLESS TRADE IN ASIA AND THE PACIFIC

UNITED NATIONS ECONOMIC AND SOCIAL COMMISSION FOR ASIA AND THE PACIFIC

UNITED NATIONS ECONOMIC COMMISSION FOR EUROPE

Business Process Analysis Guide to Simplify Trade Procedures

i Business Process Analysis Guide to Simplify Trade Procedures

The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries. This document has not been formally edited.

ii FOREWORD

Today’s international supply chains face an increasingly competitive environment, with new product safety regulations, and intense border security concerns. The need for traders to comply with all procedural, regulatory, and documentary requirements rapidly, accurately and cheaply has become extremely important in order to remain competitive.

To improve the efficiency and effectiveness of processes and information flows throughout the supply chain, it is crucial that the existing “as-is” conditions are well understood, prior to implementing trade facilitation reforms. Adapted from the business process modeling techniques that have been originally applied in the automation of mechanistic business processes, this Business Process Analysis Guide to Simplify Trade Procedures (BPA Guide) aims to provide a simple methodology to document the “as-is” business processes in international trade transactions. The BPA Guide also shares valuable country experiences and lessons learned in this area. Insights about existing processes and procedures in trade would provide senior government officials with crucial information on where improvements are necessary.

It is our hope that this BPA Guide will serve government officials as an instrument that facilitates the identification of bottlenecks in trade processes and procedures, the prioritization of areas for improvement, and the design of strategies to eliminate these bottlenecks. Ultimately, business process analysis can bring about greater transparency, improved efficiency, and greater capacity to innovate, which are in turn the keys to remaining competitive in today’s international markets.

Ravi Ratnayake Director Trade and Investment Division UN Economic and Social Commission for Asia and the Pacific

iii ACKNOWLEDGEMENTS

This publication was prepared under the guidance of Ravi Ratnayake, Director, Trade and Investment, and the coordination by Shamika Sirimanne, Chief, Trade Facilitation Section, by a team consisting of Maria Misovicova, Peng Bin of ESCAP, Markus Pikart of UNECE and Somnuk Keretho and Thayanan Phuaphanthong from the Institute for Information Technology Innovation, Kasetsart University. Substantive inputs were provided by Nikolaus Sahling (consultant). Valuable contributions were received from Yann Duval, Sang Won Lim (ESCAP) and Tom Butterly (UNECE). The external editing was provided by Dorothy Van Schooneveld.

The Business Process Analysis Guide to Simplify Trade Procedures (BPA Guide) was developed as part of the joint technical assistance project by ESCAP and UNECE and under the auspices of the United Nations Network of Experts for Paperless Trade in Asia and the Pacific (UN NExT). The project aims to raise the capacity and accelerate the adoption of the above-mentioned trade facilitation measures, especially in countries where those measures are not yet commonly implemented.

iv PREFACE

Moving goods across borders requires meeting a vast number of commercial, transport and regulatory requirements. Inefficiencies in complying with these requirements often create unnecessary delays and costs. At present, a source of tremendous inefficiencies is associated with the preparation of transport and regulatory documents, unclear border procedures, and overzealous cargo inspection.

A Single Window (see Glossary) is one of the trade facilitation measures that has increasingly gained momentum, especially in the Asia-Pacific region, as it serves as the foundation for paperless trading. Once it is fully operational, the complexity as well as unnecessary delays and costs in administering cross-border movement of goods are expected to be significantly lessened.

To ensure that the Single Window facility responds to stakeholders’ needs in different stages of the international supply chain, it is important that its design reflects the business processes in use. Given that the existing business processes may entail redundant activities and complexities that create procedural inefficiencies and bottlenecks, it is essential to harmonize and simplify the existing business processes prior to adopting them as a basis for the design of the Single Window. The harmonization and simplification of business processes cannot be achieved without good and in-depth understanding of existing practices.

The BPA Guide offers a simple methodology to elicit, document, and analyse the existing “as-is” business processes involved in international trade, as well as aid in developing recommendations for further improvement. It suggests a set of practical steps and activities, from setting the scope of the business process analysis project; planning its implementation; collecting relevant data; and presenting it in an easily understandable manner, to analysing the captured data in order to identify bottlenecks and developing recommendations for improvement. This recommended set of steps and activities was generalized from the business process analysis exercise conducted in Thailand in preparation for the development of Thailand’s Single Window e-Logistics, which is a national obligation under the ASEAN Single Window initiative. To make the BPA Guide practical, a case study on business process analysis of the export of jasmine rice in Thailand is provided in the Annex.

The BPA Guide intends to serve practitioners and policymakers from government agencies or the private sector involved in: • The harmonization and simplification of international trade procedures; • The harmonization of related data requirements with the international standard; and • The implementation of Single Window.

From the BPA Guide, practitioners will learn a step-by-step approach to business process analysis and development of recommendations for future improvement. Policymakers, on the other hand, will benefit from a better understanding of the linkage between business process analysis and trade facilitation measures, including business process simplification, data harmonization, and Single Window implementation. They will become acquainted with prerequisite steps that have to be taken prior to the implementation of trade facilitation measures.

v vi CONTENTS

Page

Foreword ...... iii

Acknowledgements ...... iv

Preface ...... v

Abbreviation ...... xi

1. TRADE FACILITATION AND BUSINESS PROCESS ANALYSIS ...... 1 1A Participants and their interests ...... 1 1B Business process analysis in the context of trade facilitation ...... 2

2. INTRODUCTION TO THE BUSINESS PROCESS ANALYSIS ...... 5 2A Definition and scope...... 5 2B Business process modeling methodology used in this Guide ...... 5 2C UML graphical notations used in this Guide ...... 6 2D Outputs of the business process analysis...... 8

3. BUSINESS PROCESS ANALYSIS GUIDE TO SIMPLIFY TRADE PROCEDURES ...... 11 3A Introduction to phases, stakeholders and other related issues ...... 11 3B Individual phases, steps and activities...... 15 Phase I: Scope setting ...... 15 Step 1: Define the project scope ...... 15 Step 2: Develop a work plan and secure resources ...... 20 Phase II: Data collection and process documentation ...... 22 Step 3: Acquire background information ...... 23 Step 4: Conduct interviews and document captured data ...... 23 Phase III: Process analysis and recommendations development ...... 30 Step 5: Analyse the “as-is” processes and identify bottlenecks ...... 30 Step 6: Develop and propose recommendations ...... 34

4. RECOMMENDATIONS FOR IMPLEMENTATION ...... 37

5. GLOSSARY ...... 39

6. REFERENCES ...... 41

7. ANNEX: BUSINESS PROCESS ANALYSIS OF THE EXPORT OF JASMINE RICE IN THAILAND ...... 43

vii BOXES

Page

Box 1.1 The UN/CEFACT international supply chain model ...... 1

Box 3.1 Case study – define the project scope...... 16

Box 3.2 Case study – scope of analysis ...... 17

Box 3.3 Case study – visualize the project scope ...... 18 Box 3.4 Case study – use cases of core business processes in frozen shrimp export ...... 21

Box 3.5 Project Evaluation and Review Technique (PERT) estimate...... 21

Box 3.6 Responsibilities and required skills of process analysts ...... 22

Box 3.7 Examples of interview questions ...... 26

Box 3.8 Case study – activity diagram of “Have the product sampled and examined” use case within the BPA of frozen shrimp export in Thailand ...... 28

Box 3.9 Integration of activity diagrams chart from the BPA of frozen shrimp export in Thailand ...... 29 Box 3.10 The time-procedure chart from the BPA of frozen shrimp export in Thailand...... 31

Box 3.11 UN/CEFACT Recommendation No.18: Facilitation Measures Related to International Trade Procedures ...... 32

viii FIGURES

Page

Figure 1.1 Step-by-step approach to developing an electronic Single Window and paperless trade environment ...... 3

Figure 2.1 The use of UML diagrams in the BPA Guide ...... 9

Figure 3.1 Key steps and stakeholders in business process analysis ...... 11

Figure 3.2 Stakeholders involved in Step 1 ...... 15

Figure 3.3 Activities involved in Step 1 ...... 16

Figure 3.4 Stakeholders involved in Step 2 ...... 19 Figure 3.5 Activities involved in Step 2 ...... 19

Figure 3.6 Stakeholders involved in Step 3 ...... 24

Figure 3.7 Activities involved in Step 3 ...... 24

Figure 3.8 Stakeholders involved in Step 4 ...... 24

Figure 3.9 Activities involved in Step 4 ...... 25

Figure 3.10 Stakeholders involved in Step 5 ...... 33 Figure 3.11 Activities involved in Step 5 ...... 33

Figure 3.12 Stakeholders involved in Step 6 ...... 35

Figure 3.13 Activities involved in Step 6 ...... 35

ix TABLES

Page

Table 2.1 Use Case Diagram notations ...... 7

Table 2.2 Activity Diagram notations...... 7

Table 3.1 Roles and responsibilities of stakeholders in BPA ...... 12

Table 3.2 Overview of BPA ...... 13

x ABBREVIATION

ASEAN Association of Southeast Asian Nations

ASYCUDA Automated System for Customs Data

ECE United Nations Economic Commission for Europe

ESCAP United Nations Economic and Social Commission for Asia and the Pacific

ICT Information and Communication Technologies

PERT Project Evaluation and Review Technique

UML Unified Modeling Language

UN/CEFACT United Nations Centre for Trade Facilitation and Electronic Business

UN NExT United Nations Network of Experts for Paperless Trade in Asia and the Pacific

xi xii 1. TRADE FACILITATION AND BUSINESS PROCESS ANALYSIS

International trade transaction encompasses all technology, veterinary, plant and quarantine activities related to the establishment of com- agencies are responsible for devising trade mercial contracts (commercial procedures), the facilitation strategies, reform programmes, arrangement of inland and cross-border trans- and laws and regulations to ensure the portation of goods (transport procedures), the smooth flow of goods and information in a export and import formalities to meet regula- secure environment. Customs authorities tory requirements (regulatory procedures), and have a specialized role here, which tradition- the payment for purchased goods (financial ally was to control the entry and exit of goods procedures). It requires cooperation between and to collect revenues. Later, this role was many actors, including traders, government extended to ensure border security and port agencies and service providers from different administration. Recently, the focus has been countries. shifted from enforcement to trade facilitation with the use of pre-arrival clearances, the 1A PARTICIPANTS AND THEIR authorized economic operator’s concept, green lanes and post-clearance audits, in- INTERESTS creasingly employing electronic trade data submission, processing and exchange as According to their interests and needs, the well as information and communication tech- actors of the international trade transaction can nologies (ICT)-enabled trade facilitation solu- be grouped into the following categories: tions, such as Single Window systems. These government agencies need enhanced a) Government agencies tax collection, more precise foreign trade Government authorities such as ministries of statistics and better administration controls, trade, finance/customs, transport, health, ag- which Single Window and paperless trade riculture, information and communication systems can provide.

Box 1.1. The UN/CEFACT international supply chain model

UN/CEFACT Recommendation No. 18 illustrates a simplified view of the international supply chain in the Buy-Ship-Pay model (see the picture below). The model not only suggests “a series of fragmented activities” that are carried out throughout the international trade transaction, but also defines different types of actors that are associated with them. Key actors in the international supply chain are authorities, intermediaries, suppliers, and customers.

