BUSINESS PROCESSES ANALYSISYelena Vassilevskaya – consultant

Regional Workshop on Trade FacilitationYerevan, Armenia, 11-13 June 2019

BASIC DEFINITIONS

Business process – sequence of measures taken with a given goal.

Modeling of business processes –method of displaying business processes, in which each element of the business process is represented by a graphic symbol. This can be a simple drawing created with a pencil and paper or computer program (for example, MS Visio).

Business process model – graphical representation of the business process

Methodology "Business Process Analysis" (BPA) is developed UNECE-UNESCAP

The Unified Modeling Language (UML) has a number of standard graphical symbols for modeling business processes

UML is widely used in business circles, in the development of information technology and software.

Due to the uniformity of the modeling methods, the results are easily perceived, analyzed and confirmed.

BPA MODELING LANGUAGE

The use case diagram – graphical overview of the main business processes that are subject to further in-depth research. It indicates all parties involved in these business processes and all the actual links between these processes and the parties involved

The action diagram – displays in detail each business process shown in the use case diagram. It depicts the sequence of actions and information flows from one responsible party to another. It informs users not only about who does what and in what order, but also about the source documents that serve as a prerequisite for action, and about the final documents that can be obtained upon completion of actions.

Description of the action diagram – table in which a description of the action diagram by the standard structure is presented (subjects, steps, documents, etc.)

FORMS OF GRAPHIC IMAGE BPA

SYMBOLS DESCRIPTION AND EXPLANATIONS FOR USE

Object border: represents the "process area"; includes the name of the object at the top of border

"Subject" (actor, Stakeholders:): represents the role performed in a particular business process it may be a person, an organization, department, etc .; it is called by an executable role; it is placed outside of the object border.

Use-case (Precedent): represents the main business process; is called by descriptive phrase from the verb and the noun.

Association of relationships:connects "subjects" with precedents (hereinafter business processes) in

which they participate.

SYMBOLS USED FOR USE CASE DIAGRAMS

SYMBOLS USED FOR ACTION DIAGRAM

SYMBOLS DESCRIPTION AND EXPLANATIONS FOR USE

"Initial state" of the action:

represents the beginning of a series of actions;

for each action diagram.

"Final state" of the course of action:

It is Used to show when action have to be stop (cancel)

Indicates that further actions can not occur in the described context.

Final state of the action:

Used to indicate the completion of a business process.

"Track":

It is used to separate actions on individuals / institutions responsible for the performance of their actions;

is called by the name of the person in charge, organization or department.

ОБОЗНАЧЕНИЯ, ИСПОЛЬЗУЕМЫЕ ДЛЯ ДИАГРАММЫ ДЕЙСТВИЙ (продолжение)

SYMBOLS DESCRIPTION AND EXPLANATIONS FOR USE

"Action":

represents an inseparable fragment of behavior;is called by name, which:

1) begins with the verb and ends with the noun;2) bears a short title, but contains enough information to be understandable to

reader

"Object":

It represents the document or information, which passes from one activity to another;

It is called by the name of the document.

"Decision":

represents a node where, depending on the result of a particular previous action, a decision must be made;

has a number of transition lines originating from the decision node and connected to various actions;

joins with the markers defining the condition on each line of the transition, coming from some action and connecting with the decision node or vice versa.

ОБОЗНАЧЕНИЯ, ИСПОЛЬЗУЕМЫЕ ДЛЯ ДИАГРАММЫ ДЕЙСТВИЙ (продолжение)

SYMBOLS DESCRIPTION AND EXPLANATIONS FOR USE

“Transfer Line”: indicates a sequential course of action and information flows in the action

diagram

“Fork” (Branching control): Used to visualize several parallel or simultaneous actions.

“Connection” (Synchronous control): It is used to indicate the place of termination of a number of parallel or

simultaneous actions

Each business process model shows::

The actions that follow in a certain order and have clear decision-making nodes;

"Subjects" that perform these actions;

certain initial resources and the results of each action;

criteria for starting and completing a business process;

the relationship between "subjects";traffic information in the business process;

relevant rules and regulations;

quantitative indicators, such as: the number of stages and time and costs required to complete a particular business process.

BUSINESS PROCESS MODEL

In 2014-2015 – two BPA studies on export and import of dry fruits from Kyrgyzstan to Kazakhstan and cereals export from Kazakhstan to Azerbaijan.

In 2016 – BPA study of the export of dry grapes from Uzbekistan

From 2010 to 2017 – completed 7 projects of developing a manuals for Kazakhstan exporters (Under the order KAZNEX INVEST), where elements of BPA methodology has been applied.

