Recommendations to improve return cargo process at branch of GE viet nam limited in hai phong

MINISTRY TRANSPORTATION OF MINISTRY OF EDUCATION & TRAINING VIETNAM MARITIME UNIVERSITY STUDENT NAME: TA THI HUONG THAO DISSERTATION GLOBAL STUDIES AND MARITIME AFFAIRS RECOMMENDATION TO IMPROVE CARGO RETURN PROCESS AT GE HAIPHONG HAI PHONG – 2015 Comment [A1]: Comment [A2]: Formatted: Font: pt MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING VIETNAM MARITIME UNIVERSITY STUDENT NAME: TA THI HUONG THAOTA THI HUONG THAO CLASS: GMA02 DISSERTATION GLOBAL STUDIES AND MARITIME AFFAIRS RECOMMENDATION TO IMPROVE CARGO RETURN PROCESS AT GE HAIPHONG Supervisor: Đoàn Trọng Hiếu Division: Faculty: HAI PHONG 2015 Formatted: Section start: New page, Width: 8.27", Height: 11.69" PREFACE As one of the most popular trend nowadays is globalization, economic integration has increasing rapidly However the transaction among nations/companies is not only buying and selling which known as forward logistic During the process, there will be defective items shipped to importer In this case, it is necessary to return defect cargo back to vendor Although the defect cargoes only account for small percentage of all imported goods they play an important role in manufacturing process Understand the importance of returning cargo, this research not only provide an overview about GE Haiphong process to return cargo to vendor but also giving recommendation to improve the process I declare that this report is my own unaided work It has not been submitted before If violated, I am solely responsible for and bear the punishments of the Institution and University Student Name and Signature TABLE OF CONTENTS LIST OF ABBREVIATIONS iv INTRODUCTION 1 The important of the topic Research Structures Research Object Research Scope Research Method Research Results Chapter 1: LITERATURE REVIEW 1.1 Exporting activities 1.1.1 Definition 1.1.2 Responsibility of different parties in exporting transaction 1.1.3 Documents in an exporting transaction 1.1.4 Customs regulations 1.2 Returning cargo 1.2.1 Definition 1.2.2 The reason to return cargo 1.2.3 The procedure to return cargo Chapter 2: EVALUATION OF RETURN CARGO PROCESS AT GENERAL ELECTRICS HAIPHONG 2.1 Company Overview 2.1.1 General Information of GE Haiphong 2.1.2 Organization 11 2.1.3 Personel 15 2.1.4 GE culture 15 2.2 Evaluation of Return Cargo Process at GE Haiphong 16 2.2.1 Reasons to return cargo and related parties in process 16 2.2.2 The general return cargo process 18 2.2.3 Two detailed return cargo process 25 2.2.4 Issues that can arise during process 28 2.2.5 Strengths and drawbacks of return cargo process 29 Chapter 3: Recommendations to return cargo process 33 3.1 Supportive GE staff 33 3.2 Using one forwarder: 33 3.3 Updating workflow: 33 3.4 Systemized process: 37 CONCLUSIONS 42 Bibliography 43 Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong LIST OF FIGURES Figure Organization chart of GE Haiphong .10 Figure The workflow of return cargo process 18 Figure Tracking files of return cargo 21 Figure 4:Process to open CDs 22 Figure 5: Custom software to open Formatted: Hyperlink, English (United States), Do not check spelling or grammar CDs……………………………………….23 Figure 6: Tracking file of return cargo Thami Shipping to Jabol……………………………… 25 Figure 7: Booking note of & Airfreight Formatted: Hyperlink, English (United States), Do not check spelling or grammar copr……………… 27 Figure 8: Tracking list of buyers………………………………………………30 Figure 9: Tracking list of LOG………………………………………… ……31 Figure 10: The workflow of return cargo process by sea………………… …34 Figure 11: The updated workflow to open CD……………………………… 36 Figure 12: The suggested process to return cargo to vendor…………….……37 Figure 13: Display of the new system………………………………………….38 Figure 914: The vendor……………………40 Figure 1105: The current systemized process process to return to return cargo to cargo to of GE vendor………………41 LIST OF TABLE Table 1: Departments and numbers of staff Haiphong…………………16 Ta Thi Huong Thao GMA02 Page i Formatted: Hyperlink, Do not check spelling or grammar Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong Ta Thi Huong Thao GMA02 Page ii Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong LIST OF FIGURES Figure 1-Organization chart of GE Haiphong 11 Figure2:The general return cargo process 18 Figure 3:Tracking files of return cargo 21 Figure 5:Custom software to open CDs 23 Figure 6:Tracking file of return cargo to Jabol 25 Figure 7:Booking note of Thami Shipping & Airfreight