Process Of Duty Free Exports And Imports Biology Essay

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Concerning the process of duty free exports and imports in Rota, Spain several legal features have to be discussed. First of all, there are two ways to process the clearance papers: cooperate with customs agent (which is the fastest, but is more costly), and engage in this personally (which takes more time, but is less costly). If the sender chooses to work with customs agent, this would be optimal in terms of time and would reduce the whole process cycle. In the optimal variant, all suppliers are supposed to be working with custom agents. In reality, less than 50% of suppliers would eagerly cooperate with agents. For determining sigma level, it is suggested that at least 75% of suppliers work with agents; for determining current efficiency level, the amount of agents and suppliers dealing with clearance papers separately is expected to be 50/50.

Moreover, in the port of entry in Spain it is necessary to produce "Baja Consular" - evidence that the applicant is transferring his residence from abroad to Spain. In the US there is no such document and it cannot be bought there; thus, an affidavit executed before a consular officer is usually accepted by the Spanish customs authorities instead of "Baja Consular". Due to these regulations, it is necessary to travel to Cadiz to confirm physical authority and to perform several other customs issues outside of entry port (this is common for Cadiz port only). This was taken into account, and the optimal time was reduced by the transportation time. Currently Spanish regulations strictly require this; however, it could be a subject of negotiation to provide all the services within entry port, thus reducing cycle time and providing better service for the customers.

What are you going to measure? What is/are the variables and what is/are the metrics?

Main process variable is cycle time. Metrics for it will be the minutes spent on each operation.

Baseline performance measure is the part of the cycle that is actually done during 24 hours. By choosing this metric it will be possible to estimate customers' expectations as 100%, and current performance as a relative value t the chosen high level.

Also, it would be useful to measure costs per each transaction, but since the costs can vary depending on the character on the freight, and the main cause of interest is the time of the cycle, this variable will be measured where it's possible.

Number of Customs Documents processed is also a secondary metrics that affects performance, and indirectly influences the duration of process cycle. Such figures as performance per T1 item and number of documents processed per freight might serve as the indicators of the process improvement.

How do these variables connect to the overall performance improvement?

For performance improvement, reducing the time of the whole delivery cycle is important. Analysis using six sigma will show current service efficiency and the direction of improvement.

Number of documents processed and such metrics as performance per item and documents per freight also show the workload and indirectly indicate the performance.

How are you going to measure the variables?

During three months, the length of all operations reflected in the process flow chart will be tracked monthly, as well as the number of items processed. As a result, the number of operations for each month will be estimated, and average duration of each operation calculated.

What is the measurement process and plan?

Measurement process will involve keeping records of all freights processed, analyzing steps of each operation (which were previously defined) and checking the accuracy of forecasts for efficient time on each step and concerning frequency of occasions of each branch of the process.

The plan is to collect every month the summary information concerning the number of forms processed and average time spent on major custom clearance steps. The purpose if to determine process sigma by comparing actual and effective time (analogues for overall and value-added work in production cases), to compare it with existing sigma levels in service industry (especially logistics and delivery), and to outline perspectives and strategies for improving this process.

What documents can you use?

Documents used will be the custom forms (A7, A8, A9, T1, Conduce, DAA, DA-500, DUA, AE-302)

Do you need to develop any data collection forms?

No, special data collection forms need not be developed, table structure will be used.

Who is going to do the measuring?

Subject matter experts will perform the measuring.

How often will you collect the data?

Monthly, 1 time per month, during 3 months (July, August, September 2010)

Show the sample data.

2010 WORKLOAD MONTH

July

August

September

Total

Number of T-1's Validated

146

185

119

450

Number of "Letter of Authorization" issued

106

110

105

321

Number of 302's received

104

82

87

273

Number of 302's not received

2

2

0

4

Number of line items electronically closed on T-1.

248

309

313

870

Number of documentation reviewed and validated

609

613

620

1842

Number of Trips to Cadiz and ports

13

12

14

39

Number of A-7 line items prepared electronically

248

309

313

870

Number of A-9's prepared

4

3

1

8

Number of Conduce prepared

5

3

2

10

DA-500

2

1

1

4

DAA

0

1

0

1

DUA

5

7

4

16

Name of block

Current time (min)

Original AE-302 not received

245

Processes with customs agent (A-7 issued)

90

Processes with customs agent (T-1 issued)

165

AE-302 validation process.

225

A-8 validation (Algeciras)

70

A-7 processing (Algeciras)

80

A-7 processing (Cadiz)

350

A-7 processing (air terminals)

40

A-8 processing (Cadiz)

330

A-9 validation

270

Conduce validation

180

DAA validation

80

DUA validation

125

Validation of shipment documents

110

T-1 validation

245

Show the sample analysis that was done on the data.

First of all, current efficiency was estimated within the limits of its performance. For this, minimal time required for each block of operations was estimated. Performance here is understood as quick clearance for different process variation stages.

Below are the explanations for each step and table with effective and current time values.

Original AE-302 not received

Value added = 0, since this is erroneous situation and its occurrence should be minimized

Processes with customs agent (A-7 issued)

Notification of the cargo arrival could be started while cargo is in the arrical process; this step does not create value. Other steps are valuable, and 70 min is value added time.

Processes with customs agent (T-1 issued)

Here there are three effective steps: cargo inspection (20 min), T-1 issuing (20 min) and clearing cargo free of duty (A-7 form, 20 min). Total effective time is 60 min.