Authority

Supplier BUY SHIP PAY Customer

Intermediary

1 Business Process Analysis Guide to Simplify Trade Procedures b) Intermediaries • The simplification and harmonization of Intermediaries are those who provide com- trade procedures and, where possible, mercial, financial, and/or transport services elimination of unnecessary ones; within an international supply chain, such as • The simplification and coordination of freight forwarders, customs brokers, third- administrative procedures at border cross- party logistics service providers, carriers, ex- ings; press integrators, port and terminal opera- tors, banks, insurance companies, and in- • The simplification of payment systems; formation technology (IT) value-added ser- • The simplification, standardization and vice providers. They are normally from the harmonization of documents required for a private sector, which needs a swift ex- trade transaction; change of trade information and transparent regulatory environment in order to comply • The facilitation of flow of information that with the requirements of clients. controls the movement of goods throughout the transaction (e.g. by applying information c) Traders and communication technology); and Generally, they are the source and the tar- • The enhancement of trust assessment get of the supply chain. They are principals through a better exchange of information. of the cargo and users of the services provided by the intermediary. They not only The successful implementation of trade depend on the services provided by services facilitation measures, however, requires not providers, but also must meet the regulatory only political and governmental support in requirements of government agencies for moving goods across borders. At the same terms of policy directions as well as human time, they also participate in the implemen- and financial resources, but also an in-depth tation of trade facilitation regulations and understanding about existing business measures in collaboration with government processes. agencies. Trading companies and business communities need a transparent and pre- According to UN/CEFACT’s step-by-step ap- dictable trading environment, and solutions proach toward a Single Window paperless en- that cater to faster customs clearance, re- vironment as shown in Figure 1.1, business duced delays at the borders, lower trade process analysis is recommended as the first transaction costs, reduced corruption, and step to be taken before undertaking other cheaper and more competitive exports. trade facilitation measures related to the simplification, harmonization, and automation of 2 1B BUSINESS PROCESS ANALYSIS trade procedures and documents. IN THE CONTEXT OF TRADE In order to improve the efficiency and effective- FACILITATION ness of processes and information flows throughout the international supply chain, it is To reduce the complexity of the international highly recommended that the “as-is” conditions trade transaction and thus costs related to it, of relevant business processes are well under- UN/CEFACT recommends implementation of stood prior to the selection of trade facilitation the following measures:1 measures.

2 UNECE (2006a). Background Paper for UN/CEFACT 1 UNECE (2006b). Towards an Integrated Strategy for Symposium on Single Window Common Standards UN/CEFACT, Geneva. and Interoperability, Geneva.

2 1. Trade Facilitation and Business Process Analysis

Figure 1.1. Step-by-step approach to developing an electronic Single Window and paperless trade environment

e-Single Window & paperless trading

Cross-border data harmonization & exchange

National data harmonization

Documents simplification and alignment

Process simplification and harmonization

Business Process Analysis

3 Business Process Analysis Guide to Simplify Trade Procedures

4 2. INTRODUCTION TO THE BUSINESS PROCESS ANALYSIS

2A DEFINITION AND SCOPE Because the underlying business process has a significant impact on the performance of the A business process is a sequence of steps overall business, any process improvement performed for a given purpose. Based on this achieved can enhance the competitiveness both at the organizational and the national generic definition, a business process consid- level. Business process analysis is a study of ered within the framework of trade facilitation existing business processes within one or can be defined as: across several organizations, both in normal operation and in exceptional situations. Its pri- A chain of logically connected activities mary goal is to understand attributes of busi- to move goods and related information ness processes and relationships among them. across borders from buyer to seller The results of the business process analysis and to provide related services may serve as a baseline for implementing trade facilitation measures such as: Business processes are valuable organizational assets. They enable the creation and delivery • Simplification of trade procedures (including of business values as defined by organiza- commercial, transport, regulatory and finan- tional goals. Business processes are often cial procedures); driven by information. In the area of interna- • Simplification of documentary requirements tional supply chain, for example, the move- and their alignment with international stan- ment of cargo has to be escorted by corr- dards; and esponding cargo documents. It involves an average of 40 documents, 200 data elements • Automation of international trade transac- (30 of which are repeated at least 30 times) tion and its associated electronic docu- and the re-keying of 60 to 70 per cent of data ments for Single Window and paperless at least once.3 Delay on document processing trade systems. or lack of integrity in the information that flows across business processes has become a 2B BUSINESS PROCESS factor that holds back cargo movement. On MODELING METHODOLOGY the average, each additional day that a cargo USED IN THIS GUIDE is delayed prior to being shipped reduces trade volume by at least 1 per cent and by Business process modeling is a technique for approximately 7 per cent if the products are documenting business processes where each time-sensitive to time-insensitive agricultural 4 element of the business process is repre- goods. sented by graphical notations. It can be achieved by a simple drawing with paper and pencil or a software tool. The resulting graphical representation of a business process is 3 APEC (1996). APEC means business: building prosperity for our community. Report to the Economic known as a business process model. Each Leaders. Asia Pacific Economic Cooperation Secre- business process model illustrates: tariat, Singapore. • 4 Djankov, S., Freund, C., and Pham, C. (2006). Trad- Activities that come in a specific order and ing on Time, World Bank, Washington DC. decision points;

5 Business Process Analysis Guide to Simplify Trade Procedures

• Actors who perform those activities; in information technology and software development. The consistency in modeling tech- • Defined inputs and outputs of each activity; niques produces results in a form that is easily • Criteria for entering and exiting the busi- understood, analysed and validated. If the ulti- ness process; mate goal of the business process modeling • How actors relate to one another; and analysis is to automate the international trade transaction and move to electronic trade • How information flows throughout the busi- documents exchangeable through the Single ness process; Window and paperless trade systems, the use • Associated rules and regulations; and of common standard graphical notations in business process modeling is vital. This is • Quantitative indicators such as number of mainly because the common standard graphi- steps, as well as time and cost required to cal notations allow business domain experts to complete a particular business process. communicate procedural and documentary re- The documentation of existing business pro- quirements with technical experts who are des- cesses in simple diagrams and brief descrip- ignated to put the systems in place. tions helps create a common understanding on working norms and operational procedures 2C UML GRAPHICAL NOTATIONS among relevant stakeholders. The stakeholders USED IN THIS GUIDE of the business processes include practitioners who deal with the documented business pro- In business process analysis, the use case cesses on a daily basis; experts who may be diagram serves as a project’s frame of refer- brought in to assist with the initiation and ence. Its purpose is to present a graphical implementation of business process improve- overview of core business processes that are ment programmes, and decision makers who subject to further examination at a greater make informed decisions regarding the revision depth. It indicates all stakeholders involved in of related regulations and procedures. these business processes and demonstrates all actual associations between these business Business process models are increasingly processes and the stakeholders. used in trade facilitation. For the purposes of this Guide, the business process model serves The activity diagram is an elaboration of each as a tool that facilitates: business process displayed in the use case diagram. It portrays a sequence of activities • The analysis of activities, documents, and and information flows from one responsible information flow in international trade pro- party to another. It informs its audience not cedures; only who is doing what in which order, but • The identification and prioritization of prob- also documentary inputs that serve as prereq- lematic areas that cause the delays in uisites to activities and documentary outputs moving goods from seller to buyer; and that can be obtained upon completion of activi- • The design of improvement measures to ties. A set of graphical notations for use case address these problematic areas (e.g. sim- and activity diagramming are provided with ex- plifying processes and data, and eliminat- planations of their meaning in Tables 2.1. and ing redundancies). 2.2. These notations are adopted from UML.

The Unified Modeling Language (UML)5 pro- This BPA Guide focuses on modeling business vides a set of standard graphical notations for processes with two types of UML diagrams: business process modeling. UML is internation- the use case diagram and the activity diagram, ally accepted and widely used not only among shown in Figure 2.1. The use case diagram practitioners in business communities but also illustrates the high-level business processes and actors associated with each of them. It serves as a frame of reference for further elaboration of business process modeling 5 UML Resource Page, http://www.uml.org. work. The activity diagram, on the other hand,

6 2. Introduction to the Business Process Analysis

Table 2.1. Use Case Diagram notations

Notation Description and instruction for use

Boundary Subject Boundary: – Represents a process area – Includes the name of a subject boundary on top

Actor: – Represents a role which participates in a particular business process. – Can be an individual, an organization, a department, etc. Actor/Role – Is labelled with a role-name – Is placed outside the subject boundary

Use Case: Use case – Represents a core business process – Is labelled with a descriptive verb-noun phrase

Relationship Association: – Links actors with the use cases (business processes) they participate in

Table 2.2. Activity Diagram notations

Notation Description and instruction for use

Initial State – Represents the beginning of a set of activities – Can only be one initial state for each activity diagram

Final Flow State – Is used to stop the flow of activities – Indicates that further activities cannot be pursued within the described context

Final Activity State – Is used to indicate the completion of the business process

Swimlane Process Process Process Participant 1 Participant 2 Participant n – Is used to break up individual actions to individuals/agencies that are responsible for executing their actions – Is labelled with the name of the responsible individual, organization, or department

Activity – Represents a non-decomposable piece of behaviour – Is labelled with a name that 1) begins with a verb and ends with a noun; and 2) is short yet contains enough information for readers to comprehend

(Continued)

7 Business Process Analysis Guide to Simplify Trade Procedures

Table 2.2. (continued)

Notation Description and instruction for use

Object – Represents a document or information that flows from one activity to another activity – Is labelled with a name of a document

Decision – Represents the point where a decision, depending on the outcome of a specific prior activity, has to be made – Has multiple transition lines coming out of a decision point and connecting to different activities – Attached with labels addressing the condition on each transition line that comes out of an activity and connects to a decision point or vice versa

Transition line – Indicates a sequential flow of activities and information flows in an activity diagram

Fork (Splitting of Control) – Is used to visualize a set of parallel activities or concurrent flow of activities

Join (Synchronization of Control) – Is used to indicate the termination of a set of parallel activities or concurrent flow of activities

describes activities, inputs, and outputs associ- • Process descriptions, including a list of ated with each business process listed in the trade forms and documents, as well as a use case diagram. list of trade-related laws, rules and regulations; 2D OUTPUTS OF THE BUSINESS • Integrated activity diagram; PROCESS ANALYSIS • Time-procedure chart; • The main output of the business process A list of identified bottlenecks; and analysis exercise within the context of trade • Recommendations to improve the business facilitation is the business process analysis process and/or to-be business process report that contains the following components: models. • Use case diagram showing the scope of These output components are further ex- the business process analysis project; plained in the following parts of the BPA • Activity diagrams; Guide.

8 2. Introduction to the Business Process Analysis

Figure 2.1. The use of UML diagrams in the BPA Guide

UML Use Case Diagram UML Activity Diagram

Exporter (or Representative) Department of Fisheries

Prepare information needed for export permit application

Application Form for Export Animals/Animal 2.3) Prepare export Remains Through Thailand permit (R. 1/1) Verify submitted Exporter Department information or Representative of Fisheries Commercial Invoice Incorrect

Packing List Correct

Issue Export Permit UML Use Case Diagram and Activity Diagram are used to visualize the captured knowledge of the business processes. Export Permit Collect R. 9 (R. 9)

9 Business Process Analysis Guide to Simplify Trade Procedures

10 3. BUSINESS PROCESS ANALYSIS GUIDE TO SIMPLIFY TRADE PROCEDURES

3A INTRODUCTION TO PHASES, Step 1 - Define a project scope STAKEHOLDERS AND OTHER Step 2 - Develop a detailed work plan RELATED ISSUES and secure resources

The business process analysis consists of Phase II: Data collection and process docu- three phases that have to be carried out in mentation, which includes two steps: sequence (see Figure 3.1): Step 3 - Acquire background information Phase I: Scope setting, which includes the Step 4 - Conduct interviews and docu- following two steps: ment captured data

Figure 3.1. Key steps and stakeholders in business process analysis

Phase I

1) Define a project scope

2) Develop a detailed plan and secure resources

Phase II Project Process Sponsor Analyst 3) Acquire background information

4) Conduct interviews and document captured data

Phase III Project Manager/ Process Participants/ Project Leader Business Domain Experts 5) Analyse the “as-is” process and identify bottlenecks

6) Develop and propose recommendations

11 Business Process Analysis Guide to Simplify Trade Procedures

Phase III: Process analysis and recommenda- • Project Manager/ Project Leader, who is in tions development, which includes the charge of planning, directing, staffing, and following two steps: managing the development of the business Step 5 - Analyse the “as-is” processes process study; and identify bottlenecks • Project Analysts, who are in charge of col- Step 6 - Develop and propose recom- lecting, documenting and analysing the mendations. business processes; • Process Participants/ Business Domain Ex- Four groups of stakeholders participate in a perts, who carry out business processes business process: and thus have specific expertise and knowledge of a business process. • Project Sponsor, who acts as authorized person from a lead agency commis- Their responsibilities in the different phases of sioning the business process analysis the business process analysis are summarized study; in Table 3.1.

