Modelling and optimization of customs processes at KCS

Abstract

Katoen Natie Customs Services (KCS) is the division of Katoen Natie (KTN) that is responsible for handling all customs related formalities. This includes the processing of 100 000 documents for all goods of all customers around the world. In order to efficiently fulfil this assignment, KCS dispose of several licenses and certificates facilitating a fast and effective customs declaration. These certificates are at risk of being revoked in case too many errors are made. Therefore, one of the main objectives of this work is to decrease the number of errors, improving the quality of the process. A second goal is to increase the overall speed of the process, which requires the identification of the process bottlenecks. The key to improve the processes is to model first all customs workflows in detail. Via a Six Sigma methodology, improvement recommendations will be stated. These recommendations will hopefully contribute to the leading position that KTN occupies in the customs industry and to the design of a world-class process layout, accompanied by optimal supporting systems. As a guideline for this report, the business process management scheme is used, which consists of several phases. First of all, the process identification and process discovery phases are executed via conducting interviews with several experts within KCS. Via this discovery, an as-is process model can be constructed. Next, a thorough analysis is executed on several data lists from 2018 and 2019 on the process errors, giving insights into the weaknesses of the as-is process. Subsequently, the Lean Six Sigma philosophy is used to suggest improvement initiatives. Lean Six Sigma not only strives to make processes faster, more efficient and more synchronized by elimination of waste but also increases the quality of the process by eliminating errors. The processing of the customs orders can be split into three parts: the sourcing part, the KCS part and the Descartes/customs part (Figure ES-1). The customer sends an order to the three sourcing applications: 4WARD, POWER (goods in bonded warehouse) and PLATO (general cargo, commodities, liquids and chemicals), all with their own characteristics. The orders subsequently arrive at KCS through the KCS Portal, which is an interface between the customer and KCS. The status and the progress of the customer order can be monitored and adjusted. The next step is the Engine, in which checks are made by the KCS Intel on the order. Subsequently, the order is put in the right queue of the KCS Clearance, where it is prepared for declaration. Thereafter the declarant manually takes the order from the Clearance queue, transferring the order to SADBEL, which is the KCS declaration software. After the declaration, the SADBEL file is sent to Descartes, which transfers the file to the governmental standards of PLDA (import and export declarations) and NCTS (goods in transit). The customs authorities check the file and release an approved customs document to the declarant in case an error occurs. Each order arriving in the Portal falls under a certain scope, depending on the content and defined in the source application. The scopes can be grouped into inbound scopes, outbound scopes, stock scopes and other scopes. Every scope corresponds with one ore more processing workflows, consisting of a sequence of tasks. The different scope types are summarized in Table ES-1 and are separately modelled in this work. There are also exception flows, including order source exception flows and the Movex flow, which is a flow specifically for Volvo, a big KTN customer. The process analysis was based on the quality of the process, since extensive data lists were available containing the errors, cancellations and regularizations of the years 2018 and 2019. The throughput of 2019 was studied per location, per month, per day, per document and per declarant, allowing to get a global view on the situation. Once a thorough analysis of the declaration process was performed, the bottlenecks of the entire system were clearly identified and some suggestions for improvement could be made. Three main improvements are discussed in chapter 5, along with several other smaller suggestions. The first point in the system that is eligible for improvement are the agreements made with the customers of KCS. Now, these agreements are fairly unidirectional, the customer makes a request and KCS has to process said request. In case the customer wants to make changes to a certain customs order, KCS is obliged to do so. However, making changes to or cancelling an order can have negative consequences for KCS, depending on the stage of the declaration process the order is currently in. Therefore, an agreement should be introduced where the customer. A second point of improvement is the actual declaration step within KCS. This process is currently completely manual although many of the actions performed in the process are rather repetitive. Because of this, the suggestion is made to partially automate the process in such a way the simpler tasks are completed automatically, leaving the more challenging tasks for the declarant. A final suggestion for improvement is the implementation of a central database within KTN. One of the most prominent causes of errors was the inconsistency of data over different business units. Some business units of KTN would make a change in their information which would not be communicated to KCS, leading to faulty information on the customs declaration. By implementing a central database, everyone would have access to the same data (given the permission to consult the data) and the inconsistency of data would no longer be an issue. These are just some of the suggestions which could improve the performance of KCS’ customs declaration systems. All suggestions for improvements are discussed elaborately in Chapter 5. Using the information provided in the process models and process analysis, combined with the recommendations from Chapter 5, the team is convinced KCS could achieve significant improvements in both quality and efficiency towards the future. mer can be held responsible for any negative consequences following from his actions.