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Global Scanning Nigeria Limited is an Inspection company. She implements Trade Assurance under Import Verification Programme, Destination Inspection and Scanning Services for Governments and International Institutions. Container inspection systems are used to scan sea containers, air containers, road trucks, tourism vehicles and railcars that may dissimulate contraband, smuggling and/or misdeclared cargo including drugs, explosive and weapons. Destination Inspection program enables the proper identification of goods after shipment, with regards to quantity, tariff classification and price verification.
This report depicts how Quality, Total Quality Management (TQM), Pareto and Quality Circle can be applied in Price Verification and Classification Unit (PVCU), the hard and soft problems of PVCU, the impact and evaluation of quality, TQM, Pareto and Quality Circle on PVCU and recommendations.
Global Scanning Nigeria limited is an inspection company that is into Destination Inspection. Destination Inspection provides technical support and capacity building to Customs administrations to improve import clearance processes, facilitates the correct assessment of import duties and taxes, avoid capital flight, and ensure that such goods comply with the laws and relevant customs regulations of the importing country. In destination Inspection, a Risk Assessment Report (RAR) is issued by an inspection company and used by Importers to clear their goods from the port of entry. The RAR is also used by the Nigerian Customs Service (NCS) in determining the dutiable value of the goods. This RAR contains the dutiable amount, associated risk with the transaction, classification and valuation resolution of the imported goods.
I was the supervisor for the Price Verification and Classification Unit (PVCU) of the RAR department. My job was to ensure correct and timely resolution of classification cases using the harmonized system codes (HS codes), price verification cases using principles of Brussels definition of value (BDV) in relation to the productivity and quality targets of RAR department. Also to assess import eligibility, risk levels, scanning services and international trade documents. Risk management using profiler and supervision of team work.
Global Scanning Nigeria Limited is a subsidiary of Global Group which is the global leader in Testing, Verification, Inspection and Certification industry by total sales. Global Group was founded in 1878 in Rouen, France as a French Grain shipment inspection house and changed her name form French Grain shipment inspection house to Global Group in 1919 with over 48,000 employees operating a network of more than 1000 offices. Global Scanning Nigeria Limited was established in the year 2000 carrying out destination inspection programme through selected ports of entry in Nigeria.
The aim and objectives of the assignment is to discuss how Quality, TQM, Pareto and Quality Circles concept can be applied in PVCU, the hard and soft problems identification and analysis using Fish Bone Diagram, charts and graphs, the impact and evaluation of quality, TQM, Pareto and Quality Circles concept on PVCU and recommendations.
Fig. 1 Fish Bone Diagram
2.1 Hard Problems
High Error Rate
Hard problems are problems that can be easily measured. There have been increases in customer complaint as a result of the wrong classification and valuation opinions leading to customers paying high import duties. Timeliness on RAR issuance has been a major concern as too much time is spent in processing the RAR before it is issued and time spent in reviewing wrong RARs. In destination inspection, the vessels are often in the port of entry and if the RARs are not issued on time, the customer ends up paying demurrage till his goods are cleared.
2.2 Soft Problems
Quality vs. Quantity
Lack of Team Work
No feed back
Lack of Total Quality Management Knowledge
Quality Inspection at Final Stage only of business process
Bottlenecks in Process Flow
Lack of Training
Lack of Job satisfaction
Soft problems are problems that are difficult to measure. Bonuses paid to staff on the number of RARs issued have made employees pay less attention to quality since their source of livelihood is tied down to the number of RARs issued. This has lead to lack of team work as everybody is focused mainly on RAR issuance. Newly employed staff are given on the job training and not properly trained about the task they are to handle because management sees the job as a routine job therefore requires no training. This has contributed to the increase in erroneous RAR and customer complaint.
Quality inspection is done only at final stage of business process and the error caused by other departments is not detected until the final stage. This causes ripple effects on PVCU and other departments in the business process and has led to increase in production of poor RARs and low productivity as time is spent in reviewing poor RAR in order to eliminate errors before it's finally issued. Time spent in reviewing incorrect RAR can be spent in producing more RARs thereby increasing productivity. It is the culture that quality should be left for the quality assurance department hence employees pay less attention to quality. Since the job is a routine job, employees are faced with lack of job satisfaction. The stringent policies employed by management have also created bottlenecks in the process flow.
The American Society for Quality defined quality as "The totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs'' (cited in Heizer, J. & Render, B., 2009, pg. 168) which agrees with Tattersley, P. (1991) definition of quality as meeting the appropriate standard or specification of a service. This may include performance, reliability, appearance, delivery, maintainability, cost effectiveness and price. Quality is about getting things done right, the first time. Quality requires continuous improvement and building a total quality management environment since quality cannot be inspected into a product or service (Heizer, J. & Render, B., 2009). Quality can only be achieved through the management of people. Galagan, P. (1990) stated that over 20% of the revenue of a company are lost by neglecting quality (cited in Motwani et al 1994).
3.1 Total Quality Management
Total Quality Management (TQM) is a quality approach that deals with the entire organisation from supplier to customer (Heizer, J. & Render, B., 2009). TQM ensures an organisation has an overview of quality and focuses on prevention of problems rather than identification of problems. Stevenson, W. (2007) stated that, there are three main philosophies to TQM which is continuous improvement, involving everybody in an organisation and customer satisfaction. He further argued that TQM has broadened the conventional interpretation of quality associated with final products or services only to the holistic view of quality in every process of producing goods or delivering services. This has lead to the birth of quality management tools such as quality circles and Pareto.
