1    Mountain Equipment    Co-op    Directed Studies 2011Presented by:Seth Lang &Dan Turner                          Mount...
2                              ACKNOWLEDGEMENTS           The following individual’s contributed in making this project po...
3                                                          TABLE OF CONTENTSAcknowledgements ................................
4       Internal Interface...................................................................................................
5REPORT STRUCTUREThe purpose of this report is focused on two areas within Mountain Equipment Co-ops daily businesspractic...
6                                            ORGANIZATION OVERVIEW        BACKGROUND        Mountain Equipment Co-op (MEC)...
7ORGANIZATION BELIEF’SPURPOSE“To help people enjoy the benefits of self-propelled wilderness-oriented recreation.”MISSION“...
8PART 1: MEC’S CBSA COMPLIANCE ANALYSIS Co-op – Directed Studies 2011                          Mountain Equipment
9                                    EXECUTIVE SUMMARYMountain Equipment Co-operative is focused on becoming a member of t...
10INTRODUCTIONPURPOSE AND OBJECTIVEThe purpose of this report is to identify MEC’s current compliance level in regards to ...
11CBSA COMPLIANCE PROGRAMSCBSA works with multiple programs to help ensure safe and secure border crossings across Canada....
12PARTNERS IN PROTECTIONPartner’s In Protection (PIP) was originally constructed in 1995 as a voluntary program with a foc...
13MEC’S CURRENT CBSA COMPLIANCE PRACTICESWith the rapid increase in global trade and border security becoming more focused...
14for transfer of goods from container to warehouse. Shipments are checked and counted for accuracyand damage, with any di...
15PHYSICALPhysical Security and Access Controls    Physical Security- MEC has implemented high levels of security complia...
16DATA AND DOCUMENTATIONThe accounting trigger1 of all paperwork involved in the transport of goods is crucial to the busi...
17MEC’S REASSESSMENT HISTORY 2008-2009As a large retailer, MEC experiences the same issues to overcome as any business inv...
18KEY PERFORMANCE INDICATOR’S-CBSA COMPLIANCEKey Performance Indicator’s (KPI’s) help organizations understand how well th...
19partners such as brokers and vendors is identified, MEC has the ability to restructure commercial importfunctions and de...
20     Average trade compliance cost           Percentage change in ratio of trade related costs to declared value (incl...
21 This would be broken down to a weighted measurement calculation of:     (8*7.5)(4*20)(1*25)(1*20)                 This ...
22   When viewing all assessments completed during the two-year period, it was found that a total of 876   errors were mad...
23       MOVEMENT OF DOCUMENTATION       The movement of documentation plays a critical role in receiving a CSA designatio...
24         EXTERNAL DOCUMENTATION RESPONSIBILITIES  FIGURE 7-EXTERNAL DOCUMENTATION RESPONSIBILITIES                      ...
25same day. This is delivered through an online system data management system.It is recommended that the MEC Logistics dep...
26MEC has experienced productive results in establishing cost saving relationships with vendors, asdescribed in the Sushi ...
27   MEC is currently working on transitioning to a larger Head Office in 2012, and it is recommended that   during this m...
28and transitioning towards a paperless document system, an improvement in sustainability practices willfollow. These reco...
29                                    BIBLIOGRAPHY   Advanced Performance Institute. (2011, April 14). What is a Key Perfo...
30APPENDENCESAPPENDIX A-PROCESS MAP OF DOCUMENTATION MOVEMENTS                           Mountain Equipment Co-op – Direct...
31APPENDIX B-TOP 15 ERROR PRONE VENDORS FROM 2008 AND 2009                             Mountain Equipment Co-op – Directed...
32          APPENDIX C- CUSTOMS COMPLIANCE WEIGHTED MEASURING TOOL          Low = 2.5 points          Medium = 5 points   ...
33APPENDIX F- VENDOR REPORT                                                                                     Vendor    ...
34APPENDIX G-SUPPLY CHAIN MANAGEMENT REPORT 2012    MOUNTAIN EQUIPMENT CO-OPERATIVE’S SUPPLY CHAIN MANAGEMENT REPORT      ...
Upcoming SlideShare
Loading in …5
×

CBSA COMPLIANCE REPORT

700 views

Published on

Section 1 of my directed studies report.

Published in: Business, Technology
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
700
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
7
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

CBSA COMPLIANCE REPORT

  1. 1. 1 Mountain Equipment Co-op Directed Studies 2011Presented by:Seth Lang &Dan Turner Mountain Equipment Co-op and the British Columbia Institute of Technology have collaborated on a project involving two important areas of focus within the logistics side of the organization, and the industry itself. ------------------------------------------------------------------------ 5/11/2011 The first part of this study focuses on identifying MEC’s current compliance level in regards to Canadian Border Service’s Agency’s (CBSA) rules and regulations, and determining best current industry practices that can be implemented into MEC’s supply chain management ------------------------------------------------------------------------ The second part of this study relates the effect transportation fuel surcharges have on the overall logistics expense of MEC’s business, and how these surcharges may be kept to a minimum. Mountain Equipment Co-op – Directed Studies 2011
  2. 2. 2 ACKNOWLEDGEMENTS The following individual’s contributed in making this project possible. This project could not have been successfully completed without a steady flow of support,guidance and leadership that was provided to us throughout our Directed Studies experience. A very special thank you goes to the following: Mountain Equipment Co-op Debbie Sung Mike Au Paul Robles Manager Supply Chain Logistics Analyst Logistics Analyst Services British Columbia Institute of Technology Gordon Kennedy Instructor and Project Advisor And all others who offered advice and assistance in contribution to the Mountain Equipment Co-op Directed Studies 2011. THANK YOU!!! And a special thank you goes to our families for your patience and understanding with late nights, early mornings, and high stress moments!! “In helping others, we shall help ourselves, for whatever good we give out completes the circle and comes back to us” Flora Edwards Mountain Equipment Co-op – Directed Studies 2011
  3. 3. 3 TABLE OF CONTENTSAcknowledgements .............................................................................................................................................. 1Table of Figures ..................................................................................................................................................... 4Report Structure .................................................................................................................................................... 5Organization Overview ....................................................................................................................................... 6 Background ......................................................................................................................................................... 6 Organization Belief’s ....................................................................................................................................... 7Part 1: MEC’s CBSA Compliance Analysis .................................................................................................... 8Executive Summary.............................................................................................................................................. 9 Introduction ..................................................................................................................................................... 10 Purpose and Objective............................................................................................................................. 10 History of CBSA .......................................................................................................................................... 10 CBSA Compliance Programs ...................................................................................................................... 11 MEC’s Current CBSA Compliance Practices ......................................................................................... 13 People ............................................................................................................................................................ 13 Physical ......................................................................................................................................................... 15 Data and Documentation ........................................................................................................................ 16 MEC’s Reassessment History 2008-2009............................................................................................. 17 Key Performance Indicator’s-CBSA Compliance ............................................................................... 