DEFINE

1

Project Title : To improve overall clearance time of inbound personal shipments at Manila portProject no. : OAS-05-02

Team Leader/Asst : R. Rajan/Olive Sebastian Members : Carina Soriano, Elsa Sumabat,

Norie Borja, Oscar Gamil, Gregg Garcia

25 November 2005

2

DEFINE

PROBLEM STATEMENT : There is a need to reduce/improve total clearance time of personal shipments of staff and reduce port costs.

GOAL STATEMENT : Reduce the overall processing and clearance time of shipments by 20% in order to better meet staff expectations and needs. Project implementation is June 2005.

3

PROJECT SCOPE

Focus on data on inbound, household goods sea shpts processed

in 2004. The process encompasses shipping arrangements from receipt of shipping documents to clearance of shipments in Manila and delivery to warehouse.

DEFINEDEFINEDEFINE

4

High Level Process MapDEFINEDEFINE

STAFF/ADB MAKESSHPG

ARRANGEMENTS

STAFF ARRIVES MLA& APPLIES FOR DFA

ID

TAX-EXEMPTIONPAPERS FILED WITH

GOVERNMENTAGENCIES

SHIPPINGDOCUMENTS

RECEIVED

SHPT CLEARANCEDELIVERY TOWAREHOUSE

5

Detailed Process MapMakes

shipping arrangements

Staff /ADB

Staff

OAIS-SI

Shipping Unit

Broker

Arrives in Manila

Accomplishes DFA ID

Application

Sends DFA ID Application to

Staff

Files, follows-up & secures

DFA ID

Advises Shipping Unit

of ID Issuance

Files FER with DFA, follows-up

1st End.4

Forwards 1st Endorsement to Shipping

Unit 5

Files 2nd Endorsement Request with

DOF8

Fwds receiving copy to

Shipping9

Receives shpg doc

from staff or broker

1

Generates FER, etc. for approval of Head, OAIS-

LM2

Forwards FER to OAIS-

SI

3

Generates 2nd

Endorsement Request

6

Forwards to OAIS-SI

7

Faxes copy to broker for follow-up with DOF

10

Secures 2nd Endorsement

Approval11

Arrives in Manila

Follows-up and secures

approval from BOC 12

Processes Clearance

from BOC 13

Delivers to Warehouse

14

6

S I P O C

CTQs S I P O CClear instructions issued to Origin Agent re sailing schedules & consignment Instructions

ADB/Staff

Communication bet.

ADB/staff & Origin Agent

START Makes

shipping arrangement

Shipment Instructions

STAFF

Availability of DFA ID when shpt arrives MLA

OAIS-SIDFA ID

Aplication

- Files DFA ID application & follow

ups ID issuance - Inform Staff/OAIS-LM when ID issued

generates

DFA ID issuance

STAFF

Timely filing of F.E.R.

OAIS-LMShipping

Documents

- F.E.R. thru SHIPMON and

forwards to Head, OAIS for approval submits to OAIS-SI

Free Entry Request (F.E.R.)

OAIS-SI

OAIS-SI F.E.R.Submit to DFA and

follows-up 1st Endorsement

1st End issuance by

DFAOAIS-SI

OAIS-LM1st

Endorsement

Generates 2nd End. Request and submits

to OAIS-SI

1st End. request

OAIS-SI

OAIS-SI2nd

EndorsementSubmit 2nd End. Request to DOF OAIS-SI

Timely submission and issuance of endorsements from gov't agencies

7

S I P O C

CTQs S I P O C

OAIS-LMCopies of 1st End. & 2nd

End. RequestFaxed to Broker BROKER

BROKERFollows-up

Approval with DOF

2nd Endorsement

approvalADB

DOF 2nd End.

Dispatches documents to

BOC by messenger

Receipts of Documents

BOC

BROKERFollows-up Final

Endorsement

Final End. by chief, Tax-

exempt Div., BOC

BROKERProcesses

clearance thru BOC

Cleared shipment

STAFF

BROKERTakes delivery of shipment from Port END

Shpt. in whse for delivery schedule

STAFF

Timely Clearance of Shipments

Timely Follow-up by Broker w/ gov't

agencies

8

DATA FOR PROJECT YDEFINEDEFINE

Output Characteristics No

. o

f d

ays

FE

R f

iled

fr

om

rec

eip

ts o

f d

ocu

men

ts

No

. o

f d

ays

til

DF

A 1

st

En

d.

