Global Business Blueprint (GBB)

Global Business Blueprint (GBB) Business Process Overview to the Trade Community June 29, 2004

Agenda • Opening Remarks …….…………………………………. 1:00 – 1:15 • SAP Fundamentals… …………………………………… 1:15 – 1:45 • GBB Approach.…………………………………………… 1:45 – 2:15 • Break .………………………………………………………. 2:15 – 2:30 • GBB Results .………………………………………………2:30 – 5:00 • Integration Scenario (Designer Apparel Incorporated) • Scenario & Supportive System Solution • Process Improvement Opportunities • Bureau of Customs and Border Protection (CBP) Issues being Addressed • Business Benefits for the Trade Community

Opening Remarks CBP 2005-2009 Strategic Goals; Modernization Mission and Vision • Commissioner Bonner has established the following prioritized strategic goals for the next five-year period: • Preventing Terrorism • Balancing Legitimate Trade and Travel with Security • One Face at the Border • Strengthening Our Control of the United States Borders • Protecting America and its Citizens • Modernizing and Managing The U.S. Customs and Border Protection Modernization Mission and Vision: • “is to build a dynamic CBP organization, enabled by information and technology to meet agency business expectations and thrive in the midst of tumultuous change. This new environment will build on robust technologies and global best practices with the capacity and flexibility to support future growth and changing business requirements in an ever-changing world.”

Opening Remarks (continued) • Why are we here? • Summit was presented to U.S Customs and Border Protection (CBP) stakeholders in context of people, process, and technology • Present results of GBB through a scenario • Background • Presented GBB as new concept, new approach at Trade Support Network (TSN) in January 2004 • SAP already being used and will remain as backbone for remaining Automated Commercial Environment (ACE) functionality • SAP 101 (Fundamentals): necessary to understand SAP concepts as we go through the scenario and also as we move forward to release-level work

Opening Remarks (continued) Captured “to-be” vision for ACE Cargo Management Lifecycle via series of workshops with: • Collaboration with Headquarters (HQ) Business Process Owners (BPO) • Focus on “what,” rather than “how” • Consideration of current trade requirements • Trade community & Participating Government Agencies (PGA) input at workshops in March using “straw model” Deliverables of GBB: • Business Process Flow Model: The “to-be” business processes, capturing an integrated solution for the ACE Cargo Management Lifecycle • SAP Fit/Gap Analysis: The functional and technical solutions (SAP or otherwise) that best support the CBP business processes

SAP Fundamentals

Evolution of ERP • What is ERP? • Enterprise Resource Planning is a software solution that enables integration of various departments and functions across a company onto a single computer system that can serve all those different departments’ particular needs.

Evolution of ERP (continued) Before ERP became popular, companies invested in: • Specialized computer systems • Needs of an individual department • Hundreds of different systems • Custom system Many times the different computer systems were not integrated resulting in a “stovepipe effect”

SAP Benefits Flexible: Configurable to meet business needs Real-time Validation: • Updates information immediately in the system as the data is saved • Provides direct access to current data and reports • Reduces operation costs Audit Trail: • All transactions can be tracked to the person entering or changing data Integrated: • Data entry in one module is immediately available in others • Eliminates duplication of data and increases data accuracy • Increases the coordination between departments

SAP Public Services Experience SAP is successfully leveraging its historical success to make a significant impact with the public sector. • Productive Federal Clients include: • NAVSUP • NAVY Moral Welfare & Recreation • Oakridge National Lab • Picatinny Arsenal • SPAWAR • Strategic Petroleum Reserve • UNICOR • U.S. Army (LMP) • U.S. Geological Survey • Bureau of Engraving & Printing • Defense Logistics Agency • Department of Defense (DOD) Enterprise Software Initiative • General Services Administration • Internal Revenue Service (IRS) • National Aeronautics and Space Administrations (NASA) • NAVAIR • NAVSEA • SAP at CBP: • Office of Finance

Data Organization in SAP The fundamental data framework within the SAP system SAP’s static informational and processing/parameter data Hierarchy SAP Master Data On-line tasks which combine to form integratedbusiness processes Transactions

Configure System Organization Data Master Data Transaction Data Enter Master Data Customer Master (All Account Types, MIDs) Sales Deal/Rebate (Anti Dumping Case #) Material Master (HTS, Schedule B) Currency Conversions Pricing (DTF, Trade Agreements) Equipment Master (Conveyance) Sales Orders (Entry/Entry Summary, Authorized Movements) Invoices (Statements, Credit Memo) Enter Transaction Data Shipping Docs (Manifest, BOL) Cross Application Components Reporting, Workflow, Case Management, etc * Configuration and Master Data must be set up to run Business Transactions Data Flow in SAP * See Appendix for definitions