In 2018 – completed a project to analyze the freight forwarding activity (Under the order STC «KAZLOGISTICS»), which used a methodology of BPA

Within the framework of the program "Supply Chain Management FIATA”, a course of lectures on the methodology of BPA;

In 2019 (at the completion stage) – BPA study cereals export from Kazakhstan to Azerbaijan, a comparison of changes over five years (details of the results in the next presentation);

** For learning the methodology of BPA UNESCAP developed E-Learning Series, which available online for free

EXPERIENCE IN THE USE OF BPA METHODOLOGY:

BPA STUDY OF CEREAL EXPORT INCLUDE:

Overview of the cereal export market from Kazakhstan;

Analysis of regulatory requirements for cereal export in Kazakhstan and cereal import in Azerbaijan;

Business process analysis of cereal export from Kazakhstan to Azerbaijan, including analysis of existing business processes, identification of bottlenecks, development of recommendations for their optimization, as well as comparison of changes over the past five years

Methodology "Business Process Analysis" (BPA) is developed UNECE-UNESCAP

Wheat production by country, 2000-2017, million tons

№ Country20

00

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Shar

e in

20

17,%

1 China 100 94 90 86 92 97 108 109 112 115 115 117 121 122 126 130 133 134 14,82 India 76 70 73 66 72 69 69 76 79 81 81 87 95 94 96 87 92 99 10,93 Russia 34 47 51 34 45 48 45 49 64 62 42 56 38 52 60 62 73 86 9,54 USA 61 53 44 64 59 57 49 56 68 60 60 54 62 58 55 56 63 47 5,25 Canada 27 21 16 23 25 26 25 20 29 27 23 25 27 38 29 28 32 30 3,36 France 37 32 39 30 40 37 35 33 39 38 38 36 38 38 39 43 30 37 4,17 Ukraine 10 21 21 4 18 19 14 14 26 21 17 22 16 23 24 27 26 26 2,98 Pakistan 21 19 18 19 19 22 21 23 21 24 23 25 24 24 26 25 26 27 2,99 Germany 22 23 21 19 25 24 22 21 26 25 24 23 22 25 28 27 24 24 2,710 Australia 22 24 10 26 22 25 11 13 21 22 22 27 30 23 25 24 22 32 3,511 Turkey 21 19 20 19 21 22 20 17 18 21 20 22 20 22 19 23 21 22 2,412 Argentina 16 15 12 15 16 13 15 16 8 9 15 16 11 8 14 12 11 18 2,013 Kazakhstan 9 13 13 12 10 11 13 16 13 17 10 23 13 14 13 14 15 15 1,6%

Other 228 232 256 219 263 256 274 252 270 278 266 280 277 293 299 330 314 309 34,1%TOTAL 685 682 682 637 727 724 723 716 793 799 755 815 794 833 853 885 882 906

Доля Казахстана по производству зерна -1,3%-2,8% в год

* Food and Agriculture Organization of the United Nations, http://www.fao.org/faostat/ru/#data/

Volumes of shipmentof cereals and flour for export

in 2008-2018

Indicators 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Cereals export volumes 5646 3577 5492 3494 7876 5268 5014 4599 5455 5763 8613

Flour export volumes 1803 2248 2297 1902 2245 1859 1844 1742 2197 2130 2134

Flour in grain equivalent 2575 3211 3281 2717 3207 2655 2634 2488 3139 3043 3048

TOTAL Cereals and flour in grain equivalent

8221 6788 8773 6211 11084 7923 7648 7088 8594 8806 11661

Thousands tons

* Data from Ministry of Agriculture of the RK, https://moa.gov.kz/ru/documents/117

Volumes of cereal (HS ’10’)import of Azerbaijan by country

of 2013-2017yy.

ExportersImported value in

Share in the total

volume of 2017, %

Growth in 2017 by 2013,%2009 2010 2011 2012 2013 2014 2015 2016 2017

World 223 316 315 374 435 339 343 345 292 100,0% -32,9%

Russia 158 46,2 102 106 173 188 309 291 241 82,6% 39,1%

India 0,07 0,25 2,59 3,74 2,87 0,5 3,21 21,1 23 7,9% 701,0%

Kazakhstan 43,1 257 162 259 236 137 22,3 18,7 12,6 4,3% -94,6%

Ukraine 9,96 3,34 7,41 0,92 2,6 0,66 6,36 6,01 5,04 1,7% 93,8%

Pakistan 4,18 1,4 0,8 0,67 0,46 0,02 0,36 1,37 2,54 0,9% 450,8%

Thailand 3,19 3,41 0,17 0,18 0,74 0,73 0,66 2,46 2,47 0,8% 234,4%

Turkey 0,22 0,23 0,3 0,57 6,18 10,1 0,77 1,98 2,15 0,7% -65,2%

Others 4,62 4,5 40,6 2,89 10,7 1,12 0,82 2,15 2,77 1,0% -74,1%

$US million

* www.trademap.org, ITC calculations based on UN COMTRADE statistics

Delivery routes of Kazakhstancereal to Azerbaijan

Основной причиной снижения объемов импорта в Азербайджан зерновых из Казахстана в пользу России является дефицит вагонов и высокие транспортные расходы