18 KPI’s –MEC Practices .................................................................................................................................... 18 KPI’S-Industry Practices ............................................................................................................................. 19Key Findings......................................................................................................................................................... 20 Reassessment Analysis ................................................................................................................................ 20 Movement of Documentation ................................................................................................................... 23 Internal Documentation Responsibilities ............................................................................................ 23 External Documentation Responsibilities ........................................................................................... 24Recommendations ............................................................................................................................................. 24 Benchmarking and Key Performance Indicators .............................................................................. 24 Supply Chain Communication................................................................................................................... 25 Internal Movement of Documentation .................................................................................................. 26 Mountain Equipment Co-op – Directed Studies 2011
  4. 4. 4 Internal Interface....................................................................................................................................... 26 External Interface ...................................................................................................................................... 26 Primary Benefits Of Recommendations................................................................................................ 27 Secondary Benefits of Recommendations............................................................................................ 27Bibliography......................................................................................................................................................... 29MEC Internal Document’s Used In This Study ........................................................................................ 29MEC Internal Sources ....................................................................................................................................... 29Appendences........................................................................................................................................................ 30 Appendix A-Process Map of Documentation Movements ............................................................ 30 Appendix B-Top 15 Error Prone Vendors from 2008 and 2009 ............................................... 31 Appendix C- Customs Compliance Weighted Measuring Tool ................................................... 32 Appendix D-Errors by Type and Source-2008 and 2009 ............................................................. 32 Appendix E- Weighted Scores by Type and Source-2008 and 2009 ........................................ 32 Appendix F- Vendor Report ..................................................................................................................... 33 Appendix G-Supply Chain Management Report 2012 ................................................................... 34 TABLE OF FIGURESFigure 1-Organizational Chart..................................................................................................................... 6Figure 2-Error by Type-2008 and 2009 .............................................................................................. 17Figure 3-Error by Source-2008 and 2009 .......................................................................................... 17Figure 5-Error Type by Vendor ................................................................................................................ 21Figure 4-Weighted Measurement Results .......................................................................................... 21Figure 6-Vendor Information 2008 ....................................................................................................... 22Figure 7-Vendor Information 2009 ....................................................................................................... 22Figure 8-Internal Documentation Responsibilities ...................................................................... 23Figure 9-External Documentation Responsibilities ..................................................................... 24Figure 10-Time Cost to MEC Logistics-2008 and 2009 ................................................................ 24Figure 11-Paperless Supply Chain Management ............................................................................ 27 Mountain Equipment Co-op – Directed Studies 2011
  5. 5. 5REPORT STRUCTUREThe purpose of this report is focused on two areas within Mountain Equipment Co-ops daily businesspractices. It has been separated into two documents in order to maintain a clear focus on what is beingdemonstrated on each topic. Each topic has no direct correlation to the other, and should beconsidered as individual subjects.The first stage of this report is an analysis of Mountain Equipment Co-op’s (MEC) current levels ofcompliance with the Canadian Border Services Agency (CBSA) trade requirements and the opportunitiesof improvement that may be incorporated into the organizations practices.The second part will explain the relationship that MEC has with their supply chain partners in regards tofuel surcharges that are included in the contract of each carrier that are defined within the scope of thestudy. An analysis of best practices that organizations in the trade industry use, and recommendationsto reduce this expense for MEC will be provided. Mountain Equipment Co-op – Directed Studies 2011
  6. 6. 6 ORGANIZATION OVERVIEW BACKGROUND Mountain Equipment Co-op (MEC) was founded in 1971 with six original members. From the opening of the first store in Vancouver, the co-operative has grown to 14 retail stores across Canada, with plans for expansion by 2012. When MEC first started out, they wanted to distinguish themselves from other outdoor retailers through eco-friendly product lines and an intensive focus on corporate social responsibility. These values have led MEC from establishing one location to start with, to a large-scale provider of sporting goods and services. MEC has over 3 million members worldwide, and are considered the largest retail co-operative within Canada. The co-operative is run by the CEO who is selected by the Board of Director’s, and have senior management in place for various departments such as Logistics, Production, Finance and Marketing (see Figure 1). These departments work together in order to create a successful co-operative that has the ability to help others within the community at the same time. (Mountain Equipment Co-op, 2011) Board of DirectorsFIGURE 1-ORGANIZATIONAL CHART Mountain Equipment Co-op – Directed Studies 2011
  7. 7. 7ORGANIZATION BELIEF’SPURPOSE“To help people enjoy the benefits of self-propelled wilderness-oriented recreation.”MISSION“Mountain Equipment Co-op provides quality products and services for self-propelledwilderness-oriented recreation, such as hiking and mountaineering, at the lowest reasonableprice in an informative, respectful manner. We are a member-owned co-operative striving forsocial and environmental leadership”VALUESMEC’s core values and beliefs revolve around their influence on their surroundings, and the people thatinhabit them. Not only does MEC want to minimize their effect on environmental issues, but they alsosupport improving these conditions for the future. Key values revolve around how they encourage theiremployee’s to be involved with improvement opportunities of their business. Employee’s opinions areimportant at MEC, and are encouraged in relation to determining future decisions made as a co-operative.MEC focuses sales primarily within Canada. Their contribution to globalization consists of relationshipswith suppliers from up to 12 countries other than Canada. Within these relationships, MEC applies strictethical sourcing regulations in order to support international communities where suppliers are locatedaround the world.THE LOGISTIC’S TEAMThe Logistics team of MEC consists of a small department located within the Head Office in Vancouver.They are consistently searching for ways to reduce costs, minimize risk, and improve efficiency to thesupply chain that help the organization achieve annual goals.As a service provider within the sporting goods industry, MEC has put into place supply chainmanagement systems in order to oversee the inflows and outflows of products and product componentsto their necessary locations. The Logistics department of MEC, who this Directed Studies is based with,works with all suppliers, carriers and the DC in Surrey to ensure freight expense is minimized, deliveriesare on time, and accurate shipments are being transported. (Mountain Equipment Co-op, 2011) Mountain Equipment Co-op – Directed Studies 2011