Table 3.1. Roles and responsibilities of stakeholders in BPA

Phase I Phase II Phase III

Role Step 1: Step 2: Step 3: Step 4: Step 5: Step 6: Define Develop a Acquire Conduct Analyse the Develop project detailed plan background interview and “as-is” and scope and secure information document processes propose resources captured data and identify recom- bottlenecks mendations

Project Finalize and Approve any Provide management support and direction when needed Sponsor approve the changes to project scope project scope Participate in major project reviews and approve key deliverables

Commit specific Ensure timely resolution of issues affecting project resources success

Project Acquire relevant Develop a Oversee and control the execution of the plan Manager/ information to detailed plan Project define the Leader scope of a Organize Participate in the review of milestone deliverables process under resources including the final output investigation

Process – Review plan Conduct desk Conduct the Analyse and Develop Analysts and propose research interviews identify recommen- adjustment if bottlenecks dations for needed Make Collect and and process necessary consolidate improvement simplification preparation data opportunities for interview of the “as-is” and Document processes Report the observation the “as-is” final output processes

Process Verify the – Provide relevant knowledge on process Participate Participants/ proposed under investigation in the Business project scope review of Domain Verify the accuracy of applicable the final Experts deliverables output

12 3. Business Process Analysis Guide to Simplify Trade Procedures (Continued on next page) Do not underestimate the efforts and time needed for tasks, especially certain those related to human interactions, e.g. data collection and verification. Do not set the scope that is too broad or vague. Do not conduct any interview session before the in- terviewer has sufficient background information and becomes familiar with the organization and specific business processes under interview. Do not attempt to create processes that look “per- fect” from the beginning. Perfection does not repre- sent what actually happens in reality and thus cannot serve as a baseline for improvement. to be a struggle. If two connecting Table 3.2. Overview of BPA Table Set up a team that consists of process analysts with critical thinking. of process analysts Set up a team that consists Be precise on the scope of process analysis study. the environment and conditions in which business domain of interest Specify terms of payment, operates, such as mode of transport, terms delivery, country of destination, and origin at the early phase business modes of transport, terms delivery, process analysis project, because different procedural and documentary requirements. have different and terms of payment For example, with limited Set the scope from perspective of beneficiary. modeling and analysis of the business process for export resources, detailed of one product is not possible. In this case, the emphasis should be oriented the emphasis is on If the beneficiary is an exporter, towards project beneficiary. what the exporter has to do in order ship cargo destination country. the emphasis is on what carrier has to do in If the beneficiary is a carrier, order to leave the port of departure. if the scope is relatively large. For example, Break the project into sub-projects the project requires analysis of business processes for exporting 10 countries’ and define the project break the project into 10 sub-projects strategic products, scope for each of them. Do collect as much background information possible from diverse available sources. Inform interviewees about overall expectations from the interview session Inform interviewees about overall expectations and the specific business processes of interest. of Define and document processes in a way that reflects the current state practices. with the activity diagram. When describing and documenting a process, start formulate ideas and a logical sequence of activities. Most Drawing helps drawing the first diagram is going likely, software on the illustrating: illustrating: including human description and participants interact participants each business process business transaction business process A folder of background information business processes which may be accompanied by a brief explanatory note of the business step. A list of guiding questions for the interview Use case diagram –– Business domain – Process areas – Process participants Business processes in which those Detailed project plan resources, schedules, and supported tools A list of potential interviewees and their contact information A set of activity diagrams – and ending points – Starting Pre-conditions and post-conditions of –– A set of activities associated with each Documents – Output and criteria to exit the Step Deliverables Do’s Don’ts Step 3: Acquire 3: Step background information Step 1: Define Step project scope Step 2: Develop a Step plan and detailed secure resources Step 4: Conduct Step interviews and document captured data

13 Business Process Analysis Guide to Simplify Trade Procedures Do not wait to the end analyse and identify any bottlenecks and recommendations for improve- incrementally ment. Rather, collect them along various phases of the process analysis study. Do not assume that all proposed recommendations can be implemented. (continued)

Table 3.2. Table activities in a logical sequence do not make sense, it means some may be missing in between. down questions that come up when drawing the diagram and use Write the second round of them for another interview session. Structure interview based on these questions. Hold an experience-sharing session among the team of process analysts to observe from time to time. Experience sharing allows process analysts in some processes across the business domain. For and depict patterns responsible for defining processes of different example, process analysts there will discover among themselves that no matter what products products are, traders have to comply with customs regulations in submitting declarations following similar instructions. (diagram of identical activities) where applicable, as it Always reuse patterns saves time and ensures the consistency of processes across business domain. During the interview, seek interviewees’ opinions and observations on bottle- seek interviewees’ During the interview, and documentary necks and issues related to the procedural, regulatory, that should be improved and how to improve them. requirements of what can and to find out the limitation Consult relevant stakeholders cannot be done for process improvement recommendations. or documen- procedural, regulatory, Listen to their reasons why a particular requirement is necessary. tary for a chart illustrating of the “as-is” proc- illustrating integrated that process step business process this particular belongs business process to complete this step (in requirements cluding forms, and document tem- plates and examples) business process processes in the business domain Time-Procedure Chart, relationships between business process and time required to complete each business process in the business domain of interest – The average time required to complete A set of business process descriptions describing: – The name of a process area to which –– The name of the business process – Related rules and regulations – The name of the responsible parties Input and criteria to enter/begin the – Activities and associated documentary – Output and criteria to exit the Activity diagram A set of observations esses that have the potential to be improved Final report with recommendations process simplification, which may include diagrams of “to-be” business processes Step Deliverables Do’s Don’ts Step 5: Step Analyse the “as- is” processes and identify bottlenecks Step 6: Develop Step and propose recommendations

14 3. Business Process Analysis Guide to Simplify Trade Procedures

The steps within each phase require that a Step 1: Define the project scope series of activities be carried out. These activities will be explained in Section 3B. It is highly Step 1 aims at identifying a frame of reference recommended that validation and verification for further detailed business process modeling activities are embedded in each step to ensure work. Using the UML use case diagram, this the accuracy and comprehensiveness of the view illustrates the high-level business pro- outputs. Such validation and verification can cesses and actors associated with each of be achieved through several rounds of a peer them. review performed by relevant stakeholders of the business process analysis exercise. Re- This step includes seven necessary activities, finement shall be made until the quality of as illustrated with the UML activity diagram in outputs is acceptable. Figure 3.3. Its detailed description is provided below. The six steps described in this guide, together with deliverables of the business process Activity 1.1 analysis report, are summarized in Table 3.2. The same table also provides guidance on Project sponsor identifies “a business domain” what should be done (the “Do’s”) and what of interest. A business domain is usually the should be avoided (the “Don’ts”) in conducting name of the industry (such as frozen shrimp the business process analysis exercise. export) or service (such as customs clearance) whose business processes are subject to the 3B INDIVIDUAL PHASES, STEPS business process analysis exercise. (See Box AND ACTIVITIES 3.1 for an example) To initiate a Business Process Analysis it is The rest of this Chapter will discuss the three crucial that the project sponsor clearly speci- phases of the business process analysis, de- fies: tailed steps involved in each phase and activities necessary to complete the steps. • The stage of the international supply chain Phase I: Scope setting that he/she is interested in analysing - i.e. “Buy”, “Ship”, or “Pay”; and The objective of this phase is to establish a • The environment and conditions in which baseline for the implementation and manage- the industry of interest operates and which ment of a business process analysis project. It shall be included in the BPA; i.e. mode of consists of two steps: transport, terms of delivery, terms of pay- Step 1 - Define the project scope ment, and country of destination (given that Step 2 - Develop a detailed work plan and regulatory requirements vary from one ensure resources. country to another).

Figure 3.2. Stakeholders involved in Step 1

This UML use case diagram indicates that Step 1 “Define Project Sponsor 1) Define project project scope” requires the participation from: definition – Project Sponsor Process Participants/ – Project Manager/Project Leader Business Domain Experts – Process Participants/Business Domain Experts

Project Manager/ Project Leader

15 Business Process Analysis Guide to Simplify Trade Procedures

Figure 3.3. Activities involved in Step 1

Project Manager/ Process Participants/ Project Sponsor Project Leader Business Domain Experts

Conduct Identify a desk research business domain of interest

Extract key process participants and business processes

Visualize collected information

Use Case Review and Diagram provide feedback

Inaccurate Accurate Approve

Box 3.1 Case study – define the project scope

Recognizing the need for a greater efficiency in documentary procedures related to international trade transactions, Thailand has prioritized the establishment of the Single-Window e-Logistic Platform as the national flagship project. Progress towards the establishment of the Single-Window e-Logistic Platform was hindered by several factors, one of which was the absence of knowledge about the integrative nature of processes performed by different parties and about information flow throughout the international supply chain.

In response to this shortfall, the Department of Export Promotion (under the Ministry of Commerce) commis- sioned an in-depth study on the export process with the following objectives: • To drive formalization of the export process; • To investigate interrelationships among processes, information, and stakeholders, as well as related laws and regulations; • To provide a basis for simplification of procedural requirements and harmonization of data requirements; and • To facilitate automation of international trade transactions, and thus the establishment of the Single-Window e-Logistic Platform.

Export processes vary by product. It is therefore not possible to carry out the study of the export process for all products at once. Given the resource constraints, it was decided to include only one product in the project. Products were prioritized and rated using the following criteria: • Strategic importance of the product on national economy; • Aggressiveness of competition; and • Degree of willingness of stakeholders to participate in data collection process.

Frozen shrimp was the product selected, based on the above criteria. It is one of the country’s strategic export products. The export volume of shrimp has been growing for the past five years. The production of frozen shrimp, in addition, involves the whole chain of production from farmers to manufacturers, retailers, and suppliers. About 80 percent of raw materials for production are sourced locally. Thai producers have been targeted to differentiate their products to deal with direct competition with low-cost Chinese and Vietnamese shrimp. Rice and poultry are also considered as among Thailand’s strategic export products. However, relatively close connection with stakeholders from shrimp exporters, their logistics service providers, and relevant government agencies gave relatively more confidence in achieving the goal of the project.

Source: ESCAP from The Analysis of Frozen Shrimp Export Process in Thailand, Institute for Innovative IT, Kasetsart University

16 3. Business Process Analysis Guide to Simplify Trade Procedures

Activity 1.2 - to depict each stakeholder, who Project manager/project leader conducts initial is known as process participant/ desk research to identify core business pro- business domain expert; and cesses that are related to the business domain - to depict all actual associations of interest. between business processes and Activity 1.3 process participants/business domain experts. Project manager/project leader, based on research outcome, extracts key business pro- When there are core sub-business processes, cesses associated with the industry or service project manager/project leader may organize of interest, as well as stakeholders who inter- core business processes into a process area. act with those business processes. Boundaries Boundary may be used to group core Activity 1.4 sub-business processes together. Project manager/project leader documents captured core business processes and stake- An example of a UML use case diagram is holders of the business domain of interest given in Box 3.3. using UML Use Case notations (see table 2.1). Activity 1.5 Project manager/project leader uses the following notations: Process participants/business domain experts review the use case diagram and provide - to depict core business pro- feedback in terms of its accuracy as well as Use case cesses; suggestions for further improvement.