Issu

ed &

R

ecei

ved

No

. o

f d

ays

fro

m r

ecp

t ti

l 2n

d E

nd

. R

equ

est

file

d a

t D

OF

No

. o

f d

ays

fro

m f

ilin

g

at D

OF

to

cle

aran

ce o

f sh

ipm

ent

Timely Clearance of HHG inbound sea shipments

- Strong relationship

- Moderate relationship

- Weak relationship

No symbol = No relationship

Potential Output Measures

9

DEFINEDEFINE CTQ

Output UnitClearance Time between shipment arrival and clearance

Output Characteristic

(Big Y)Timely Clearance of shipments

Operations Definition

Process starts when shipping documents are received and ends when the shpt is clearedHow process will be measured

Deviation from target clearance processing time. Weekends and holidays not included.

LSL - 4 daysUSL - 11 days

Target Total clearance time in 7 days

Shipments processed more than 7 days

No. of Defect Opportunities

Per Unit1 opportunity for a defect

CTQ

Project Y (Little y) Measure

Specification Limits

Defect

High-Level Need

Improved Clearance Time

10

Data Collection PlanMEASUREMEASURE

• Household Goods sea shipments processed in 2004

• Sample size: 59

• Weekends & Holidays not included

• Data Source: 2004 Status Report – HHG Shipments

• Who will collect/verify data: Olive/Elsa

11

Data Collection PlanMEASUREMEASURE

Total Processing Time includes:

A. No. of Days – DFA file vs DFA Release of Endorsement to ADB (DFA Performance)

B. No. of Days – DFA Release vs. Filing at DOF (OAIS-LM Performance)

C. No. of Days – Filing at DOF vs. Clearance of Shpt (Broker Performance)

D. No. of Days – ATA vs. Clearance of Shpt (Broker Performance)

E. Actual Performance of Broker – Lower value of C & D

Total P = A + B + E + 1*

* 1 day processing from receipt of shipping documents to Filing at DFA

12

Data Sheet

Data Collection FormMEASUREMEASURE

13

Specification LimitsMEASUREMEASURE

LSL USL Target

A. DFA File vs. DFA Release 1 3 2(DFA Performance)

B. DFA Release vs. DOF File 1 2 1(OAIS-LM Performance)

C. Actual Broker Performance 1 5 3D. Total Processing Time + 1 4 11 7

14

Minitab StatisticsMEASUREMEASURE

Descriptive Statistics: DFA

Total

Variable Count N N* CumN Percent CumPct Mean SE Mean TrMean StDev

DFA 59 59 0 59 100 100 2.542 0.173 2.415 1.330

Sum of

Variable Variance CoefVar Sum Squares Minimum Q1 Median Q3

DFA 1.770 52.33 150.000 484.000 1.000 2.000 3.000 3.000

Variable Maximum Range IQR Skewness Kurtosis MSSD

DFA 10.000 9.000 1.000 3.04 16.39 1.759

15


DFA

Frequency

1086420

25

20

15

10

5

0

Mean 2.542StDev 1.330N 59

Histogram (with Normal Curve) of DFA

16


DFA

Perc

ent

10.07.55.02.50.0

99.9

99

95

90

80706050403020

10

5

1

0.1

Mean

<0.005

2.542StDev 1.330N 59AD 4.091P-Value

Probability Plot of DFANormal

17


1086420

LSL Target USLProcess Data

Sample N 59Shape 2.01675Scale 2.8705

LSL 1Target 2USL 3Sample Mean 2.54237

Overall CapabilityPp 0.28PPL 0.61PPU 0.12Ppk 0.12

Observed PerformancePPM < LSL 0.0PPM > USL 84745.8PPM Total 84745.8

Exp. Overall PerformancePPM < LSL 112403PPM > USL 335186PPM Total 447589

Process Capability of DFACalculations Based on Weibull Distribution Model

Zlt = Ppk x 3; 0.12 x 3 = 0.36

Zst = 1.5 + Zlt; 1.5 + 0.36 = 1.86 Sigma

18


Descriptive Statistics: OAIS-LM TotalVariable Count N N* CumN Percent CumPct Mean SE Mean TrMean StDevOAIS-LM 59 59 0 59 100 100 1.0847 0.0366 1.0377 0.2809

Sum ofVariable Variance CoefVar Sum Squares Minimum Q1 Median Q3OAIS-LM 0.0789 25.89 64.0000 74.0000 1.0000 1.0000 1.0000 1.0000

Variable Maximum Range IQR Skewness Kurtosis MSSDOAIS-LM 2.0000 1.0000 0.000000000 3.06 7.62 0.0862