  8. 8. 8PART 1: MEC’S CBSA COMPLIANCE ANALYSIS Co-op – Directed Studies 2011 Mountain Equipment
  9. 9. 9 EXECUTIVE SUMMARYMountain Equipment Co-operative is focused on becoming a member of the Custom’s Self-Assessment(CSA) program under the Canadian Border Service’s Agency (CBSA), which involves demonstrating a highlevel of compliance in regards to the security of documents and goods moving into Canada.The purpose of this report is to identify MEC current compliance levels in regards to CBSA regulationsand determine best industry practices that can be implemented into the MEC supply chainmanagement. An important aspect of the Logistics department is to become more pro-active withvendor-trade compliance and establish benchmarks to see where it stands compared to leaders withinthe commercial import industry.Industry trends show that businesses are focusing on improving customs compliance practices byrestructuring supply chain relationships. The changes involved in this transition consist of higher levelsof communication in regards to commercial imports, and the ability to transport key documentation inthe most efficient, secure manner.Methodologies used within this report include collecting internal data through MEC records, researchingindustry practices, and communication with industry professionals. Actions have been taken to examineprocedures currently in place, analyzing areas such as:  Current levels of CBSA compliance for MEC  Industry wide levels of CBSA compliance  Best practices in KPI’s and benchmarking  Reassessment of past MEC commercial documentationThe results of the findings showed that although MEC applies an acceptable level of compliance withCBSA, there are opportunities that exist to achieve higher standards in regards to supply chain securitymanagement. It has been determined that MEC will accomplish goals of top levels of CBSA compliancewith the following recommendations:  Establish uniformed KPI’s and benchmarks  Raise levels of information sharing between all supply chain relationships  Implement paperless document management systemBy following these recommendations MEC will have the opportunity to establish themselves as leadersin CBSA vendor-trade compliance, and have the ability to respond quicker to any changes within theinternational trading environment. Mountain Equipment Co-op – Directed Studies 2011
  10. 10. 10INTRODUCTIONPURPOSE AND OBJECTIVEThe purpose of this report is to identify MEC’s current compliance level in regards to CBSA’s rules andregulations, and to determine best current industry practices that can be implemented into MEC’ssupply chain management. MEC’s objective is to transition towards becoming a more “pro-active”participant within the vendor-trade compliance with the CBSA, identifying best practises to improvetheir operations. MEC’s is currently striving to stay compliant with CBSA rules and regulations andbenchmark themselves against leaders and trendsetters of CBSA compliance within the industry.As an importer of commercial goods, concentration of efforts must be applied to ensure that propersecurity and full documentation is provided throughout the supply chain. This ensures that no finesfrom the Administrative Monetary Policy System (AMPS) are received, or worst case scenario, therestriction of imports is imposed on the business. (CBSA, 2011)After completing a full analysis of MEC’s compliance levels compared to best industry practices, arecommendation of opportunities for improvement within vendor-trade import/export practices will beapplied. Gaps in MEC’s supply chain management system will be identified, in order to enhance theorganizations compliance with CBSA.HISTORY OF CBSA IN A TYPICAL WEEK, THE CBSA*:In regards to international trade, border security and compliance has  Welcomes 1.7 millionincreased significantly over the past decade. Due to factors such as the travellersrapid growth of globalization, and the threats of terrorism such as the  Examines over 105,000event of 9/11, the creation of the Canadian Border Services Agency travellers(CBSA) was formed in 2003. Prior to this time, there were three major  Seizes drugs worth overgroups of government that were responsible for border security within $7 millionCanada.  Seizes an average of over $780,000 in undeclared  Citizenship and Immigration Canada currency  Intercepts 1000 food,  Canada Customs and Revenue Agency plant and animal products  Canadian Food Inspection Agency that pose a threat to Canadas agricultureThe CBSA was formed to oversee the responsibilities and functions of  Removes 250 people whothese groups, offering services at approximately 1,200 points across are inadmissible toCanada and over 30 international locations. CBSA manages the Canada, including over 30commercial import/export sector of Canada, regulating the inflows and criminals  Collects $75 million inoutflows of goods within the Canadian borders. Programs have been import duties, and $330established for importers and exporters of commercial goods such as million in GST/HSTPartners in Protection (PIP), Customs Self-Assessment (CSA), andPartners in Compliance (PIC) to help streamline the border process for * Based on FY 2008-2009 data.low-risk importers and carriers. (CBSA, 2011) All data is approximate. Mountain Equipment Co-op – Directed Studies 2011
  11. 11. 11CBSA COMPLIANCE PROGRAMSCBSA works with multiple programs to help ensure safe and secure border crossings across Canada. Thethree main points that CBSA focuses on in regards to commercial compliance programs are  Smoother border clearances  The development of information resources  Security and enforcement in dealing with tradePrograms such as Partner’s in Protection (PIP) are provided on a voluntary basis, while the AdvancedCommercial Information (ACI) program is becoming a mandatory step in the border compliance stage ofthe import/export industry.ADVANCED COMMERCIAL INFORMATIONCBSA established the Advanced Commercial Information (ACI) program in 2004 with the focus being onrisk management of goods crossing the border. ACI requires that all partners associated with thisprogram to submit all documentation electronically to CBSA prior to arrival at any border crossings. Thishelps Custom’s identify any possible threats ahead of time, and provides a smoother security process forall parties involved.The Advanced Commercial Information program is currently being implemented in three separatephases for the transportation industry of Canada.  Phase 1 -Marine Mode  Phase 1 was implemented in 2004, requiring all marine carriers to electronically submit cargo data to CBSA 24 hours prior to arrival  Phase 2 -Air Mode and Marine Shipments Loaded in United States  Effective in 2006, requiring all air carriers to electronically submit cargo data to CBSA 4 hours prior to arrival  Phase 3 –eManifest (in process)  This phase requires all highway carriers to submit cargo data to CBSA 1 hour prior to arrival and rail carriers 2 hours before arrival  The eManifest program is currently in a transition stage, with an implementation timeline starting in late 2011By 2013 all CBSA clients will be required to incorporate the ACI program into daily business practices. Allclients will be able to submit documentation through regular EDI programs, or the new eManifest portalthat will be provided late 2011. (CBSA, 2012) Mountain Equipment Co-op – Directed Studies 2011
  12. 12. 12PARTNERS IN PROTECTIONPartner’s In Protection (PIP) was originally constructed in 1995 as a voluntary program with a focus onpromoting business awareness and compliance with customs regulations. After September 11, 2001,PIP altered their approach to focus more on trade chain security. The level of importance for the PIPprogram increased in 2002 when it became mandatory for importers to have a PIP designation in orderto become involved in the FAST (Free and Secure Trade) initiative. PIP has aligned similar securitystandards with compliance related programs around the world in order to enhance the internationaltrade network of low-risk businesses.The application process for PIP starts with potential members submitting a security profile to CBSA. Theprofile demonstrates whether or not the business is meeting security requirements, in order to qualifyfor the second stage. After the security profile has been submitted, a CBSA officer reviews theinformation, determines if security requirements have been met and if approved, schedules an on-sitevalidation with the organization. After the security profile and on-site validation has been approved, aMemorandum of Understanding (MOU) is signed to finalize the PIP designation. PIP members mustprovide updated security profiles and schedule site validations every three years. (CBSA, 2012)CUSTOMS SELF-ASSESSMENTThe Customs Self-Assessment (CSA) program was designed 2001to streamline the clearance process, and simplify accounting and CSA APPLICATION PART 2payment procedures for border crossings. With a CSA REQUIREMENTSmembership, businesses have the ability to submit import A demonstration of the flow ofdocumentation once a month instead of one transaction at a documentation and goods must betime. This reduces the amount of time and money spent on provided, in both a report andcustom processes for businesses, and allows a more accurate process map, of different importdocumentation on all imports. scenarios such as:  a purchase where you directAs with PIP, there is a three-step process in order to receive a CSA ship the goods to a third partydesignation. First, businesses are subjected to a risk assessment ofcompliance history with CBSA. Once the first stage has been  a purchase where you enter the goods into your receivingcompleted, a detailed report showing that business practices, systembooks, records, and all other documentation, supportscompliance history records that have been examined.  an importation where you make no payment for theThis shows that a CSA member has implemented steps to remain goodscompliant with supply chain security in any situation that canarise. In the final stage approved members are required to sign a  other adjustments such asSummary of Program Requirements that states all specific overages, shortages and damaged goodsrequirements of that business. (CBSA, 2011) Mountain Equipment Co-op – Directed Studies 2011