Pareto is a problem solving tool that is used in focusing attention on the most important problems in an organisation (Stevenson, W. 2007). According to Sanders, R. (1992) Vilfredo Pareto is the origin of the Pareto concept which 80% of problems are caused by 20% of factors. Sanders, R (1992) further stated that once problems that account for 80% of poor quality can be identified, then the cause of such problems can be tackled rather than tackling all the problems associated with the poor quality.
3.4 Quality Circles
Quality circle is a TQM tool for promoting continuous improvement. Beckford, J. (2002) stated that quality circles is used to improve and develop an organisation; to respect human relations and build job satisfaction; to stretch human potential and capabilities.
The following questions below were directed to the operations Manager in order to ascertain and identify the problems associated with SGS Scanning Nigeria Limited.
Are bonuses paid to staff, if yes what are the criteria for a staff to be eligible for the bonus?
Are Feedbacks concerning productivity given to staff regularly?
Do your employees understand what is meant by quality?
How often is quality emphasized in the office?
How is quality built into your organisation? (quality circle and Quality Audit)
Are newly employed staffs been given Training before commencement of Duties?
How often is training organised in the office?
What is the rate of customer complaint and how is the customer complaints managed? (using pareto to know the problems to pay attention to)
What are the main areas of customer complaint? (Wrong Hs Codes and freight Uplift, Timeliness)
ANALYSIS OF RESULTS
5.1 Are bonuses paid to staff, if yes what are the criteria for a staff to be eligible for the bonus?
Operations Manager: Bonuses are paid to staff based on productivity. The more RARs issued by an employee, the more bonuses he is entitled to at the end of the month. This has made employees paid less attention to the quality of the RAR and more on quantity. This has lead to lack of team work since employees are interested in issuing plenty RARs based on the incentives tied to productivity.
Team play can be encouraged in PVCU by breaking the unit into small mini group. A team is defined as "a small group of people sharing a joint responsibility for their activity and contribution to an organisation" (Choppin, J., 1991, pg. 113). Bonuses should be tied to both quality and productivity and given to the mini groups based on performance rather than the individual. This would encourage healthy competition and co-operation among the mini groups. This would also ensure that the mini groups pay more attention to quality hence quality will be improved.
5.2 Are Feedbacks concerning productivity given to staff regularly?
5.3 Do your employees understand what is meant by quality?
Operations Manager: Quality according to the managers, supervisors and employees was just to
5.4 How often is quality emphasized in the office?
Operations Manager: Quality was only emphasized only when wrong RARs were produced and on customers complaint.
5.5 How is quality built into your organisation? (Quality circle)
Operations Manager: Quality is only introduced at the final stage of the RAR issuance. The RAR Quality Control Unit is responsible for inspection of RARs before they are issued.
Introduction of a quality team to audit the entire RAR before issuance will contribute to an error free RAR. Quality Circle is also another concept that can be introduced in the PVCU. Here all employees in PVCU are involved. This gives them a broader view of the entire operations processes in the department, frequent errors on RARs, policies that creates
5.6 Are newly employed staffs been given Training before commencement of Duties?
Operations Manager: The operations manager stated that since the job is a routine task, there was no need to train newly hired employees as they would eventually understand the roles and tasks over time. However quality training is very important and part of any organisation. Quality training is a must if organisations must compete and attain their goal of continuous improvement. Training is a critical to the success of any organisation. It equips a company's workforce to acquire the necessary skills to improve and maintain quality product and services (Motwani et al 1994).
5.7 How often is training organised in the office?
Operations Manager: Training are only organised for the managers only and not employees. It is s a culture and policy that only managers or employees who have spent over 10 years with the company that should be trained as a result of high labour turnover. The envisaged loss of employees after training resulted to the creation of the above policy.
The managers receive this training and do not transfer the necessary skills, information and knowledge gained from the training to the employees. When these managers eventually resign, the information and knowledge goes with them. Choppin, J. (1991) stated that people are the main resource within an organisation and the opportunity for personal development should be of the highest importance. If the workforce is trained and well equipped with the necessary skills and information related to the job, there would be an increase in quality of the services delivered. The progress of a workforce within an organisation is an opportunity for greater corporate achievement (Choppin, J. 1991). When problems affecting the quality of a product have been identified, Training will helps eliminate problems by equipping the employee with the necessary information and skills to be efficient in their task (Ferketish, B. and Hayden, J. 1992, cited in Motwani et al 1994).
5.8 What is the rate of customer complaint and how is the customer complaints managed?
Operations Manager: The rate of customer complaint has been on the increase. The Customer service department receives the complaint and send them directly to the Quality department and operations manager.
5.9 What are the main areas of customer complaint? (Use bar chart, graphs, and pie charts Wrong Hs Codes and freight Uplift, Timeliness)
Operations Manager: Customers complaint are on timeliness on RAR issuance, wrong harmonised system codes and wrong freight and free on board value (FOB value) uplift. Since there are no lay down procedures to checkmate wrong RARs before final issuance, production of wrong RAR opinion are bound to happen. Pareto concept can be used to record all the errors identified during the process or audit and inspection of RAR before issuance. With the result of the possible errors, management can now evaluate the results to determine which of these errors have great impact on the RARs and develop measures or strategies to tackle them.
Using Pareto to collate current error rates as during continuous improvement programme over a period of one year, monitoring the trend and improvement curve one would ascertain the level of quality attained and if there will be need to intensify effort on quality awareness or device new strategies to enhance quality.
Creating a customer complaint form to and collating results to see the trend of improvement.
Reduction in customer complaint
Reduction in Error rate
Reduction in cost of quality
Reduction in wrong RAR
Increase in productivity
Improved lead time
Annual Labour Turnover rate
Percentage of defective reports
Fig. A systems Approach to Training Evaluation (Source: Motwani et al 1994)