CSPCAR5 MODULE 2 by Ceddet

STRATEGIC CUSTOMS PLANNING AND MANAGEMENT

MODULE 2

STRATEGIC PLANNING AND ITS CONNECTION WITH CUSTOMS MANAGEMENT

COURSE AUTHOR Interamerican Development Bank (IDB) (www.iadb.org), through its Integration and Trade Sector (INT). COURSE COORDINATOR Interamerican Development Bank (IDB) (www.iadb.org), through its Integration and Trade Sector (INT), the Institute for the Integration of Latin America and the Caribbean (INTAL) (www.iadb.org/es/intal), the Inter-American Institute for Economic and Social Development (INDES) (www.indes.org), the World Customs Organization (WCO) (www.wcoomd.org) and the General Secretariat of Central American Integration (SG-SICA) (http://www.sica.int/). MODULE AUTHOR José Carlos Arobes Aguilar-Galindo, Head of the Regional Customs and Special Taxes Department of Andalucía, Ceuta and Melilla. EDUCATIONAL COORDINATION AND EDITING The Inter-American Institute for Economic and Social Development (INDES) (www. indes.org), in collaboration with the Economic and Technological Development Distance Learning Center Foundation (CEDDET) (www.ceddet.org) and Caribbean Customs Law Enforcement Council (CCLEC) (www.cclec.net).

Copyright ©2016 Inter-American Development Bank. This work is licensed under a Creative Commons IGO 3.0 Attribution-NonCommercial-NoDerivatives (CC-IGO 3.0 BY-NC-ND) (http://creativecommons. org/licenses/by-nc-nd/3.0/igo/legalcode). This document is the intellectual property of the Inter-American Development Bank (IDB). Any partial or total reproduction of this document should be reported to: BIDINDES@iadb.org Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB’s name for any purpose other than for attribution, and the use of IDB’s logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC-IGO license. Note that the link provided above includes additional terms and conditions of the license. The opinions expressed in this publication necessarily reflect the views of the Inter-American Development Bank, its Board of Directors, or the countries they represent. These materials have been revised in light of the ministerial decisions taken in the framework of the 9th World Trade Organization Ministerial Conference held in Bali, Indonesia, in December 2013. The adjustments were made in order to reflect a higher alignment between the course topics and the priorities identified in Bali’s Ministerial Declaration and decisions, where all IDB members participated. Bali Ministerial Declaration and Decisions

Strategic Customs Planning and Management

MODULE 2

Table of contents List of Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 List of Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 General Module Aims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Questions to Guide Learning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 UNIT I. GENERAL PLANNING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Learning objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 I.1. Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 I.2. Basic concepts. Functions. Usefulness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 I.3. Principles of planning and the planning process . . . . . . . . . . . . . . . . . . . . . . . . . . 10 I.4. Components and phases of the planning process . . . . . . . . . . . . . . . . . . . . . . . . 11 I.5. Types of planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 I.5.1. Strategic planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 I.5.2. Operational planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 I.5.3. Tactical planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 I.5.4. Forward planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 I.5.5. Short, medium or long-term planning (as a dimension of time) . . . . . . . . 17 I.5.6. Objectives planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 I.5.7. Scenario planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 I.6. Types of plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 I.6.1. Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 I.6.2. Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 I.6.3. Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 I.6.4. Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 I.6.5. Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 I.6.6. Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Strategic Customs Planning and Management

MODULE 2

I.6.7. Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 I.6.8. Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 UNIT 2. STRATEGIC PLANNING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Learning objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 II.1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 II.2. Variables of strategic planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 II.3. Strategic planning requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 II.4. Phases of the strategic planning process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 II.4.1. Defining the mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 II.4.2. Defining the vision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 II.4.3. Situational diagnosis: SWOT analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 II.4.4. Identification of actors: stakeholder analysis . . . . . . . . . . . . . . . . . . . . . . 38

II.4.5. Definition of strategic objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 II.4.6. Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 II.4.7. Projects or action plans (operational plans) . . . . . . . . . . . . . . . . . . . . . . . 44 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 UNIT 3. A PRACTICAL APPROACH TO STRATEGIC PLANNING IN CUSTOMS ORGANIZATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Learning objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 III.1. Balanced scorecard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 III.2. Other customs planning tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 III.2.1. Annual control plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 III.2.2. Annual objectives plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 III.2.3. Additional planning tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Strategic Customs Planning and Management