  13. 13. 13MEC’S CURRENT CBSA COMPLIANCE PRACTICESWith the rapid increase in global trade and border security becoming more focused on maintaining asafe and seamless flow of import/exports, MEC recognizes that as an importer of commercial goods,having high levels of compliance is important to the daily business practices of the organization. Inorder to achieve such high levels, procedures have been put into place in all departments, withcompliance and security being focused towards three main areas:  People: employees, suppliers, carriers, brokers  Physical: Head Office, Distribution Centre, containers, trailers  Documents: filing systems for invoices, customs forms, payment receiptsMountain Equipment Co-op has been a member of the Partner’s in Protection program since 2008, andonly uses carriers that are PIP, FAST, or C-TPAT (Custom’s-Trade Partnership Against Terrorism) certified.The Partner’s in Protection membership is concentrated on the physical security and compliancemeasures that are put into place at MEC.Currently, MEC is going through the process of the second stage of a CSA designation. As a PIPdesignation shows a business has achieved the physical security requirements from CBSA, the CSAprogram demonstrates that a member has taken the steps necessary to ensure the security andcompliance of all paperwork involved in the movement of goods. They have undergone a riskassessment of CBSA compliance history, and have provided detailed information on corporate structure,key business activities, and policies related to risk management. The second part of the CSA applicationfocuses on the documentation aspect of the organization, with MEC developing a report that details allbook and record keeping, and the controls put into place to manage this system.PEOPLEINTERNALPersonnel SecurityPotential MEC employees go through a screening process, which includes background and referencechecks when applicable. Once a candidate for employment has been hired, they are required to sign aconfidentiality agreement. If necessary, depending on position of the new employee, responsibilitiessuch as swipe keys and online system access are assigned.MEC has steps in place to manage the termination of employees when the situation arises. Terminatedemployees are required to submit all MEC property such as swipe keys, and management levels arerequired to ensure the removal of IT access before the employee is escorted off MEC property.Procedural SecurityMEC takes certain measures such as process mapping in order to recognize gaps in the security of thesupply chain. Process mapping helps identify where MEC needs to concentrate efforts, and which areasoffer room for improvement. The DC of MEC has procedures put into place for shipping and receivingdepartments for accepting deliveries and organizing outbound deliveries to other locations. Warehousestaff receives notice and documentation prior to the arrival of all inbound carriers in order to prepare Mountain Equipment Co-op – Directed Studies 2011
  14. 14. 14for transfer of goods from container to warehouse. Shipments are checked and counted for accuracyand damage, with any discrepancies being reported to management.Security Training and AwarenessMEC requires that all employees, old and new, are aware of possible security threats within theirenvironment, and the proper building security procedures are implemented to handle those threats. Itis the management’s responsibility to maintain this awareness, and ensure that every new employee isprovided this information through an orientation. Policies that employees are educated on includeInformation Systems and the Business Code of Conduct policy. In the event of emergency situations atany MEC location, the Business Resumption Plan has been put into place, in order to maintain highlevels of security throughout the supply chain. The Crisis Management Team in the Head Officemonitors this plan.Management monitors security training and awareness, and meetings are held to ensure properawareness is educated to all employees. Changes in security or PIP related news is communicatedthrough the MEC intranet.EXTERNALSupply Chain SecurityThrough the course of the supply chain, MEC has developed business relationships with entities such asvendors, carriers, brokers, and freight forwarders. Responsibility over the introduction and supervisionof these relationships has been broken down into three different areas. These three departments atMEC constantly review all supply chain partner’s security profiles, to strive towards supply chain securityrisk levels of zero.  Production- uses a “MEC Production Facility Technical Evaluation Form” and a “STEP” process for choosing manufacturers. These two documents help review potential suppliers technical capabilities and social compliance. It is MEC’s goal to ensure that high standards of ethical sourcing have been applied to each supplier, with regular visits being made to factories to monitor this compliance.  Buying and Design- responsible for product vendor’s selection. Managers of this department are trained in vendor selection, which takes a look at criteria such as financial health, product strength and supply capabilities.  Logistics-the Logistics department at MEC is responsible for carrier selection to transport products from manufacturers and vendors. A list of carrier selection criteria has been established that includes rates, services, claims, and any security compliance designations that may apply to that carrier (PIP, FAST). Vendors are forwarded a letter of “Supply Chain Security Partnership Requirements” that request all WCO-accredited security programs they are involved in. If vendors do not respond, they have to complete a supply chain security profile questionnaire or provide a statement declaring security compliance with MEC The Logistics department is also responsible for maintaining records on security profile, and communicate any irregularities that occur to the Production and/or Buying and Design department. Mountain Equipment Co-op – Directed Studies 2011
  15. 15. 15PHYSICALPhysical Security and Access Controls  Physical Security- MEC has implemented high levels of security compliance within all physical buildings under the business. The DC located in Surrey is where the majority of cross-border shipments arrive, and security measures have been put in place to prevent and to react to possible security threats in the most efficient manner possible. DC management are responsible for ensuring that all entry points into the building and property are securely locked, including all windows, doors, gates and fences. Shipment handling areas and storage facilities are equipped with video surveillance and alarms, and DC management is responsible for issuing access to all areas. This access is provided through the control of keys, pass cards and locks that are distributed to selected levels of personnel. The DC has maintained security control around the premises through a system of gates surrounding the location. Loading bays are designed in a secure fenced area, and gates are open from 6:00am to 4:30pm in order to prevent after-hours access. The stability of gate and fence security is continuously monitored, and signage has been put in place to make visitors aware of “No Trespassing” or “Authorized Personnel Only” areas. Adequate lighting has been put into place inside and outside the DC facilities. This helps make visitors aware of all signage, and which areas of the DC can be accessed without supervision.  