Box 3.2. Case study – scope of analysis

The Ministry of Commerce, represented by Department of Export Promotion, as a project sponsor, specified that the analysis of the frozen shrimp export process covers all activities in the international trade transaction, which range from “the establishment of commercial contracts”, through “the arrangement of inland and cross- border transportation and export formalities to meet regulatory requirements” to “the payment of the purchased cargo”. Due to the fact that mode of transport, terms of delivery, and terms of payment can vary, the project sponsor agreed to the following assumptions made for the study:

• Ship: Shrimp exporters choose ocean freight as a mode of transport, as it is one of the cheapest and most convenient ways to ship goods overseas. • CIF (Cost, Insurance, and Freight): Shrimp exporters in most cases arrange and absorb the cost of shipping their cargo to the port of destination. Minimum insurance coverage is also procured against loss of or damage to the goods during the carriage. • FCL (Full Container Load): For simplicity, the analysis of frozen shrimp export process traces the operation of a sole exporter. It is also assumed that the whole container is intended for a single consignee. • CY (Container Yard) Container Service: For simplicity, it is assumed that CY/CY container service is used. Under such service, the carrier delivers an empty container to exporter’s premises for loading and brings the loaded container back to the container yard. At the container yard, the container waits to be loaded onto the vessel. No unpacking or modification is made. • L/C (Letter of Credit): For simplicity, a letter of credit is assumed as method of payment.

Source: ESCAP from The Analysis of Frozen Shrimp Export Process in Thailand, Institute for Innovative IT, Kasetsart University

17 Business Process Analysis Guide to Simplify Trade Procedures

Activity 1.6 Activity 1.7 Project manager/project leader revises and/or Project sponsor approves the final version of refines the project scope where necessary, use case diagram. The use case diagram acts based on the feedback from process partici- as a baseline for planning, managing, and pants/business domain experts. carrying out the business analysis study.

Box 3.3. Case study – visualize the project scope

This UML use case diagram illustrates core business processes used when exporting frozen shrimp from Thailand. It provides the frame of reference for analysing the business processes in detail. The diagram lists all process participants/business domain experts, business processes, and the relationships among them.

The diagram shows that the scope of analysis will cover all activities in the international trade transaction, which include commercial procedures, transport procedures, regulatory procedures, and financial procedures. The core business processes are organized according to the UN/CEFACT “Buy-Ship-Pay” model. Given that the movement of cargo has to comply with regulatory requirements, transport procedures and regulatory procedures are closely related. Their main sub-processes are therefore grouped as “Ship”.

2) Ship

2.1) Have product sampled Authorized Private and examined Inspector Insurance Company 2.2) Arrange transport

2.3) Prepare Inland export permit Haulage

1) Buy 2.4) Apply for Importer cargo insurance Customs’ Department of Bank Fisheries Exporter or 2.5) Prepare and 3) Pay Representative submit customs declaration Importer’s Customs Carrier Bank (Shipping Line) 2.6) Load container and transfer to port of departure Port Exporter’s 2.7) Clear goods Authority Bank through customs

2.8) Handle Department of container and stow it on vessel Foreign Trade

2.9) Prepare documents required Department of by importers Consular Affairs

The Central Islamic Committee Office Thailand

Source: ESCAP from The Analysis of Frozen Shrimp Export Process in Thailand, Institute for Innovative IT, Kasetsart University

18 3. Business Process Analysis Guide to Simplify Trade Procedures

Figure 3.4. Stakeholders involved in Step 2

Project Sponsor 2) Develop a detailed plan and secure Project Manager/ resources Project Leader

Process Analysts This process requires the participation from: – Project Manager/Project Leader – Project Sponsor – Process Analysts

Figure 3.5. Activities involved in Step 2

Project Manager/Project Leader Process Analysts Project Sponsor

Use Case Diagram

Identify tasks and sequence of tasks

Estimate efforts

Develop project schedule

Assign process analysts

Derive the detailed plan

Detailed Review and Project Plan provide feedback

Unacceptable Acceptable Review and provide feedback

Unacceptable

Acceptable

Approve

19 Business Process Analysis Guide to Simplify Trade Procedures

The use case diagram may be changed at a core business processes represented by use later stage if an inaccuracy is found. The cases in the use case diagram (see Box 3.4 for revised diagram should be approved by the an example), the rest – including the develop- project sponsor before adopting it as a frame ment of integrated activity diagram, time-proce- of reference. dure chart, a list of identified bottlenecks, and recommendations for future improvement – Step 2: Develop a work plan and secure requires only a one-time implementation. resources Activity 2.2 The objective of this step is to develop a Project manager/project leader estimates the detailed work plan that guides and manages effort (man-hours or man-days) needed to the implementation of the business process complete each identified task and to prepare analysis. The work plan should be based on all deliverables. There is no standard bench- the use case diagram developed in Step 1. mark time for each activity required to complete the business process analysis project. Based on the use case diagram, the work Likewise there is no one-size-fits-all solution to breakdown structure, which is an output-ori- determine the amount of required resources. ented description of project tasks, can be de- However, the following approach may be help- veloped. This work breakdown structure then ful for time and resource estimation: provides a starting point for estimating project costs, staffing and scheduling. • In conducting business process analysis, great time and effort is spent on collecting Figure 3.5 illustrates activities that a project and compiling data into visual diagrams manager/project leader has to carry out in and written descriptions. There is a set of this step in cooperation with process similar project tasks for elaborating each analysts and under the oversight of the project use case into an activity diagram and pro- sponsor. These activities are further explained cess description. The more process partici- below. pants/business domain experts are involved in a business process that is represented Activity 2.1 by a use case, the more complex and time-consuming the business process Project manager/project leader identifies, in analysis will be. sequential order, tasks required to derive each output of the business process analysis • The first session of a face-to-face data- project. They include: collection interview with each process participant/business domain expert who is a • Activity diagrams; part of Phase II may take one to two • Process descriptions, including a list of hours. Given that the business process trade forms and documents as well as a analysis is an iterative task, the interview list of trade-related laws, rules and regula- with relevant process participants/business tions; domain experts may be conducted more • Integrated activity diagram; than once. However, the project teams • Time-procedure chart; should avoid conducting more than three interviews with the same process partici- • A list of identified bottlenecks; and pants/business domain experts. • Recommendations to improve the business process and/or to-be business process • Project Evaluation and Review Technique 6 models. (PERT) estimate might be used for this purpose. (See Box 3.5) To prepare the work breakdown structure of the project, the project manager/project leader needs to anticipate project activities outlined in 6 Marchewka, J.T. (2006). Information Technology Step 3 onward. While Activity 3.1 – 3.3 and Project Management, 2nd ed. John Wiley & Sons Activity 4.1 – 4.10 have to be carried out for all Inc., Hoboken, NJ.

20 3. Business Process Analysis Guide to Simplify Trade Procedures

Box 3.4. Case study – use cases of core business processes in frozen shrimp export

1) Buy 2.3) Prepare Export permit Exporter or Importer Exporter or Department Customs Representative Representative of Fisheries 2.8) Handle 2.4) Apply container and for cargo stow it on vessel insurance Importer’s Bank Exporter or Carrier Exporter or Insurance Representative (Shipping Line) Representative Company 3) Pay

Exporter or Importer Representative Port Authority Exporter or 2.5) Prepare and Customs Representative submit customs declaration Exporter’s Bank

Customs Bank Department Exporter’s Bank of Fisheries Authorized 2.1) Have product Private Inspector sampled and examined Inland Haulage Exporter or 2.9) Prepare Department of Representative documents required 2.6) Stuff container by importers Foreign Trade and transfer to port Exporter or Department of of departure Fisheries Exporter or Customs Representative Representative Department of Consular Affairs

2.2) Arrange Inland Haulage Port Authority transport Inland Haulage 2.7) Clear Exporter or goods through The Central Representative customs Islamic Exporter or Carrier Committee Representative (Shipping Line) Office Thailand Customs

Source: ESCAP from The Analysis of Frozen Shrimp Export Process in Thailand, Institute for Innovative IT, Kasetsart University

Box 3.5. Project Evaluation and Review Technique (PERT) estimate

Project Evaluation and Review Technique (PERT) allows probabilistic treatment of activity duration in the estimation. PERT estimate may be used to compute weighted average for each individual task. A three-point estimate includes pessimistic, most likely and optimistic. The equation is as follows:

Task Estimate = Optimistic Time + (4 * Most Likely Time) + Pessimistic Time 6

• The Optimistic Time is the minimum time in which a task can be completed. It is the best-case scenario set under the assumption that everything goes as planned and no internal or external obstacles will occur. • The Most Likely Time is an estimate of the expected time that is required to complete the task. • The Pessimistic Time is the maximum time of the worst-case scenario in which the task should be completed.

21 Business Process Analysis Guide to Simplify Trade Procedures

Activity 2.3 into the detailed plan for project stakeholders to review. Project manager/project leader develops a project schedule based on the following infor- Activity 2.6 mation: Project stakeholders review the detailed plan • Set of tasks which are identified in a se- and then provide feedback. quential manner Activity 2.7 • Project effort estimates Project manager/project leader revises and • Duration of the project stated in the con- refines the detailed plan, based on the re- tractual arrangement made with the project ceived feedback. sponsor. Activity 2.8 Activity 2.4 Project sponsor, in consultation with other Project manager/project leader assigns pro- project stakeholders, approves the detailed cess analysts to the project. Once again the plan as the baseline for future project execu- number of process analysts required depends tion, monitoring and evaluation. on the project duration. The shorter the project duration is, the larger the number of process Phase II: Data collection and process analysts is required. The responsibilities and documentation required skills of process analysts are listed in Box 3.6. The knowledge about existing business processes is normally embedded in government Activity 2.5 or private sector employees who routinely con- Project manager/project leader compiles duct the business processes. Such knowledge project time and effort estimates, project is usually not documented, thus impossible to schedules, and project staff (process analysts) analyse and improve further. The purpose of

Box 3.6. Responsibilities and required skills of process analysts

Process analysts are responsible for the following: • Studying and analysing the current processes (“as-is” processes); • Creation of the business process model; • Developing recommendations how to improve the current processes; and • Designing the new processes (“to-be” processes) in collaboration with other stakeholders.

Process analysts should be selected based on the following skills. • Technology skills: Although it is not necessary, basic knowledge of UML notations, especially in use case diagrams and activity diagrams is desirable. Related work experience is complementary. • Business/organization skills: It is important that the selected process analysts know or have an access to the individuals of the business domain subject to the business process analysis study. It is also very useful if they have knowledge of a particular organization or industry associated with the targeted business domain. • Interpersonal/communication skills: The ability of the selected process analysts to effectively communicate and interact with other project members is crucial to project success. They should have the ability to create and sustain reasonably good relationships with project stakeholders and especially Process Participants/Business Domain Experts. • Analytical skills: Ability to think analytically. They should be able to capture relevant information from verbal expression and written documents. They should be able to summarize the information, as well as formulate and document the business processes.

