CBSA COMPLIANCE REPORT

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Mountain Equipment
Co-op
Directed Studies 2011

Presented by:

Seth Lang &
Dan Turner
Mountain Equipment Co-op and the British Columbia
Institute of Technology have collaborated on a project
involving two important areas of focus within the
logistics side of the organization, and the industry itself.
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5/11/2011
The first part of this study focuses on identifying MEC’s
current compliance level in regards to Canadian Border
Service’s Agency’s (CBSA) rules and regulations, and
determining best current industry practices that can be
implemented into MEC’s supply chain management
------------------------------------------------------------------------
The second part of this study relates the effect
transportation fuel surcharges have on the overall
logistics expense of MEC’s business, and how these
surcharges may be kept to a minimum.
Mountain Equipment Co-op – Directed Studies 2011

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ACKNOWLEDGEMENTS

The following individual’s contributed in making this project possible.

This project could not have been successfully completed without a steady flow of support,
guidance and leadership that was provided to us throughout our Directed Studies experience.

A very special thank you goes to the following:

Mountain Equipment Co-op

Debbie Sung Mike Au Paul Robles
Manager Supply Chain
Logistics Analyst Logistics Analyst
Services

British Columbia Institute of Technology

Gordon Kennedy
Instructor
and
Project Advisor

And all others who offered advice and assistance in contribution to the

Mountain Equipment Co-op Directed Studies 2011.

THANK YOU!!!

And a special thank you goes to our families for your patience and understanding with late
nights, early mornings, and high stress moments!!

“In helping others, we shall help ourselves, for whatever good we give out completes
the circle and comes back to us”

Flora Edwards


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TABLE OF CONTENTS

Acknowledgements .............................................................................................................................................. 1
Table of Figures ..................................................................................................................................................... 4
Report Structure .................................................................................................................................................... 5
Organization Overview ....................................................................................................................................... 6
Background ......................................................................................................................................................... 6
Organization Belief’s ....................................................................................................................................... 7
Part 1: MEC’s CBSA Compliance Analysis .................................................................................................... 8
Executive Summary.............................................................................................................................................. 9
Introduction ..................................................................................................................................................... 10
Purpose and Objective............................................................................................................................. 10
History of CBSA .......................................................................................................................................... 10
CBSA Compliance Programs ...................................................................................................................... 11
MEC’s Current CBSA Compliance Practices ......................................................................................... 13
People ............................................................................................................................................................ 13
Physical ......................................................................................................................................................... 15
Data and Documentation ........................................................................................................................ 16
MEC’s Reassessment History 2008-2009............................................................................................. 17
Key Performance Indicator’s-CBSA Compliance ............................................................................... 18
KPI’s –MEC Practices .................................................................................................................................... 18
KPI’S-Industry Practices ............................................................................................................................. 19
Key Findings......................................................................................................................................................... 20
Reassessment Analysis ................................................................................................................................ 20
Movement of Documentation ................................................................................................................... 23
Internal Documentation Responsibilities ............................................................................................ 23
External Documentation Responsibilities ........................................................................................... 24
Recommendations ............................................................................................................................................. 24
Benchmarking and Key Performance Indicators .............................................................................. 24
Supply Chain Communication................................................................................................................... 25
Internal Movement of Documentation .................................................................................................. 26


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Internal Interface....................................................................................................................................... 26
External Interface ...................................................................................................................................... 26
Primary Benefits Of Recommendations................................................................................................ 27
Secondary Benefits of Recommendations............................................................................................ 27
Bibliography......................................................................................................................................................... 29
MEC Internal Document’s Used In This Study ........................................................................................ 29
MEC Internal Sources ....................................................................................................................................... 29
Appendences........................................................................................................................................................ 30
Appendix A-Process Map of Documentation Movements ............................................................ 30
Appendix B-Top 15 Error Prone Vendors from 2008 and 2009 ............................................... 31
Appendix C- Customs Compliance Weighted Measuring Tool ................................................... 32
Appendix D-Errors by Type and Source-2008 and 2009 ............................................................. 32
Appendix E- Weighted Scores by Type and Source-2008 and 2009 ........................................ 32
Appendix F- Vendor Report ..................................................................................................................... 33
Appendix G-Supply Chain Management Report 2012 ................................................................... 34

TABLE OF FIGURES

Figure 1-Organizational Chart..................................................................................................................... 6
Figure 2-Error by Type-2008 and 2009 .............................................................................................. 17
Figure 3-Error by Source-2008 and 2009 .......................................................................................... 17
Figure 5-Error Type by Vendor ................................................................................................................ 21
Figure 4-Weighted Measurement Results .......................................................................................... 21
Figure 6-Vendor Information 2008 ....................................................................................................... 22
Figure 7-Vendor Information 2009 ....................................................................................................... 22
Figure 8-Internal Documentation Responsibilities ...................................................................... 23
Figure 9-External Documentation Responsibilities ..................................................................... 24
Figure 10-Time Cost to MEC Logistics-2008 and 2009 ................................................................ 24
Figure 11-Paperless Supply Chain Management ............................................................................ 27


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REPORT STRUCTURE

The purpose of this report is focused on two areas within Mountain Equipment Co-op's daily business
practices. It has been separated into two documents in order to maintain a clear focus on what is being
demonstrated on each topic. Each topic has no direct correlation to the other, and should be
considered as individual subjects.

The first stage of this report is an analysis of Mountain Equipment Co-op’s (MEC) current levels of
compliance with the Canadian Border Services Agency (CBSA) trade requirements and the opportunities
of improvement that may be incorporated into the organizations practices.

The second part will explain the relationship that MEC has with their supply chain partners in regards to
fuel surcharges that are included in the contract of each carrier that are defined within the scope of the
study. An analysis of best practices that organizations in the trade industry use, and recommendations
to reduce this expense for MEC will be provided.


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ORGANIZATION OVERVIEW

BACKGROUND

Mountain Equipment Co-op (MEC) was founded in 1971 with six original members. From the opening of
the first store in Vancouver, the co-operative has grown to 14 retail stores across Canada, with plans for
expansion by 2012. When MEC first started out, they wanted to distinguish themselves from other
outdoor retailers through eco-friendly product lines and an intensive focus on corporate social
responsibility. These values have led MEC from establishing one location to start with, to a large-scale
provider of sporting goods and services.

MEC has over 3 million members worldwide, and are considered the largest retail co-operative within
Canada. The co-operative is run by the CEO who is selected by the Board of Director’s, and have senior
management in place for various departments such as Logistics, Production, Finance and Marketing (see
Figure 1). These departments work together in order to create a successful co-operative that has the
ability to help others within the community at the same time. (Mountain Equipment Co-op, 2011)

Board of Directors

FIGURE 1-ORGANIZATIONAL CHART


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ORGANIZATION BELIEF’S

PURPOSE
“To help people enjoy the benefits of self-propelled wilderness-oriented recreation.”

