Recommendation to improve cargo return process at ge haiphong

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MINISTRY OF MINISTRY OF EDUCATION &
TRANSPORTATION 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
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
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
1. The important of the topic...............................................................................1
2. Research Structures.........................................................................................1
3. Research Object...............................................................................................1
4. Research Scope...............................................................................................2
5. Research Method.............................................................................................2
6. Research Results............................................................................................2
Chapter 1: LITERATURE REVIEW.........................................................................3
1.1. Exporting activities......................................................................................3
1.1.1. Definition............................................................................................3
1.1.2. Responsibility of different parties in exporting transaction...............3
1.1.3. Documents in an exporting transaction..............................................4
1.1.4. Customs regulations...........................................................................5
1.2. Returning cargo............................................................................................7
1.2.1. Definition............................................................................................7
1.2.2. The reason to return cargo..................................................................7
1.2.3. The procedure to return cargo............................................................7
Chapter 2: EVALUATION OF RETURN CARGO PROCESS AT GENERAL
ELECTRICS HAIPHONG..................................................................................9
2.1. Company Overview......................................................................................9
2.1.1. General Information of GE Haiphong................................................9
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 1 Organization chart of GE Haiphong................................................10
Figure 2 The workflow of return cargo process.............................................18
Figure 3 Tracking files of return cargo..........................................................21
Figure 4:Process to open CDs........................................................................22
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………………………………………….38
Figure 114: The current process to return cargo to vendor……………………
40
Figure 125: The systemized process to return cargo to vendor………………
41
LIST OF TABLE
Table 1: Departments and numbers of staff of GE Haiphong…………………
16
Ta Thi Huong Thao Page i
GMA02
Recommendations to improve cargo return process at Branch of GE Vietnam
limited in Haiphong
Ta Thi Huong Thao Page ii
GMA02
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 Page iii
GMA02
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 Page iv
GMA02
INTRODUCTION
1. 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.
2. Research Structures
1. Introduction
2. Chapter 1: Overview About Return Cargo
3. Chapter 2: Company Overview
4. Chapter 3: The Process to Return Cargo
5. Chapter 4: Recommendation to Return Cargo Process
6. Conclusions
3. 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.
4. Research Scope
Research Subject: 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
5. Research Method
Analysis: Data of the research is collected by many ways. The method to
conduct this research is mainly interview with GE’s staff in different department to
ask for information and process.
 Interviewing the staff directly
 Observation from practical cases or in daily works
6. Research Results
The research presents a detailed process to return cargo to vendor with examples.
Moreover, strengths and drawbacks of this process are also pointed out with
recommendations proposed.
CHAPTER 1: LITERATURE REVIEW
1.1. Exporting activities
1.1.1. Definition
Exporting cargo is sending goods or services across national territorial for
the purpose of selling and realizing foreign exchange.
1.1.2. Responsibility of different parties in exporting transaction
- Exporter: (A Basic Guide to Exporting, 1998, pp. 4-6)When exporting
goods to another country, the exporter must be aware of packing, labeling,
documentation, and insurance requirements. It is important that exporters make sure
that the cargo is:
 Packed correctly so that it arrives in good condition
 Labeled correctly to ensure that the goods are handled properly and
arrive on time at the right place;
 Documented correctly to meet domestic and foreign government
requirements, as well as proper collection standards; and
 Insured against damage, loss, pilferage and delay.
Most exporters rely on an international freight forwarder to perform
these services because of the multitude of considerations involved in
physically exporting goods
- Importer:
 Declaring your merchandise that is imported
 Completing and accurate documents
 Compliance with all legal requirements
 Pay duties on time
 Maintaining accurate records
- Forwarder: (A Basic Guide to Exporting, 1998, pp. 12-
15) People who conduct the forwarding services called as the forwarders or freight
forwarders, forwarding agents.
Services that forwarders often serve are following:
 Preparing goods for transportation
 Organizing cargo transportation within the port
 Organizing cargo handling
 Consulting customers about cargo transportation
 Carrying out there procedure of sending or receiving
goods
 Custom clearance services
 Paying the costs
 Consolidating, packing
 Checking the document related to cargo transportation
1.1.3. Documents in an exporting transaction
- Commercial Invoice
A commercial invoice is a bill for the cargoes issued by the seller to the buyer.
Government uses these invoices to determine the true value of goods when
assessing customs duties. Governments that use the commercial invoice to control
imports will often specify its form, content, number of copies, language to be used,
and other characteristics.
- Export Packing List
Considerably more detailed and informative than a standard domestic packing list,
an export packing list lists seller, buyer, shipper, invoice number, date of shipment,
mode of transport, carrier, and itemizes quantity, description, the type of package,
such as a box, crate, drum, or carton, the quantity of packages, total net and gross
weight (in kilograms), package marks, and dimensions, if appropriate. Both
commercial stationers and freight forwarders carry packing list forms. A packing
list may serve as conforming document. It is not a substitute for a commercial
invoice. In addition, U.S. and foreign customs officials may use the export packing
list to check the cargo.