22 3. Business Process Analysis Guide to Simplify Trade Procedures

Phase II is to make the knowledge of these • Names of government and other agencies business processes readily available through and businesses responsible for carrying out documenting them. The documentation then respective activities in the business pro- can serve as a baseline to improve the processes under examination (e.g. chambers cesses. of commerce, in case of issuance of a non-preferential certificate of origin); Phase II includes two steps: • Contact names and details of potential Step 3 - Acquire background information interviewees in the identified agencies and Step 4 - Conduct interviews and docu- businesses, i.e. officer-in-charge at the opment captured data erational level for each activity; • Step 3: Acquire background information Sequence of actions/activities in a process; i.e. processes and procedures required to It is important that process analysts acquire at move goods across the border; the outset as much background information on • Forms and documents associated with the business processes under examination as each action/activity (import/export permits, possible, prior to the face-to-face interviews. SPS certificates7, certificates of origin, Background information could be obtained via commercial invoice, customs declaration, desk research through information publicly etc.). available on the Internet, information portals, and at inquiry points of the agencies or busi- Activity 3.3 The project manager/project lea- nesses involved in the business domain of der reviews the outcome of desk research, interest. including the interview questions, and deter- mines whether process analysts are ready to The background information is useful for pro- proceed with the next step. cess analysts in the preparation of interview questions and makes them better prepared to Step 4: Conduct interviews and document conduct face-to-face interviews. Moreover, it captured data allows them to effectively and efficiently capture the information and data to be collected during The purpose of Step 4 is to conduct the face- the face-to-face interviews and put these into a to-face interviews with process participants/ broader context. Stakeholders participating in business domain experts. Face-to-face inter- this step are shown in Figure 3.6. views are the most commonly used data collection method for the business process analy- Activities associated with gathering the back- sis exercise. This process aims to confirm the ground information are described in Figure 3.7, accuracy of the previously collected back- and further explained below. ground information in order to gain an in-depth understanding of each use case or core busi- Activity 3.1 ness process in question. Such comprehensive For each use case (see Box 3.4 for example), information is necessary for creating a visual process analysts conduct desk research, which representation as well as descriptive explana- involves the gathering of the background infor- tion for each use case. mation, related laws and regulations from publicly accessible sources such as websites or Once the face-to-face interview sessions with inquiry points of relevant governmental agen- the relevant business process participants have cies and business. been conducted, process analysts consolidate all inputs from interviewees and document Activity 3.2 them. There are three main outputs that should be delivered under Step 4: For each use case, process analysts system- atically record and organize relevant information into a folder. The folder should contain the following information: 7 Sanitary and Phytosantary certificate

23 Business Process Analysis Guide to Simplify Trade Procedures

Figure 3.6. Stakeholders involved in Step 3

3) Acquire background information

Process Analysts Project Manager/ Project Leader This step requires the participation from: – Project Analysts – Project Manager/Project Leader

Figure 3.7. Activities involved in Step 3

Process Analysts Project Manager/Project Leader

Conduct desk research

Record and organize information

Folder of Review and provide background feedback information

Insufficient

Sufficient

Figure 3.8. Stakeholders involved in Step 4

Project Sponsor

4) Conduct interviews and document captured data Project Manager/ Process Participants/ Project Leader Business Domain Experts

This step requires the participation from: – Process Analysts – Process Participants/ Business Domain Experts – Project Manager/ Project Leader Process Analysts – Project Sponsor

24 3. Business Process Analysis Guide to Simplify Trade Procedures

• Activity diagrams Activity 4.1 • Process descriptions, including a list of rel- Process analysts contact potential interviewees evant forms and documents as well as by phone or email to agree on the date, time laws, rules and regulations and venue of the face-to-face interview. As • Time-procedure charts noted before, potential interviewees are selected based on their involvement in a busi- The stakeholders and activities involved in this ness process area of interest and the type of step are shown in Figures 3.8. and 3.9. information that they can provide. Process par-

Figure 3.9. Activities involved in Step 4

Project Manager/Project Leader Process Analysts Process Participants/ Project Sponsor Business Domain Experts

No Oversee the conduct Plan the Invite potential of project tasks interview session interviewee Yes

Allocate time for an interview

A list of Conduct the Participate in interview interview the interview questions

Consolidate collected data

A set of activity Review and diagrams provide feedback

Accurate Inaccurate

Develop textual description

A set of process Review and description provide feedback

Accurate Inaccurate

Integrate consolidated data

Integrated Time-procedure Review and activity diagram chart provide feedback

Accurate Inaccurate

Prepare a submission of all deliverables

A set of activity A set of process diagrams description Acknowledge the Integrated Time-procedure project progress activity diagram chart

25 Business Process Analysis Guide to Simplify Trade Procedures ticipants/business domain experts who are in rapport with the potential interviewees. Estab- charge at the operational levels have relatively lishing a good rapport not only increases the more potential as interviewees, as they usually chance of having potential interviewees deal with respective procedures and formalities participate effectively in the planned face-to- associated with the business process of inter- face interview, but also helps create a est on a daily basis. pleasant atmosphere during the interview. Pleasant atmosphere is a vital precondition It is important that process analysts have for a successful and result-oriented interview sound communication skills. Prior to inviting session. the potential interviewees, process analysts need to introduce themselves in a polite, Activity 4.2 friendly, and professional manner. Process Process participants/business domain experts analysts also need to clearly explain the pur- decide if they wish to participate. pose of the interview, how this interview will contribute to the overall business process If process participants/business domain experts analysis exercise, what will be the results of agree to participate, they inform process ana- this exercise and how these will be used. lysts when it is convenient to have a face-to- Doing so allows them to establish a good face interview. If not, process analysts look for

Box 3.7. Examples of interview questions

Business process analysis: • How many people are involved in this business process? • What are necessary activities that an exporter/importer has to take in order to acquire a particular document? • What are supplementary documents that an exporter/importer has to submit along with the application form when a particular document is requested? • How can an exporter/importer who is to submit the application form collect the requested document (manually or electronically)? • Are copies of documents accepted in lieu of original documents? • Is there any fee that an exporter/importer has to pay in order to acquire the document? If so, how much? • What are the laws or regulations associated with these procedural and documentary requirements? • Which business processes can be carried out in parallel? • Which business process has to be carried out next?

Information flow analysis: • With which other actor in the business do you need to communicate? • What kind of data do you exchange? • What kind of information do you send to which actor?

Time analysis: • How much time, including waiting time, in average hours or days does it take to complete this entire business process from the beginning to the end? What is the maximum and minimum time? • How many actual man-hours does it require to complete this particular activity in this business process?

Cost analysis: • How much on the average does it cost to complete this particular activity in this business process or to process one document?

Suggestions for improvement: • What are problems/bottlenecks you encounter in procedures and regulations to import or export? • What are improvements that you would like to see in the near future?

26 3. Business Process Analysis Guide to Simplify Trade Procedures other potential interviewees who can substitute may also inject their opinions or ideas to for the person who rejected an interview. stimulate the interviewee to express and elaborate his/her ideas related to the sub- Activity 4.3 ject matter. Process analysts prepare a list of questions • During the face-to-face interviews, the pro- based on the background information acquired cess analysts should also seek earlier. The questions need to be easy to interviewees’ opinions and observations on understand and structured in a logical se- any bottlenecks and issues related to the quence to ensure the best possible result. The process, documents, laws, and regulations questions should allow the process analysts to that should be improved, why and how to gain a better understanding of those points improve them. they have previously found unclear. Examples of such interview questions, which were gener- • Process analysts should take notes care- alized from the Frozen Shrimp Export Process fully. All points the interviewees make Analysis, are provided in Box 3.7. should be written down, even though they may sound irrelevant at the moment. Activity 4.4 • Process analysts should provide feedback Process analysts conduct the face-to-face on statements made by the interviewees to interviews with the process participants/ confirm their correctness and understanding business domain experts. It is recommended of the obtained information. that the following issues are taken into • Process analysts should always respect the account. time schedule. A summary of the major • Each face-to-face interview session is at- points should be made before ending the tended by one, or in specific cases, by at interview session. maximum two process analysts. Having two process analysts in the session is in fact Activity 4.5 necessary when the process analysts are Process analysts consolidate all the statements relatively new to the field, or have little made by interviewees into an activity diagram experience in conducting business process for each use case immediately upon their re- analysis. turn to the office. This work should be com- • If the interview is tape recorded, it is pleted within maximally two working days after necessary to obtain permission from the the interview. interviewee prior to the interview. • Although the process analysts conduct the An activity diagram portrays a sequence of interview session with prepared questions activities carried out to achieve a specific which are organized in a logical sequence, goal. It illustrates detailed activities and flows the interview is unlikely to be a question of information or documents from one respon- and answer session. Therefore, it is recom- sible party to another in a given sequence. mended to keep the interview free-flowing During this step, the process analysts might and conversational, however within a basic discover common patterns in the activity dia- structured framework. The best way is grams. Reusing these patterns helps avoid to start with general questions to draw repetition of work and save time. For example, information about a particular business the customs declaration process from the busi- process that is common to all operational ness process analysis of exporting frozen cases. The general questions are then shrimp can be reused in a business process followed by more specific questions not analysis for exporting frozen poultry products. only to seek clarifications but also to iden- Table 2.2 presents the basic elements and tify discrepancies and conditions where notations of an activity diagram that is applied such discrepancies occur. Process analysts in this business process analysis study. should adjust their questions according to Box 3.8 illustrates an example of an activity how the interviewee is responding. They diagram.

27 Business Process Analysis Guide to Simplify Trade Procedures

Activity 4.6 Activity 4.8 Process participants/business domain experts Process analysts provide textual description of review the activity diagrams and then provide individual activity diagrams. feedback. Process description has to include the following elements: Activity 4.7 a) The name of a process area which this Process analysts revise and/or refine individual particular business process belongs to; activity diagrams, as necessary. b) The name of a business process;

Box 3.8. Case Study – Activity diagram of “Have the product sampled and examined” use case within the BPA of frozen shrimp export in Thailand

Swimlane shows a boundary of activity to be carried out by a responsible actor.

Authorized Private Inspector Exporter (or Representative) Department of Fisheries

Initial state shows where Have product ready the sequence of for sampling activities begins. Diamond indicates the point where a decision has to be made. Schedule the Notify the date for sampling date sample collection

Final flow state indicates that further activities Collect Submit Request cannot be pursued. sample for Sampling

Sequence of activities Examine Deliver Request for Collect carried out to achieve sample sample Sampling sample specific goals

Object represents a document Record sampling Record the result or information that flows from result of examination one activity to another.

Examine Collect sample Test Report Test Report Record result of examination

Collect Test Report Test Report

Final state shows where the sequence of activities reaches its end with its goals achieved.

Soure: ESCAP from the Analysis of Frozen Shrimp Export Process in Thailand, Institute for Innovative IT, Kasetsart University.

28 3. Business Process Analysis Guide to Simplify Trade Procedures c) Related rules and regulations; h) The average time required to complete d) The name of responsible parties; the process and/or durations for each in- e) Input and criteria to enter/begin the busi- volved transaction. ness process; Activity 4.9 f) Procedures and associated documentary requirements to complete the process; Process participants/business domain experts g) Output and criteria to exit the business review process description and then provide process; and feedback.

Box 3.9. Integration of activity diagrams chart from the BPA of frozen shrimp export in Thailand

2.5) Prepare and 2.6) Stuff container 2.7) Clear goods 2.8) Handle container submit customs and transfer to port through customs at terminal and stow declaration of departure it on vessel

Exporter Inland Haulage Customs Department of Customs Exporter (or Representative) Inland Haulage Port Authority Exporter’s Bank Exporter (or Representative) Customs Customs’Bank (or Representative) Fisheries Exporter Customs Carrier Inland Haulage Port Authority or Representative (Shipping Line) Packing List Export Permit (R. 9) Transfer container Prepare Declaration Declaration Reject to terminal information Equipment Monitor Retrieve declaration container stuffing Interchange Receipt information Coordinate container Stack container handling at terminal at terminal Commercial Invoice Monitor Goods Transition container sealing Control List Verify submitted Cross check declaration R. 9 Reference Number Record date-time information information with handed Prepare Container Loading List of when container Export Declaration Prepare Request in documents is stacked Goods Transition Prepare Incorrect information for for Port Entry Control List Reject (TKT. 308.2) cargo movement Transfer container Questionable of misconduct Container Correct to point of inspection SubmitTKT. 308.2 Inspect Loading List No duty Verify Goods Transition Unquestionable Coordinate a Declaration Accept and pay entry fee cargo information Control List of misconduct Container transfer of Duty Record Misconduct List Message container to berth TKT. 308.2 cargo/container found Incorrect Record a case Coordinate a Allocate Order duty information to be filed payment Misconduct transfer of required Correct not found container to berth equipment Print out Goods Acknowledge Allow goods Deduct notified Goods Transition Transition Control List payment of Payment Order Control List Accept to be exported amount and Prepare R. 9 entry fee Transfer container to berth Goods Transition Acknowledge Acknowledge Control List Transfer cargo Goods Transition to port actual quantity Notify Debit Advice deduction for Export License (R. 9) Control List Audit quantity exported to be exported Manage a stowing of duty payment Receipt container on vessel Stow container Ask for permission on vessel R. 9 with information on Acknowledge Remittance Advice to enter port at actual quantity Acknowledge actual quantity exported Bank Statement Main Gate to be exported Record a number payment transfer Record date-time Prepare of port entry B/L of container Take cargo to stowed on vessel point of container Acknowledge Receive Bill of Credit Advice inspection Measure weight duty payment B/L Lading Prepare Outward of cargo/container Prepare Container List Manifest Update status Inspect container condition of Declaration at time of gate in Outward Container List Incorrect Manifest Receive Receipt No. Specify a point in a terminal Receipt No. Where container will be placed Correct Acknowledge Determine service and approve charge to be collected Receive EIR Verify no. of Allocate equipment consignments Prepare EIR for cargo handling exported with Acknowledge service declarations Equipment charge to be paid Take cargo to Interchange Sub-Gate Receipt (EIR)

