RECOMMENDATION TO IMPROVE CARGO RETURN PROCESS AT GE HAIPHONG

MINISTRY OFTRANSPORTATION MINISTRY OF EDUCATION & TRAININGVIETNAM MARITIME UNIVERSITY STUDENT NAME: TA THI HUONG THAO DISSERTATION GLOBAL STUDIES AND MARITIME AFFAIRS RECOMMENDATION TO I

MINISTRY OF

TRANSPORTATION

MINISTRY OF EDUCATION &

TRAININGVIETNAM 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

I declare that this report is my own unaided work It has not beensubmitted before.

If violated, I am solely responsible for and bear the punishments of theInstitution and University

Student Name and Signature

TABLE OF CONTENTS

3

Table of Contents 4

List of Figures i

INTRODUCTION 1

1 The important of the topic 1

2 Research Structures 1

3 Research Object 1

4 Research Scope 1

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

(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 8

1.2.2 The reason to return cargo 8

1.2.3 The procedure to return cargo 8

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 9

Chapter 2: EVALUATION OF RETURN CARGO PROCESS AT GENERAL ELECTRICS HAIPHONG 10

2.1 Company Overview 10

2.1.1 General Information of GE Haiphong 10

2.1.2 Organization 11

2.1.3 Personel 15

The total employee of Brach of GE Vietnam limited in Haiphong is 200483 Human resource plays an important role in company’s success GE Haiphong is famous for its solid human capital strategy HR manages to do things to reach out to employee, tries to give them strong leadership support Working for GEEHP, 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)….16 2.1.4 GE culture 16

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

- In the 4th, October, 2015, Bien Dong Mariner left Dinh Vu port to carry cargo to USA 28

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

3.3 Updating workflow: 33

3.4 Systemized process: 36

CONCLUSIONS 41

Bibliography 42

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

Figure 2:Tracking files of return cargo 21

Figure 314: The current process to return cargo to vendor 39

Figure 145: The systemized process to return cargo to vendor 40

Ta Thi Huong Thao Page i GMA02

Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong

3

Table of Contents 4

List of Figures i

INTRODUCTION 1

1 The important of the topic 1

2 Research Structures 1

3 Research Object 1

4 Research Scope 1

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

(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 8

1.2.2 The reason to return cargo 8

1.2.3 The procedure to return cargo 8

Ta Thi Huong Thao Page ii GMA02

Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong

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 9

Chapter 2: EVALUATION OF RETURN CARGO PROCESS AT GENERAL ELECTRICS HAIPHONG 10

2.1 Company Overview 10

2.1.1 General Information of GE Haiphong 10

2.1.2 Organization 11

2.1.3 Personel 15

The total employee of Brach of GE Vietnam limited in Haiphong is 200483 Human resource plays an important role in company’s success GE Haiphong is famous for its solid human capital strategy HR manages to do things to reach out to employee, tries to give them strong leadership support Working for GEEHP, 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)… 16

2.1.4 GE culture 16

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

- In the 4th, October, 2015, Bien Dong Mariner left Dinh Vu port to carry cargo to USA 28

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

Ta Thi Huong Thao Page iii GMA02

Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong

3.1 Supportive GE staff 33

3.3 Updating workflow: 33

3.4 Systemized process: 36

CONCLUSIONS 41

Bibliography 42

Ta Thi Huong Thao Page iv GMA02

Recommendations to improve cargo return process at Branch of GE Vietnam limited in Haiphong

AWB Airway Bill

PIC Person in Charge

ETD Estimated Time of Departure

Ta Thi Huong Thao Page v GMA02

1 The important of the topic

As one of the most popular trend nowadays is globalization, economicintegration has increasing rapidly However the transaction amongnations/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 onlyaccount for small percentage of all imported goods they play an important role inmanufacturing process Without the replacement for the defective parts, productionmay have to stop As the matter of fact, if production stops for only one hour, theconsequences can be massive In RTV (Return to vendor), quick transaction throughreverse logistics is highly important in order to keep trust intact Otherwise, it spoilsthe relationship between vendor and seller Paying close attention to return cargocan help to improve customer satisfaction and loyalty Reverse logistics alsoincludes gaining feedback to get improvement to both seller and buyer