copr 27 Figure 8: Tracking list of buyers 30 Figure 9:Tracking list of LOG 31 Figure 10: The workflow of return cargo process by sea 34 Figure 11: The updated workflow to open CD 36 Figure 12: The suggested process to return cargo to vendor 37 Figure 13: Display of the new system 39 Figure 14: The current process to return cargo to vendor 40 Figure 15: The systemized process to return cargo to vendor 41 Ta Thi Huong Thao GMA02 Page iv Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong LIST OF ABBREVIATIONS GE General Electrics GW Geodis Wilson CD Custom Declaration RMA Return Material Authorization LOG Logistic WH Warehouse RTV Return to Vendor GM General Manager EHS Environment, Health and Safety FIN Finance WTG Wind Turbine Generator QC Quality Control ELA Electrical Assembly SOU Sourcing MM Material Management NCR Non-claim return AWB Airway Bill PIC Person in Charge ETD Estimated Time of Departure Ta Thi Huong Thao GMA02 Page v Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong INTRODUCTION The important of the topic As one of the most popular trend nowadays is globalization, economic integration has increasing rapidly However the transaction among nations/companies is not only buying and selling which known as forward logistic During the process, there will be defective items shipped to importer In this case, it is necessary to return defect cargo back to vendor Although the defect cargoes only account for small percentage of all imported goods they play an important role in manufacturing process Without the replacement for the defective parts, production may have to stop As the matter of fact, if production stops for only one hour, the consequences can be massive In RTV (Return to vendor), quick transaction through reverse logistics is highly important in order to keep trust intact Otherwise, it spoils the relationship between vendor and seller Paying close attention to return cargo can help to improve customer satisfaction and loyalty Reverse logistics also includes gaining feedback to get improvement to both seller and buyer Understand the important of returning defective cargoes to vendors; I would like to choose the topic: “Recommendation to Return Cargo Process at Branch of GE Vietnam limited in Haiphong” to write in this dissertation Research Structures Introduction Chapter 1: Overview About Return Cargo Chapter 2: Company Overview Chapter 3: The Process to Return Cargo Chapter 4: Recommendation to Return Cargo Process Conclusions Research Object Not only to give an overview about GE Haiphong, the objective of this research is to clarify the current return cargo process Moreover, strengths and drawbacks of this process are pointed out with recommendations to improve some steps Ta Thi Huong Thao GMA02 Page Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong B The drawbacks of return cargo process  Too many forwarders: This process uses different Forwarders in each shipment can be a drawback Each forwarder has its own requirements For example: Fedex requires a set of documents with: agreements, 1manual bill, invoice and packing list (3 copies) Meanwhile, DHL ask GE Haiphong to online booking and then print the bill with invoice and packing list Therefore the person in charge of the return shipment can sometimes make mistakes when preparing documents  Repeated information: The information can repeat itself lead to wasting a big amount of time A logistic staff need average 3-4 hour in a return cargo case Within one year there are about 250- 350 return shipments This creates additional jobs and time for LOG Each department has their own tracking list (buyer, logistic and warehouse), therefore it takes time for other functions to check the information on different sheets For example: + Tracking list of Buyer: Figure 8: Tracking list of buyers Ta Thi Huong Thao GMA02 Page 30 Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong + Tracking list of LOG: Figure 9:Tracking list of LOG  Information missing: Data can be lost due to buyer/logistic/warehouse staff might not record correctly  Inflexible workflow: Because having detailed process, the working style becomes less flexible In many urgent cases, some steps can be skipped However staffs keen on following every steps of process For example, when defective cargoes need to be shipped urgently because factory ask for replacement to continue manufacturing, LOG staff refused to prepare documents to ship cargo without confirmation from vendor to pay 75$ for custom In fact, buyer can get this