Access Controls- When a visitor arrives at the DC they must park in a designated visitor’s area, or if entering the loading bay, they have already made an appointment with the office to notify of arrival. Once a visitor has parked, they need to buzz in at the entrance, and a MEC employee has to let them into the building. A carrier dropping a load off in the bay has to buzz in as well, at an entrance to the cargo handling area. At this point a MEC employee will check all paperwork and documentation to start the unloading process. All employees at DC are required to have proper identification in order to access certain areas of the facilities, and the issuance of all identification badges and key cards are properly documented by management. This helps clearly identify threats that may be presented on the MEC property. MEC has procedures in place for employees in dealing with the challenging and removal of unauthorized visitors. Communication systems are defined in the orientation to new employees that have steps in place for contacting internal security personnel, and local law enforcement if necessary.Container, Trailer and Railcar SecurityShipments are received on a daily basis from MEC’s carriers to the DC in Surrey. All shipments aredelivered by service providers who are FAST, PIP, and/or C-TPAT certified. Once a shipment has arrivedat the warehouse, a MEC employee will examine the outside of the container and check the seal on thedoor and verified against the waybill to ensure cargo integrity. Seal numbers are recorded, and anydiscrepancies such as broken seals will be reported to the Logistics department at Head Office.Once the outside of the container and seal has met requirements, the doors are opened on thecontainer and secured against a loading door to prevent access by unwarranted individuals. There is nounauthorized entry to the container, trailer or storage area within the DC. Mountain Equipment Co-op – Directed Studies 2011
  16. 16. 16DATA AND DOCUMENTATIONThe accounting trigger1 of all paperwork involved in the transport of goods is crucial to the business of acommercial importer. An organized and secure flow of documentation shows CBSA that goods andsensitive information are maintaining high levels of security throughout the supply chain. MEC haspolicies and procedures put into place in order to maintain a directive of high levels of compliance withCBSA in regards to paperwork involved in the transport of goods.The paperwork involved with transporting goods across the Canadian border begins with the Buyingdepartment at MEC submitting a PO to the chosen vendor. Once vendor has confirmed order with areceipt, the introduction of the BOL and commercial invoice is implemented into the documentationflow. Once this paperwork has been developed, it is submitted by vendor to the MEC Logisticsdepartment for review. Once the paperwork has been accurately confirmed, it is sent to broker for thepreparation of customs documents, which are introduced to the set of paperwork. This set is also sentto the DC in Surrey in order to prepare to receive the shipment. At this point, copies of documentationare under the responsibility of the broker, the distribution centre, and also the carrier to ensure therelease of goods at the border.Once duties and tariffs have been paid to customs, the broker sends the documentation package to MECFinance to prepare for payment to vendor. During this process, DC receives shipment and immediatelychecks the packing list against the BOL to confirm that an accurate order has been sent. If an issue withthe shipment is encountered, an over/under in total pieces or the damage of goods is found, a claim isfiled to the appropriate parties. Whether a claim is warranted or not, sets of documentation are sentdaily by courier to the MEC Head Office to proceed with the next stage in the paperwork process.The H/O is where the documentation flow reaches its final stage, proceeding with further review toconfirm accuracy and compliance with all CBSA regulations. Finance department is responsible formonthly sweeps2 of matching3 documentation and reviewing sets of paperwork to prepare forfinalization. If errors are determined within the paperwork, a reassessment process is initiated, withFinance sourcing the error and communicating with Logistics in order to proceed with a B2 submissionto CBSA. Completed matched sets of documentation, and adjusted B2 cases are completed withpayment to vendor and filed for storage within a secure area at the Head Office.The flow of documentation through the import process is fully demonstrated in Appendix A of thisreport with a detailed process map.1 Accounting trigger is the internal process of using books and records to account for all imports to submit to customs2 Monthly sweeps are the reconciliation of any unmatched documents missed by the “Accounting Trigger”3 Matching is the process of analyzing documentation received from DC with sets of paperwork from broker to maintainaccuracy in areas such as quantities received, proper payment, and CBSA issues such as HS coding, C of O, and Value forDuty. Mountain Equipment Co-op – Directed Studies 2011
  17. 17. 17MEC’S REASSESSMENT HISTORY 2008-2009As a large retailer, MEC experiences the same issues to overcome as any business involved withcommercial trade. Mountain Equipment Co-op maintains records of CBSA compliance for every invoice,shipment, and product that passes through Canadianborders, in order to reveal gaps they may havethroughout their supply chain.A large focus of CBSA compliance is the re-assessmentof all import documents that are utilized throughoutthe year. MEC reviews documentation on a consistentbasis in order to catch any mistakes that may occurduring the course of the logistics process. Theseprocedures help prevent future errors, and maintain agood standing with CBSA.When taking a look at imports that need reassessment,MEC has broken down the types of errors into sevenmain categories. The records in Figure 2 demonstrate areas FIGURE 2-ERROR BY TYPE-2008 AND 2009of improvement that MEC, their broker’s, and vendors may focus on for the future. This helps limiterrors that may occur, and shows CBSA that the business is dedicated to becoming 100% compliant withtrade regulations.Once MEC has analyzed an error that has been made in CBSA documentation, it is then traced back to itssource and recorded. First, errors are categorized by broker, vendor or MEC themselves to identifyinitial responsibility. The elimination of using a broker for custom related documents, upon approval of aCSA designation, would take away a source of 37.6% of compliance errors between 2008 and 2009.As seen in Figure 3, documentation errorshave reduced from 2008 to 2009, but arestill a significant issue for MEC’s businesspractices. Between these two years, MECfound 876 compliance errors within theircustom’s paperwork. This results in a timeand money cost for all parties involved.MEC is obligated to reassess paperwork asdetailed in report, which reduces availabletime and resources that can be directed toother areas of focus within the co-operative.After compliance issues have now beenassigned to a source, MEC has the ability to go FIGURE 3-ERROR BY SOURCE-2008 AND 2009into more detail on addressing mistakes thathave been made. This specifically is helpful to analyze mistakes at the fault of vendors that haveestablished a relationship with MEC. Appendix B illustrates the top 15 vendors that contributed toerrors on CBSA documentation during 2008-2009 for MEC. Mountain Equipment Co-op – Directed Studies 2011
  18. 18. 18KEY PERFORMANCE INDICATOR’S-CBSA COMPLIANCEKey Performance Indicator’s (KPI’s) help organizations understand how well they are performing inrelation to their strategic goals and objectives. The three main reasonsthat KPI’s are used within businesses are: FOUR ISSUES COMPANIES  To learn and improve SEE AS IMPORTANT TO  To report externally and demonstrate compliance GLOBAL TRADE AND  To control and monitor people COMPLIANCE  Growing global operations (sales, purchases, and Compliance KPI’s are put into place by businesses distribution networks in order to follow regulations for CBSA standards, and must be continually monitored in  Need to improve order to maintain control of business practices. operational inefficiencies (Advanced Performance Institute, 2011) due to incomplete visibility or disparate systems  Growing complexity ofKPI’S –MEC PRACTICES security regulations forBusinesses today are using benchmarks and KPI’s to help define areas of international tradeimprovement within their organization. By clearly identifying logistical  Growing risks associatedbenchmarks, the ability to determine where they are today in regards to with non-compliancecompliance, and where they would like to be for the future becomesclearer. The MEC Logistics departments benchmarking process andKPI’s consist of focusing on three specific areas  Benchmarking against CBSA requirements for PIP and CSA programs  Utilizing information recorded through the movement process of documentation  Reviewing degree of compliance in regards to all parties involved in the supply chain relationshipThe MEC Logistics department keeps records on all documentation movements, collecting data that canbe used to source specific information on carriers, vendors, broker or internal branches of MEC. Theserecords are all stored by paper, or electronically stored within MEC’s computer system. Reviewingoccurrences such as errors made in documentation is an important aspect of how MEC measures KPI’sspecifically for compliance with CBSA. Errors in documentation are recorded by type, source, and whensource is found to be vendor; the specific vendor that was responsible for the error is identified. Byusing this information in KPI’s, MEC can review which sources are remaining in compliance withdocumentation security, and which ones need to be focused on in order to achieve levels that areacceptable for CBSA standards.The steps taken in the reassessment process is fundamental when analyzing MEC’s compliance withCBSA. MEC uses information that is recorded annually such as type of error, and error source as a KPI inorder to focus on areas in improvement within the supply chain. If a gap in communication with logistics Mountain Equipment Co-op – Directed Studies 2011