- Airway Bill
Air freight shipments require airway bills. Airway bills are shipper-specific (i.e.,
USPS, Fed-Ex, UPS, DHL, etc.).
- Bill of Lading
A bill of lading is a contract between the owner of the goods and the carrier. For
vessels, there are two types: a straight bill of lading, which is non-negotiable, and a
negotiable or shipper's order bill of lading. The latter can be bought, sold, or traded
while the goods are in transit. The customer usually needs an original as proof of
ownership to take possession of the goods.
- Export Licenses
An export license is a government document that authorizes the export of specific
goods in specific quantities to a particular destination. This document may be
required for most or all exports to some countries or for other countries only under
special circumstances.
- Certificate of Origin
The Certificate of Origin (CO) is required by some countries for all or only certain
products.
- Customs export declaration form:
Customs form completed and submitted by an exporter at the port
of export, it is meant to serve two major purposes: (1)
to provide information on amount, nature, and value of exports to
the statistical office for compilation of foreign trade data, and (2)
to serves as an export control document. In some cases,
an export license and/or a certificate of origin is also required to
be attached.
1.1.4. Customs regulations
 Procedures
(http://vietnamembassy-usa.org/, 2015)Customs procedures are
completed at customs offices established at international seaports,
international river ports, international civil airports, international
railway stations, international post offices, or land border gates or
at customs offices established elsewhere under the decision of the
Minister of Finance.
 Examination
The head of the customs office that receives customs declaration
shall determine whether to examine the merchandise or the
extent of examination. Vietnam has adopted a system of minimum
customs inspection. Under the newly amended Law on Customs,
whether a consignment of goods is examined or not depends on
the result of analysis of information, records of compliance with
law by the owner, and the level of risk of breach of the customs
law. Instead of actual customs examination before clearance of
goods, the customs now relies more on post-entry auditing to
enforce the law.
 Examination exemption :The actual customs inspection is
exempted for:
- Goods being imported or exported by owners with good
observance of the law;
- Export goods, except those produced from imported materials
and those subject to conditional export;
- Import goods which are machinery and equipment to form
fixed assets and which are tax exempt as part of an investment
project ;
- Goods imported into free trade zones, transit ports and
customs bond warehouses, goods in transit, emergency relief
goods, specialized goods directly servicing national defense and
security, humanitarian aid goods and goods temporarily imported
for re-exported within a specified time;
- Goods in other special cases as may be decided by the Prime
Minister;
- Goods other than the above mentioned may be exempted from
actual customs examination if the analysis of information from
various sources and from a reconnaissance by Customs
establishes that there is no possibility of a breach of custom law.
Random examination of no more than 5% of merchandise may be
conducted by the customs to assess the goods owner’s compliance
with the customs law.
Whole –Lot Examination shall be applied to goods whose owners
have bad customs records or where customs violation is
suspected.
 Clearance
In general, goods are released after customs procedures have
been completed and taxes have been paid. However, there are
some exceptions to this rule. For example, where there is an
appropriate reason, declarers may be allowed to submit certain
documents in delay. Deferred tax payment may also be applicable
to certain type of merchandise such as inputs imported for export
manufacturing etc. Goods imported in emergency cases are
released immediately without waiting for the completion of
customs procedures or paying taxes .
For import or export goods which must be appraised in order to as
certain if they are permitted to be imported or exported, if the
goods owner requests to hold the goods for preservation, the
customs office shall accept such request only in the case where all
conditions for customs control have been satisfied. For goods
which are permitted to be imported or exported but their value
must be verified or they must be appraised, analyzed and
classified in order to determine the amount of duty payable, such
goods shall be cleared by Customs only after the goods owner has
discharged the obligation to pay duty on the basis of a self –
declaration and assessment of duty and has provides sufficient
guarantee in the form of a surety, a deposit or some other
appropriate instrument, covering the ultimate payment of customs
duties for which the goods may be liable as the results of the
verification of the value of the goods and of the appraisal, analysis
and classification of the goods.
1.2. Returning cargo
1.2.1. Definition
Return cargo to vendor (RTV) refers to the process of return of
goods that takes place between a user or retailer and a vendor. It
may consist of return between user and retailer that sends it back
to vendor. In some cases, user may directly send the goods to the
vendors. It involves following activities:
 Return of goods
 Repair
 Resend replacement, Otherwise refund for the good
(Handling In & Outbound Product Returns)In order to get a Return Material
Authorization (RMA) issued, buyer need to gather and submit a large amount of
documents, such as the original PO number, packing slip number, invoice number,
items, quantities, reason for the return and contact information. Vendors often
require documents before issuing an RMA number. In the meantime, buyer is still
responsible for the inventory and must account for both the quantity and value of
the defective goods. After the vendor has approved the request and issued an RMA
number, the RTV transaction is shipped to the vendor.