confirmation when the cargo is being shipped  Not updated workflow: + The general workflow only applies for returning cargo by air with forwarder like DHL, Fedex However in fact, there are shipments (more than 70 kg), transporting by ship is more preferable When returning cargo by sea, GE staffs have no work instruction which leads to confusion or mistakes in process especially for new staffs Ta Thi Huong Thao GMA02 Page 31 Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong + The process to open Custom Declaration of Geodis Wilson also lack of step After Geodis Wilson opens draft Custom Declaration and send to LOG to check The process only mentions the next step where Custom check cargo and Geodis has final Custom Declaration The case LOG checks CDs and finds out incorrect information is not mentioned + In the existing process, the workflow ends when cargo shipped from warehouse However, in reality after that two parties (GE and vendors) have to work together for payment Ta Thi Huong Thao GMA02 Page 32 Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong CHAPTER 3: RECOMMENDATIONS TO RETURN CARGO PROCESS 3.1 Supportive GE staff  Recommendation: Within GE Haiphong, staffs from different department should be more supportive toward each other It is likely that each department works independently and reluctant to help other staffs from different departments  Benefit: If staffs from different departments give more support to each other, the job will go more smoothly It also builds up a friendly working environment within GE Haiphong which motivates employees to work 3.2 Using one forwarder:  Recommendation: To address the problem of using many forwarders, GE Haiphong should work with vendor to agree to use only one forwarder DHL is the most outstanding choice because of the following reason: + Their working style is professional They are willing to support their customer + Unlike other forwarders, GE Haiphong registers DHL account which means GE is a customer of DHL even though it use other companies’ account to ship the cargo + DHL Supply Chain (DSC) is the world's largest 3PL and contract logistician They have their own flight so it would be easy save time to get information to open CDs Meanwhile with other forwarders, logistic staff needs to ask for information about flight, warehouse… + DHL's scope allows its customers to more easily adjust vendor supply chains  Benefit: It is easier to work with only one forwarder Logistic staff is not likely to make mistakes with paper work GE Haiphong also has good relationship with DHL Haiphong Therefore, DHL is willing to give support or even help to make changes in documents 3.3 Updating workflow:  Recommendations:: + In the existing process, the workflow ends when cargo shipped from warehouse However, in reality after that vendors need to make payments Therefore the process should include payment step  Custom fee: With the term Exwork, vendors will pay GE Haiphong 75$ to the custom In case agreement signed with the term FCA or DDP, the custom fee will be GE Haiphong’s responsibility Ta Thi Huong Thao GMA02 Page 33 Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong  Transportation fee: With the term Exwork and FCA, GE Haiphong use vendor’s account to pay or vendor remote booking With term DDP, GE Haiphong uses its account to pay forwarder to ship the cargo  Cargo payment: After defect items sent to vendors, vendors will repair these items and send back GE Therefor no payment will be made + The general workflow needs to update the case returning cargo by sea To return cargo by ship, staff should follow another workflow as following: Formatted: Normal, Centered, Indent: First line: 0.06" Figure 10: The workflow of return cargo process by sea Ta Thi Huong Thao GMA02 Page 34 Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong With the shipment more than 70 kg, GE Haiphong prefers shipping the cargo by ship because the freight will be cheaper than by air In this case, the first two steps (sending request to return cargo; updating information, create manual invoice and sending documents to forwarder) are the same with shipping the cargo by air.After preparing a set of documents (correspondence, imported PO, non-commercial invoice and packing list, agreement), LOG staff sends these documents to vendor forwarder.Forwarder in this case can be Geodis or another forwarder depending on vendor’s decision The next step (step 3) is booking carrier and open custom declaration Forwarder contacts with shipping company