FI CRM SD FI SD SAP GTS R/3 SCM IS-PS WF MM SAP Components CRM: Customer Relationship Management • Communication Tools • Business Partner SD: Sales & Distribution • Sales Order • Outbound Delivery • Billing • Foreign Trade FI: Financial Accounting • General Ledger • Accounts Receivable • Accounts Payable • Special Ledgers GTS: Global Trade Services • Foreign Trade • Sanction Party List • Denied Party List IS-PS: Industry Solutions for the Public Sector • Budgetary Ledger Postings • Proprietary Ledger Postings WF: Workflow • Event Handling • Task Notification • Parallel Work Routing SCM: Supply Chain Management • Event Management • Delivery Scheduling • Demand Management MM: Material Management • Procurement • Inventory Management • Foreign Trade * See Appendix for definitions

Questions ?

Global Business Blueprint (GBB) Approach & Results

GBB: Purpose • Define an end-state integrated process vision for future technology which is a collection of documentation defining “to be” business processes and how CBP will use SAP and other technology applications and tools to perform these functions • Define an integration approach leveraging current ACE technologies • Develop or refine existing program strategies, including project schedule, cost and implementation sequence • Define the baseline scope • Provide updates to the ACE Program Plan • Determine the appropriate system solution for future functionality

Refined process flows as a result of GBB Business Process Decomposition: GBB: Approach • Where we ended up was understanding • the integrated processes and “how” they • will work in the future end state GBB started by performing… A breakdown of a business process to the sub-process level to obtain a high level understanding of the business process requirements, synergies with other common processes, and the key inputs and outputs. FOCUS on “What needs to be done, why it needs to be done, & who does it” • Where we are now. . . • Analysis has been completed within the team that reviewed the collected business processes and determined appropriate technical solutions for each business process. • FOCUS on “how” SAP or other technical components may be used to support CBP business processes in the future. • At the start we did not focus on “how”? • A process flow is not a detailed understanding of “how” the tasks in a process are executed currently nor the detailed requirements of that process. Confirm Model #1 Complete Gap Analysis & Develop Model #2 Validate Model w/ PGAs & TSN Review & Refine Model Conduct Model Integration Reviews Create Straw Model March/April February

GBB Results: Summary • Provides an integrated process / technical framework for the ACE Cargo Management Lifecycle. This framework emphasizes the right information for the right people at the right time. • Leverages the best for all modes of transportation and provides the flexibility to support the variations within each mode. • Includes a framework which fully integrates the export process to realize the benefits of a closed-loop system. • Moves to a master data-driven system from a transactional-based approach, providing greater visibility and access to centralized data. • Provides CBP, PGAs, and the trade community with a future direction through an integrated solution suited for a dynamic external environment.

Business Process Flow Development Total Workshops: 77 Process Breakdown: CBP Process: 55 Level 2: 33 TSN & PGA: 11 Level 3/4: 162 Other: 11 Port Visits: 4 Touch Points Evaluated: PGA & TSN – 11 workshops conducted across all major process areas All major TSN groups participated in Workshops 8 PGAs were involved in the Workshops (Census Bureau, Food & Drug Administration, Federal Communication Commission, USDA/Animal Plant Health Inspection Service, International Trade Commission, Federal Maritime Administration, Federal Motor Carrier Safety Administration and U.S. Army Corps of Engineers) Duties, Taxes and Fees, HTS, and other data objects GBB Results: Quick Facts

GBB Results: TSN/PGA Workshops • Sessions held late March/early April • Account Management: Export Accounts • Account Management: Carrier and Courier • Account Management: Importer, Broker, Warehouse Operator • Account Management: Foreign Trade Zones (FTZ) • Account Management and Manage Finance: Sureties, e-Bond and Bond Sufficiency • Manage Finance: Protest, Liquidation, Netting • Manage Release: (Export Process) Pre-Departure, SED/Manifest, Licensing • Manage Release: FTZ Admission, Entry and Export Process • Manage Release: e-Manifest for Sea, Rail, Air • Manage Post Release: Entry/Entry Summary, Recon, Post-Summary Corrections, Importer Activity Summary Statement (IASS) • Manage Post Release: Drawback

