Issues in Customs Administration - Literature review Example

?Literature Review: Customs Administration [College] Customs Administration According to, Chowdhury, (1992) a supply chain is a network of retailers, transporters, suppliers, distributers and storage facilities that participate in the production, delivery and sale of a product or products to the consumer. Most supply chains are made up of companies that decide to work together to gain competitive advantage over other in the market. The three main arts of a supply chain are supply, manufacturing and distribution. The council of Supply chain Management Professional (CSCMP) define supply chain as a process that entails the planning and management of all the activities that are involved in sourcing and procurement and conversion and all the logistics there in. Supply chain also includes coordination and collaboration between channel partners, who are suppliers, third party customer service providers, intermediaries and customers. According to Chen and Paulrag (2004), supply chain is the movement of materials right from their source to the end customer ,an illustration is given in the table below. Source: Chen and Paulrag (2004). Nagurney (2006) points out that supply chain is made up of the people, activities and resources including information involved in moving a product right from the supplier to the consumer. It is important tot note that note that multinational and international companies have incorporate exportation into their supply chains. Supply chain is no longer contained within country borders due to international trade and globalization. Supply chain can is involved on an international level at almost all the stages, whether it is vendor, manufacturing or at customer level. According to Murray,(2010), the global supply chain continues to be complex and there is need for companies to adopt relevant ideas into their supply chain strategies. According to Wu and Zhao (2007), the concept of internalization keeps changing and this trend had increased over the last five years. To comply with the changes in internalization, it is important for multinational companies to understand how firms behave and how they different companies perform in the international market. The manner in which a company performs in the export market is an antecedent to the firms committement in exporting, it also affects the manner in which managers define the various export strategies they use (Singh, 2002).It however clear that to effectively compete in the export market, affirm should ensure that there is appropriate logistics as they play a very vital role in the performance of the country’s export market. According to Cook (1999), firms around the world need to analyze marketing mix, the existing international environment the supply and demand network, strategies and marketing information as a pace setter for the way in which in the export market should be approached to maximize the potential in the foreign market share. Supply chain management in the export market could be related to corrective and preventive measures and customer service. Given that the supply chain management is crucial in the performance of the export market, countries should work towards establishing an efficient and effective customs administration for reliable services. According to Chowdhury,(1992) every country has a definite custom administration that is in accordance with its economic policies. A custom is an agency in a country that has the responsibility of safeguarding customs duties , collecting duties and controlling the movement of goods in and out of the country. Depending on a country’s policies and local legislation and regulation, some countries may not allow specific goods into or out of their territories due to some specific reasons. For example importation of goods that are highly manufactured within the country is prohibited by most customs to protect the businesses of local manufacturers. According to Widdowson (2008) customs duty is a tariff levied on all the goods that exported or imported into the country ,when customs duty is not paid, the customs administration has the right of holding such goods within the customs area. Customs play very important role in the government, they carry out administration, maintain the existing law, order and justice and carry out the collection of revenue. Despite the great importance that customs have on a country’s economy, some of them are infested with high level corruption. Some countries have gone ahead and privatized such customs to curtail corruption cases, improve their efficiently and effectiveness in the economy. Widdowson (), argues that customs have traditionally been endowed with the responsibility of implementing a variety of border management policies mostly on behalf of government agencies. Nowadays most customs environment change depending on the countries within which the custom operate the government priorities. For instance the World Trade Organisation, World Customs organization among other international bodies and agencies keep responding to the changing global standards in relation to the nature of boarder management. According to Widdowson, points out that roles of customs vary from one country to another there are several roles played by customs, some of the roles are ; revenue collection ,interdiction of prohibited substances, the protection of cultural heritage, enforcing trade compliance and facilitation ,and enforcement of intellectual property rights .However in developing and no developed nations ,customs play more revenue collection duty compared to developed nations there is more focus on border protection in relation to Free Trade Agreements .However the rise of terrorism acts has prompted the need for border protection across all economies. There has been evolution of the roles played by the customs , with the introduction of wide-bodied aircrafts, ecommerce, shipping containers and an increase in the technicalities f international trade agreements ,customs have had to change the manner in which they are administered to cope with increased work load, new technologies that have revolutionalized the transport and trade systems. The current social expectation is beyond intervention for intervention sake but intervention by exception where intervention is only carried out incase of any risk involved “In this day and age, however, social expectations no longer accept the concept of intervention for intervention’s sake. Rather, the current catch-cry is ‘intervention by exception’, that is, intervention when there is a legitimate need to do so; intervention based on identified risk.” (Widdowson, pg 2). Customs currently look for the best strategies to promote international trade in the simplest, cheapest and reliable means of getting goods in and out of the country. There is need to achieve certainty, flexibility timeliness and clarity while dealing with the government to create most effective ways of doing business. 