MISSION
“Mountain Equipment Co-op provides quality products and services for self-propelled
wilderness-oriented recreation, such as hiking and mountaineering, at the lowest reasonable
price in an informative, respectful manner. We are a member-owned co-operative striving for
social and environmental leadership”

VALUES
MEC’s core values and beliefs revolve around their influence on their surroundings, and the people that
inhabit them. Not only does MEC want to minimize their effect on environmental issues, but they also
support improving these conditions for the future. Key values revolve around how they encourage their
employee’s to be involved with improvement opportunities of their business. Employee’s opinions are
important at MEC, and are encouraged in relation to determining future decisions made as a co-
operative.

MEC focuses sales primarily within Canada. Their contribution to globalization consists of relationships
with suppliers from up to 12 countries other than Canada. Within these relationships, MEC applies strict
ethical sourcing regulations in order to support international communities where suppliers are located
around the world.

THE LOGISTIC’S TEAM
The Logistics team of MEC consists of a small department located within the Head Office in Vancouver.
They are consistently searching for ways to reduce costs, minimize risk, and improve efficiency to the
supply chain that help the organization achieve annual goals.

As a service provider within the sporting goods industry, MEC has put into place supply chain
management systems in order to oversee the inflows and outflows of products and product components
to their necessary locations. The Logistics department of MEC, who this Directed Studies is based with,
works with all suppliers, carriers and the DC in Surrey to ensure freight expense is minimized, deliveries
are on time, and accurate shipments are being transported. (Mountain Equipment Co-op, 2011)


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PART 1: MEC’S CBSA COMPLIANCE ANALYSIS Co-op – Directed Studies 2011
Mountain Equipment

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EXECUTIVE SUMMARY

Mountain Equipment Co-operative is focused on becoming a member of the Custom’s Self-Assessment
(CSA) program under the Canadian Border Service’s Agency (CBSA), which involves demonstrating a high
level of compliance in regards to the security of documents and goods moving into Canada.

The purpose of this report is to identify MEC current compliance levels in regards to CBSA regulations
and determine best industry practices that can be implemented into the MEC supply chain
management. An important aspect of the Logistics department is to become more pro-active with
vendor-trade compliance and establish benchmarks to see where it stands compared to leaders within
the commercial import industry.

Industry trends show that businesses are focusing on improving customs compliance practices by
restructuring supply chain relationships. The changes involved in this transition consist of higher levels
of communication in regards to commercial imports, and the ability to transport key documentation in
the most efficient, secure manner.

Methodologies used within this report include collecting internal data through MEC records, researching
industry practices, and communication with industry professionals. Actions have been taken to examine
procedures currently in place, analyzing areas such as:

 Current levels of CBSA compliance for MEC
 Industry wide levels of CBSA compliance
 Best practices in KPI’s and benchmarking
 Reassessment of past MEC commercial documentation

The results of the findings showed that although MEC applies an acceptable level of compliance with
CBSA, there are opportunities that exist to achieve higher standards in regards to supply chain security
management. It has been determined that MEC will accomplish goals of top levels of CBSA compliance
with the following recommendations:

 Establish uniformed KPI’s and benchmarks
 Raise levels of information sharing between all supply chain relationships
 Implement paperless document management system

By following these recommendations MEC will have the opportunity to establish themselves as leaders
in CBSA vendor-trade compliance, and have the ability to respond quicker to any changes within the
international trading environment.


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INTRODUCTION

PURPOSE AND OBJECTIVE
The purpose of this report is to identify MEC’s current compliance level in regards to CBSA’s rules and
regulations, and to determine best current industry practices that can be implemented into MEC’s
supply chain management. MEC’s objective is to transition towards becoming a more “pro-active”
participant within the vendor-trade compliance with the CBSA, identifying best practises to improve
their operations. MEC’s is currently striving to stay compliant with CBSA rules and regulations and
benchmark themselves against leaders and trendsetters of CBSA compliance within the industry.

As an importer of commercial goods, concentration of efforts must be applied to ensure that proper
security and full documentation is provided throughout the supply chain. This ensures that no fines
from the Administrative Monetary Policy System (AMPS) are received, or worst case scenario, the
restriction of imports is imposed on the business. (CBSA, 2011)

After completing a full analysis of MEC’s compliance levels compared to best industry practices, a
recommendation of opportunities for improvement within vendor-trade import/export practices will be
applied. Gaps in MEC’s supply chain management system will be identified, in order to enhance the
organizations compliance with CBSA.

HISTORY OF CBSA IN A TYPICAL WEEK, THE
CBSA*:
In regards to international trade, border security and compliance has
 Welcomes 1.7 million
increased significantly over the past decade. Due to factors such as the
travellers
rapid growth of globalization, and the threats of terrorism such as the  Examines over 105,000
event of 9/11, the creation of the Canadian Border Services Agency travellers
(CBSA) was formed in 2003. Prior to this time, there were three major  Seizes drugs worth over
groups of government that were responsible for border security within $7 million
Canada.  Seizes an average of over
$780,000 in undeclared
 Citizenship and Immigration Canada currency
 Intercepts 1000 food,
 Canada Customs and Revenue Agency
plant and animal products
 Canadian Food Inspection Agency that pose a threat to
Canada's agriculture
The CBSA was formed to oversee the responsibilities and functions of  Removes 250 people who
these groups, offering services at approximately 1,200 points across are inadmissible to
Canada and over 30 international locations. CBSA manages the Canada, including over 30
commercial import/export sector of Canada, regulating the inflows and criminals
 Collects $75 million in
outflows of goods within the Canadian borders. Programs have been
import duties, and $330
established for importers and exporters of commercial goods such as
million in GST/HST
Partners in Protection (PIP), Customs Self-Assessment (CSA), and
Partners in Compliance (PIC) to help streamline the border process for * Based on FY 2008-2009 data.
low-risk importers and carriers. (CBSA, 2011) All data is approximate.


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CBSA COMPLIANCE PROGRAMS

CBSA works with multiple programs to help ensure safe and secure border crossings across Canada. The
three main points that CBSA focuses on in regards to commercial compliance programs are

 Smoother border clearances
 The development of information resources
 Security and enforcement in dealing with trade

Programs such as Partner’s in Protection (PIP) are provided on a voluntary basis, while the Advanced
Commercial Information (ACI) program is becoming a mandatory step in the border compliance stage of
the import/export industry.

ADVANCED COMMERCIAL INFORMATION
CBSA established the Advanced Commercial Information (ACI) program in 2004 with the focus being on
risk management of goods crossing the border. ACI requires that all partners associated with this
program to submit all documentation electronically to CBSA prior to arrival at any border crossings. This
helps Custom’s identify any possible threats ahead of time, and provides a smoother security process for
all parties involved.

The Advanced Commercial Information program is currently being implemented in three separate
phases for the transportation industry of Canada.