AE-302 validation process.

Cargo inspection and AE-302 signing is an effective step (25 min) as well as clearance office procession of the documents (20 min). Total effective time: 45 min.

A-8 validation (Algeciras)

Notification of cargo arrival could be done earlier; other steps are effective. Total effective time: 50 min.

A-7 processing (Algeciras)

All steps are effective. Total effective time: 80 min.

A-7 processing (Cadiz)

Shipping documents review and validation can be considered as effective step (30 min), A-7 preparation (20 min) and partly customs authorization and providing physical authority (20 min + 20 min). Total effective time: 90 min.

A-7 processing (air terminals)

All steps are effective. Total effective time: 40 min.

A-8 processing (Cadiz)

Review and validation of documents (20 min) and A-7 preparation (20 min) are effective steps. Custom authorization and providing physical authority will be included into steps dealing with A7. Total effective time: 40 min.

A-9 validation

Customs clearance (20 min), A-9 issuing (20 min) and physical authorization process (20 min) are effective. Total effective time: 60 min.

Conduce validation

Review and validation of documents (20 min), conduce issuing (20 min) and customs house authorization (20 min) are effective steps. Total effective time: 60 min.

DAA validation

DAA issuing (20 min) as well as inspecting the product and signing documents (20 min) are effective steps, in this case. Total effective time: 40 min.

DUA validation

DUA clearance (45 min) and issuing DUA (30 min) are effective; preparing and attaching the documents can be dome in previous phases. Total effective time: 75 min.

Validation of shipment documents

A-7 declaration (30 min), checking and validating other documents (20 min) and issuing A-7 (20 min) are effective steps. Total effective time: 70 min.

T-1 validation

Processing of electronic T-1 (20 min), proving duty free through A-7 (25 min) and visual inspection of cargo (60 min) can be considered effective. Total effective time: 105 min.

Block

Name of block

Current time (min)

Effective time (min)

1

Original AE-302 not received

245

0

2

Processes with customs agent (A-7 issued)

90

70

3

Processes with customs agent (T-1 issued)

165

60

4

AE-302 validation process.

225

45

5

A-8 validation (Algeciras)

70

50

6

A-7 processing (Algeciras)

80

80

7

A-7 processing (Cadiz)

350

90

8

A-7 processing (air terminals)

40

40

9

A-8 processing (Cadiz)

330

40

10

A-9 validation

270

60

11

Conduce validation

180

60

12

DAA validation

80

40

13

DUA validation

125

75

14

Validation of shipment documents

110

70

15

T-1 validation

245

105

In order to obtain current efficiency of the process, "optimal" time had to be estimated as well as current time. This was done using several assumptions:

in optimal case there will be at least 75% of suppliers using customs agent services; currently, there are 50%

in optimal case all time delays that are not directly related to the process itself, are minimized

in both cases the frequency of process variance remains the same.

Using sample data, frequencies of key variation points were calculated:

Frequencies (probabilities):

Frequency of A9

1.78%

Frequency of A7/A8

98.22%

Frequency of NATO countries

61.56%

Frequency of 302 not received (in all AE-302 group)

1.47%

Frequency of DAA/DA-500

1.11%

Frequency of Conduce

2.22%

Frequency of DUA

3.56%

Frequency of Cadiz shipments

8.67%

On the basis of these frequencies, process low chart and time estimates for each block it is possible to calculate process performance (P) and customers' expectations (E). Quality of the process can be calculated as performance divided by expectations: Q = P/E. This formula was used for calculating sigma of the process.

Explain the results and the baseline performance measure, mean and sigma.

Baseline performance measure is the part of the cycle that is actually done during 24 hours. By choosing such metrics it is possible to estimate customers' expectations as 100%, and current performance as a relative value t the chosen high level. Here it is supposed that customers expect 100% quality, but it is true for most services.

Intermediate calculations:

 

Agent

Current

Optimal

1

Processes with customs agent (T-1 issued)

165.00

60.00

2

Processes with customs agent (A-7 issued)

90.00

70.00

Total

255.00

130.00

 

No agent

Current

Optimal

1

Validation of shipment documents

110.00

70.00

2

T-1 validation

245.00

105.00

3

A7-A8 processing

192.45

127.69

4

A-9 validation

4.80

1.07

Total

552.25

303.76

 

AE-302 total time

Current

Optimal

1

AE-302 not received

3.59

0.00

2

AE-302 validation process.

225.00

45.00

 

Total

228.59

45.00

Final estimate:

 

Cycle time

Current

Optimal

1

Stage 1 (agent / no agent)

403.63

173.44

2

AE-302 validation

140.71

27.70

3

DAA validation

0.89

0.44

4

Conduce validation

4.00

1.33

5

DUA validation

4.44

2.67

Total (minutes)

553.67

205.58

Total (days)

0.38

0.14

Part of cycle done per 1 day

2.60

7.00

Quality

37.13%

Mean value of the cycle length of current process is P = 553.67 minutes.

Customers' expectations: E = 205.58 minutes.

Quality = 37.13%

Thus, sigma of the process is approximately 1.18, which is quite low and should be improved.

Calculate the current six sigma limits.

Six sigma limits for this process are will be equal to 208 minutes approximately.

For service, the level of 3-4.5 sigma limits is considered acceptable. The major task is to improve process performance at least to 3 sigma level, or 93.3%, which is equal to 220.5 minutes per cycle.

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