  19. 19. 19partners such as brokers and vendors is identified, MEC has the ability to restructure commercial importfunctions and determine better business practices that will help reduce the opportunities for an error tooccur. If high levels of error are linked to one specific source such as a specific vendor or MECemployee, the source is sent an email to create awareness that there is room for improvement in theprocess.As stated, MEC is currently a member of the Partner’s in Protection program, and is in the second stageof the Custom’s Self-Assessment application. The CBSA and all related programs have detailedrequirements for maintaining an acceptable level of compliance with border security. MEC incorporatesthese requirements and uses them as a benchmark when any new scenarios that are introduced to thebusiness. This includes new stores being opened, the relocation of any property (such as Head Office),and any new relationships established with vendors, carriers, or brokers. By using PIP and CSArequirements as a benchmark for changes within the businessplan MEC is able to sustain levels of security that are necessary forvendor-trade compliance. COMMERCIAL IMPORTER’S TRADE COMPLIANCEThe requirements that are communicated through the CBSA PRIORITIES FOR 2011website, and import program requirements show what level MEC  Improve productivity andwants to be, in order to be considered a “pro-active” participant visibility using new technologywith vendor-trade compliance. MEC Logistics department is (get automated)continuously monitoring the CBSA website for any newregulations being introduced, or adjustments to issues such as HS  Streamline process’scoding or new areas of focus CBSA introduces annually.  Centralize trade compliance function across the enterpriseKPI’S-INDUSTRY PRACTICES  Utilize or collaborate withThe relationship between commercial importer’s and the CBSA service providersmust be measured to give the organization an idea of what level  Move toward a paperlessof compliance they are at, and what improvements can be made process with improvedthrough the conclusions of the KPI’s used during the process. visibilityThe transportation industry uses KPI’s to determine what level ofcompliance it is situated at. Five KPI’s that are used to benchmarkagainst industry standards are:  Average trade compliance cost  Total ratio of trade related costs to declared value (including software, labour, fines, tariffs, duties, broker fees)  Perfect order rate received  Complete and on-time shipments exported to international locations  Perfect order rate delivered  Complete and on-time shipments exported to international locationsBusinesses within the commercial import sector also incorporate continuous benchmarking processesagainst previous years to help display progress in the organization. This helps identify trends and gaps inannual reports that can be focused on for the following years. Mountain Equipment Co-op – Directed Studies 2011
  20. 20. 20  Average trade compliance cost  Percentage change in ratio of trade related costs to declared value (including labour, software, fines, broker fees, etc.)  Total landed cost  Percentage change in total global trade costs (including compliance, logistics/forwarding, transportation, warehousing, etc. Plus actual cost of goods(Bob Heaney, 2010)KEY FINDINGSAfter analyzing MEC’s compliance with CBSA, there were some areas where room for improvementexists in regards to import procedures. The organization is currently targeting September of 2011 toproceed with the second stage of the CSA application, with the focus being on the security ofdocumentation within their supply chain. MEC has put procedures in place for the physical security ofdaily business practices that are at acceptable levels for commercial importers. Organization facilities,the physical movement of goods, and training of employees have been aligned with CBSArecommendations. These factors will continue to have an influence on what direction MEC takes for thefuture.REASSESSMENT ANALYSISUpon a CSA approval, the significance of each type of documentation error will change, as MEC will beable to apply any necessary paperwork to CBSA after they have received shipments. A weightedmeasuring tool has been established with the Logistics department that determines the degree ofcompliance that each type of documentation error has on daily business practices (see Appendix C).This tool measures the impact on time cost, money cost, and the difficulty of recovery cost through arating system of high, medium and low for each type of error provided. High, medium and low degreesof impact are scored as 10 points, 5 points, and 2.5 points each. By summarizing the total degree ofcompliance, each type of error influences over MEC, an opportunity for creating awareness betweenMEC and supply chain partners is provided.The calculation that determines the degree of (# of Errors)(Weighted Measure)compliance is the following: Number of TransactionsExample: Using the vendor Seattle Bike Supply,it has been determined that between 2008 and2009, that the business was responsible for theerrors of 14 different transactions between MEC and themselves. The errors were broken down to 8quantity issues, 4 pricing errors, and a NAFTA and invoicing error each. Mountain Equipment Co-op – Directed Studies 2011
  21. 21. 21 This would be broken down to a weighted measurement calculation of: (8*7.5)(4*20)(1*25)(1*20) This reaches a conclusion of Seattle Bike Supply receiving a 86 Transactions w/vendor weighted score of 2.15 in regards to the degree of impact that the business has over MEC’s reassessment of all documentation. This measurement tool also shows that with 14 errors occuring out of of 86 total transactions, the Seattle Bike Supply company has a 83.7% reliability rating when dealing with transactional issues. Once this formula has been implemented for all vendors, these results will give an idea of where each vendor stands in regards to CBSA compliance and provides a forecast for accuracy of each shipment provided by vendors well. This formula was put into effect for ten vendors(see Figure 4) that were responsible for documentational errors that caused MEC to reassess customs documents during 2008 and 2009. Figure 5 demonstrates how each error from vendors have different degrees of impact in the responsibilities that the Logistics team at MEC oversees. Comparing the vendor’s Defeet and Chaco, it can be seen that Chaco was responsible for 7 errors in documentation and Defeet 10 errors.FIGURE 4-WEIGHTED MEASUREMENT RESULTS FIGURE 5-ERROR TYPE BY VENDOR Due to the fact that Chaco’s main source of mistakes was in applying a discount, the company scored much higher then Defeet when dealing with the degree of impact. Chaco may have had 3 less mistakes then Defeet, but due to the fact that 90% of Defeet’s mistakes were a result of inaccurate quantities shipped, the degree of compliance was minimal for an organization like MEC that is looking towards a CSA future. Mountain Equipment Co-op – Directed Studies 2011
  22. 22. 22 When viewing all assessments completed during the two-year period, it was found that a total of 876 errors were made in compliance related documentation. This resulted in providing information that can be analyzed in different ways. Statistics such as weighted degrees of compliance, time cost, and accuracy of documentation can be studied in order to determine improvements that can be made in regards to customs compliance. An example can be found in Figure’s 6 and 7 that show vendor information that can be utilized from 2008 and 2009. Company Total Total Scores Transaction Transactions Error Accuracy Cascade Design 119 9 0.82 92.4% Highway 2 6 4 13.33 33.3% Mission Playground 7 4 11.07 42.9% Cyclone 25 6 2.80 76.0% Softride 8 3 7.50 62.5% Veltec 15 5 3.83 66.7% Metolius 14 7 3.75 50.0% Visual Graphic Design 11 2 4.55 81.8% Seattle Bike Supply 38 5 1.32 86.8% Carve Design 2 3 23.75 -50.0%FIGURE 4-VENDOR INFORMATION 2008 Company Total Total Scores Transaction Transactions Errors Accuracy Chaco 11 7 12.27 36.36% Terry Precision 9 5 10.28 44.44% Seattle Bike Supply 48 8 1.88 83.33% Defeet 28 10 3.13 64.29% Teko Socks 19 5 3.95 73.68% BOB Trailers 28 4 2.41 85.71% Cyclone 15 6 3.83 60.00% Leatherman 29 4 1.90 86.21% Eastern Warmth 9 6 5.00 33.33% Eco Lips 7 3 6.79 57.14%FIGURE 5-VENDOR INFORMATION 2009 These vendors play an important role within the commercial importing responsibility of MEC; providing information on HS coding, establishing documentation such as commercial invoices, and preparing orders for shipment to the MEC DC. It has been found that a significant amount of errors found in documentation for MEC are being sourced back to vendors, accounting for 34.6% of necessary reassessments between the years of 2008-2009. Mountain Equipment Co-op – Directed Studies 2011