 Phase 1 -Marine Mode
 Phase 1 was implemented in 2004, requiring all marine carriers to electronically
submit cargo data to CBSA 24 hours prior to arrival

 Phase 2 -Air Mode and Marine Shipments Loaded in United States
 Effective in 2006, requiring all air carriers to electronically submit cargo data to
CBSA 4 hours prior to arrival

 Phase 3 –eManifest (in process)
 This phase requires all highway carriers to submit cargo data to CBSA 1 hour
prior to arrival and rail carriers 2 hours before arrival
 The eManifest program is currently in a transition stage, with an implementation
timeline starting in late 2011

By 2013 all CBSA clients will be required to incorporate the ACI program into daily business practices. All
clients will be able to submit documentation through regular EDI programs, or the new eManifest portal
that will be provided late 2011. (CBSA, 2012)


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PARTNERS IN PROTECTION
Partner’s In Protection (PIP) was originally constructed in 1995 as a voluntary program with a focus on
promoting business awareness and compliance with customs regulations. After September 11, 2001,
PIP altered their approach to focus more on trade chain security. The level of importance for the PIP
program increased in 2002 when it became mandatory for importers to have a PIP designation in order
to become involved in the FAST (Free and Secure Trade) initiative. PIP has aligned similar security
standards with compliance related programs around the world in order to enhance the international
trade network of low-risk businesses.

The application process for PIP starts with potential members submitting a security profile to CBSA. The
profile demonstrates whether or not the business is meeting security requirements, in order to qualify
for the second stage. After the security profile has been submitted, a CBSA officer reviews the
information, determines if security requirements have been met and if approved, schedules an on-site
validation with the organization. After the security profile and on-site validation has been approved, a
Memorandum of Understanding (MOU) is signed to finalize the PIP designation. PIP members must
provide updated security profiles and schedule site validations every three years. (CBSA, 2012)

CUSTOMS SELF-ASSESSMENT
The Customs Self-Assessment (CSA) program was designed 2001
to streamline the clearance process, and simplify accounting and CSA APPLICATION PART 2
payment procedures for border crossings. With a CSA REQUIREMENTS
membership, businesses have the ability to submit import A demonstration of the flow of
documentation once a month instead of one transaction at a documentation and goods must be
time. This reduces the amount of time and money spent on provided, in both a report and
custom processes for businesses, and allows a more accurate process map, of different import
documentation on all imports. scenarios such as:

 a purchase where you direct
As with PIP, there is a three-step process in order to receive a CSA ship the goods to a third party
designation. First, businesses are subjected to a risk assessment of
compliance history with CBSA. Once the first stage has been  a purchase where you enter
the goods into your receiving
completed, a detailed report showing that business practices,
system
books, records, and all other documentation, supports
compliance history records that have been examined.  an importation where you
make no payment for the
This shows that a CSA member has implemented steps to remain goods
compliant with supply chain security in any situation that can
arise. In the final stage approved members are required to sign a  other adjustments such as
Summary of Program Requirements that states all specific overages, shortages and
damaged goods
requirements of that business. (CBSA, 2011)


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MEC’S CURRENT CBSA COMPLIANCE PRACTICES

With the rapid increase in global trade and border security becoming more focused on maintaining a
safe and seamless flow of import/exports, MEC recognizes that as an importer of commercial goods,
having high levels of compliance is important to the daily business practices of the organization. In
order to achieve such high levels, procedures have been put into place in all departments, with
compliance and security being focused towards three main areas:

 People: employees, suppliers, carriers, brokers
 Physical: Head Office, Distribution Centre, containers, trailers
 Documents: filing systems for invoices, customs forms, payment receipts

Mountain Equipment Co-op has been a member of the Partner’s in Protection program since 2008, and
only uses carriers that are PIP, FAST, or C-TPAT (Custom’s-Trade Partnership Against Terrorism) certified.
The Partner’s in Protection membership is concentrated on the physical security and compliance
measures that are put into place at MEC.

Currently, MEC is going through the process of the second stage of a CSA designation. As a PIP
designation shows a business has achieved the physical security requirements from CBSA, the CSA
program demonstrates that a member has taken the steps necessary to ensure the security and
compliance of all paperwork involved in the movement of goods. They have undergone a risk
assessment of CBSA compliance history, and have provided detailed information on corporate structure,
key business activities, and policies related to risk management. The second part of the CSA application
focuses on the documentation aspect of the organization, with MEC developing a report that details all
book and record keeping, and the controls put into place to manage this system.

PEOPLE

INTERNAL
Personnel Security
Potential MEC employees go through a screening process, which includes background and reference
checks when applicable. Once a candidate for employment has been hired, they are required to sign a
confidentiality agreement. If necessary, depending on position of the new employee, responsibilities
such as swipe keys and online system access are assigned.
MEC has steps in place to manage the termination of employees when the situation arises. Terminated
employees are required to submit all MEC property such as swipe keys, and management levels are
required to ensure the removal of IT access before the employee is escorted off MEC property.

Procedural Security
MEC takes certain measures such as process mapping in order to recognize gaps in the security of the
supply chain. Process mapping helps identify where MEC needs to concentrate efforts, and which areas
offer room for improvement. The DC of MEC has procedures put into place for shipping and receiving
departments for accepting deliveries and organizing outbound deliveries to other locations. Warehouse
staff receives notice and documentation prior to the arrival of all inbound carriers in order to prepare


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for transfer of goods from container to warehouse. Shipments are checked and counted for accuracy
and damage, with any discrepancies being reported to management.

Security Training and Awareness
MEC requires that all employees, old and new, are aware of possible security threats within their
environment, and the proper building security procedures are implemented to handle those threats. It
is the management’s responsibility to maintain this awareness, and ensure that every new employee is
provided this information through an orientation. Policies that employees are educated on include
Information Systems and the Business Code of Conduct policy. In the event of emergency situations at
any MEC location, the Business Resumption Plan has been put into place, in order to maintain high
levels of security throughout the supply chain. The Crisis Management Team in the Head Office
monitors this plan.

Management monitors security training and awareness, and meetings are held to ensure proper
awareness is educated to all employees. Changes in security or PIP related news is communicated
through the MEC intranet.

EXTERNAL
Supply Chain Security
Through the course of the supply chain, MEC has developed business relationships with entities such as
vendors, carriers, brokers, and freight forwarders. Responsibility over the introduction and supervision
of these relationships has been broken down into three different areas. These three departments at
MEC constantly review all supply chain partner’s security profiles, to strive towards supply chain security
risk levels of zero.

 Production- uses a “MEC Production Facility Technical Evaluation Form” and a “STEP” process
for choosing manufacturers. These two documents help review potential suppliers technical
capabilities and social compliance. It is MEC’s goal to ensure that high standards of ethical
sourcing have been applied to each supplier, with regular visits being made to factories to
monitor this compliance.

 Buying and Design- responsible for product vendor’s selection. Managers of this department
are trained in vendor selection, which takes a look at criteria such as financial health, product
strength and supply capabilities.