1.2.2. The reason to return cargo
When finding defect items in the shipment imported, importer need to return
these item to vendor. The defect cargo has to be shipped back to vendor so they can
be repaired and transferred back to importer. Importer then uses repaired ones to
continue manufacturing. Therefore, without replacement items, production can be
affected. As a result, returning cargo plays an important role for a company.
1.2.3. The procedure to return cargo
The Sub-department of Customs where import procedure was carried out
shall carry out the export procedure. If goods are exported at another checkpoint,
the procedure for moving goods to the checkpoint of export shall be carried out.
According to chapter 2 circular 22/2014/TT-BTC published by The Ministry
of Finance, before making customs declaration, customs declarants shall register
with customs offices information relating to the exports.
(Finance)Pre- registered information is valid and shall be preserved on the
system for 7 day at most, counting from the time of registration or the time of final
change. Customs declarations may themselves correct information pre-registered.
According to article 56 of circular 128/2013/TT-BTC published by The
Ministry of Finance, the customs dossier for return cargo consists of:
- The written explanation of the company for the export;
- The declaration of exported goods: 02 original copies;
- The declaration of previously exported goods: submit 01
photocopy and present the original;
- The written acceptance to take back goods made by the
foreign seller (if exported goods are returned to the seller): 01
original copy or photocopy;
- The contract to sell goods to a third country or to export
goods to a free trade zone (if goods are exported to a third
country or a free trade zone).
- A decision on compulsory re-export made by a competent
authority (if any): 01 photocopy.
All the return cases’ CDs are belongs to lane 3 therefore the defect items has
to undergo physical verification. The customs officer in charge of goods inspection
shall compare the exported goods with the samples taken when they were import (if
any) and with the description on the import declaration; specify the quantity,
quality, categories of exported goods, and consistency between the imported and
exported goods.
About the tax regulation on return cargo, the customs authority shall decide
not to collect tax on goods that are returned or exported to a third country or a free
trade zone if the declarant submit a sufficient application for tax cancellation when
following the procedure for returning goods, exporting goods to a third country or a
free trade zones as guided in Article 117 of Circular 128/2013/TT-BTC, and the
customs authority has ample evidence that the exported goods are the goods
previously exporter.
CHAPTER 2: EVALUATION OF RETURN CARGO
PROCESS AT GENERAL ELECTRICS HAIPHONG
General Electric (GE) which was established by Thomas Edison in 1892 is
an advanced technology, services and finance company taking on the world’s
toughest challenges. Dedicated to innovation in energy, health, transportation and
infrastructure, GE operates in more than 100 countries and employs about 300,000
people worldwide. GE was one of the first American companies established in
Vietnam since 1993 even before the US Embargo was lifted. GE first set up a
representative office in Hanoi in 1993, and subsequently in HCM City in 2001,
working in partnership with local organizations. In 2003, GE established GE
Vietnam Ltd, a 100% GE capital investment that offers a wide range of after-sales
services in the fields of medical, electrical and energy equipment. GE Vietnam now
employs approximately 6600 people and offers products and services in Oil & Gas,
Power & Water, Energy Management, Healthcare and Aviation.
2.1. Company Overview
2.1.1. General Information of GE Haiphong
- History: GE Power & Water Haiphong (GEHP) is under GE Power &
Water, the biggest business of GE. The factory obtained Investment Certificate in
2008, started construction in May 2009 and launched first product in May 2010.
Target of this project to build a world-class factory in Vietnam specializing on
manufacturing major wind turbine components and accessories like generators,
converters,…GE has invested more than US$110 million in its Hai Phong
manufacturing facility which employs more than 500 engineers and skilled workers.
Wind turbine generators and other energy products manufactured in Hai Phong are
exported to GE’s manufacturing and service centers around the globe. Total export
volume stands at around US$278 million since inception and is the highest amongst
industries in Hai Phong.
Working for GEHP, besides the competitive compensation & benefit policy,
excellent working conditions, employees will have great opportunity in professional
trainings and expand career growth globally by joining Technical excellence,
leadership, and soft skills trainings; operational management leadership program
(OMLP); human resource leadership program (HRLP); financial management
program (FMP)…
- Address: Lot H1-H6 and F13A, F13B,F14, F15 Nomura- Haiphong
Industrial Zone, An Duong district, Haiphong City, Vietnam
- Using square: 84.220,90 m2
- Fields of business:
+ Manufacture, install components and part for machine, equipment of
generating power system, power plant, component, spare part for power
transmitting system
+ Provide service of installing, warranty, maintaining and repairing for
machine, equipment said above
+ Constructing workshop for rent
+ Manufacture, install spare part, component for machine, equipment
belonging to system of water supplying industry and petrol industry
- Chief of Branch: Ms Vu Thu Trang, born on 13/12/1978
- Total capital of investment: 2,320,455,000,000 (two thousand three
hundred twenty billion four hundred fifty five million) dongs equivalent to
111.000.000 (one hundred eleven million) USD
2.1.2. Organization
Figure 3-Organization chart of GE Haiphong