Department of Department of Consular Affairs Consular Affairs

The Central Islamic The Central Islamic Committee Office Committee Office Thailand Thailand

Department of Foreign Trade (or Authorized CoOIssuer) Department of Foreign Trade (or Authorized CoOIssuer)

Importer’s Bank Importer’s Bank

Bank Deduct Exporter’s Bank Statement notified amount Debit Advice Exporter’s Bank

Importer Importer

Authorized Private Inspector Authorized f Private Inspector f Acknowledge Commercial Invoice deduction for Submit Request for Request for No duty Prepare Request Port Entry and Port Entry Prepare Order duty Payment duty payment Receive Export License Ask for permission Exporter or Exporter or g Monitor stuffing Monitor sealing for Port Entry pay entry fee (TKT. 308.2) e Declaration R. 9 Reference No. payment Order Receipt No. (R. 9) to enter port h Duty Representative of container of container Representative information Remittance f Prepare information Goods Transition Print out Goods Transition at Main Gate Export Declaration Advice for cargo movement Control List Control List and Prepare R. 9 Goods Transition Department Control List Department of Fisheries of Fisheries

Inland Inland Take empty container Transfer Haulage c Haulage to manufacturer cargo to port

Carrier/Shipping Line or Agent Carrier/Shipping Line or Agent

Insurance Declaration Reject Company and/or Insurance Company Invoice Reject Correct Correct Verify submitted Declaration Acknowledge Update status Customs Receipt No. Goods Transition Verify Goods Transition information Accept duty payment of declaration Customs Incorrect Control List Reject information Control List Accept Acknowledge Incorrect payment transfer Customs’ Bank Customs’ Bank Credit Advice Record cargo/ Acknowledge Port Port container payment of Receipt Authority Authority information entry fee

The above diagram illustrates the integration of some business processes (use cases) that have to be carried out in order to export frozen shrimp from Thailand. The use cases shown in this diagram include “prepare and submit customs declaration”, “load container and transfer to port of departure”, “clear goods through customs”, and “handle container at terminal and stow it on vessel”. In the horizontal swimlanes, all process participants involved in exporting frozen shrimp from Thailand are listed. As can be seen from the top, they are Department of Consular Affairs, the Central Islamic Committee Office Thailand, Department of Foreign Trade or Authorized Certificate of Origin Issuer, Importer’s Bank, Exporter’s Bank, Importer, Authorized Private Inspector, Exporter or Representa- tive, Department of Fisheries, Inland Haulage, Carrier (Shipping Line or Agent), Custom’s Bank, Port Authority.

Source: ESCAP from The Analysis of Frozen Shrimp Export Process in Thailand, Institute for Innovative IT, Kasetsart University

29 Business Process Analysis Guide to Simplify Trade Procedures

Activity 4.10 Activity 4.16 Process analysts revise and/or refine process Project sponsor acknowledges the completion description of each activity diagram, as neces- of the documentation of existing business pro- sary. cesses.

Activity 4.11 Phase III: Process analysis and Process analysts work together to integrate all recommendations activity diagrams of the business processes development associated with all use cases defined earlier into a single integrated activity diagram. The A better understanding of the “as-is” processes integrated activity diagram represents an is obtained once the processes are defined interconnected view of business processes and documented. Activity diagrams, process used in an industry or to provide a particular descriptions listing all documentary require- service. It illustrates relationships between core ments, the associated documents, laws, rules, business processes, process participants, and and regulations as well as time-procedure information flow throughout the area under charts have been prepared to provide the the scope of the study. An example of an stakeholders with an overall and integrated integrated activity diagram is provided in view of the current situation and the discov- Box 3.9. ered problem areas. Based on these inputs, Activity 4.12 recommendations for improvement can be developed. International recommendations on Process analysts develop a time-procedure trade and transport facilitation and best prac- chart based on the average time required to tices such as UN/CEFACT Recommendation complete one business process represented by 18 (see Box 3.11), can be considered and one use case. The development of a time- applied. The logical steps in this phase in- procedure chart should be in line with the clude: World Bank methodology used in the Trading Across Borders study of the Doing Business Step 5 - Analyse the “as-is” processes project.8 An example of the time-procedure and identify bottlenecks chart is provided in Box 3.10. Step 6 - Develop and propose recom- Activity 4.13 mendations

Process participants/business domain experts Step 5: Analyse the “as-is” processes and review the integrated activity diagram and time- identify bottlenecks procedure chart, and then provide a feedback. The purpose of Step 5 is to identify the bottle- Activity 4.14 necks of the “as-is” processes described in the Process analysts revise and/or refine the inte- activity diagrams, the process descriptions, and grated activity diagram and time-procedure the time-procedure chart. It aims at developing chart as necessary. a set of observations related to the current business processes that have potential for Activity 4.15 improvement, such as the identification of Project manager/project leader, in addition to duplicated and redundant procedural and overseeing the project tasks carried out by documentary requirements which cause delays. process analysts, consolidate all deliverables Figure 3.10 shows stakeholders participating achieved in this step for a submission to in Step 5. project sponsor. Illustration of necessary activities that have to be conducted in order to analyse the “as-is” 8 World Bank, The Doing Business project, http:// business processes and identify the bottle- www.doingbusiness.org necks is provided in Figure 3.11.

30 3. Business Process Analysis Guide to Simplify Trade Procedures

Activity 5.1 may include duplicated and redundant procedural and documentary requirements, as well Process analysts identify the bottlenecks and as outdated laws or unnecessary regulations record observations related to the current “as- that create operational obstacles. is” business processes that have the potential for improvement. Activity 5.2 To locate the bottlenecks, process analysts Project manager, process participants/business may first review the time-procedure chart, as it domain experts, and project sponsor review a visualizes those particular business processes set of observations listing bottlenecks in the that require an extensive time to complete. “as-is” business processes and provide feed- They can then examine the relevant activity back. diagram together with the associated process description to learn what may cause the long Activity 5.3 delays. The potential causes of such problems Process analysts revise/refine it as necessary.

Box 3.10. The time-procedure chart from the BPA of frozen shrimp export in Thailand

Days

35 ¤

4 days 30

11 3 days

25 10 1 day 1 day 9 1 day 6 7 8 1 day 5 20 3 days 4

3 14 days 1. Buy – Conclude sales contract and trade terms 2. Have product sampled and technically examined 15 3. Arrange transport 4. Prepare export permit 5. Apply for cargo insurance 6. Prepare and submit customs declaration 10 7. Stuff container and transfer it to port of departure 2 8. Clear goods through customs 9. Handle container at terminal and stow it on vessel 10. Prepare documents required by importer as listed in L/C 5 11. Pay – Claim payment of goods 2 days

1 0 Process 12 34 56 7 8 91011¤

This time-procedure chart is an illustration of the time required to complete each business process in the business domain of interest. It assists the process analysts in spotting where possible bottlenecks are. While each bar on the x axis represents an individual procedure within a business process, the y axis represents the average total time (number of days, in this case) required to complete that particular procedure.

Source: ESCAP from The Analysis of Frozen Shrimp Export Process in Thailand, Institute for Innovative IT, Kasetsart University

31 Business Process Analysis Guide to Simplify Trade Procedures

Box 3.11. UN/CEFACT Recommendation No. 18: Facilitation Measures Related to International Trade Procedures

UN/CEFACT Recommendation No. 18 provides a comprehensive set of recommendations regarding international best practices and standards for the facilitation and harmonization of trade transactions. In order to understand the complexity of international trade, including the key elements of a trade transaction, UN/CEFACT developed a model of the international supply chain. Based on this model, specific measures were developed to cover the key elements of the trade transaction process. These are presented under four major categories, namely: commercial measures; international payment measures; official control measures; and transport-related measures.

Recommendation No. 18 is targeted both at companies involved in the business of trade, and at national governments and national and international organizations related to trade. The Recommendation should be especially relevant to transition and developing countries which can still significantly improve their economic performance by streamlining international trade procedures. There are some general principles appropriate for officials and a dedicated section: “Group 3: Measures related to official controls”. Here are some examples:

Procedures and data requirements • Procedures should be kept to a minimum. They should be commercially oriented and relate closely to trade and transport requirements. Procedures should be simplified, harmonized and should comply with international standards. • Data requirements should be kept to a minimum, and should be simplified, harmonized and standardized, to ease the information flow. • Laws, regulations and other information regarding procedures and data requirements should be readily accessible to all parties concerned.

Information technology • Transition strategies to replace paper documents by electronic information exchange or electronic documents are common practice. The use of information and communication technology and the resulting electronic solutions should be encouraged.

Recommended measures related to official controls • Predictability: The time required, the procedures used and the fees related to official regulations should be predictable. • Transparency: All relevant information of general application pertaining to official rules and regulations, including information about procedures and control requirements, should be made available to the business community as well as to government bodies. • Cost-benefit analysis: Before introducing new requirements or prolonging existing rules for inspection, control and testing of goods in international trade, the authorities concerned should make cost and benefit assessments of proposals in consultation with the business community.

These recommendations provide further input for possible improvements at this stage of the BPA. Several “to- be” models might be set up to and compared to identify the optimal solution.

UN/CEFACT Recommendation No.18 can be downloaded in English, French and Russian version from: http:// www.unece.org/cefact/recommendations/rec_index.htm

32 3. Business Process Analysis Guide to Simplify Trade Procedures

Figure 3.10. Stakeholders involved in Step 5

Project Sponsor

5) Analyze the “as-is” processes and identify Project Manager/ bottlenecks Process Participants/ Project Leader Business Domain Experts

This step requires the participation from: – Process analysts – Process Participants/ Business Domain Experts Process Analysts – Project Manager/ Project Leader – Project Sponsor

Figure 3.11. Activities involved in Step 5

Process Analysts Project Manager/ Process Participants/ Project Sponsor Project Leader Business Domain Experts

A set of A set of activity process diagrams description Integrated Time- activity procedure diagram chart

Identify bottlenecks

A set of observations listing Review and bottlenecks in the “as-is” provide feedback business processes

Incomplete Complete Review and provide feedback

Inaccurate

Accurate Review and provide feedback

Unacceptable

Acceptable

Approve

33 Business Process Analysis Guide to Simplify Trade Procedures

Activity 5.4 For example, the automation of paper-based transactional operations can be either imple- Project sponsor, in consultation with process mented as a full-scale trade and transport participants/business domain experts and information exchange among stakeholders project manager/project leader, approves the (paperless trade) or automated customs observations. clearance systems such as ASYCUDA.9 Step 6: Develop and propose UN/CEFACT Recommendation No. 18 on Fa- recommendations cilitation Measures Related to International Trade Procedures may provide background The objective of this step is to develop and information on trade facilitation measures, in- propose recommendations that help eliminate cluding how to simplify and harmonize the trade bottlenecks and inefficiencies of procedures transaction procedures, documentary require- and documentary requirements within the ex- ments, rules, and regulations (see Box 3.11). amined business process. Such recommendations can also focus on enhancing transpar- In line with the recommendations, process ency in trade procedures or introduce new analysts prepare a set of responding activity security measures that would not be contradic- diagrams that represents the “to-be” business tory to trade facilitation. The measurable ben- processes. efits of implementing such recommendations may include the reduction in time and cost in Activity 6.2 international trade, as well as an increase in Process participants/business domain experts, trade and foreign direct investment. project manager/project leader, and project sponsor review and provide feedback on pro- Figures 3.12 and 3.13 illustrate the stakehold- posed recommendations for the business pro- ers and activities involved in this step. cess improvement, which may include a set of activity diagrams representing the future “to-be” Activity 6.1 business processes. The proposed recommen- Process analysts develop and propose recom- dations and the newly designed business pro- mendations for business process improvement. cesses may act as an intuitive tool to support Business process improvement can take vari- a discussion with the corresponding authori- ous forms. It may include the following mea- ties. sures: Activity 6.3 • Elimination of redundant procedures Process analysts gather the feedback and re- • Merging of some procedures that may also vise and refine the recommendations and the lead to the elimination of duplicate or un- activity diagrams representing the “to-be” busi- necessary documentary requirements ness processes as necessary. • Modification of relevant laws and regulations in a way that better facilitate business Activity 6.4 operations Project sponsor, in consultation with process • Automation of relevant procedures and participants/business domain experts, approves data exchange. the recommendations.