 Logistics-the Logistics department at MEC is responsible for carrier selection to transport
products from manufacturers and vendors. A list of carrier selection criteria has been
established that includes rates, services, claims, and any security compliance designations that
may apply to that carrier (PIP, FAST). Vendors are forwarded a letter of “Supply Chain Security
Partnership Requirements” that request all WCO-accredited security programs they are involved
in. If vendors do not respond, they have to complete a supply chain security profile
questionnaire or provide a statement declaring security compliance with MEC
The Logistics department is also responsible for maintaining records on security profile, and
communicate any irregularities that occur to the Production and/or Buying and Design
department.


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PHYSICAL

Physical Security and Access Controls

 Physical Security- MEC has implemented high levels of security compliance within all physical
buildings under the business. The DC located in Surrey is where the majority of cross-border
shipments arrive, and security measures have been put in place to prevent and to react to
possible security threats in the most efficient manner possible. DC management are responsible
for ensuring that all entry points into the building and property are securely locked, including all
windows, doors, gates and fences. Shipment handling areas and storage facilities are equipped
with video surveillance and alarms, and DC management is responsible for issuing access to all
areas. This access is provided through the control of keys, pass cards and locks that are
distributed to selected levels of personnel.
The DC has maintained security control around the premises through a system of gates
surrounding the location. Loading bays are designed in a secure fenced area, and gates are
open from 6:00am to 4:30pm in order to prevent after-hours access. The stability of gate and
fence security is continuously monitored, and signage has been put in place to make visitors
aware of “No Trespassing” or “Authorized Personnel Only” areas. Adequate lighting has been
put into place inside and outside the DC facilities. This helps make visitors aware of all signage,
and which areas of the DC can be accessed without supervision.

 Access Controls- When a visitor arrives at the DC they must park in a designated visitor’s area,
or if entering the loading bay, they have already made an appointment with the office to notify
of arrival. Once a visitor has parked, they need to buzz in at the entrance, and a MEC employee
has to let them into the building. A carrier dropping a load off in the bay has to buzz in as well,
at an entrance to the cargo handling area. At this point a MEC employee will check all
paperwork and documentation to start the unloading process.

All employees at DC are required to have proper identification in order to access certain areas of
the facilities, and the issuance of all identification badges and key cards are properly
documented by management. This helps clearly identify threats that may be presented on the
MEC property. MEC has procedures in place for employees in dealing with the challenging and
removal of unauthorized visitors. Communication systems are defined in the orientation to new
employees that have steps in place for contacting internal security personnel, and local law
enforcement if necessary.

Container, Trailer and Railcar Security
Shipments are received on a daily basis from MEC’s carriers to the DC in Surrey. All shipments are
delivered by service providers who are FAST, PIP, and/or C-TPAT certified. Once a shipment has arrived
at the warehouse, a MEC employee will examine the outside of the container and check the seal on the
door and verified against the waybill to ensure cargo integrity. Seal numbers are recorded, and any
discrepancies such as broken seals will be reported to the Logistics department at Head Office.
Once the outside of the container and seal has met requirements, the doors are opened on the
container and secured against a loading door to prevent access by unwarranted individuals. There is no
unauthorized entry to the container, trailer or storage area within the DC.


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DATA AND DOCUMENTATION

The accounting trigger1 of all paperwork involved in the transport of goods is crucial to the business of a
commercial importer. An organized and secure flow of documentation shows CBSA that goods and
sensitive information are maintaining high levels of security throughout the supply chain. MEC has
policies and procedures put into place in order to maintain a directive of high levels of compliance with
CBSA in regards to paperwork involved in the transport of goods.

The paperwork involved with transporting goods across the Canadian border begins with the Buying
department at MEC submitting a PO to the chosen vendor. Once vendor has confirmed order with a
receipt, the introduction of the BOL and commercial invoice is implemented into the documentation
flow. Once this paperwork has been developed, it is submitted by vendor to the MEC Logistics
department for review. Once the paperwork has been accurately confirmed, it is sent to broker for the
preparation of customs documents, which are introduced to the set of paperwork. This set is also sent
to the DC in Surrey in order to prepare to receive the shipment. At this point, copies of documentation
are under the responsibility of the broker, the distribution centre, and also the carrier to ensure the
release of goods at the border.

Once duties and tariffs have been paid to customs, the broker sends the documentation package to MEC
Finance to prepare for payment to vendor. During this process, DC receives shipment and immediately
checks the packing list against the BOL to confirm that an accurate order has been sent. If an issue with
the shipment is encountered, an over/under in total pieces or the damage of goods is found, a claim is
filed to the appropriate parties. Whether a claim is warranted or not, sets of documentation are sent
daily by courier to the MEC Head Office to proceed with the next stage in the paperwork process.

The H/O is where the documentation flow reaches its final stage, proceeding with further review to
confirm accuracy and compliance with all CBSA regulations. Finance department is responsible for
monthly sweeps2 of matching3 documentation and reviewing sets of paperwork to prepare for
finalization. If errors are determined within the paperwork, a reassessment process is initiated, with
Finance sourcing the error and communicating with Logistics in order to proceed with a B2 submission
to CBSA. Completed matched sets of documentation, and adjusted B2 cases are completed with
payment to vendor and filed for storage within a secure area at the Head Office.

The flow of documentation through the import process is fully demonstrated in Appendix A of this
report with a detailed process map.

1 Accounting trigger is the internal process of using books and records to account for all imports to submit to customs
2 Monthly sweeps are the reconciliation of any unmatched documents missed by the “Accounting Trigger”
3 Matching is the process of analyzing documentation received from DC with sets of paperwork from broker to maintain

accuracy in areas such as quantities received, proper payment, and CBSA issues such as HS coding, C of O, and Value for
Duty.


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MEC’S REASSESSMENT HISTORY 2008-2009
As a large retailer, MEC experiences the same issues to overcome as any business involved with
commercial trade. Mountain Equipment Co-op maintains records of CBSA compliance for every invoice,
shipment, and product that passes through Canadian
borders, in order to reveal gaps they may have
throughout their supply chain.

A large focus of CBSA compliance is the re-assessment
of all import documents that are utilized throughout
the year. MEC reviews documentation on a consistent
basis in order to catch any mistakes that may occur
during the course of the logistics process. These
procedures help prevent future errors, and maintain a
good standing with CBSA.

When taking a look at imports that need reassessment,
MEC has broken down the types of errors into seven
main categories. The records in Figure 2 demonstrate areas FIGURE 2-ERROR BY TYPE-2008 AND 2009

of improvement that MEC, their broker’s, and vendors may focus on for the future. This helps limit
errors that may occur, and shows CBSA that the business is dedicated to becoming 100% compliant with
trade regulations.
Once MEC has analyzed an error that has been made in CBSA documentation, it is then traced back to its
source and recorded. First, errors are categorized by broker, vendor or MEC themselves to identify
initial responsibility. The elimination of using a broker for custom related documents, upon approval of a
CSA designation, would take away a source of 37.6% of compliance errors between 2008 and 2009.