MODULE 2

List of Figures Figure 1.1. Planning and other administrative functions Figure 1.2. Elements of planning Figure 1.3. Phases of the Planning Process Figure 1.4. Types of planning Figure 1.5. Types of plans Figure 2.1. Diagram of the strategy plan components Figure 2.2. Stages of the strategic planning process Figure 2.3. SWOT Analysis Figure 2.4. Indicators for measuring results Figure 2.5. Indicators and the organisational hierarchy

List of Tables Examples of strengths and weaknesses, opportunties and threats in a customs organisation

Glossary AEO: Authorized Economic Operator WCO: World Customs Organization AEAT: Agencia Estatal de Administraciรณn Tributaria (Spanish Tax Agency) SWOT: Strengths, Weaknesses, Opportunities, Threats

General Module Aims The general aim of this module is: Acquire the knowledge necessary for developing a strategy plan to fulfill the mission and vision established for customs.

Strategic Customs Planning and Management

MODULE 2

Analyze the different phases of strategic planning and the connection between them in order to differentiate the different levels of existing plans. By way of introduction, Unit 1 will define basic concepts and the different types of planning as well as the main existing plans. Unit 2 is devoted entirely to the analysis of strategic customs planning, with mention of its components and stages of development. Finally, Unit 3 offers a practical view of customs strategic planning at customs by exposing a scorecard. Other instruments of planning are further analyzed.

Questions to Guide Learning What is the purpose of strategic planning? How will the results of the implemented measures be evaluated? What is the connection between a customs authorityâ&#x20AC;&#x2122;s programs and strategy and its mission?

How can you implement a balanced scorecard to design a strategic planning model?

Strategic Customs Planning and Management

MODULE 2

UNIT I

GENERAL PLANNING

Learning Objectives Determine the scope and purpose of planning, and analyze the roles that organizational planning must play. Determine the most suitable type of planning for the organization.

I.1. Definition In general terms we can say that planning consists of setting the specific course of action to follow (choosing from among alternatives), establishing the principles which will guide the course of action, the sequence of operations to carry it out and the time and resources necessary to achieve the planned goals and objectives. Planning is one of the administrative roles identified in any organization and which, together with management, organization and control, forms part of the administrative cycle. Figure 1.1 below illustrates.

Source: Prepared by the authors

Figure 1.1. Planning and other administrative functions

Strategic Customs Planning and Management

MODULE 2

Basically, we can state that planning is to anticipate the path the organization should follow to achieve an objective. It includes the definition of the overall aim, objective, strategy design and their implementation, evaluation and control. Planning involves making decisions, but decision making is not always the same as planning. Planning is what we do before taking action, that is, it is a decision made in advance which determines what will be done and how, in order to achieve specific outcomes in the future. Planning is one of the roles of administration and consists of deciding what objectives are to be achieved and what should be done to achieve them. Planning is a process which begins with setting objectives and defines detailed strategies, policies and plans to achieve them; it is what an organization establishes to implement decisions and includes performance review and feedback before a new planning cycle is introduced. All other administrative functions are based on planning. Without the activities determined by planning there is nothing to organize, manage and no need for control.

Text box 1.1: The importance of planning in an organization

Administration is a structure, a building in which organization, execution and control are the pillars and planning is the foundation.

Text box 1.2: Why plan? Planning is the first administrative role that impacts all others. To promote more efficient employee performance. To more rationally use existing or potential resources. To troubleshoot. To achieve the organizationâ&#x20AC;&#x2122;s objectives and goals. To adequately cope with changes. To reduce uncertainty in management decision making

Strategic Customs Planning and Management

MODULE 2

I.2. Basic concepts. Functions. Usefulness Basic planning concepts arise from the definitions presented thus far: OBJECTIVES: Planning starts with objectives, in order to know where the organization intends to go and how it can get there. PLAN: This is an expected course of action taken in order to achieve goals. DECISION MAKING: To the extent that there should be various future courses of action to choose from, that is, deciding what will be done and how, before taking action. FORECAST: Visualizing the future and identifying those factors which, within human limitations, could favorably or unfavorably influence that future as the organization advances. What roles must planning play? ADAPTIVE: planning should be flexible in order to make adjustments according to the external and internal environment. EFFECTIVENESS AND EFFICIENCY: to improve and optimize resource allocation and use. HUMAN RESOURCES MAINTENANCE AND/OR DEVELOPMENT: to maintain and/ or improve commitment, morale and satisfaction in the organization. BETTER DECISION-MAKING: to improve accountability, participation and decision-making structures. What are the effects of proper planning? It manages and validates results and intentions. It generates organizational credibility and increases membersâ&#x20AC;&#x2122; commitment to the organization. It has positive effects on long-term organization. It provides clarity regarding the future direction of the organization. It renews internal and external organizational commitment. It improves internal knowledge on organizational functioning and complexity. It strengthens the organizationâ&#x20AC;&#x2122;s capacity to address problems and make decisions. It improves internal communication.