to book vessel providing the following information: consignee’s address and name, the weight and dimension of cargo, cargo type and the ready time of cargo After receiving these information, shipping company then issues an booking note and send it to forwarder In this booking note, forwarder usually pays attention to the name of vessel, warehouse name, the deadline for cargo to be at that warehouse Return cargo by sea is usually LCL (less container loaded) Therefore cargo should be moved from factory’s warehouse to another warehouse to load on a container with cargoes of shipper In this step, forwarder also has to open Custom declaration At the first place, forwarder accesses custom system and request open CDs by filling information The system than informs the lane of CDs which is lane (all return cargo is lane 3) Forwarder then sends draft custom declaration to LOG staff to check After receiving confirmation from LOG staff, forwarder prepare a set of documents including draft CDs, agreement, non-commercial invoice and packing list, correspondence, imported PO With this set of documents, forwarder and custom staff come to GE’s warehouse to check the cargo Having the verification of custom, forwarder can get CDs final version The last step of the process is with this CDs, forwarder transport the cargoes from GE’s warehouse to the warehouse addressed in booking note of shipping company and ship the cargo After arriving LCL warehouse, cargoes are then loaded in container After container loaded on board of the ship, forwarder issues an Bill of lading (House Bill) and send it to GE Haiphong There are differences between House bill and Master Bill A House Bill of Lading is a transportation contract which takes place between a customer and a forwarder This legal document is issued by a freight or cargo forwarder to each exporter, for goods to be shipped or transported in a group The second type of bill of lading the master bill of lading, or MBL Just like a house Ta Thi Huong Thao GMA02 Page 35 Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong bill of lading, MBL is a transportation contract between a customer and a forwarder However, unlike the HBL, the master bill of lading is issued by the shipping company or carriers When cargo reachs the port of consignee’s country, forwader continue to carry out custom and ship cargo to consignee’s warehouse + The process for Geodis Wilson to open Custom Declaration also needs to update the case when LOG staff checks and finds out incorrect information in draft Custom Declaration After finding the mistake and informing Geodis Wilson, Geodis Wilson then open another draft Custom Declaration and resend LOG These steps keep repeating until no mistakes are found.The new process to open Custom Declaration is following: Formatted: Indent: Left: -0.31", Hanging: 0.13", No bullets or numbering Check documents OK NOT OK Email back to LOG staff to fix the issue Open draft custom declaration and send LOG OK NOT OK Reopen CDs and send back to LOG Custom check cargo Geodis send CDs to LOG staff  Figure 11: The updated workflow to open CD  Benefits: Updated workflow helps GE staff to have more clear guidance to work avoiding confusion during process and saves time For example, when returning cargo by ship, warehouse staff can aware in advance that cargo will be transport from GE warehouse to another warehouse after cargo verification Therefore, warehouse staff Ta Thi Huong Thao GMA02 Page 36 Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong can arrange cargo in the position near/neat to the gate When forwarder comes to pick up cargo, warehouse staff will not have to take time to find the cargo 3.4 Systemized process:  Recommendation: For the problem of repeating information, a solution is using digitize returning invoice and uploading report into Oracle (A system of GE Haiphong to keep track with all the shipments) The following step will be taken place: Figure 12: The suggested process to return cargo to vendor Ta Thi Huong Thao GMA02 Page 37 Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong Step 1:Request for shipping: Quality control (QC) finds out the defect items and issues an NCR number and the name of vendor QC will put this NCR number into system The system will receive data and send NCR number and the name of supplier to Person in charge (PIC) in Buyer This Buyer then will contact with vendor and make agreement After that, Buyer will input other information (Cargo information, forwarder, ship to address, payment