As seen in Figure 3, documentation errors
have reduced from 2008 to 2009, but are
still a significant issue for MEC’s business
practices. Between these two years, MEC
found 876 compliance errors within their
custom’s paperwork. This results in a time
and money cost for all parties involved.
MEC is obligated to reassess paperwork as
detailed in report, which reduces available
time and resources that can be directed to
other areas of focus within the co-
operative.

After compliance issues have now been
assigned to a source, MEC has the ability to go
FIGURE 3-ERROR BY SOURCE-2008 AND 2009
into more detail on addressing mistakes that
have been made. This specifically is helpful to analyze mistakes at the fault of vendors that have
established a relationship with MEC. Appendix B illustrates the top 15 vendors that contributed to
errors on CBSA documentation during 2008-2009 for MEC.


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KEY PERFORMANCE INDICATOR’S-CBSA COMPLIANCE

Key Performance Indicator’s (KPI’s) help organizations understand how well they are performing in
relation to their strategic goals and objectives. The three main reasons
that KPI’s are used within businesses are:
FOUR ISSUES COMPANIES
 To learn and improve
SEE AS IMPORTANT TO
 To report externally and demonstrate compliance GLOBAL TRADE AND
 To control and monitor people COMPLIANCE
 Growing global
operations (sales,
purchases, and
Compliance KPI’s are put into place by businesses
distribution networks
in order to follow regulations for CBSA
standards, and must be continually monitored in  Need to improve
order to maintain control of business practices. operational inefficiencies
(Advanced Performance Institute, 2011) due to incomplete
visibility or disparate
systems

 Growing complexity of
KPI’S –MEC PRACTICES
security regulations for
Businesses today are using benchmarks and KPI’s to help define areas of international trade
improvement within their organization. By clearly identifying logistical
 Growing risks associated
benchmarks, the ability to determine where they are today in regards to with non-compliance
compliance, and where they would like to be for the future becomes
clearer. The MEC Logistics departments benchmarking process and
KPI’s consist of focusing on three specific areas

 Benchmarking against CBSA requirements for PIP and CSA programs
 Utilizing information recorded through the movement process of documentation
 Reviewing degree of compliance in regards to all parties involved in the supply chain
relationship

The MEC Logistics department keeps records on all documentation movements, collecting data that can
be used to source specific information on carriers, vendors, broker or internal branches of MEC. These
records are all stored by paper, or electronically stored within MEC’s computer system. Reviewing
occurrences such as errors made in documentation is an important aspect of how MEC measures KPI’s
specifically for compliance with CBSA. Errors in documentation are recorded by type, source, and when
source is found to be vendor; the specific vendor that was responsible for the error is identified. By
using this information in KPI’s, MEC can review which sources are remaining in compliance with
documentation security, and which ones need to be focused on in order to achieve levels that are
acceptable for CBSA standards.

The steps taken in the reassessment process is fundamental when analyzing MEC’s compliance with
CBSA. MEC uses information that is recorded annually such as type of error, and error source as a KPI in
order to focus on areas in improvement within the supply chain. If a gap in communication with logistics


19

partners such as brokers and vendors is identified, MEC has the ability to restructure commercial import
functions and determine better business practices that will help reduce the opportunities for an error to
occur. If high levels of error are linked to one specific source such as a specific vendor or MEC
employee, the source is sent an email to create awareness that there is room for improvement in the
process.

As stated, MEC is currently a member of the Partner’s in Protection program, and is in the second stage
of the Custom’s Self-Assessment application. The CBSA and all related programs have detailed
requirements for maintaining an acceptable level of compliance with border security. MEC incorporates
these requirements and uses them as a benchmark when any new scenarios that are introduced to the
business. This includes new stores being opened, the relocation of any property (such as Head Office),
and any new relationships established with vendors, carriers, or brokers. By using PIP and CSA
requirements as a benchmark for changes within the business
plan MEC is able to sustain levels of security that are necessary for
vendor-trade compliance. COMMERCIAL IMPORTER’S
TRADE COMPLIANCE
The requirements that are communicated through the CBSA PRIORITIES FOR 2011
website, and import program requirements show what level MEC  Improve productivity and
wants to be, in order to be considered a “pro-active” participant visibility using new technology
with vendor-trade compliance. MEC Logistics department is (get automated)
continuously monitoring the CBSA website for any new
regulations being introduced, or adjustments to issues such as HS  Streamline process’s
coding or new areas of focus CBSA introduces annually.
 Centralize trade compliance
function across the enterprise
KPI’S-INDUSTRY PRACTICES
 Utilize or collaborate with
The relationship between commercial importer’s and the CBSA service providers
must be measured to give the organization an idea of what level
 Move toward a paperless
of compliance they are at, and what improvements can be made process with improved
through the conclusions of the KPI’s used during the process. visibility

The transportation industry uses KPI’s to determine what level of
compliance it is situated at. Five KPI’s that are used to benchmark
against industry standards are:

 Average trade compliance cost
 Total ratio of trade related costs to declared value (including software, labour, fines,
tariffs, duties, broker fees)
 Perfect order rate received
 Complete and on-time shipments exported to international locations
 Perfect order rate delivered
 Complete and on-time shipments exported to international locations

Businesses within the commercial import sector also incorporate continuous benchmarking processes
against previous years to help display progress in the organization. This helps identify trends and gaps in
annual reports that can be focused on for the following years.


20

 Average trade compliance cost
 Percentage change in ratio of trade related costs to declared value (including labour,
software, fines, broker fees, etc.)
 Total landed cost
 Percentage change in total global trade costs (including compliance,
logistics/forwarding, transportation, warehousing, etc. Plus actual cost of goods

(Bob Heaney, 2010)

KEY FINDINGS

After analyzing MEC’s compliance with CBSA, there were some areas where room for improvement
exists in regards to import procedures. The organization is currently targeting September of 2011 to
proceed with the second stage of the CSA application, with the focus being on the security of
documentation within their supply chain. MEC has put procedures in place for the physical security of
daily business practices that are at acceptable levels for commercial importers. Organization facilities,
the physical movement of goods, and training of employees have been aligned with CBSA
recommendations. These factors will continue to have an influence on what direction MEC takes for the
future.

REASSESSMENT ANALYSIS
Upon a CSA approval, the significance of each type of documentation error will change, as MEC will be
able to apply any necessary paperwork to CBSA after they have received shipments. A weighted
measuring tool has been established with the Logistics department that determines the degree of
compliance that each type of documentation error has on daily business practices (see Appendix C).
This tool measures the impact on time cost, money cost, and the difficulty of recovery cost through a
rating system of high, medium and low for each type of error provided. High, medium and low degrees
of impact are scored as 10 points, 5 points, and 2.5 points each. By summarizing the total degree of
compliance, each type of error influences over MEC, an opportunity for creating awareness between
MEC and supply chain partners is provided.