19


OAIS-LM

Frequency

21

90

80

70

60

50

40

30

20

10

0

Mean 1.085StDev 0.2809

N 59

Histogram (with Normal Curve) of OAIS-LM

20


OAIS-LM

Perc

ent

2.01.51.00.50.0

99.9

99

95

90

80706050403020

10

5

1

0.1

Mean

<0.005

1.085StDev 0.2809N 59AD 19.950P-Value

Probability Plot of OAIS-LMNormal

21


21

LSLTarget USLProcess Data




Observed PerformancePPM < LSL 0PPM > USL 0PPM Total 0


Process Capability of OAIS-LMCalculations Based on Weibull Distribution Model

Zlt = 0.08 x 3 = 0.24

Zst = 1.5 + 0.24 = 1.74 Sigma

22


Descriptive Statistics: Broker TotalVariable Count N N* CumN Percent CumPct Mean SE Mean TrMean StDevBroker 59 59 0 59 100 100 3.966 0.288 3.774 2.213 Sum ofVariable Variance CoefVar Sum Squares Minimum Q1 Median Q3Broker 4.895 55.79 234.000 1212.000 1.000 2.000 3.000 5.000 Variable Maximum Range IQR Skewness Kurtosis MSSDBroker 11.000 10.000 3.000 1.43 2.31 4.819

23


Broker

Frequency

9.67.24.82.40.0

25

20

15

10

5

0


Histogram (with Normal Curve) of Broker

24


Broker

Perc

ent

121086420-2-4

99.9

99

95

90

80706050403020

10

5

1

0.1

Mean

<0.005


Probability Plot of BrokerNormal

25


9.67.24.82.40.0







Process Capability of BrokerCalculations Based on Weibull Distribution Model

Zlt = 0.16 x 3 = 0.48

Zst = 1.5 + 0.48 = 1.98 Sigma

26


Descriptive Statistics: Total P. TotalVariable Count N N* CumN Percent CumPct Mean SE Mean TrMean StDevTotal P. 59 59 0 59 100 100 8.576 0.351 8.377 2.692

Sum ofVariable Variance CoefVar Sum Squares Minimum Q1 Median Q3Total P. 7.248 31.39 506.000 4760.000 4.000 7.000 8.000 10.000

Variable Maximum Range IQR Skewness Kurtosis MSSDTotal P. 17.000 13.000 3.000 1.10 1.48 7.353

27


Total P.

Frequency

16141210864

10

8

6

4

2

0


Histogram (with Normal Curve) of Total P.

28


Total P.

Perc

ent

181614121086420

99.9

99

95

90

80706050403020

10

5

1

0.1

Mean

<0.005


Probability Plot of Total P.Normal

29


15129630







Process Capability of Total P.Calculations Based on Weibull Distribution Model

Zlt = 0.29 x 3 = 0.87

Zst = 1.50 + 0.87 = 2.37 Sigma

30

Process Capability SummaryMEASUREMEASURE

Mean Target ST Capability

A. DFA Performance 2.542 2.0 1.86

B. OAIS-LM Performance 1.0847 1.0 1.74

C. Actual Broker Performance 3.966 3.0 1.98

D. Total Processing Time + 1 8.576 7.0 2.37

31

Defects Count ANALYZEANALYZE

CodeDEFECT TYPE Count

A Delay in Receipt of Docs 18

B Held at Port Per Staff Request 2

C Delay at DOF 15

D Amendment of B/L 2

E Delay at BOC 1

F Incomplete Docs Submitted to DFA 1

G Papers Lost at DFA 1

Defect - Shipments with Total Clearance Time (DFA Filing to

Clearance +1 Day) of Over 7 days

32

MEASUREMEASURE PARETO CHART

Count

Per

cent

Defect TypeCount

37.5 5.0 5.0 2.5 5.0Cum % 45.0 82.5 87.5 92.5

18

95.0 100.0

15 2 2 1 2Percent 45.0

OtherEDBCA

40

30

20

10

0

100

80

60

40

20

0

Pareto Chart of Defect Type

33

CAUSE & EFFECT ANALYZEANALYZE

- Freight not yet paid - Staff unaware of importance - No advance copies sent

- Docs kept by staff of docs - Agent not given clear - Docs lost by staff instructions by staff on sending

Incomplete instructions to of documents - Staff does not read agent - Docs sent late despite long guidelines transit time

- Too much data for staff to read & comprehend

- Short transit time- guidelines not specificenough re timetable forsending documents to Manila

N

TransitTime

Staff

Shipping Guidelines

Origin Agent

CC

C

C

C

C

C

C

C

C

C

34

ANALYZEANALYZECAUSE & EFFECT

#1 Cause: Delay in Receiving Documents

Analysis:1. Need to increase staff awareness on importance of receiving

shipping documents early.