2) Singapore Customs Singapore is a country made up of 63 islands and the smallest country in South East Asia, despite its size, Singapore has emerged as one of the mot prosperous economies in the world. The country has established a strong international trade link in a capitalist mixed market with minimal government intervention. According to a world Banks report on “Doing Business Report 2010” , the country was ranked as one of the easiest destination to do business in, it was ranked the first one with the most open and liberal economy in transacting international trade ,the second one with the best investment potential and the first and second ones with low levels of corruption in Asia and in the world respectively. These are part of the reason that Singapore has been selected as a bench mark to Thai .According to CIA fact sheet, the county exports a total of up to $ 268.9 billion and imports up to $ 245 billions. According to Tan (2000)another reason that makes the country’s economy to thrive is the strategic position it is located, this position enables it to smoothly carry out international trade. In addition, the Port of Singapore is the biggest and busiest in the world .The Port is surrounded with key world economies players, Australia, India, China and Japan. In order to manage all these transaction, the country’s customs has to be extremely efficient and fast in carrying out it transactions. In fact the port is involved in rapid foreign shipment processing and extremely fast and reliable customs clearance process .This is yet another reason why this country can be the best benchmark for the Thai market. Singapore Customs was re-constituted in 2003and placed under the ministry of Finance , the re-constitution brought together revenue and trade enforcement of Customs and Excise Department (CED),Statistical Audit Unit(SAU) and the Trade Facilitation Division (TFD). During the same time Border control functions was transferred to the Immigration and Checkpoints Authority (ICA) under the ministry of Home Affairs. This means that all the departments dealing with the Custom are financial and trade related making it more specialized and up to the task that it has been endowed with. The main function of the Singapore Customs are to facilitate trade through understanding customers needs and offering of customized solutions to the business community in a bid to promote the growth of business in Singapore. The body also maintains a robust and effective regulatory regime that quickly adapts to the ever changing business landscape. This is achieved through adopting principles of risk management so that legitimate trader can comfortably conduct business in Singapore. Singapore Customs ensure that there is trade security in order to secure trade supply chains. Apart from normal function the customs has put e services in place to adapt to the changing trade environment and customer needs and preferences. The vision of Thai customs is to become “a world Class Customs for national Competiveness and social protection” on the other hand Singapore customs vision is to “A leading Custom that enhances Singapore’s economy by assuring integrity of the trading system” . The vision for Singapore is more objective compared to the Thai one, its main aim is to benefit the country through the practice of integrity. Singapore Custom’s values are integrity, teamwork, committement, courage and responsiveness .In general ,Singapore’s customs is more organized ,focused and up to the task to ensure that the countries economy flourishes, however the Thai customs can be compared to the traditional customs that has not yet adopted to the changing business environment globally. In Thai ,during the reign of King Rama IV a Tax House was establish to perform the role of collecting custom duties and taxes on the goods that were being imported into the country. Late king Rama IV established accustoms House that was placed under the public sector, this house is currently known as the Customs Department. Currently the Customs Department is undergoing changes that would see faster and more efficient services for it customers. There is emphasis on export promotion and a push to make the custom compliant to international agreements and standards. The main functions performed by Thai customs are the collection of duties and taxes ,supervision of imports and exports to ensure that they comply with the law, prevention and suppression of criminal activities like smuggling and tax evasion, promoting manufacturing and exporting of goods and facilitating international trade. Singapore Customs was re-constituted in 2003 and placed under the ministry of Finance, the re-constitution brought together revenue and trade enforcement of Customs and Excise Department (CED),Statistical Audit Unit(SAU) and the Trade Facilitation Division (TFD). During the same time Border control functions was transferred to the Immigration and Checkpoints Authority (ICA) under the ministry of Home Affairs. This means that all the departments dealing with the Custom are financial and trade related making it more specialized and up to the task that it has been endowed with. Another reason that makes Singapore as a bench mark is the manner in which it handle exports, first of all the export market is that the information is well displayed and any international trader will be highly equipped with all the information required right from the website .For example 3) Benchmarking Benchmarking - According to Camp (2006,P.234) benchmarking is a business process improvement tool that works through comparing the performance of competitors and seek to outdo them through being more competitive in terms of reduced cost and quality production. Advantages of benchmarking According to Camp (2006) one of the strong points of this tool is that it set the foundation