The calculation that determines the degree of (# of Errors)(Weighted Measure)
compliance is the following: Number of Transactions
Example: Using the vendor Seattle Bike Supply,
it has been determined that between 2008 and
2009, that the business was responsible for the
errors of 14 different transactions between MEC and themselves. The errors were broken down to 8
quantity issues, 4 pricing errors, and a NAFTA and invoicing error each.


21

This would be broken down to a weighted measurement calculation of:

(8*7.5)(4*20)(1*25)(1*20) This reaches a conclusion of Seattle Bike Supply receiving a
86 Transactions w/vendor weighted score of 2.15 in regards to the degree of impact
that the business has over MEC’s reassessment of all
documentation. This measurement tool also shows that
with 14 errors occuring out of of 86 total transactions, the
Seattle Bike Supply company has a 83.7% reliability rating
when dealing with transactional issues. Once this formula has been implemented for all vendors, these
results will give an idea of where each vendor stands in regards to CBSA compliance and provides a
forecast for accuracy of each shipment provided by vendors well.

This formula was put into effect for ten vendors(see Figure 4) that were responsible for
documentational errors that caused MEC to reassess customs documents during 2008 and 2009. Figure
5 demonstrates how each error from vendors have different degrees of impact in the responsibilities
that the Logistics team at MEC oversees. Comparing the
vendor’s Defeet and Chaco, it can be seen that Chaco
was responsible for 7 errors in documentation and
Defeet 10 errors.

FIGURE 4-WEIGHTED MEASUREMENT RESULTS FIGURE 5-ERROR TYPE BY VENDOR
Due to the fact that Chaco’s main source of mistakes was in applying a discount, the company scored
much higher then Defeet when dealing with the degree of impact. Chaco may have had 3 less mistakes
then Defeet, but due to the fact that 90% of Defeet’s mistakes were a result of inaccurate quantities
shipped, the degree of compliance was minimal for an organization like MEC that is looking towards a
CSA future.


22

When viewing all assessments completed during the two-year period, it was found that a total of 876
errors were made in compliance related documentation. This resulted in providing information that can
be analyzed in different ways. Statistics such as weighted degrees of compliance, time cost, and
accuracy of documentation can be studied in order to determine improvements that can be made in
regards to customs compliance. An example can be found in Figure’s 6 and 7 that show vendor
information that can be utilized from 2008 and 2009.

Company Total Total Scores Transaction
Transactions Error Accuracy
Cascade Design 119 9 0.82 92.4%
Highway 2 6 4 13.33 33.3%
Mission Playground 7 4 11.07 42.9%
Cyclone 25 6 2.80 76.0%
Softride 8 3 7.50 62.5%
Veltec 15 5 3.83 66.7%
Metolius 14 7 3.75 50.0%
Visual Graphic Design 11 2 4.55 81.8%
Seattle Bike Supply 38 5 1.32 86.8%
Carve Design 2 3 23.75 -50.0%

FIGURE 4-VENDOR INFORMATION 2008

Company Total Total Scores Transaction
Transactions Errors Accuracy
Chaco 11 7 12.27 36.36%
Terry Precision 9 5 10.28 44.44%
Seattle Bike Supply 48 8 1.88 83.33%
Defeet 28 10 3.13 64.29%
Teko Socks 19 5 3.95 73.68%
BOB Trailers 28 4 2.41 85.71%
Cyclone 15 6 3.83 60.00%
Leatherman 29 4 1.90 86.21%
Eastern Warmth 9 6 5.00 33.33%
Eco Lips 7 3 6.79 57.14%

FIGURE 5-VENDOR INFORMATION 2009

These vendors play an important role within the commercial importing responsibility of MEC; providing
information on HS coding, establishing documentation such as commercial invoices, and preparing
orders for shipment to the MEC DC. It has been found that a significant amount of errors found in
documentation for MEC are being sourced back to vendors, accounting for 34.6% of necessary
reassessments between the years of 2008-2009.


23

MOVEMENT OF DOCUMENTATION

The movement of documentation plays a critical role in receiving a CSA designation from CBSA.
Responsibilities of movements have been divided between different departments within MEC, and
external sources such as vendors, carriers and brokers.

An investigation of the movement of documentation has been completed, starting from an original
purchase order being processed to the final storage of all paperwork for audit purposes. Process
mapping, internal research and the development of industry wide practices have outlined MEC’s level of
compliance with CBSA. Figure 8 and 9 provides a summarization of internal and external responsibilities
over the movement of documentation for MEC related transactions.

INTERNAL DOCUMENTATION RESPONSIBILITIES

FIGURE 6-INTERNAL DOCUMENTATION RESPONSIBILITIES


24

EXTERNAL DOCUMENTATION RESPONSIBILITIES

FIGURE 7-EXTERNAL DOCUMENTATION RESPONSIBILITIES

RECOMMENDATIONS

Time Cost to MEC Logistics 2009 BENCHMARKING AND KEY PERFORMANCE
Min Hours INDICATORS
Broker 1860 31
MEC 2040 34 Although it is important to determine industry wide levels of
Vender 2520 42 compliance and benchmark against competitors, more focus must be
Panalpina 60 1 maintained on internal KPI’s. A commercial importer should strive to
Grand Total 6480 108 become 100% compliant with CBSA regulations, and shift focus from
comparing levels of compliance that competitors have, to how those
levels are maintained.
Time Cost to MEC Logistics 2008 As shown in Key Findings, MEC has recorded information that may be
Min Hours utilized in taking a look at where the organization stands with
Broker 4500 75.0 custom’s compliance. It has been determined that although Logistics
MEC 2980 49.7 takes great care in collecting data such as error reports,
Vender 3540 59.0 reassessment history, and vendor related information; the
organization has the opportunity to utilize this information in a more
Grand Total 11020 183.7
effective manner. In the years 2008 and 2009, it was found that a
total of 291.7 man-hours worked for the Logistics department were
Note: Table shows error by source focused strictly on the reassessment of compliance errors. (See
and calculations are based on a Figure 10)
twenty one minute time cost per
error as per Logistics department Logistics has the information necessary to benchmark against their
previous compliance history, just as MEC demonstrates KPI’s and
benchmarks in areas such as the annual Financial and Sustainability
FIGURE 8-TIME COST TO MEC LOGISTICS- Reports. The organization also provides daily updates in sales for
2008 AND 2009
each store, benchmarking against the previous year’s sales on the


25

same day. This is delivered through an online system data management system.

It is recommended that the MEC Logistics department establish a Supply Chain Management Report
(Appendix G) with uniformed KPI’s on an annual basis to help identify areas of focus for years to come.
This will help MEC maintain high levels of customs compliance, provide accountability performance
awareness to parties responsible for documentation, and reduce the time cost of reassessing Custom
packages for the Logistics department.