2. Apart from the Staff Information Handbook, staff needs to access important shipping information while still at origin which may be relayed directly and accurately to the origin mover.

should be short, 1 page, can be handed over to the mover

35

ANALYZEANALYZE

- misplaced - No signatory applications - No power at DOF - No designated alternate

signatory - No pre-alert on change

- Docs cannot be located in signatory computer problems at Releasing

- Processor absent- No messenger to BOC

- Broker did not follow-up approval at DOF - No strict monitoring of

approval dates of DOF

- Broker followed up late at DOF - Shipping Unit has to re-do

2nd End. requests due to sudden change in signatory

N

DelayinDOFRel.

SHIPPINGUNIT

DOF

BROKER

DOF

CN

N

C

N

C

C

N

N

C

N

CAUSE & EFFECT

36

ANALYZEANALYZECAUSE & EFFECT

#2 Cause: Delay at the DOF

Analysis:1. Need to coordinate with the DOF for an alternate signatory in

case of absence of main signatory.2. Need to strictly monitor the approval dates of 2nd Endorsements

by the DOF.3. Need to strictly monitor the clearance performance of broker

based on the approval of 2nd endorsement by the DOF.

37

Proposed SolutionsIMPROVEIMPROVE

1. Provide staff, while still at origin, with vital information containingshipping instructions which can be handed over to the origin agent.

Shipping Instructions – for origin agent (ITOM)Commencement: Since 01 June 2005

2. Monitoring sheet to include additional dates for: Receipt of shipping documents Approval of 2nd Endorsement by DOFCommencement: Since 01 June 2005

3. Coordinate with brokers to submit copies of approved DOF 2nd endorsements.Commencement: Since 01 June 2005

38

CONTROLCONTROL Project Implementation

• From 1 June 2005, all new staff with signed offer letters were sent the ITOM by e-mail

• To date, only 10 shipments have arrived and cleared thru Customs

• Data sample size for this review = 10

39

Revised Specification LimitsCONTROLCONTROL

LSL USL Target

A. Recpt of Docs vs DFA File 0 1 1(LM Performance)

B. DFA File vs. DFA Release 1 3 2(DFA Performance)

C. DFA Release vs. DOF File 1 2 1(LM Performance)

D. Broker Performance 1 5 3E. Total Processing Time 3 11 7

40

CONTROLCONTROL Process Capability Charts

A. LM1 – Receipt of Docs to DFA File

10987654321

2

1

0

_X=0.9

UCL=2.378

LCL=-0.578

Observation10987654321

2

1

0

__MR=0.556

UCL=1.815

LCL=0

ST

* 0.13Z.LSL * *Z.Bench 1.63 0.13Z.Shift 1.50

LT

1.50P.USL * 0.447563P.LSL * *P.Total 0.0513586 0.447563

Mean

Yield 94.86 55.24DPMO 51358.6 447563.0Cp * *Cpk

0.9

* *CCpk * *Pp * *Ppk *

0.9

0.04

StDev * 0.759Z.USL

1 1

3.17582-1.37582

I and MR Chart

Process Tolerance

Specifications

Potential (ST) Capability

Process Tolerance

Specifications

Actual (LT) Capability

Data Source:Time Span:Data Trace:

Capability I ndices

Report 2: Process Capability for LM1

41

CONTROLCONTROL

210

USL

10987654321

1000000

100000

10000

1000

100

10

1

Date:

Lower Spec:Nominal: Opportunity:

Reported by:Project:Department:Process:Characteristic:Units:Upper Spec: 1

Actual (LT)

Process Performance Process Demographics

Actual (LT) Potential (ST)

Sigma(Z.Bench)

DPMO

0.13

447563.0

1.63

51358.6

Process Benchmarks

Report 1: Executive Summary

Process Capability Charts

42

CONTROLCONTROL

10987654321

4

2

0

_X=2.5

UCL=4.864

LCL=0.136


3.0

1.5

0.0

__MR=0.889

UCL=2.904

LCL=0

ST

* 0.69Z.LSL * 2.06Z.Bench 2.13 0.63Z.Shift 1.50

LT

1.50P.USL * 0.245798P.LSL * 0.0195410P.Total 0.0167112 0.265339

Mean

Yield 98.33 73.47DPMO 16711.2 265338.6Cp * *Cpk

2

* *CCpk * *Pp * 0.46Ppk *

2.5

0.23

StDev * 0.727Z.USL

31 31

4.680950.319051

I and MR Chart

Process Tolerance

Specifications


Process Tolerance

Specifications



Capability I ndices

Report 2: Process Capability for DFA


B. DFA Performance

43

CONTROLCONTROL

4321

LSL USL

10987654321

1000000

100000

10000

1000

100

10

1

Date:

Lower Spec: 1Nominal: Opportunity:


Actual (LT)



Sigma(Z.Bench)

DPMO

0.63

265338.6

2.13

16711.2

Process Benchmarks



44

CONTROLCONTROL

10987654321

4

2

0

_X=2

UCL=3.773

LCL=0.227


2

1

0

__MR=0.667

UCL=2.178

LCL=0

ST


LT

1.50P.USL * 0.0009841P.LSL * 0.151115P.Total 0.0057444 0.152100

Mean

Yield 99.43 84.79DPMO 5744.4 152099.6Cp * *Cpk

3

* *CCpk * *Pp * 0.69Ppk *

2

0.34

StDev * 0.969Z.USL

51 51

4.90793-0.907932

I and MR Chart

Process Tolerance

Specifications


Process Tolerance

Specifications



Capability I ndices

Report 2: Process Capability for BROKER


D. Broker Performance

45

CONTROLCONTROL

543210

LSL USL

10987654321

1000000

100000

10000

1000

100

10

1

Date:



Actual (LT)



Sigma(Z.Bench)

DPMO

1.03

152099.6

2.53

5744.4

Process Benchmarks



46


10987654321

8

6

4

_X=6.4

UCL=9.060

LCL=3.740


3.0

1.5

0.0

__MR=1

UCL=3.267

LCL=0

ST


LT

1.50P.USL * 0.0002022P.LSL * 0.0044686P.Total 0.0000207 0.0046708

Mean

Yield 100.00 99.53DPMO 20.7 4670.8Cp * *Cpk

7

* *CCpk * *Pp * 1.03Ppk *

6.4

0.87

StDev * 1.300Z.USL

113 113

10.30142.4986

I and MR Chart

Process Tolerance

Specifications


Process Tolerance

Specifications



Capability I ndices

Report 2: Process Capability for TOTAL

E. Total Processing Time

47


10864

LSL USL

10987654321

1.0000E+06

10000.000

100.000

1.000

0.009

Date:



Actual (LT)



Sigma(Z.Bench)

DPMO

2.60

4670.8

4.10

20.7

Process Benchmarks


48

Process Capability Comparison

CONTROLCONTROL

Mean 1 Mean 2 TargetST Cap

1ST Cap

2

A. LM1 – Receipt of Docs to File DFA 0.90 1.00 1.63

B. DFA Performance 2.54 2.50 2.00 1.86 2.13

C. LM2 - DFA Release to File DOF 1.08 1.00 1.00 1.74

D. Broker Performance 3.97 2.00 3.00 1.98 2.53

E. Total Processing Time 8.58 6.40 7.00 2.37 4.10

49

CONTROLCONTROLBenefits

• With the implementation of proposed solutions, total processing time was reduced from an average of 8.58 days to 6.40 days or a reduction of 25.41% in clearance time.

• Process Sigma improved from 2.37 to 4.10.

50

CONTROLCONTROL

Soft Savings

Soft Savings – 25.41% reduction in clearance time results in:

•Savings in storage and demurrage costs of US$1,542.00 per year for shipments processed within 7 days or faster.

•Increased customer satisfaction – staff will be able to settle down faster and concentrate on work.

• Savings in staff time previously spent on correcting errors in documentation, explaining delays to staff, arguing with agents, etc., may be diverted to more profitable work.

•Enhanced relationship with agents due to clear guidelines and instructions received from ADB

51

Lessons Learned

1. While the Six Sigma approach is a powerful tool, having relevant data is important in analyzing and making decisions.

2. Critical thinking is important in deciding on a problem and which methods to apply.

3. Buy-in from the members of a project is important; and open communication, teamwork and ownership is the way to achieve this.

4. We have proven to ourselves that it is possible to further improve a process perceived as ‘maximized’.

52

The End

DEFINE

Documents

clearance of shipments

clearance time of shipments

endorsement request6forwards

endorsement requestforwards

endorsement approval11arrives

endorsement approvalfollows

days fer

receipt of shipping