Understand the important of returning defective cargoes to vendors; I wouldlike 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

3 Research Object

Not only to give an overview about GE Haiphong, the objective of thisresearch is to clarify the current return cargo process Moreover, strengths anddrawbacks of this process are pointed out with recommendations to improve somesteps

4 Research Scope

Research Subject: Recommendation to return cargo process at Branch of GEVietnam limited in Haiphong

Research Scope: The reality and current process of returning cargoesactivities at Branch of GE limited in Haiphong

5 Research Method

Analysis: Data of the research is collected by many ways The method toconduct this research is mainly interview with GE’s staff in different department toask for information and process

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 withrecommendations proposed

CHAPTER 1: LITERATURE REVIEW1.1 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 surethat the cargo is:

 Packed correctly so that it arrives in good condition

arrive on time at the right place;

requirements, as well as proper collection standards; and

Most exporters rely on an international freight forwarder to perform these services because of the multitude of considerations involved in physically exporting goods

- Importer:

- Forwarder: (A Basic Guide to Exporting, 1998, pp 12-15)

People who conduct the forwarding services called as the forwarders or freightforwarders, forwarding agents

Services that forwarders often serve are following:

Carrying out there procedure of sending or receiving goods

1.1.3 Documents in an exporting transaction

- 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 packinglist to check the cargo

- Export Licenses

An export license is a government document that authorizes the export of specificgoods in specific quantities to a particular destination This document may berequired for most or all exports to some countries or for other countries only underspecial circumstances.

- Certificate of Origin

The Certificate of Origin (CO) is required by some countries for all or only certain products

- Customs export declaration form:

Customsformcompleted 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 exportcontroldocument 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 arecompleted at customs offices established at international seaports,international river ports, international civil airports, international railwaystations, international post offices, or land border gates or at customsoffices established elsewhere under the decision of the Minister ofFinance

 Examination

The head of the customs office that receives customs declaration shalldetermine whether to examine the merchandise or the extent ofexamination Vietnam has adopted a system of minimum customsinspection Under the newly amended Law on Customs, whether aconsignment of goods is examined or not depends on the result ofanalysis of information, records of compliance with law by the owner,and the level of risk of breach of the customs law Instead of actualcustoms examination before clearance of goods, the customs now reliesmore on post-entry auditing to enforce the law

 Examination exemption :The actual customs inspection is

- Goods in other special cases as may be decided by the PrimeMinister;

- Goods other than the above mentioned may be exempted fromactual customs examination if the analysis of information from varioussources 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 beconducted by the customs to assess the goods owner’s compliance with

Whole –Lot Examination shall be applied to goods whose owners havebad customs records or where customs violation is suspected

 Clearance

In general, goods are released after customs procedures have beencompleted and taxes have been paid However, there are someexceptions to this rule For example, where there is an appropriatereason, declarers may be allowed to submit certain documents in delay.Deferred tax payment may also be applicable to certain type ofmerchandise 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 ascertain if they are permitted to be imported or exported, if the goodsowner requests to hold the goods for preservation, the customs officeshall 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 thegoods owner has discharged the obligation to pay duty on the basis of aself –declaration and assessment of duty and has provides sufficientguarantee in the form of a surety, a deposit or some other appropriateinstrument, covering the ultimate payment of customs duties for whichthe goods may be liable as the results of the verification of the value ofthe goods and of the appraisal, analysis and classification of the goods

(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 returnthese 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 tocontinue manufacturing Therefore, without replacement items, production can beaffected 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 outshall 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 TheMinistry of Finance, the customs dossier for return cargo consists of:

photocopy and present the original;