term, mode, …) and send agreement to logistic staff Step 2:Warehouse pack cargo and input information in the system The system will send a request email to warehouse Warehouse will pack the shipment and input dimension data on serve Step 3: System generates invoice and send automatically to LOG’s email From all the data inputed, logistic staff will run an automatic noncommercial invoice and packing list Step 4:Open CDs and ship out  Logistic staff will send agreement, non-commercial and packing list to Geodis Wilson to carry out custom declaration  Contact Forwarder and ship the cargo Contact forwarder and ship the cargo All the information will be inputed in a system with the display as following: Formatted: English (United States) Formatted: List Paragraph, Indent: Left: 0", First line: 0", Bulleted + Level: + Aligned at: 0.25" + Indent at: 0.5", Tab stops: 0.25", Left Formatted: List Paragraph, Tab stops: 0.25", Left Ta Thi Huong Thao GMA02 Page 38 Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong Formatted: Centered, Indent: First line: 0", Space After: pt Formatted: Font: Italic, Vietnamese (Vietnam) Figure 13: Display of the new system  Ta Thi Huong Thao GMA02 Page 39 Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong  Benefits: With only one input, different departments are able to re-use without repeating the information Figure 914: The current process to return cargo to vendor Ta Thi Huong Thao GMA02 Page 40 Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong Figure 1105: The systemized process to return cargo to vendor For example compare to the existing process, buyer has to send NCR number to Warehouse to get packing information and send another email to logistic staff to request return cargo Meanwhile, with the new process, when buyer input NCR number, logistic staff and warehouse staff can use this number at the same time - This new process can save time for logistic department Instead of manual invoice which takes time, logistic staff can get an invoice from system bases on all the input data In detail, the average time of making an invoice is from 10-20 minutes depends on the amount of input information Whereas the digitize digitized returning invoice only takes one-click amount of time Ta Thi Huong Thao GMA02 Page 41 Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong CONCLUSIONS Returning defect cargo can be underestimated However, sending cargo back to vendor plays necessary role in production Without cargo sent back to suppliers, there will not be replacements to continue manufacturing The normal return process can take about weeks for the cargo to reach vendor’s factory Moreover, this process involves different parties and takes time This dissertation suggests different recommendations to improve the process The current workflow is not detail enough and lack of steps The first recommendation is using only DHL as forwarder to transport the cargo The current workflow is not detail enough and lack of steps The next suggestion is updating and improving the current workflow The third recommendation is using a digital system to input the data and get non-commercial invoice and packing list from system This new method only takes eight to nine days With the amount of time saved, GE’s employees can complete other tasks This simplification is very meaningful in increase the productivity of GE Haiphong Ta Thi Huong Thao GMA02 Page 42 Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong BIBLIOGRAPHY (2015, NOV 15) Retrieved NOV 2015, from http://vietnamembassy-usa.org/ A Basic Guide to Exporting (1998) Finance, T M (n.d.) Retrieved Oct 2015, from http://thuvienphapluat.vn/ Handling In & Outbound Product Returns (n.d.) Retrieved from http://www.ndsapps.com/ Ta Thi Huong Thao GMA02 Page 43 Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong APPENDICE Non-commercial invoice and packing list Return and replacement request Customs clearance Correspondence DHL’s shipment receipt Ta Thi Huong Thao GMA02 Page 44 ... Recommendation to return cargo process at Branch of GE Vietnam limited in Haiphong Research Scope: The reality and current process of returning cargoes activities at Branch of GE limited in Haiphong... process to return cargo to vendor 41 Ta Thi Huong Thao GMA02 Page iv Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong LIST OF ABBREVIATIONS GE General... 43 Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong LIST OF FIGURES Figure Organization chart of GE Haiphong .10 Figure The workflow of return cargo