Стоимость экспортных перевозок зерна из Казахстана в Азербайджан железнодорожным транспортом за пять лет увеличилась на 13-15%

ОТКРЫТ ПОРТ КУРЫК

THE MAIN CHANGES ON THE REGULATION FOR 5 YEARS

The requirement for the formation of state resources of grain is abolished (by the Law of the Republic of Kazakhstan dated 04.12.2015 No. 435-V)

Wheat and barley, if the minimum lot size is 600 tons, should be sold on the domestic market through electronic rialto

The document “certificate of quality” was replaced with “Passport of grain quality”, requirements for its receipt were introduced / Order of the Ministry of Agriculture of the Republic of Kazakhstan No. 4-1 / 364 dated 04.23.2015.

The list of public services provided via the egov.kz web port has been expanded.

From 2018, the declaration of goods is carried out in electronic form through the automated information system "Astana-1" - astana-1.kz

In March 2019, the “Single Window” portal eokno.gov.kz began to work in test operation mode

Since April 2019, a certificate of origin has been automated.

Since April 2019, a new function has been implemented in the railways information system - the execution of electronic transportation documents for rail transportation

УСЛОВИЯ, ПРИНЯТЫЕ ДЛЯ ДАННОГО ИССЛЕДОВАНИЯ

The exporter manages delivery on DAT conditions (INCOTERMS 2010);

Cereals are supplied from Kazakhstan to Azerbaijan by Railway through the territory of Russia which, likewise Kazakhstan, is a member of the EEU Customs Union.

The transportation is organized by the freight forwarder, who organizes the payment for transportation on the territory of the Republic of Kazakhstan and the Russian Federation. importer pays for the territory of Azerbaijan

To calculate the cost of performing business processes, it is assumed that 1 car is transported, all cargo (wheat) is 60 tons. The total amount of the contract does not exceed $ 50,000, which eliminates the need to register a trade contract with a bank

Payment for a commercial contract is carried out by a letter of credit.

The exporter has an EDS for egov.kz, doc24.kz, an EDS for Astana-1 and an EDS for the ACS DKR. E

xporter performs customs clearance without a broker.

18

Comparison of Use case diagrams of cereals export in 2014 and in 2019

2014 2019

19Business process in former study (2014)

Business process in the present study (2019) Explanations

2.1. Obtain import permit 2.1. Obtain import permitNumber and name have not changed, but currently this document is issued by the Food Safety Agency of the Republic of Azerbaijan instead of the sanitary inspection

2.2. Obtain Phytosanitary certificate 2.5.Obtain Phytosanitary certificate

The order of execution and the numbering of the business process are changed, since the receipt of this document occurs during the loading of grain into the wagon.

2.3.Confirmation of obligation supply grain to the state resource

Excluded because is not legally required any more

- 2.2. Obtain Certificate of OriginSupplemented as it is required during the cereals export.

2.4. Obtain a certificate of conformity 2.3.

Obtain Cereal Quality Passport & Declaration of Conformity

As well as 5 years ago confirmation of compliance was carried out in the form of Declaration. Since 2015, it is required to obtain a passport of grain quality. The issuance of these two documents is carried out by the same certification bodies, their receipt is combined, the numbering has changed

2.5. Arrange transport 2.4. Arrange transport

Renumbered due to moving and deleting previous business processes. The execution of this business process has changed, mainly due to the fact that the freight forwarder is involved.

COMPARISON OF USE CASE DIAGRAMS OF CEREALS EXPORT

20

COMPARISON OF USE CASE DIAGRAMS OF CEREALS EXPORT

Business process in former study (2014)

Business process in the present study (2019) Explanations

2.6. Loading and custom declaration 2.6. Loading & Custom clearance

The execution of this business process has changed because the freight forwarder is involved. There is also a change due to the digitization of some operations.