GBB Results: (continued) • Trade community/PGA overview of high-level process, with understanding that further detail to be defined in next stage of process • 93% said expectations met • 90% said level of detail adequate • 100% said joint sessions with Trade community/ PGAs are valuable “These sessions allow the PGAs to see first hand that the trade is sincerely interested in the same goals as the PGA. (i.e. full compliance)” “As a PGA, it gives a better understanding of what the trade goes through to get me this information” Need to provide more detail – confirmation/validation not possible at level presented “It would be helpful to have agenda and information for discussion prior to meeting so could do preparation”

Follow-up Focus Sessions • Arrival/Pre-Arrival • Export Controls • Accounts • Brokers Setting up Importer Accounts • Air Industry Business Practices • PGA-granted Licenses, Certificates, Permits • Post Release • Foreign Trade Zone (FTZ) Weekly Entries • Importer Activity Summary Statement (IASS) • Post-Summary Corrections • Finance • Statement and Netting

Introduction to the Integrated CBP Cargo Management Lifecycle Process

Integrated CBP Cargo Management Lifecycle End to End Process

SAP Functional Scope The following SAP Software Components have been initially identified as necessary to enable the business process scope. Account Relationship Management • CRM – Customer Relationship Management • SD – Sales & Distribution • GTS – Global Trade Services • EM – Event Manager Finance • FI – G/L – General Ledger • FI – A/R – Accounts Receivable • FI – FM – Funds Management • ISPS-CD- Public Sector Collections & • Disbursement • Financial Reporting Release: Pre-Arrival Arrival • GTS – Global Trade Services • CRM – Customer Relationship Management • SD – Sales & Distribution • MM – Materials Management • EM – Event Manager BI – Reporting, Analysis • BW – Business Information Warehouse • R/3 - Reporting Post Release • CRM – Customer Relationship Management • GTS – Global Trade Services • SD – Sales & Distribution • MM – Materials Management • EM – Event Manager SAP Technical • Enterprise Portal * See Appendix for definitions

Level of Technical Fit Low ------------------------------------------------------------------------------------------------High Account Management Manage Release Post Release (Gap: Manifest Processing) Finance GBB Results: Fit / Gap Analysis • A Fit/Gap analysis is a rating for determining the technical solution to meet the requirements of the business process • Basic Definitions: FIT – The defined “to be” business process can be mapped to the SAP system through configuration. GAP – The defined “to be” business process cannot be mapped to the SAP system through configuration. • Overall a high degree of process FIT has been identified with the process areas

GBB Results: Process Gaps • Major Process Gaps Identified to date: • Manifest Document – A complex multi-level document is required to support the Manifest process in SAP. The structure of the document requires a series of nested levels with large amounts of data required at each level. Additionally, the manifest documents must be correlated to the Filer / Entry documents that allow the release of cargo into the commerce of the US. Currently, this process is not enabled by any SAP solution, however, eCP and SAP are co-developing the Multi-Modal Manifest solution for incorporation into the SAP GTS software. • Visibility of all Cargo Management Lifecycle transactions – An important aspect of CBP process is the ability to have traceability to the transaction lifecycle of cargo, conveyance, equipment, and individuals moving in and out of the US. While SAP provides excellent workflow capabilities, there will have to be enhancements to provide full lifecycle visibility of all transactions across SAP systems.

GBB Combined People, Process, & Technology Perspective Process and Technical Integration Standardization / Commonality of Processes Data and Process Discipline Information Accuracy, Harmonization, and Accessibility Quality at the Source: Right Information Available to the Right People at the Right Time throughout the Process Building on ACE work done to date End-to-End solution showing one thread Trade Incorporates Best Business practices from the trade community Opportunity to re-engineer the Trade processes to fit within proposed CBP design Ensures the smooth flow of legitimate trade Reduces redundant information requirements Promotes uniformity among CBP ports Reduces reliance on paper processes Eliminates unnecessary processes Provides for incorporation of PGA requirements Key Themes The solution framework we will be walking through today is focused on the following themes:

Account Management ENFORCEMENT Billing/ Liquidation/ Protest Auth Move SED / Cargo Receipt Export Manifest Admissibility \Release Entry Summary Import Manifest Entry Drawback F I N A N C E - REVENUE & COLLECTIONS Integrated CBP Cargo Management Lifecycle Process View This diagram represents the logical view of the process areas. It will be used to facilitate the process scenario discussion depicted on the following pages.