- The written acceptance to take back goods made by the foreignseller (if exported goods are returned to the seller): 01 original copy orphotocopy;

a free trade zone (if goods are exported to a third country or a freetrade zone)

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 inspectionshall compare the exported goods with the samples taken when they were import (ifany) and with the description on the import declaration; specify the quantity,quality, categories of exported goods, and consistency between the imported andexported goods

About the tax regulation on return cargo, the customs authority shall decidenot to collect tax on goods that are returned or exported to a third country or a freetrade zone if the declarant submit a sufficient application for tax cancellation whenfollowing the procedure for returning goods, exporting goods to a third country or afree trade zones as guided in Article 117 of Circular 128/2013/TT-BTC, and thecustoms authority has ample evidence that the exported goods are the goodspreviously 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’stoughest challenges Dedicated to innovation in energy, health, transportation andinfrastructure, GE operates in more than 100 countries and employs about 300,000people worldwide GE was one of the first American companies established inVietnam since 1993 even before the US Embargo was lifted GE first set up arepresentative office in Hanoi in 1993, and subsequently in HCM City in 2001,working in partnership with local organizations In 2003, GE established GEVietnam Ltd, a 100% GE capital investment that offers a wide range of after-salesservices in the fields of medical, electrical and energy equipment GE Vietnam nowemploys 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 onmanufacturing major wind turbine components and accessories like generators,converters,…GE has invested more than US$110 million in its Hai Phongmanufacturing facility which employs more than 500 engineers and skilled workers.Wind turbine generators and other energy products manufactured in Hai Phong areexported to GE’s manufacturing and service centers around the globe Total exportvolume stands at around US$278 million since inception and is the highest amongstindustries in Hai Phong

Working for GEHP, besides the competitive compensation & benefit policy,excellent working conditions, employees will have great opportunity in professionaltrainings 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 managementprogram (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:

generating power system, power plant, component, spare part for powertransmitting system

+ Provide service of installing, warranty, maintaining and repairing formachine, equipment said above

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 to111.000.000 (one hundred eleven million) USD

2.1.2 Organization

Figure 1-Organization chart of GE Haiphong

On top of the organization chart is General Manager (GM) with followingresponsibility:

coordinating all divisional department activities to develop and implement range goals and objectives to meet business and profitability growth objectives

department or division progress toward stated goals and objectives

- Develops, reviews, updates and implements business strategic planning,including sales, financial performance and new product development

- Oversees manufacturing and materials departments to review production andoperating reports and resolve operational, manufacturing and facility problems toensure minimum costs and prevent operational delays and to meet future growth

fundamental or new technology used for new or existing products orimprovement to provide cost reduction, safety, customer requirements andmarket growth

ascertain manufacturing or outsourcing requirements to develop new markets

and implementation, production efficiency, financial reporting, budgetaryplanning and submittal for capital expenditures

GE Haiphong includes the following departments:

 Admin:

- Liaise with vendors such as car supplier, travel agencies, couriers, cleaners,stationery, staffs, and many others

- Organize, assist and coordinate for all office Events, Meeting, Conference,Seminars, Trainings

- Handle and monitor monthly Admin expenses: stationery, canteen, bustransportation, accommodation ….

- Interpret and translate if required

 Environment, Health and safety (EHS): This department is responsible for

environmental protection, occupational health and safety at work

 Finance (FIN):

and the Balance Sheet

would be kept by Finance department Other departments also use thesedocuments

- Prepare and plan internal financial information – this would mainly beperformed in the case of a budget, which is a financial plan and can helpmanagers take corrective action

expenses would be analysed primarily using ratio analysis tools

 Wind turbine Generator (WTG):

production They also make work instruction If there is any issue duringmanufacturing process, ME is also person in charge

- Planer: Planer is in charge of accepting or rejecting orders Besides, thisdepartment also makes plan to import material and control material inventorylevel