Strategic Customs Planning and Management

MODULE 2

I.3. Principles of planning and the planning process The following basic principles of planning and the planning process can be highlighted: PRINCIPLE OF UNIVERSALITY Planning should include enough factors such as time, personnel, budget, etc., in order to develop a well-rounded plan. PRINCIPLE OF RATIONALITY Each and every plan should be grounded in logic and contain objectives that can realistically be achieved as well as the resources needed to achieve them. PRINCIPLE OF COMMITMENT Time is a crucial factor when defining a plan and must therefore be defined with extreme accuracy. Funds should only be committed to planning when a return on planning costs can be expected in the near future as a result of the analysis of long-term planning. PRINCIPLE OF FLEXIBILITY

Plans should be flexible and not rigid structures; they should be dynamic, adaptable to change in response to any unforeseen and exogenous circumstances that may arise. PRINCIPLE OF CONTINUITY The above should be taken into account when formulating plans to avoid delays due to changes to the plan. This is necessary in order to meet the organizationâ&#x20AC;&#x2122;s overall goals. PRINCIPLE OF PRECISION Given that plans will govern specific, concrete and defined actions they should be accurate and avoid vague, inconclusive statements. PRINCIPLE OF UNITY While a planâ&#x20AC;&#x2122;s components must work independently of each other they must also work towards the same goal. Plans should be considered hierarchically until a single plan is created.

Strategic Customs Planning and Management

MODULE 2

Text box 1.3: Planning principles PLANNING PRINCIPLES

DEFINITION

Universality

Includes all required factors

Rationality

Logical foundation

Commitment

Planning should foresee positive effects

Flexibility

Susceptible to change

Continuity

With earlier plans

Precision

Specific and concrete

Unity

Integrated programs should share the same aim

I.4. Components and phases of the planning process Proper planning should include the following elements outlined in Figure 1.2 below:

Source: Prepared by the authors

Figure 1.2. Elements of planning 1. AIMS: specify goals and objectives. 2. MEANS: choose the policies, programs, procedures and practices through which the objectives are to be achieved. 3. RESOURCES: determine the types (human, technical, capital) and quantities of required resources; define how these will be acquired or generated and how they will be allocated to the activities.

Strategic Customs Planning and Management

MODULE 2

4. DEVELOPMENT: design decision-making procedures and how these should be organized so that the plan can be carried out. 5. MONITORING: design a procedure to predict or detect errors in the plan, and to prevent or correct them on an ongoing basis. The core phases of a planning process are described in Figure 1.3 below:

Source: Prepared by the authors

Figure 1.3. Phases of the Planning Process

A. OPPORTUNITY AWARENESS (AS WELL AS AWARENESS OF STRENGTHS, WEAKNESSES AND THREATS: SWOT ANALYSIS) This is where planning starts. The organizationâ&#x20AC;&#x2122;s current status should be identified in light of its strengths and weaknesses, including the reasons behind wanting to reduce uncertainties and the expectations of profits or improvements. A preliminary study of future opportunities, of where the organization stands and its strengths and weaknesses, including problems to solve and what the organization wants to achieve, is recommended in order to establish potential objectives. B. SET OBJECTIVES This phase consists of setting both long and short-term objectives for the organization in general and for each of its individual areas. The objectives explain the expected results, indicate the steps to follow as well as their priority, and identify what can be achieved with the strategies, policies, procedures, rules, budgets and programs that are included in the plan. C. DETERMINE ALTERNATIVE COURSES OF ACTION Alternative courses of action are identified and studied during this phase, especially those which are not as obvious, since in many cases the best reasonable alternative is often the less apparent one.

Strategic Customs Planning and Management

MODULE 2

D. EVALUATION OF ALTERNATIVE COURSES OF ACTION After searching for alternative courses of action and examining their strengths and weaknesses, the next step is to evaluate them by comparing the courses of actions with the set objectives. Since there are different courses of action for all situations and many variables to be analyzed, operations research and mathematical quantitative techniques are mainly applied in administration in this step of planning. E. CHOOSE A COURSE OF ACTION The decision about what course of action to take is made in this phase, which will result in programs or projects. F. QUANTIFICATION OF PLANS THROUGH THE BUDGET In this phase, numerical expression gives meaning to decision-making and plan establishment, turning them into budgets. An organizationâ&#x20AC;&#x2122;s overall budget is the sum of income and expenses, with earnings, budgets of the main balance sheet items (cash and capital expenditures).