for performance development hence enabling the firm to outdo its competitors. Another benefit that he has pointed out is that the strategy provides the business with a platform of identifying the positive practices of its competitors and try to incorporate them in it own operations. According to Boxwell (1994), performance improvement is one of the most popular advantages of benchmarking, when a firm adopts benchmarking procedures it is likely to improve in order to enhance competitiveness. It gives guideline to the best survival tactics of a business, more over it identifies the key business processes and best practices that would lead the company to better performances .In addition he points out that new paradigms and gets customs out of their comfort zones to new grounds that are not based on historical performance but adopt tot he ever changing trends in the market. Benchmarking also enables firms to place organizational focus on change , apart form enabling the organization from adopting chance it give the guidelines on what should be followed when processing the necessary changes. Companies who benchmark their performance report the following benefits: Benchmarking enables a company identify specific problem areas and find ways of eliminating them. It also builds confidence when a firm finds out that there are better ways of doing things than normal procedures used in the company. Benchmarking also shifts internal thinking to measurable components that is inputs and outputs, it also serves as a baseline to be used as a report card. According to benchmarking tends to make companies work smatter compared to harder ,it instill the spirit of competiveness which is healthy for the business ( Wood,2009). Disadvantages of benchmarking The greatness weakness of this strategy according to Camp (2006, P.244) is the tendency of a company to develop complacency after realizing that it has outdone the competitors. Such company usually realizes later that the strategy was meant to open more hidden chances that could have enabled it to do even better in future.) Despite the fact that benchmarking is a health business practice, it should also be noted that it has short comings that can be detrimental to the development of a business organization. Thus, it is of great import for a business to be pretty watchful when selecting the tools, mechanisms and method of benchmarking. According to Camp (2006), benchmarking makes business organizations to overlook their own strength and develop more interest in the strength and opportunities available for other business organizations. For instance, in the air and overseas supply and Logistics Company, it is well appreciated that businesses operate in environments that are diverse in technology, level of economy and socio-political dynamics. This implies that their operational strategy varies from one company as well as country to another. However, benchmarking leads them in to believing that they can adopt the same strategy in operations, marketing, among others, which might be absolutely incorrect. Research by various business experts congregate on a concurrence that benchmarking is not an end to itself. They argue that most businesses concentrate on benchmarking at the expensive of being self innovative, and probably the pioneer in a given product design, technology and any new method that can improve operational efficiency. This syndrome has made some companies in supply industry look inferior and lack a drive that could enable them adopt a form of technology that can put them in a more competitive position. Furthermore, it is noted that companies that pioneer in a given way of doing something, for instance, technology have a tendency of getting patent rights for them. Consequently, they sale it to other companies that want to learn that technology and make exorbitant profits out of it. It is worth noting that companies that lead in benchmarking, similarly, have self inflicting destructive tendencies. Commonly, there is a pattern of complacency among them. Quite often, this pattern is due to the feeling of self righteousness, self gratification and contentment. Accordingly, this encourages haughtiness, arrogance and hauteur as the feeling of being the industry leader becomes prevalent in the company. As a result they slow down in their efforts to aggressively engage new business improvement skills as well as training of staff and stilling a desire for channel. References Chen, I. J., Paulraj, A. (2004): Towards a theory of supply chain management: the constructs and measurements. In: Journal of Operations Management, 22/2: 119-150 Anna Nagurney: Supply Chain Network Economics: Dynamics of Prices, Flows, and Profits, Edward Elgar Publishing, 2006, Oliver, R.K., Webber, M.D., 1982, “Supply-chain management: logistics catches up with strategy”, Outlook, Booz, Allen and Hamilton Inc. Reprinted 1992, in Logistics: The Strategic Issues, ed. M Christopher, Chapman Hall, London, pp. 63-75. -Lages, L.F., Lages, C. and Lages, C.R., (2004), European Perspectives on Export PerformanceDeterminants: An Exploratory Study. 6th European Framework Program. Rundh, B., (2007), International Marketing Behaviour Amongst Exporting Firm. EuropeanJournal of Marketing. Vol. 41 (1/2)181-198 Tan, K. C.,( 2000) Supply Chain Management: Practices, Concerns, and Performance Issues. TheJournal of Supply Chain Management. The Institute for Supply Management, Inc. pp:42-54 Chowdhury, F. L. (1992) Evasion of Customs Duty in Bangladesh, unpublished MBA dissertation submitted to Monash University, Australia Widdowson, D. The Changing role of Customs Evolution or Revolution ? “World Customs Journal Vol 1 No. 1” from http://www.worldcustomsjournal.org/media/wcj/2007/1/The_changing_role_of_Customs_evolution_or_revolution.pdf World Customs Organization 1999, International Convention on the Harmonization and Simplifi cation of Customs Procedures (as amended), General Annex, Standard 6.2, Brussels, known as the Revised Kyoto Convention. T Hayes 1993, Can EDI eliminate Customs? Address by Mr TP Hayes, AO, Secretary General, Customs Co-operation Council, to the Pan-Asian EDI Summit, Kuala Lumpur, Malaysia, July. Wood, Brad. 7 Steps to Better Benchmarking. Retrieved from http://bpmmag.net/mag/7-steps-better-benchmarking-0507/index1.html Boxwell, Robert, J., Jr. (1994). Benchmarking for Competitive Advantage. New York: McGraw-Hill. ISBN 0-07-006899-2. Read More