2.7. Border crossing of Russia 2.7. Border crossing of Russia There are no fundamental changes.

2.8. Border crossing of Azerbaijan

2.8. Pre-import declarationDivided into two business process, as it seemsmore logical.

2.9. Border crossing of Azerbaijan

2.9. Unloading cargo and Custom declaration

2.10. Obtain Health Certificate Divided into two business process, as it seemsmore logical.

2.11. Unloading cargo & Customclearance

14 main business processes and 15 participants are involved in cereal exports from Kazakhstan to Azerbaijan

21

Example activity diagram b.p. 2.3.: Obtain Cereal Quality Passport & Declaration of Conformity

Stakeholders: Exporter Certification body Research laboratory (Of

certification body)

Stakeholders: Exporter Certification body Research laboratory (Of

certification body)

Consists of 12 steps

Duration : 4 days

Cost: 71$US

Result: Exporter holds Cereal Quality Passport, Registered Declaration of conformity and copies of test protocols for his cereal products.

Regulated by: 6 main regulatory documents

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Example activity diagram b.p. 2.4.: Arrange transport

Stakeholders: • Exporter (Consignor);• Kazakhstan freight forwarder;• Kazakhstan Railways;• Owner of rail wagons.

Stakeholders: • Exporter (Consignor);• Kazakhstan freight forwarder;• Kazakhstan Railways;• Owner of rail wagons.

Exporter (Consignor)

2.4.1. Apply for arrange transport

Fright forwarder Kazakhstan Rail ways

2.4.2. Search for thebest conditions of use of

the wagons and payment of transportation across

Russia

2.4.5. Form and send commercial offer

2.4.6. Consider if the offer is acceptable

2.4.7. Sign an additional agreement to forwarding

contract

not acceptable

acceptable

cancel

Owner of rail wagons

2.4.3. Request the price of the wagon service

2.4.4. Provid the price of the wagon service

2.4.8. Sign an additional agreement to forwarding

contract

2.4.12. Provides information to apply to the transportation plan and

EDS

Additional agreement

2.4.9. Conclude a wagon service contract

2.4.10. Conclude a wagon service contract

Wagon service contract

2.4.11. Provides information about the

owner of the wagons to fill SMGS

not acceptable

acceptable

2.4.14. Report on the receipt of the applicationvia ACS, considers the application and agrees with the railways of the participating countries

2.4.15. Send a message via the ACS DKR with the

reason refusal

2.2.17. Send confirmationthe transportation planmessage via the ACS

Electronic refusal message

Plan confirmation message

Power of attorney to use EDS

EDS

2.4.13. Online is applying for a transportation plan with the use of a digital signature of the shipper

through ASU DKR

2.4.16. Inform about the reason for refusal

2.4.18. Inform about the confirmation of the

inclusion of transportation in the plan

2.4.19. Transfer the necessary funds for

settlement with service providers

2.4.20. Get the necessary money to settle with

service providers

Consists of 20 steps

Duration : 7-10 days

Result: Exporter (consigner) has a confirmation of the inclusion of transportation in the plan, has a rail car for transportation, has all necessary information for the execution of shipping documents

Regulated by: 3 main regulatory documents and many others

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Пример Диаграммы действий б.п. 2.6.: Загрузка вагона и таможенное оформление

Участники: Экспортер (грузоотправитель); Экспедитор; Казахстанские железные

дороги; Казахстанская таможня.

Участники: Экспортер (грузоотправитель); Экспедитор; Казахстанские железные

дороги; Казахстанская таможня.

Состоит из 20 шагов

Выполнение: 1-2 дня

Стоимость: 153 $US (100 $US за погрузку,

Результат: Экспортер отправил груз по железной дороге, выполнил таможенное оформление, имеет оригиналы перевозочных и таможенных документовдекларацию соответствия и копии протоколов испытаний.

Регулируется: 6 основными нормативными документами и много других

Study of 2014 Study of 2019

SUMMARY OF PROGRESS

Business process

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№ Name № Name

1.BUY 1. BUY

1.1.Contract conclusion 2 8 7 12,5 N 1.1.

Contract conclusion 2 9 6 35 N without changes

2.SHIP 2. SHIP

2.1.Obtain import permit 3 7 1,25 16 N 2.1.

Obtain import permit 3 7 5 3 N

improved regulation

2.2.Obtain Certificate of Origin 2 7 1 4 Y

business process added

2.2.Obtain Phytosanitary certificate

2 7 4,5 25 N 2.5.Obtain Phytosanitary certificate

2 10 0,3 11 Y simplified and automation

2.3.

Confirmation of obligation supply grain to the state resource

2 6 3,5 0 Y excluded, not required

2.4.Obtain a certificate of conformity

3 13 10 68 N 2.3.