SUPPLY CHAIN COMMUNICATION
As part of MEC’s Supply Chain Security Partnership Requirements under MEC LOGISTIC’S CASE
STUDY-THE SUSHI ROLL
the PIP program, the Logistics department oversees security profiles
that are submitted by all vendors. This shows CBSA that, from origin to In 2008 MEC conducted a study
destination, measures are in place to ensure that MEC goods coming to see if the packaging process
into Canada are secure. of imported garments could be
improved upon. By rolling
It is recommended that the MEC Logistics department continue to take garments like “sushi”, MEC was
able to create a new logistics
steps in increasing supply chain security by establishing a higher level of
alternative that helped:
communication with vendors. Due to a rise in border security on an
international level, commercial import expenses are becoming a higher  Save almost 1.4 kg of
area of focus for business. It is in the best interest of MEC to apply a plastic per box shipped
closer relationship with supply chain partners, through the sharing of
 Reduced receiving times by
information that is related to all transactions between all parties. This
up to three minutes on
can be provided through regular compliance reports that update average
vendor’s on where MEC stands compared to benchmarks and KPI’s that
have been set at the beginning of each business year.  Made sorting at the
distribution centre easier
It has been concluded that benchmarking and KPI’s are a necessary part
of MEC’s business practices. It is assumed that organizations within  Reduced the number of
MEC’s supply chain relationship are incorporating these principles distorted or damaged
within their own business. MEC’s Logistics department collects enough products received
information on commercial imports to demonstrate to vendor’s how After testing this with one
they are helping establish high levels of compliance. This information overseas vendor and receiving
may be shared through the implementation of a Vendor Report such successful results; MEC
(Appendix F) that can be issued to vendors on a regular basis. A incorporated this practice into
scorecard will allow vendors to review strengths and weaknesses in all relationships with suppliers.
their commercial import compliances involving MEC transactions. By Once initiated, vendors
experienced a reduction in
sharing information on issues such as documentation errors, vendors transportation expenses that
will be able to assess MEC reports to help focus their own KPI’s and were then felt downstream by
improve efficiency of their business. their customers.


26

MEC has experienced productive results in establishing cost saving relationships with vendors, as
described in the Sushi Roll Case Study. By establishing a higher level of communication between supply
chain partners through the sharing of information, MEC will continue towards goals such as:

 The reduction CBSA documentation errors
 The reduction of time cost involved in the reassessment process
 The improvement in efficiency of the flow of MEC good’s into Canada

INTERNAL MOVEMENT OF DOCUMENTATION
MEC has provided the necessary resources to analyze the movement of documentation within the
organization. The movement of paperwork involved in the logistics function of all goods received by
MEC is displayed in a detailed process map found in Appendix A. It has been determined that MEC has
installed high levels of monitoring the security of all documentation, through an organized structure that
has been divided between departments such as Logistics, Finance, Buying and the DC located in Surrey.

MEC has the opportunity to increase these levels of security, and it is recommended that the focus on
implementing a paperless document management system that will streamline movements throughout
the supply chain relationship. The creation of an online network will help MEC continue a seamless flow
of document management, starting from the creation of a purchase order from a vendor, to the
communication between DC and departments within the Head Office.

Currently there are many logistics software companies that can modify their products to align with their
customer’s daily business practices. E-logistics programs can be set up to have internal and external
interfaces with different levels of security restrictions. This will allow all documentation involved with
moving goods into Canada to be stored, retrieved, and inputted with one single source (See Figure 11).

INTERNAL INTERFACE
 Information on transactions, commercial documents, and reassessment process’s may be
pulled from database; helping departments such as Logistics and Finance establish strong
benchmarks with ease.
 More efficient organization of paperwork, inputs of new information are available
instantaneously
 Higher level of communication between DC and Head Office, reducing movements of
physical documents

EXTERNAL INTERFACE
 May be applied to establish closer relationship with vendors, communicating key
information on new HS updates, changes in Country of Origin, tariffs and discounts applied
 All vendors documentation involving MEC will be formatted into one single process
 The reduction of errors made in documentation between MEC and vendors, as all
information can be pulled from one source
 Movements of carriers can be monitored more effectively


27

MEC is currently working on transitioning to a larger Head Office in 2012, and it is recommended that
during this movement that a paperless document management system is included with this new
direction MEC is taking. By storing all internal and external information using an electronic database, a
higher level of CBSA compliance is reached and a more effective documentation management is
ensured.

Internal Users External Users

FIGURE 9-PAPERLESS SUPPLY CHAIN MANAGEMENT

PRIMARY BENEFITS OF RECOMMENDATIONS

All recommendations made will enhance MEC’s compliance with CBSA commercial import regulations.
The instalment of a paperless document management system will help establish higher levels of security
in regards to customs compliance. The introduction of this system will also help MEC establish stronger
and clearer KPI’s for the organization, and bring a higher level of communication between all parties
involved in the security of supply chain management.

MEC will benefit from these recommendations by displaying a secure movement of documentation to
CBSA, and reducing the time cost involved with monitoring these movements. This will allow the
Logistics department to focus on other areas to improve upon, within the responsibilities of the
movement of MEC products into Canada.

SECONDARY BENEFITS OF RECOMMENDATIONS

MEC displays a great deal of focus on sustainable practices involved within their business. By
establishing strong benchmarks, maintaining higher levels of communication with supply chain partners


28

and transitioning towards a paperless document system, an improvement in sustainability practices will
follow. These recommendations will help:

 Eliminate supplies necessary to complete documentation

 Reduce methods of transportation of documents such as DC to Head Office and Broker to Head
Office by freight forwarders, reducing carbon footprint

 Reduce amount of errors made in documentation and orders prepared by vendors, therefore
lowering transportation costs necessary to correct such errors

By implementing the suggested strategies, a higher level of sustainability is achieved at a lower cost to
MEC. This aligns with the organization’s values, and at the same time helps MEC move towards the goal
of high levels of vendor-trade compliance and a CSA designation.


29

BIBLIOGRAPHY

Advanced Performance Institute. (2011, April 14). What is a Key Performance Indicator.
Retrieved April 14, 2011 from Advanced Performance Institute: http://www.ap-
institute.com/Key%20Performance%20Indicators.html

Bob Heaney. (2010). Global Trade Management. Aberdeen Group.