- Quality control (QC): The engineers in Quality control take responsible forquality framework, product quality control Processing quality plan is also a task

quality control engineers have to complete They have the right to stop any compliance quality-related actions

non- Electrical Assembly (ELA):

production They also make work instruction If there is any issue duringmanufacturing process, ME is also person in charge

- Planer: Planer is in charge of accepting or rejecting orders Besides, thisdepartment also makes plan to import material and control material inventorylevel

- Quality control (QC): The engineers in Quality control take responsible forquality framework, product quality control Processing quality plan is also a taskquality control engineers have to complete They have the right to stop any non-compliance quality-related actions

 Material Management (MM)

- Warehouse: Warehouse staffs are in charge of keeping material under suitableconditions, delivering and receiving cargos For daily task, warehouse staff inputquantity data in the system

meet the deadline of planer Besides, logistic also takes responsible to carry outthe procedure to export products

 Sourcing (SOU): This department consists of 2 parts: Buyer and Supplier

Quality Control(SQE) This department is in charge of working withsuppliers

- Buyer: responsible for defined work or projects with moderate complexity Buyer taskconsists of identify and qualify new suppliers, assess supplier capabilities and makerecommendations on supplier acceptability, implement sourcing standardsincluding process & execution,write reports to track PO activity and supplierperformance, analyze and track Supplier promise date accuracy and developreports to ensure Supplier promise date accuracy

- SQE (Supplier quality control engineer): SQE are engineers who take responsibility

of checking imported cargo’s quality

 Information Technology (IT): Besides workers, every employee in GE has

laptop and work mainly with emails Therefore, information technology plays

an important role to support with laptop issues Besides, IT helps to work onprojects.

 Human resource (HR):

- They advertise job postings, filter candidates, screen applicants, conductinterviews and coordinate hiring efforts with managers responsible for makingthe final selection of candidates

- Employee’s relations is the HR discipline concerned with strengthening theemployer-employee relationship through measuring job satisfaction, employeeengagement and dealing with conflicts in workplace

can be support, orientation

2.1.3 Personel

Table 1: Department and number of staffs/workers of GE Haiphong

The total employee of Brach of GE Vietnam limited in Haiphong is 200483.Human resource plays an important role in company’s success GE Haiphong isfamous for its solid human capital strategy HR manages to do things to reach out toemployee, tries to give them strong leadership support Working for GEEHP,besides the competitive compensation & benefit policy, excellent workingconditions, employees will have great opportunity in professional trainings andexpand career growth globally by joining Technical excellence, leadership, and softskills trainings; operational management leadership program (OMLP); humanresource leadership program (HRLP); financial management program (FMP)…

2.1.4 GE culture

GE culture is about providing everyone who works here with opportunities

to exercise their responsibility, integrity, and creativity.GE is famous for investing

in human resource Every year there are many courses, trainings taken place in GE

to improve employee’s working productivity and soft skill All GE’s employee aretaught about influencial, presentative skill and how to interact with co-worker, how

to avoid stress All the courses are free and optional for GE’s employee Besides,

GE also has tried to apply the GE Belief through all company GE belief consists of

5 components (Customers determine our success, stay lean to go fast, learn andadapt to win, empower and inspire each other, delivery result in uncertain world)

GE Haiphong is also very active in social activities Every year GE Haiphongusually takes part in at least one social activities, volunteer work to help community.For example in September, 2015 GE employee came to Cat Ba island to give giftsfor 2 primary school here

2.2 Evaluation of Return Cargo Process at GE Haiphong

2.2.1 Reasons to return cargo and related parties in process

In a shipment to GE Haiphong, there can be defect cargo The mistake wascaused by vendor There are some vendors who usually delivery defect cargoes such

as Jabol (China), Plexus (China), GE Pacific(USA)…

The defect cargo has to be shipped back to vendor so they can be repairedand transferred to GE Haiphong These defect items after reach vendor’s addresswill be repaired and shipped back GE Haiphong Therefore, if GE Haiphong doesnot return the defect items it will not have component to continue manufacturing

 Vendor