Obtain Cereal Quality Passport & Declaration of Conformity

2 12 5 71 N duration reduced

2.5. Arrange transport 4 12 7 270 N 2.4. Arrange transport 4 20 9 0 Y

much more complicated

COMPARISON OF KEY INDICATORS

Study of 2014 Study of 2019

SUMMARY OF PROGRESS

Business process

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№ Name № Name

2.6. Loading cargo & custom clearance

5 24 1,5 495 N 2.6.Loading cargo & custom clearance 4 20 2 153 Y

simplified , automated, reduced cost

2.7.Border crossing of Russia and transportation*

3 6 7 4686 Y 2.7.Border crossing of Russia and transportation*

3 6 7 5738 Ywithout changes,increase in the cost of transportation

2.8. Border crossing of Azerbaijan and transportation*

4 10 3 0,0

2.8.Pre-import declaration 2 6 0,1 21 Y

uncomplicated, automation

2.9.Border crossing of Azerbaijan & transportation*

3 9 2,8 0 N without changes

2.9. Unloading Cargo& Custom clearance

3 11 3 800 Y

2.10.Obtain Health Certificate 2 13 4,5 60 Y automation

2.11.Unloading Cargo& Custom clearance

3 13 0,8 1166 Ywithout changes,increase in the cost of transportation

3. Pay 3.PAY

3.1. Establish payment guarantee

4 9 2,5 290 N 3.1.Establish payment guarantee

4 9 3 300 N without changes

3.2. Claim payment for goods

4 13 2,5 453 N 3.2.Claim payment for goods 4 13 6 500 N duration increased

COMPARISON OF KEY INDICATORS

Total: • 50.1 days (1.8

days less than in 2014),

• taking into account parallel operations 30 days (6 days less than in 2014)

‘TIME-PROCEDURE’ chart for cereal export in 2019

Cost increased by 13% mainly due to an increase in the cost of transposition

‘COST-PROCEDURE’ chart for cereal export in 2019

REQUIRED DOCUMENTS

For cereal export in Kazakhstan: For cereal import in Azerbaijan:

Declaration of the goods Pre-import declaration

Import declaration

Foreign trade contract, commercial documents: invoice, etc .

Foreign trade contract, commercial documents: invoice, etc .

Transport documents (SMGS, Bill of lading) Transport documents (SMGS, Bill of lading)

Import Quarantine Permit (AZ) Import Quarantine Permit (AZ)

Phytosanitary certificate (KZ) Phytosanitary certificate (KZ)and Health certificate (AZ)

Declaration of Conformity (KZ) Declaration of Conformity (KZ)

Cereal Quality Passport (KZ) Cereal Quality Passport (KZ)

Certificate of origin of goods (KZ) Certificate of origin of goods (KZ)

Copy of the exporter’s Declaration

29

BRIEF ANALYSIS OF THE DOCUMENTS

Foreign trade contract: the original is required for accounting, despite the fact that both countries have ratified the Vienna Convention (in accordance with article 11 "it is not required that the contract of sale is concluded or confirmed in writing")

Import quarantine permit (AZ): 7 years ago Kazakhstan eliminated the requirement to obtain such a document, the import procedure has been simplified without any negative consequences.

Phytosanitary certificate (KZ and re-issued in AZ o Health Certificate): the reissue of the certificate required in Azerbaijan 5 days (Kazakhstan gives for 1 day). At this time, a temporary document is issued for customs clearance. It is recommended to recognize the Kazakhstan certificate without reissue

Certificate of origin (KZ): for the cereal import to Azerbaijan is not required, because, regardless of the country of origin, import duties do not apply for cereal;

Declaration of Conformity (RK) & Cereal Quality Passport (RK): the content and purpose of documents is different, however it is issued by the same certification bodies, their receipt is mandatory. Perhaps it is necessary to combine them into a single document.

The main progressive achievements: the system "Astana-1", the portal "Single window", electronic transportation documents through the railway IS, automation of obtaining a certificate of origin.

The volume of exports of Kazakh grain to Azerbaijan for 5 years has decreased significantly. The main reason for this is the high cost and complexity of the organization of rail transport. The opening of the port of Kuryk may partially solve the problem.

Consider the possibility: exceptions to import quarantine permit and certificate of origin (for

grain exported to Azerbaijan) exceptions the requirement to obtain a certificate of origin for the

cereal export from Kazakhstan to Azerbaijan, as this document does not give any additional preferences

combining the declaration of conformity and grain quality passport in a single document

recognition of Kazakhstan phytosanitary certificate in Azerbaijan without additional tests

Main conclusions and recommendations

vassilevs@bk.ru

I WISH YOU SUCCESS AND PROSPERITY!