CBSA. (2011, April 14). CBSA-About Us. Retrieved April 14, 2011 from CBSA:
http://www.cbsa-asfc.gc.ca/agency-agence/menu-eng.html

CBSA. (2012, April 23). Importer Programs. Retrieved April 23, 2012 from Canadian Border
Service's Agency: http://www.cbsa-asfc.gc.ca/import/ip-pi-eng

Mountain Equipment Co-op. (2011 йил 14-April). MEC-About MEC. Retrieved 2011 йил 14-
April from Mountain Equipment Co-op:
http://www.mec.ca/Main/content_text.jsp?FOLDER%3C%3Efolder_id=140847439603942
3

MEC INTERNAL DOCUMEN T’S USED IN THIS STUDY

MEC‘s Partners in Protection Application

MEC’s Partners in Protection Security Profile

Custom’s Self Assessment Application Part 1

Reassessment Data for 2008, 2009, and 2010

Vendor Transaction List

MEC Custom’s Compliance Manual

MEC Global Supply Chain Management

MEC INTERNAL SOURCES

Mike Au, Manager Supply Chain Services

Debby Sung, Logistics Analyst

Paul Robles, Logistics Analyst

Kathryn vander Linden, Account’s Payable Supervisor


30

APPENDENCES

APPENDIX A-PROCESS MAP OF DOCUMENTATION MOVEMENTS


31

APPENDIX B-TOP 15 ERROR PRONE VENDORS FROM 2008 AND 2009


32

APPENDIX C- CUSTOMS COMPLIANCE WEIGHTED MEASURING TOOL

Low = 2.5 points
Medium = 5 points
High = 10 points

No Brokerage C of O Discount HS Code Invoicing Nafta Pricing Quantity RTV
Time Cost Low High Medium Medium Medium Medium Medium Low Medium
Money Cost High High High Medium High High High Low Medium
Difficulty of Recover Cost Medium Low Low Medium Medium High Low Low Medium
Total Scores 17.5 22.5 17.5 12.5 20 25 20 7.5 15
*Feedback was provided by Logistics Department

APPENDIX D-ERRORS BY TYPE AND SOURCE-2008 AND 2009

2008
Problem Time Cost
At Fault No Brokerage C of O Discount HS Code Invoicing Nafta Pricing Quantity RTV Grand Total Min Hours
Broker 2 16 201 2 4 225 4500 75.0
MEC 20 2 9 110 3 3 2 149 2980 49.7
Vender 2 13 2 10 5 38 106 1 177 3540 59.0
Grand Total 20 6 38 313 13 7 45 108 1 551 11020 183.7

2009
Problem Time Cost
At Fault No Brokerage C of O Discount HS Code Invoicing Nafta Pricing Quantity RTV Grand Total Min Hours
Broker 1 4 8 76 1 2 1 93 1860 31
MEC 19 5 75 2 1 102 2040 34
Vender 2 1 4 2 19 3 14 80 1 126 2520 42
Panalpina 2 1 3 60 1
Grand Total 22 5 19 154 20 5 17 81 1 324 6480 108

APPENDIX E- WEIGHTED SCORES BY TYPE AND SOURCE-2008 AND 2009
Scores 17.5 22.5 17.5 12.5 20 25 20 7.5 15
2008
No Brokerage C of O Discount HS Code Invoicing Nafta Pricing Quantity RTV Grand Total
Broker 0 45 280 2512.5 0 50 80 0 0 2967.5
MEC 350 45 157.5 1375 60 0 60 15 0 2062.5
Vender 0 45 227.5 25 200 125 760 795 15 2192.5
Grand Total 350 135 665 3912.5 260 175 900 810 15 7222.5

Scores 17.5 22.5 17.5 12.5 20 25 20 7.5 15
2009
No Brokerage C of O Discount HS Code Invoicing Nafta Pricing Quantity RTV Grand Total
Broker 17.5 90 140 950 20 50 20 0 0 1287.5
MEC 332.5 0 87.5 937.5 0 0 40 7.5 0 1405
Vender 35 22.5 70 25 380 75 280 600 15 1502.5
Panalpina 0 0 35 12.5 0 0 0 0 0 47.5
Grand Total 385 112.5 332.5 1925 400 125 340 607.5 15 4242.5


33

APPENDIX F- VENDOR REPORT

Vendor
Seattle Bike Supply
Vendor Report 2008-2009

Overview Invoice Accuracy
Mountain Equipment Co-operative is in the process of initiating higher levels Seattle Bike Supply (SBS) experienced
of communication with vendors such as you. This will involve the process of an Invoice Accuracy percentage of
sending Vendor Scorecards to suppliers involved in the supply chain of our 86.8% in the year 2008, and a
organization. In this Scorecard we will provide information related to percentage of 83.33% in 2009
commercial imports, and what our supply chain relationship can do to reduce
costs, and maintain high levels of compliance with customs.
Invoice Errors
It was shown that 75% of compliance
Priorities
errors from SBS were due to quantity
Over the course of the next year, our main priorities in vendor-trade issues over the two-year period.
compliance are reducing errors in documentation.

Adaptations
Objectives
MEC will be setting up a paperless document management system that will
help both our companies establish an organized efficient form of Areas of high degrees of impact for
communicating documents necessary in transactions for the future Mountain Equipment Co-op

 Correct Country of Origin
Evaluation  Issues under NAFTA
 Invoicing and Pricing issues
We found that MEC and SBS should focus on quantity issues over the next
year, and see if we can raise levels of invoice accuracy. If we achieve these two
goals, it will reduce time and money cost towards our organizations. MEC is
also focused on improving efficiencies, and if there is anything we are doing to
effect these two areas of focus for the next year, please let us know.

Thanks,

Logistics Team,

Mountain Equipment Co-operative


34

APPENDIX G-SUPPLY CHAIN MANAGEMENT REPORT 2012

MOUNTAIN EQUIPMENT CO-OPERATIVE’S SUPPLY CHAIN MANAGEMENT REPORT

MEC decides to go “paperless” with MEC 2012 Areas Of Focus
Supply Chain Management
Establishing higher levels of custom’s security, and at same Reducing Non-Compliance Issues
time, reducing our impact on the environment…
MEC would like to improve accuracy
levels in commercial import
documentation issues such as HS code, 2
country of origin, and quantity issues

By going paperless in supply chain
management, we keep time and money
cost in monitoring compliance, to a
minimum 2

Supply Chain Communication

As a co-operative looking towards the
future, we want to know how to
improve our operations, just as you do
as well! 3
In maintaining a goal of we would like our supply
By establishing strong benchmarks and
high levels of compliance in chain partner’s to get
sharing this information, we have the
regards to commercial involved! By turning to a ability to improve our business process,
import regulations, web-based document system, and help others do the same. 4
Mountain Equipment Co- MEC will reduce the risk of
operative is transitioning to non-compliance issues, and
a paperless supply chain in turn reduce costs as well.
management system, and

New to 2012….Benchmarking tools such as the Vendor Report
In the year 2012, we are excited to bring new elements to our business. This includes providing all suppliers
with MEC Vendor Report’s. In the report, we will demonstrate what is most important to us in regards to
establishing high goals of compliance with commercial imports, and how your business is influencing the
direction we are taking. The Vendor Report will help supply chain partner’s identify areas of improvement
within their daily business practices, and focus on improving those areas. At MEC we are consistently
trying to improve operations, and would like to know from you as well, if there is anything we can do to
make the logistics process as efficient as possible!!


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