CRM GTS Account Management R/3 BW SAP Systems ENFORCEMENT Billing/ Liquidation/ Protest Auth Move SED / Cargo Receipt Export Manifest Admissibility \Release Entry Summary Import Manifest Entry Drawback F I N A N C E - REVENUE & COLLECTIONS Integrated CBP Cargo Management Lifecycle Technical Enablers During GBB, the team mapped the processes to SAP software components and identified interfaces to other required systems. Other Legacy and Touch Point Systems Other Government Agency Systems Office of Finance - SAP Legal and Policy * See Appendix for definitions

SAP Technical Enablers • GTS - (Global Trade Services) is an international trade compliance solution that provides import and export control functionality for screening legal responsibilities, business partners and trade documents. Automation includes: processing the in bound manifest, entry and authorized movement documents. The correlation of trade data for checking for licenses, permits, certificates and integrated admissibility screening prior to release. • CRM - (Customer Relationship Management) enables key processes in Account Management, Release, and Post Release. Automates core business operations across all account touch points: Entry/Entry Summary, Quota, DTF (CRM Sales), Account Management (CRM Business Partners), Trend analysis (CRM Marketing), and Case Management, Verification (CRM Service).

SAP Technical Enablers • R/3 - Enterprise handles Billing, Inventory Management and Finance. All of the SAP solutions listed above are born out of SAP R/3. Any sales document created in the GTS/CRM system will be replicated into R/3 so that process in Billing, Statement Processing, and Finance can be executed. Master data like Account Data will be replicated to R/3 while data like HTS and DTF will be maintained in R/3 and replicated to the appropriate systems ‘real-time’. • BW – (Business Information Warehouse) is SAP’s data warehouse and business intelligence solution for reporting, decision support, analysis and data mining. It will enable CBP to access and analyze combined historical data from GTS, CRM, R/3 and non-SAP applications. Master data (like account, HTS, DTF) and transaction level data (entry/entry summary, authorized movements, quota, AD/CVD etc…) will be extracted from the SAP solutions to provide both operational and analytical reporting to support the Cargo Management Lifecycle.

Legacy Legacy Other 3rd Party Finance - OF Incoming Documents GTS CRM R/3 Enterprise E-Manifest Entry, License, Permits, Certificates Quota / Visa HAZMATS Release Accounts Account Mgmt Case Mgmt Protest DTF Billing Rebates Tariff Rate Quota Drawback FI Key Functionality = Data, Transaction, and Work Flows Event Manager • Business Warehouse • Portal Integrated CBP Cargo Management Lifecycle Systems Viewpoint * See Appendix for definitions

Integration Scenario This Transaction scenario depicts the “to be” end-to-end process for importing and exporting goods into and out of the commerce of the United States

Integration Scenario Designer Apparel Inc. • Designer Apparel, Inc. has been importing for three years and has decided to initiate an import venture of silk from Hong Kong from “Wormer, Inc.,” a silk producing factory. • There are manufacturing plants in the U.S. and Canada that will each receive portions of the shipments to be manufactured into the Evans fall 2004 Clothing Line. • Designer Apparel, Inc. will send a portion of their imported cargo to a subsidiary company in England and claim drawback against the import entries. • Additionally, Designer Apparel wants to use a new Broker, Hall Brokerage.

Request Portal View of Account • Mark Porter, the newly designated import/export Manager for Designer Apparel, Inc., has decided that he would like to view and update the existing account data for Designer Apparel, Inc. • Step 1: Mark locates the ACE user ID Application on the Customs Modernization tab and completes the online application through a CBP secure Internet web page. • Step 2: Mark submits the online application on the CBP website with the following data • a list of the company’s principal officers and their contact information • the company’s fiscal year end date • relationships to other business entities • Agreed to the Terms and Conditions document

Creation of ACE user ID • Step 3: The CBP Account Administrator (role to be defined), Roberta Bruno, logs into ACE and sees that she has a received a message on her homepage that an application for a new ACE user ID needs to be reviewed. • Step 4: Roberta Bruno reviews Mark Porter’s application to confirm that all the required information has been provided on the online application. • Information entered is automatically validated by ACE • After all validations have successfully passed, the CBP Account Administrator establishes the user ID and password in ACE. • Step 5: Notification sent to Mark Porter (Account Owner) by ACE with his new ACE user ID and password for access to the Designer Apparel, Inc account.