9 ASYCUDA (Automated System for Customs Data - http://www.asycuda.org) is a computerized customs management system, developed and provided by UNCTAD. The system handles manifests and customs declarations, accounting procedures, transit and suspense procedures.

34 3. Business Process Analysis Guide to Simplify Trade Procedures

Figure 3.12. Stakeholders involved in Step 6

Project Sponsor

6) Develop and propose recommendations Project Manager/ Process Participants/ Project Leader Business Domain Experts

This step requires the participation from: – Process Analysts – Process Participants/ Business Domain Experts Process Analysts – Project Manager/ Project Leader – Project Sponsor

Figure 3.13. Activities involved in Step 6

Process Analysts Project Manager/ Process Participants/ Project Sponsor Project Leader Business Domain Experts

A set of observations listing bottlenecks in the “as-is” business processes

Develop and propose recommendations

Recommendations for processes improvement Review and A set of activity provide feedback diagrams for “to-be” processes Incomplete Complete Review and provide feedback

Inaccurate

Accurate Review and provide feedback

Unacceptable

Acceptable

Approve

35 Business Process Analysis Guide to Simplify Trade Procedures

36 4. RECOMMENDATIONS FOR IMPLEMENTATION

Trade facilitation measures such as the simpli- manager/project leader, process partici- fication, harmonization, and automation of pro- pants/business domain experts. cedures and documents involve interagency coordination and collaboration. Their successful • Choose a champion: Determine a lead implementation requires not only political and agency that is capable of guiding the conduct governmental support in terms of both policy of BPA and facilitating the communication directives and human and financial resources, among business process analysis stakehold- but also an in-depth understanding about exist- ers. Choose the business process analysis ing business processes, including their related champion wisely. Avoid the “ivory tower dicta- information flows, laws, rules, and regulations. tor” approach. Instead, nominate the party with efficient and effective team-player skills. Analysis of business processes involved in • moving goods across borders is, therefore, a Start small, and then evolve: Chose the right starting point and form an effective necessary exercise that must be carried out team, which is critical to succeed. If the team prior to implementing any other trade facilita- members of the business process analysis tion measure. Trade facilitation measures, in project are new to the BPA, start with a other words, cannot be applied without locating relatively smaller scope. See what works for the source of problem areas, bottlenecks and the project and learn from that. Drop steps redundancies. that do not work. It is important to start small and demonstrate success, then to build on The following recommendations are outlined to that success. As a general rule, the wider assist the policymakers and trade facilitation the scope, the more difficult it is to choreo- practitioners in setting up the BPA project. graph the initial project, but the bigger is the opportunity to improve processes. • Get buy-in from the officials: Convey the necessity of trade facilitation and business • Profit from experience: Keep in mind that process analysis through awareness-raising the learning experience gained during the programmes – starting at the top. Educate initial phase helps accelerate the business both relevant government officials and the process analysis tasks at the later stage. trade and transport community on the ne- Make use of the learning effect; start with cessity of business process analysis and simple processes and engage complex is- its potential return on investment for all sues later on. This avoids frustration and stakeholders in the long run. repetition of efforts. Also try to benefit from international best practice and expertise. • Adequate resources: Secure adequate Studies and case studies can be obtained human resources and funding. Obtain a from various standard development organi- mandate from top government officials for zations and trade facilitation bodies. the members of the business process analysis team, which may be from an • Invest in training: Train the staff that dis- outsourced third party. seminates relevant knowledge about the business process analysis and familiarize • Roles and responsibilities of the project the business process analysis team about stakeholders: Identify clearly the roles of the common methodology that all members agencies, as a project sponsor, project must follow.

37 Business Process Analysis Guide to Simplify Trade Procedures

• Performance measurement: Set realistic benchmarks to be achieved after the “to- be” processes are in place. Performance indicators of an optimum best practice country10 can be taken as a model.

10 Refer to the World Bank’s study on Trading across Borders as one of the performance benchmarkings, http://www.doingbusiness.org

38 5. GLOSSARY

Activity Diagram – a graphical representation element of the business process is repre- that describes the flow of activities carried out sented by graphical notations. Unified Model- by stakeholders involved in a particular busi- ing Language (UML) provides graphical nota- ness process. The activity diagram is a type of tions for business process modeling that are diagram that uses a set of notations defined accepted and widely used not only among by the Unified Modeling Language (UML). practitioners in business community but also those in information technology and software Automation – the application of information industry. Business process modeling can be and communication technologies to facilitate achieved by a simple drawing with paper and the manual operation of business processes. pencil or a software tool.

Business Process – a logical series of related Harmonization – the effort to align procedural, transactions that converts input to results or regulatory, and/or documentary requirements output. A business process considered within with relevant standards. the frame of trade facilitation in this paper can be defined as “a chain of logically connected Business Process Analysis – a systematic ex- activities to move goods and related informa- amination of business processes in order to tion across borders from buyer to seller and to gain better understanding and to develop im- provide related services”. provement strategies.

Business Process Model – a graphical repre- Simplification – the effort to reduce complexity, sentation of a business process. It illustrates in our context, of the trade and transport facili- (i) activities performed and decision points, (ii) tation processes and documentary require- actors who perform those activities, (iii) activi- ments. ties’ input and output, (iv) alternate routes of activities subject to different business rules Single Window – a facility that allows parties and conditions, and (v) criteria for entering and involved in trade and transport to lodge stan- exiting the business process. The process dardized information and documents with a model also demonstrates how the various ac- Single Window entry point to fulfil all import, tors relate to one another and how the infor- export and transit-related regulatory require- mation flows throughout the business process. ments. If information is electronic, then indi- The process model has become increasingly vidual data should only be submitted once. important in the area of trade facilitation. It UN/CEFACT Recommendation No. 33 and serves as an organizational blueprint that facili- Case Studies on Implementing a Single Win- tates the identification of bottlenecks, the dow can be found at: prioritization of areas for improvement and im- http://www.unece.org/cefact/single_window/ provement strategies, and the design of auto- welcome.htm/. mated systems to promote paperless trade. It also enables the benchmarking of process im- Time-Procedure Chart - a chart illustrating rela- provement after implementing the improvement tionships between each business process and initiatives. time (normally in days) required to complete each business process in the business domain Business Process Modeling – a technique for of interest. While each bar on the x axis documenting business processes where each represents a business process (procedure), the

39 Business Process Analysis Guide to Simplify Trade Procedures height of the bar associated with the time worldwide as an international best practice to scale on the y axis represents the average simplify and harmonize trade procedures and total time required to complete that particular information flow. business process. Unified Modeling Language – a standardized Trade Facilitation – measures used to simplify visual specification language for business pro- and harmonize procedural, regulatory, and/or cess and information modeling. documentary requirements associated with the international supply chain. Use Case – a UML notation representing a business process. UN/CEFACT Recommendations – a series of more than 30 recommendations developed and Use Case Diagram – a graphical representa- maintained by the United Nations Center for tion that illustrates major elements of the busi- Trade Facilitation and Electronic Business (UN/ ness domain which includes relevant business CEFACT). These recommendations are used processes and their stakeholders.

40 6. REFERENCES

APEC Business Advisory Council (1996). UNECE (2001). Facilitation Measures Related APEC means business: building prosperity for to International Trade Procedures, Recommen- our community, Report to the Economic Lead- dation No. 18, ECE/TRADE/271, New York ers. Asia Pacific Economic Cooperation Secre- and Geneva. tariat, Singapore. UNECE (2006a). Background Paper for Djankov, S., Freund, C., and Pham, C. (2006). UN/CEFACT Symposium on Single Window Trading on Time, World Bank, Washington DC. Common Standards and Interoperability, Geneva. Marchewka, J.T. (2006). Information Technol- ogy Project Management, 2nd ed. John Wiley UNECE (2006b). Towards an Integrated Strat- & Sons Inc., Hoboken, NJ. egy for UN/CEFACT, Geneva.

41 Business Process Analysis Guide to Simplify Trade Procedures

42 7. ANNEX

BUSINESS PROCESS ANALYSIS Authority, 10) Office of Commodity Standards, OF THE EXPORT OF JASMINE 11) Department of Foreign Trade, 12) Depart- ment of Agriculture, 13) Board of Trade of RICE IN THAILAND Thailand, 14) Customs, 15) Thai Chamber of Commerce, 16) Department of Disease Control, This set of diagrams represents business proc- and 17) Department of Consular Affairs. esses involved in exporting a full container load of jasmine rice from Thailand by maritime trans- Business processes in the scope of this analy- port. The study limits the scope of analysis to sis are categorized into 3 groups according to the delivery of the consignment under the C.I.F. UN/CEFACT International Supply Chain Model. term and the payment by using the letter of The first group of business processes is called credit. In fulfilling procedural and documentary “Buy”. It is concerned with the conclusion of requirements involved in exporting Thai jasmine trade terms and the establishment of sales rice, the exporter indirectly or directly deals with contract. The second group of business proc- 15 parties. The number of parties that the esses under investigation is called “Ship”. This exporter has to deal with will go up to 17 if the group of business processes has broad cover- importer requests for the Certificate of Fruit, age. It ranges from the arrangement of inland Food, Vegetable Quarantine and the legalization and cross-border transportation to the conduct of trade documents. These parties are 1) ex- of other necessary actions to meet regulatory porter or representative, 2) importer, 3) export- requirements of both export and import coun- er’s bank, 4) importer’s bank, 5) insurance tries. The last group of business processes in company, 6) authorized private inspector, 7) this study is called “Pay” which is about the inland haulage, 8) carrier (shipping line), 9) Port claim for payment of goods.