  23. 23. 23 MOVEMENT OF DOCUMENTATION The movement of documentation plays a critical role in receiving a CSA designation from CBSA. Responsibilities of movements have been divided between different departments within MEC, and external sources such as vendors, carriers and brokers. An investigation of the movement of documentation has been completed, starting from an original purchase order being processed to the final storage of all paperwork for audit purposes. Process mapping, internal research and the development of industry wide practices have outlined MEC’s level of compliance with CBSA. Figure 8 and 9 provides a summarization of internal and external responsibilities over the movement of documentation for MEC related transactions. INTERNAL DOCUMENTATION RESPONSIBILITIESFIGURE 6-INTERNAL DOCUMENTATION RESPONSIBILITIES Mountain Equipment Co-op – Directed Studies 2011
  24. 24. 24 EXTERNAL DOCUMENTATION RESPONSIBILITIES FIGURE 7-EXTERNAL DOCUMENTATION RESPONSIBILITIES RECOMMENDATIONS Time Cost to MEC Logistics 2009 BENCHMARKING AND KEY PERFORMANCE Min Hours INDICATORS Broker 1860 31 MEC 2040 34 Although it is important to determine industry wide levels of Vender 2520 42 compliance and benchmark against competitors, more focus must be Panalpina 60 1 maintained on internal KPI’s. A commercial importer should strive to Grand Total 6480 108 become 100% compliant with CBSA regulations, and shift focus from comparing levels of compliance that competitors have, to how those levels are maintained. Time Cost to MEC Logistics 2008 As shown in Key Findings, MEC has recorded information that may be Min Hours utilized in taking a look at where the organization stands with Broker 4500 75.0 custom’s compliance. It has been determined that although Logistics MEC 2980 49.7 takes great care in collecting data such as error reports, Vender 3540 59.0 reassessment history, and vendor related information; the organization has the opportunity to utilize this information in a more Grand Total 11020 183.7 effective manner. In the years 2008 and 2009, it was found that a total of 291.7 man-hours worked for the Logistics department were Note: Table shows error by source focused strictly on the reassessment of compliance errors. (See and calculations are based on a Figure 10) twenty one minute time cost per error as per Logistics department Logistics has the information necessary to benchmark against their previous compliance history, just as MEC demonstrates KPI’s and benchmarks in areas such as the annual Financial and SustainabilityFIGURE 8-TIME COST TO MEC LOGISTICS- Reports. The organization also provides daily updates in sales for2008 AND 2009 each store, benchmarking against the previous year’s sales on the Mountain Equipment Co-op – Directed Studies 2011
  25. 25. 25same day. This is delivered through an online system data management system.It is recommended that the MEC Logistics department establish a Supply Chain Management Report(Appendix G) with uniformed KPI’s on an annual basis to help identify areas of focus for years to come.This will help MEC maintain high levels of customs compliance, provide accountability performanceawareness to parties responsible for documentation, and reduce the time cost of reassessing Custompackages for the Logistics department.SUPPLY CHAIN COMMUNICATIONAs part of MEC’s Supply Chain Security Partnership Requirements under MEC LOGISTIC’S CASE STUDY-THE SUSHI ROLLthe PIP program, the Logistics department oversees security profilesthat are submitted by all vendors. This shows CBSA that, from origin to In 2008 MEC conducted a studydestination, measures are in place to ensure that MEC goods coming to see if the packaging processinto Canada are secure. of imported garments could be improved upon. By rollingIt is recommended that the MEC Logistics department continue to take garments like “sushi”, MEC was able to create a new logisticssteps in increasing supply chain security by establishing a higher level of alternative that helped:communication with vendors. Due to a rise in border security on aninternational level, commercial import expenses are becoming a higher  Save almost 1.4 kg ofarea of focus for business. It is in the best interest of MEC to apply a plastic per box shippedcloser relationship with supply chain partners, through the sharing of  Reduced receiving times byinformation that is related to all transactions between all parties. This up to three minutes oncan be provided through regular compliance reports that update averagevendor’s on where MEC stands compared to benchmarks and KPI’s thathave been set at the beginning of each business year.  Made sorting at the distribution centre easierIt has been concluded that benchmarking and KPI’s are a necessary partof MEC’s business practices. It is assumed that organizations within  Reduced the number ofMEC’s supply chain relationship are incorporating these principles distorted or damagedwithin their own business. MEC’s Logistics department collects enough products receivedinformation on commercial imports to demonstrate to vendor’s how After testing this with onethey are helping establish high levels of compliance. This information overseas vendor and receivingmay be shared through the implementation of a Vendor Report such successful results; MEC(Appendix F) that can be issued to vendors on a regular basis. A incorporated this practice intoscorecard will allow vendors to review strengths and weaknesses in all relationships with suppliers.their commercial import compliances involving MEC transactions. By Once initiated, vendors experienced a reduction insharing information on issues such as documentation errors, vendors transportation expenses thatwill be able to assess MEC reports to help focus their own KPI’s and were then felt downstream byimprove efficiency of their business. their customers. Mountain Equipment Co-op – Directed Studies 2011
  26. 26. 26MEC has experienced productive results in establishing cost saving relationships with vendors, asdescribed in the Sushi Roll Case Study. By establishing a higher level of communication between supplychain partners through the sharing of information, MEC will continue towards goals such as:  The reduction CBSA documentation errors  The reduction of time cost involved in the reassessment process  The improvement in efficiency of the flow of MEC good’s into CanadaINTERNAL MOVEMENT OF DOCUMENTATIONMEC has provided the necessary resources to analyze the movement of documentation within theorganization. The movement of paperwork involved in the logistics function of all goods received byMEC is displayed in a detailed process map found in Appendix A. It has been determined that MEC hasinstalled high levels of monitoring the security of all documentation, through an organized structure thathas been divided between departments such as Logistics, Finance, Buying and the DC located in Surrey.MEC has the opportunity to increase these levels of security, and it is recommended that the focus onimplementing a paperless document management system that will streamline movements throughoutthe supply chain relationship. The creation of an online network will help MEC continue a seamless flowof document management, starting from the creation of a purchase order from a vendor, to thecommunication between DC and departments within the Head Office.Currently there are many logistics software companies that can modify their products to align with theircustomer’s daily business practices. E-logistics programs can be set up to have internal and externalinterfaces with different levels of security restrictions. This will allow all documentation involved withmoving goods into Canada to be stored, retrieved, and inputted with one single source (See Figure 11).INTERNAL INTERFACE  Information on transactions, commercial documents, and reassessment process’s may be pulled from database; helping departments such as Logistics and Finance establish strong benchmarks with ease.  More efficient organization of paperwork, inputs of new information are available instantaneously  Higher level of communication between DC and Head Office, reducing movements of physical documentsEXTERNAL INTERFACE  May be applied to establish closer relationship with vendors, communicating key information on new HS updates, changes in Country of Origin, tariffs and discounts applied  All vendors documentation involving MEC will be formatted into one single process  The reduction of errors made in documentation between MEC and vendors, as all information can be pulled from one source  Movements of carriers can be monitored more effectively Mountain Equipment Co-op – Directed Studies 2011