Creating a Broker Account • Designer Apparel, Inc., wants to use new broker, Hall Brokerage. Hall Brokerage has received their CBP broker license, which they applied for one year ago. Now Hall Brokerage would like to manage their account in ACE and applies for a user ID and password. • Step 6: CBP Account Administrator (role to be defined) reviews the Broker Account information and sees that Sarah Combs will be account owner for Hall Brokerage and enters the information into ACE: • name, address, and contact information within the account • Broker Exam, License, Permit EIN number • Any related information

Account Validation • Step 7: ACE validates that… • The address is correct and within the accepted format, • A duplicate account is not entered by verifying that the combination of Broker EIN number and address does not exist • Step 8: ACE account activation and notification sent • After all validations and verifications have passed, a notification is sent to Sara Combs at Hall Brokerage that the ACE account has been created and is provided an ACE Broker account, user ID, and password

View Account Information • Step 9: Sara Combs signs onto the ACE Secure Data Portal using her ACE user ID and password to enter ACE and searches in the system with Hall Brokerage ACE account number to manage the Hall Brokerage account

Account Management • Designer Apparel has expanded their line of business to accessories by acquiring a new subsidiary, Accessories Etc Company. Now that Mark has an ACE user ID, he would like to update the Designer Apparel account with new information • Step 10: Mark Porter logs onto ACE using his ACE user ID and password to maintain the Designer Apparel account • Mark searches for the Designer Apparel account using his Importer of Record number • The Designer Apparel account number is a uniquely generated by SAP and is different than the Importer of Record (IR) number; however, the IR number is an attribute of the account

Account Management • Step 11: Within the Designer Apparel account, Mark Porter has the authority to: • Maintain Designer Apparel, Inc.’s name, address, and updates his new contact information within the account. • Assigns user access rights to specific account information to those individuals involved with the Designer Apparel, Inc. account. • Grants access to his Brokers: Hall Brokerage (existing CBP account) • Grants access to his Carriers: Sunkist Ocean Liners (existing CBP account) • Grants access to his Surety (existing CBP account) • Maintain Designer Apparel, Inc. account structure by linking existing Importer of Record (IR) numbers of newly acquired Accessories Etc Company.

Account Management • Step 12: ACE validates updated/changed data • Once the account information is updated and changed by Mark, ACE will validate the data • Step 13: Notification • After all validations are passed, a notification is sent to Mark and the account manager that the ACE account has been updated

Relevant GBB Findings Account Management

Account Management • Process Improvements • Mistake-proofing the account creation and maintenance processes through the use of SAP CRM account data edit checking and portal technologies. Ensuring account data is set up properly up-front in the process reduces the number of times the account data is handled during routine maintenance, as well as daily in the field. • Elimination of duplicate account entries and centralized account data, affording full visibility to accounts; better decision support in the field and at HQ

Account Management CBP Issues Being Addressed • Creating an account for every entity that does business with CBP • Maintaining centralized data • Requiring accurate account data up-front • Eliminating the port-generated ID • ACE-generated unique identifier

Account Management Business Benefits to the Trade Community • Use of current and consistent technology enablers • Access to ACE with a single user ID and relevant security permissions • Access to CBP forms & communications according to need • Uniform account view for both CBP, account, and authorized government agencies • Access to historical and transactional information • Centralized account updates, rather than port-by-port • Visibility to special instructions for trade community from CBP headquarters • Improved and streamlined communication with CBP, PGAs

Real Time Report The Carrier Transports the Cargo • Sunkist Ocean Liners, owner operator of the vessel, has an International Carrier Bond already established. • Step 14: Fred, working for Sunkist Ocean Liners, submits the manifest data via EDI • A list of the separate items of merchandise being transported by the carrier • Includes both trip and shipment data twenty-four hours in advance of lading in Hong Kong • Includes in-bond data for the 6 containers (900 rolls) of goods being exported to Canada, filed as part of the Multi-Modal Manifest data filed twenty-four hours prior to lading • The silk shipment is expected to arrive in San Francisco from Hong Kong in twenty working days after departure. Manifest Information Available

The Broker Files Transaction Data • Step 15 : Sara Comb at Hall Brokerage, Designer Apparel, Inc.’s Broker, enters the entry transaction into the brokerage’s electronic message data for transmission to ACE (new ABI). Ms. Comb files entry/entry summary for the 4 containers (600 rolls) of woven silk fabric (5007.10.60.30) entering the U.S. commerce

Real Time Report Process the Entry • Step 16: Once the entry data has been received and validated by ACE, the correlating process links the entry to the corresponding bill of lading. • Note: Since the in-bond document information was filed as part of the multi-modal manifest, an automatic correlation occurred as part of the filing. If a separate in-bond transaction is produced by an entity other than the carrier, correlating will be required • Step 17: Following the successful correlation, ACE indicates two containers require further review.

Global Business Blueprint (GBB)