43 Business Process Analysis Guide to Simplify Trade Procedures

Annex Figure 1. Parties involved in exporting rice in Thailand

2) Ship

B 2.1) Obtain Insurance Authorized Export Permit Company Private Inspector

C 2.2) Arrange Inland transport Haulage

2.3) Arrange D the inspection and fumigation Board of Trade of Thailand E 2.4) Obtain cargo Importer insurance A 1) Buy Office of 2.5) Provide Commodity F customs declaration Standards N Exporter or 3) Pay Representative 2.6) Collect G empty container (s) Importer’s from yard Department of Bank Foreign Trade 2.7) Stuff Customs H container (s)

Department of 2.8) Transfer Exporter’s I to port of Agriculture Bank departure

J 2.9) Clear goods through Carrier customs (Shipping Line)

K 2.10) Handle cargo and stow on vessel Port Authority L 2.11) Prepare documents required by importer

2.12) Verify the Department of accuracy/authenticity Thai Chamber Consular M of exported cargo Department of of Commerce Affairs Disease Control

44 7. Annex

Annex Table 1: List of Documents

1. Proforma Invoice (35) 22. House Sea Cargo Manifest (37) 2. Purchase Order (39) 23. Export Declaration (75,39) 3. Commercial Invoice (50) 24. Good Transition Control List (22,3) 4. Application for Letter of Credit (24) 25. Application for Permission to Export Rice (KP. 2) 5. Letter of Credit (32) 26. Sales Report (KP 3) (21) 6. Packing List (25) 27. Application for the Collection of the 7. Cargo Insurance Application Form (20) Permit for the Export of Rice (A. 3) 8. Cover Note (23) 28. Permit for the Export of Rice (A. 4) (32) 9. Insurance Policy (24) 29. Application for Certificate of Standards 10. Booking Request Form – Border of Product (MS. 13/1) (44) Crossing (24) 30. Certificate of Analysis (17) 11. Booking Confirmation – Border Crossing 31. Certificate of Product Standards (MS. (31) 24/1) (45) 12. Booking Request Form – Inland 32. Certificate of Fumigation (21) Transport (16) 33. Application for Phytosanitary Certificate 13. Booking Confirmation – Inland Transport (PQ. 7) (29) (18) 34. Phytosanitary Certificate (34) 14. Bill of Lading (40) 35. Application for Certificate of Origin 15. Empty Container Movement Request (TKT 305) (19) 36. Certificate of Origin (38) 16. Request for Port Entry (TKT 308.2) (27) 17. Equipment Interchange Report (EIR) Conditional (24) 1. Application for Certificate of Fruit, Food, 18. Container Loading List (18) Vegetable Quarantine 19. Container List Message (32) 2. Certificate of Fruit, Food, Vegetable 20. Outward Container List (34) Quarantine 21. Master Sea Cargo Manifest (17) 3. Legalization

For the single consignment category, there are 928 data elements in total and 362 without duplicates. These numbers are inclusive of 42 optional data elements that customs would like to collect but they are not mandatory for exporter to provide. For the multiple consignment category, there are 111 data elements in total and 83 without duplicates.

Following are the diagrams of the business process analysis of the export of jasmine rice in Thailand.

45 Business Process Analysis Guide to Simplify Trade Procedures

Buy

Exporter or Importer Representative

Quote price and term of trade Not acceptable

Cancel Proforma Invoice

Acceptable

Confirm the intent to purchase

Prepare the shipment Purchase Order of goods

46 7. Annex

Obtain export permit

Exporter or Representative Department of Foreign Trade

Prepare documents for the application of export permit

Draft Permit for the Application for Permission Export of Rice (A. 4) to Export Rice (KP.2)

Sales Report (KP 3) Verify submitted information Application for the Collection Evidence of Sales of the permit for the Export (Purchase Order or of Rice (A. 3) Sales Contract) Incorrect

Correct

Sign and authenticate A. 4

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

47 Business Process Analysis Guide to Simplify Trade Procedures

Arrange transport

Carrier (Shipping Line) Inland Haulage Exporter or Representative

Reserve cargo space and vessel

Acknowledge Booking booking Request

Draft Bill of Lading

Incorrect

Correct

Schedule the pick-up and delivery of container

Acknowledge Booking booking Request

Booking Confirmation

Incorrect

Correct

Acknowledge booking confirmation

48 7. Annex

Arrange the inspection and fumigation

Board of Trade Authorized Private Exporter or Representative Office of Commodity Department of of Thailand Inspector Standards Agriculture

Request the Inspection and fumigation of goods

Application for Application for Verify submitted Certificate of Phytosanitary information Standards of Certificate (PQ.7) Product (MS. 13/1) Record the Verify submitted Permit for the receipt of PQ. 7 information Export of Rice (A. 4) Registered Record the Evidence of PQ.7 receipt of Sales (Purchase MS. 13/1 Order or Sales Contract)

Registered MS. 13/1

Schedule the inspection and fumigation

Registered Registered MS. 13/1 PQ.7

Acknowledge Booking service request Request

Registered PQ.7

Registered MS. 13/1 Acknowledge Acknowledge Acknowledge Service inspection fumigation service Confirmation schedule schedule confirmation

49 Business Process Analysis Guide to Simplify Trade Procedures

Obtain cargo insurance

Exporter or Representative Insurance Company

apply for cargo insurance

Cargo Insurance Letter of Credit Application Form Refuse

Commercial Draft Bill Packing List Invoice of Lading Accept

Approve the insurance coverage

Receive insurance Cover Note coverage

Submit Transport contract

Issue Insurance Bill of Lading Policy

Collect Insurance Insurance Policy Policy

Arrange the payment of Receive the payment of insurance premium insurance premium

50 7. Annex

Provide customs declaration

Exporter or Representative Customs

Prepare Declaration Declaration Reject information

Commercial Invoice

No. of Permit for the Export Verify submitted of Rice (A. 4) information

Export Declaration

Incorrect

Correct

Acknowledge the receipt Declaration Accept of declaration no.

51 Business Process Analysis Guide to Simplify Trade Procedures

Collect empty container(s) from yard

Carrier (Shipping Line) Port Authority Inland Haulage

Request the permission to move empty container(s) to exporter’s premise Take haulage to container yard

Empty Container Movement Request (TKT. 305)

Single payment Bulk payment Make payment

Record for Collect payment payment to be of port charges made in bulk

Receipt

Allocate required equipment

Lift container on to haulage

52 7. Annex

Stuff a container

Authorized Private Inspector Department of Agriculture Exporter of representatiive Office of Commodity Board of Trade of Inland Haulage Standards Thailand

Packing List

Prepare goods Transfer a for stuffing container to a warehouse

Randomly Registered not selected MS. 13/1

Collect Randomly sample selected

Monitor the Examine inspection physical condition

Poor

Fine

Stuff a container

Registered Unnecessary PO. 7

Necessary Fumigate the cargo

Monitor the Record fumigation fumigation method

Completed PO. 7 Seal the cargo Certificate of Fumigation

Conduct laboratory examination

Completed Satisfactory Request the MS. 13/1 Issue issuance MS. 24/1 Certificate of MS. 24/1 Analysis Unsatisfactory Collect Receive a copy MS. 24/1 MS. 24/1 of MS. 24/1

53 Business Process Analysis Guide to Simplify Trade Procedures

Transfer to port of departure

Customs Exporter or Representative Inland Haulage Port Authority

Prepare Prepare Goods Transition information Request for Control List Reject for cargo Port Entry movement (TKT. 308.2)

Goods Verify Submit TKT. 308.2 Transition information and pay entry fee Control List

Incorrect Request for Record Port Entry cargo/container (TKT. 308.2) information Correct

Goods Transition Control Print out Goods List Accept Transition Control List Acknowledge payment of entry fee

Goods Transition Transfer cargo Control List to port

Receipt

Ask for permission to enter port at Main Gate Record date-time of port entry Take cargo to point of container inspection Measure weight of cargo/container

Inspect container condition at time of gate in

Specify a point in a terminal Where container will be placed

Prepare EIR

Equipment Interchange Receipt (EIR)

Receive EIR

Take cargo to Sub-Gate Allocate equipment for cargo handling

54 7. Annex

Clear goods through customs (container)

Inland Haulage Customs Exporter (or Representative)

Equipment Interchange Receipt Retrieve declaration information Goods Transition Control List

Cross check declaration information with handed in documents

Transfer container to Randomly selected point of inspection

Inspect cargo Randomly not selected

Misconduct Misconduct not found found

Record a case to be filed

Record the quantity exported

Goods Transition Acknowledge actual Control List Audit quantity of goods to be exported

55 Business Process Analysis Guide to Simplify Trade Procedures

Handle container and stow on vessel

Exporter or Customs Carrier (Shipping Line) Inland Haulage Port Authority Representative

Transfer container to terminal

Coordinate container Stack container handling at terminal at terminal

Prepare Container Record date-time Loading List of when container is stacked

Container Loading List Coordinate a Container transfer of List Message container to berth

Coordinate a Allocate transfer of required container to berth equipment

Transfer container to berth

Manage a stowing of container on vessel Stow container on vessel

Prepare Record a number B/L of container stowed on vessel

Receive Bill of B/L Lading Prepare Outward Container List Prepare Manifest

Outward Container List

Incorrect Manifest Correct

Acknowledge Determine service and approve charge to be collected

Verify no. of consignments exported with declarations Acknowledge service charge to be paid

56 7. Annex

Prepare documents required by importer

Exporter or Representative Department of Foreign Department of Department of Department of Trade or Thai Agriculture Disease Control Consular Affairs Chamber of Commerce

Prepare documents for the application of documents required for importing jasmine rice

Commercial Not required Bill of Lading Invoice

Bill of Lading Completed Required Application for Letter of Phytosanitary Application for Credit Certificate Certificate of MS. 24/1 (PQ. 7) Fruit, Food, and Vegetable Application Certificate of Quarantine for Certificate Fumigation Verify submitted of Origin information Certificate of Verify submitted Origin information Incorrect Verify submitted information Incorrect Correct Incorrect Issue and Correct authenticate the Issue and certificate Correct authenticate the certificate Issue and authenticate the certificate

Certificate of Origin Phytosanitary Collect documents Certificate Certificate of required for importing Fruit, Food, jasmine rice and Vegetable Quarantine Copy of Legalization Certificate of Applicant’s ID required Origin and Certificate of copy Legalize Fruit, Food, submitted Vegetable Phytosanitary documents Quarantine Certificate and copy and copy Legalization not required Collect legalized documents

57 Business Process Analysis Guide to Simplify Trade Procedures

Verify the accuracy and authenticity of exported cargo

Office of Commodity Exporter or Representative Customs Department of Standards Foreign Trade

Prepare documents Prepare documents to declare the actual for submitting to amount exported Customs at port of exit

Permit for the Export Permit for the Export of rice (A. 4) with of Rice (A. 4) with actual quantity actual quantity exported exported Record the actual quantity exported Certificate of Standards Certificate of Standards and released date of Products (MS. 24) of Products (MS. 24) with actual quantity with actual quantity exported exported

Evidence of Sales (Purchase Order of Acknowledge Sales Contract) the provided information

Acknowledge the provided information

58 7. Annex

Pay

Exporter or Representative Exporter’s Bank Importer’s Bank Importer

Apply for L/C

Proforma Invoice Verify submitted information Application for L/C

Not Approved

Approved

Issue L/C

Arrange the Call for the L/C fee payment collection of L/C (Letter of Credit)

Collect L/C Notify the decline Decline the request for the payment to make payment of goods of goods Prepare documents required during importation as listed in L/C

Commercial Packing Insurance Bill of Invoice List Policy Lading

Phytosanitary Certificate Other document Certificate of Origin required by L/C

Request the Verify submitted payment of goods documents

Fail to meet conditions in L/C

Meet conditions in L/C

Forward submitted Verify submitted documents documents Fail to meet conditions set in L/C Verify submitted documents Meet conditions set in L/C Approved Not Approved

Receive the Transfer the Transfer the Collect the Make the payment payment payment payment payment

Collect documents required for import

59 Business Process Analysis Guide to Simplify Trade Procedures

The Time-Procedure Chart form the Business Process Analysis of Jasmine Rice Export from Thailand

Day ¤

4 days 16 15 1 day 14 3 days 13

12 10 1 day 1 day 11 2 days 6 7 8910

3 days 4 5 5 2 days 3 2 days 2

1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Process¤

1. Buy – Conclude sales contract and trade terms 8. Stuff container(s) 2. Obtain export permit 9. Transfer to port of departure 3. Arrange transport 10. Clear goods through customs 4. Arrange the inspection and fumigation 11. Handle container at terminal and stow on vessel 5. Obtain cargo insurance 12. Prepare documents required by importer 6. Provide customs declaration 13. Verify the accuracy/authenticity of exported cargo 7. Collect empty container(s) from yard 14. Pay – Claim payment of goods

60 United Nations United Nations publication Economic and Social Commission for Asia and the Pacific Sales No. E.09.II.F.21 Trade and Investment Division Copyright © United Nations 2009 United Nations Building ISBN: 978-92-1-120588-6 Rajadamnern Nok Avenue ST/ESCAP/2558 Bangkok 10200 Thailand Fax: +66 2 288 1026, 288 1027 E-mail: [email protected] Website: http://www.unescap.org/unnext USD $36 ISBN 978-92-1-120588-6

United Nations publication Printed in Bangkok December 2009 – 630