  27. 27. 27 MEC is currently working on transitioning to a larger Head Office in 2012, and it is recommended that during this movement that a paperless document management system is included with this new direction MEC is taking. By storing all internal and external information using an electronic database, a higher level of CBSA compliance is reached and a more effective documentation management is ensured.Internal Users External Users FIGURE 9-PAPERLESS SUPPLY CHAIN MANAGEMENT PRIMARY BENEFITS OF RECOMMENDATIONS All recommendations made will enhance MEC’s compliance with CBSA commercial import regulations. The instalment of a paperless document management system will help establish higher levels of security in regards to customs compliance. The introduction of this system will also help MEC establish stronger and clearer KPI’s for the organization, and bring a higher level of communication between all parties involved in the security of supply chain management. MEC will benefit from these recommendations by displaying a secure movement of documentation to CBSA, and reducing the time cost involved with monitoring these movements. This will allow the Logistics department to focus on other areas to improve upon, within the responsibilities of the movement of MEC products into Canada. SECONDARY BENEFITS OF RECOMMENDATIONS MEC displays a great deal of focus on sustainable practices involved within their business. By establishing strong benchmarks, maintaining higher levels of communication with supply chain partners Mountain Equipment Co-op – Directed Studies 2011
  28. 28. 28and transitioning towards a paperless document system, an improvement in sustainability practices willfollow. These recommendations will help:  Eliminate supplies necessary to complete documentation  Reduce methods of transportation of documents such as DC to Head Office and Broker to Head Office by freight forwarders, reducing carbon footprint  Reduce amount of errors made in documentation and orders prepared by vendors, therefore lowering transportation costs necessary to correct such errorsBy implementing the suggested strategies, a higher level of sustainability is achieved at a lower cost toMEC. This aligns with the organization’s values, and at the same time helps MEC move towards the goalof high levels of vendor-trade compliance and a CSA designation. Mountain Equipment Co-op – Directed Studies 2011
  29. 29. 29 BIBLIOGRAPHY Advanced Performance Institute. (2011, April 14). What is a Key Performance Indicator.Retrieved April 14, 2011 from Advanced Performance Institute: http://www.ap-institute.com/Key%20Performance%20Indicators.htmlBob Heaney. (2010). Global Trade Management. Aberdeen Group.CBSA. (2011, April 14). CBSA-About Us. Retrieved April 14, 2011 from CBSA:http://www.cbsa-asfc.gc.ca/agency-agence/menu-eng.htmlCBSA. (2012, April 23). Importer Programs. Retrieved April 23, 2012 from Canadian BorderServices Agency: http://www.cbsa-asfc.gc.ca/import/ip-pi-engMountain Equipment Co-op. (2011 йил 14-April). MEC-About MEC. Retrieved 2011 йил 14-April from Mountain Equipment Co-op:http://www.mec.ca/Main/content_text.jsp?FOLDER%3C%3Efolder_id=1408474396039423MEC INTERNAL DOCUMEN T’S USED IN THIS STUDYMEC‘s Partners in Protection ApplicationMEC’s Partners in Protection Security ProfileCustom’s Self Assessment Application Part 1Reassessment Data for 2008, 2009, and 2010Vendor Transaction ListMEC Custom’s Compliance ManualMEC Global Supply Chain ManagementMEC INTERNAL SOURCESMike Au, Manager Supply Chain ServicesDebby Sung, Logistics AnalystPaul Robles, Logistics AnalystKathryn vander Linden, Account’s Payable Supervisor Mountain Equipment Co-op – Directed Studies 2011
  30. 30. 30APPENDENCESAPPENDIX A-PROCESS MAP OF DOCUMENTATION MOVEMENTS Mountain Equipment Co-op – Directed Studies 2011
  31. 31. 31APPENDIX B-TOP 15 ERROR PRONE VENDORS FROM 2008 AND 2009 Mountain Equipment Co-op – Directed Studies 2011
  32. 32. 32 APPENDIX C- CUSTOMS COMPLIANCE WEIGHTED MEASURING TOOL Low = 2.5 points Medium = 5 points High = 10 points No Brokerage C of O Discount HS Code Invoicing Nafta Pricing Quantity RTVTime Cost Low High Medium Medium Medium Medium Medium Low MediumMoney Cost High High High Medium High High High Low MediumDifficulty of Recover Cost Medium Low Low Medium Medium High Low Low MediumTotal Scores 17.5 22.5 17.5 12.5 20 25 20 7.5 15 *Feedback was provided by Logistics Department APPENDIX D-ERRORS BY TYPE AND SOURCE-2008 AND 2009 2008 Problem Time Cost At Fault No Brokerage C of O Discount HS Code Invoicing Nafta Pricing Quantity RTV Grand Total Min Hours Broker 2 16 201 2 4 225 4500 75.0 MEC 20 2 9 110 3 3 2 149 2980 49.7 Vender 2 13 2 10 5 38 106 1 177 3540 59.0 Grand Total 20 6 38 313 13 7 45 108 1 551 11020 183.7 2009 Problem Time Cost At Fault No Brokerage C of O Discount HS Code Invoicing Nafta Pricing Quantity RTV Grand Total Min Hours Broker 1 4 8 76 1 2 1 93 1860 31 MEC 19 5 75 2 1 102 2040 34 Vender 2 1 4 2 19 3 14 80 1 126 2520 42 Panalpina 2 1 3 60 1 Grand Total 22 5 19 154 20 5 17 81 1 324 6480 108 APPENDIX E- WEIGHTED SCORES BY TYPE AND SOURCE-2008 AND 2009 Scores 17.5 22.5 17.5 12.5 20 25 20 7.5 15 2008 No Brokerage C of O Discount HS Code Invoicing Nafta Pricing Quantity RTV Grand Total Broker 0 45 280 2512.5 0 50 80 0 0 2967.5 MEC 350 45 157.5 1375 60 0 60 15 0 2062.5 Vender 0 45 227.5 25 200 125 760 795 15 2192.5 Grand Total 350 135 665 3912.5 260 175 900 810 15 7222.5 Scores 17.5 22.5 17.5 12.5 20 25 20 7.5 15 2009 No Brokerage C of O Discount HS Code Invoicing Nafta Pricing Quantity RTV Grand Total Broker 17.5 90 140 950 20 50 20 0 0 1287.5 MEC 332.5 0 87.5 937.5 0 0 40 7.5 0 1405 Vender 35 22.5 70 25 380 75 280 600 15 1502.5 Panalpina 0 0 35 12.5 0 0 0 0 0 47.5 Grand Total 385 112.5 332.5 1925 400 125 340 607.5 15 4242.5 Mountain Equipment Co-op – Directed Studies 2011
  33. 33. 33APPENDIX F- VENDOR REPORT Vendor Seattle Bike SupplyVendor Report 2008-2009 Overview Invoice Accuracy Mountain Equipment Co-operative is in the process of initiating higher levels Seattle Bike Supply (SBS) experienced of communication with vendors such as you. This will involve the process of an Invoice Accuracy percentage of sending Vendor Scorecards to suppliers involved in the supply chain of our 86.8% in the year 2008, and a organization. In this Scorecard we will provide information related to percentage of 83.33% in 2009 commercial imports, and what our supply chain relationship can do to reduce costs, and maintain high levels of compliance with customs. Invoice Errors It was shown that 75% of compliance Priorities errors from SBS were due to quantity Over the course of the next year, our main priorities in vendor-trade issues over the two-year period. compliance are reducing errors in documentation. Adaptations Objectives MEC will be setting up a paperless document management system that will help both our companies establish an organized efficient form of Areas of high degrees of impact for communicating documents necessary in transactions for the future Mountain Equipment Co-op  Correct Country of Origin Evaluation  Issues under NAFTA  Invoicing and Pricing issues We found that MEC and SBS should focus on quantity issues over the next year, and see if we can raise levels of invoice accuracy. If we achieve these two goals, it will reduce time and money cost towards our organizations. MEC is also focused on improving efficiencies, and if there is anything we are doing to effect these two areas of focus for the next year, please let us know. Thanks, Logistics Team, Mountain Equipment Co-operative Mountain Equipment Co-op – Directed Studies 2011
  34. 34. 34APPENDIX G-SUPPLY CHAIN MANAGEMENT REPORT 2012 MOUNTAIN EQUIPMENT CO-OPERATIVE’S SUPPLY CHAIN MANAGEMENT REPORT MEC decides to go “paperless” with MEC 2012 Areas Of Focus Supply Chain Management Establishing higher levels of custom’s security, and at same Reducing Non-Compliance Issues time, reducing our impact on the environment… MEC would like to improve accuracy levels in commercial import documentation issues such as HS code, 2 country of origin, and quantity issues By going paperless in supply chain management, we keep time and money cost in monitoring compliance, to a minimum 2 Supply Chain Communication As a co-operative looking towards the future, we want to know how to improve our operations, just as you do as well! 3 In maintaining a goal of we would like our supply By establishing strong benchmarks and high levels of compliance in chain partner’s to get sharing this information, we have the regards to commercial involved! By turning to a ability to improve our business process, import regulations, web-based document system, and help others do the same. 4 Mountain Equipment Co- MEC will reduce the risk of operative is transitioning to non-compliance issues, and a paperless supply chain in turn reduce costs as well. management system, and New to 2012….Benchmarking tools such as the Vendor Report In the year 2012, we are excited to bring new elements to our business. This includes providing all suppliers with MEC Vendor Report’s. In the report, we will demonstrate what is most important to us in regards to establishing high goals of compliance with commercial imports, and how your business is influencing the direction we are taking. The Vendor Report will help supply chain partner’s identify areas of improvement within their daily business practices, and focus on improving those areas. At MEC we are consistently trying to improve operations, and would like to know from you as well, if there is anything we can do to make the logistics process as efficient as possible!! Mountain Equipment Co-op – Directed Studies 2011

×