I.5. Types of planning The different types of planning illustrated in Figure 1.4 are analyzed below.

Source: Prepared by the authors

Figure 1.4. Types of planning

Strategic Customs Planning and Management

MODULE 2

I.5.1. Strategic planning It is the organizationâ&#x20AC;&#x2122;s broadest type of planning and consists of medium or longterm planning that considers the organization as a whole. In this type of planning managers must identify what the organization must do to succeed three to five years into the future. As we shall see in the next unit, strategic planning consists of the strategies that result from the organizationâ&#x20AC;&#x2122;s mission and vision. Text box 1.4. Strategic planning It is designed for the medium and long-term. It considers the organization as a whole and encompasses all resources and areas. It is defined by managers located at the top of the organizational pyramid in charge of the other employees in the organization.

I.5.2. Operational planning

Operational planning consists of clearly establishing the implementation of the strategy plan in line with the specific objectives. Like the strategy plan, operational planning should be simple, easy to understand for all participants, and clearly define the tasks they must carry out and the time available to complete them. Operational plans can range from fairly simple timelines that identify important events in the process to complex, highly-detailed plans which explain what needs to happen on specific dates. This is the type of planning carried out for each task or activity. Text box 1.6 Operational planning Its main characteristics are: It is designed for the short term or immediate future. It treats each activity separately and is concerned with achieving specific goals. It is defined for each task or activity and includes programs, procedures, methods and standards. This planning is done at lower levels and focuses on current operations.

Strategic Customs Planning and Management

MODULE 2

Strategic planning vs. Operational planning It is necessary to highlight the difference between strategic planning and operational planning within the framework of organizational planning. Although both aim to determine the best course of action, the first deals with the medium and long term and the second relates to the short term. When we talk about strategic planning we are referring to major decisions, to establishing strategic objectives that enable the organization to fulfil its mission and vision. Therefore, strategic planning is the foundation for establishing mechanisms to monitor and evaluate these objectives; management oversight cannot be carried out without a prior strategic planning process. Strategic planning focuses on aspects of the organizationâ&#x20AC;&#x2122;s external environment: the end users to which major services or strategic services are provided and the final results and impact of its intervention. When we talk about operational planning we are referring to the setting of shortterm goals which implement the strategies. With this type of planning it is possible to program activities and the estimated budget for carrying them out. Operational planning involves the generation of internal goals and commitments that are part of the plan for providing services within the required time frame. Text box 1.7. Strategic planning vs. Operational planning STRATEGIC PLANNING

OPERATIONAL PLANNING

Long term

Short term

Proactive

Reactive

Global vision

Functional approach

Focuses on external elements

Focuses on internal elements

Qualitative information

Quantitative information

I.5.3. Tactical planning Tactical planning is developed for each department or unit and consists of mediumterm plans. This type of planning is often used to describe what the organization must do to make the company successful in that period of time.

Strategic Customs Planning and Management

MODULE 2

Text box 1.5 Tactical planning Its main characteristics are: It is designed for the medium term. It covers each department, its specific resources and is concerned with achieving the objectives assigned to each. This type of planning is defined in each element of the company.

The following table provides a comparison between strategic, tactical and operational planning. Text box 1.8. Comparison of strategic, tactical and operational planning

TYPE OF PLANNING

CONTENT

TIME FRAME

SCOPE

STRATEGIC

Generic

Long term

Focuses on the organization as a whole

TACTICAL

Less generic

Medium term

Focuses on each unit separately

OPERATIONAL

Detailed, specific and analytical

Short term

Focuses on a specific area or activity

I.5.4. Forward planning Its usefulness in planning stems from the fact that it essentially allows the following aspects: a. Identify trends and possible changes, as well as potential events that could have significant impact on the future. b. Develop possible future scenarios. c. Identify alternatives considering their long-term future effect. What distinguishes forward planning is the emphasis on the formulation of objectives or desired future and the active search for ways to make it possible, in light of a planning process that extends from the formulation of more general social and economic ideals to the details of the development and implementation of individual decisions.

Strategic Customs Planning and Management

MODULE 2

I.5.5. Short, medium or long-term planning (as a dimension of time) It is estimated that multiple planning periods can exist in an organization simultaneously in order to resolve different problems and unforeseen events that arise. Given that short-term planning should relate to accounting periods this type of planning is selected to correspond to quarters of a year. Long-term planning includes the application of an analysis to determine the attitudes that the company can achieve in the future; it can also be seen as a dynamic and very flexible process that can handle any change in plans. Together with the administrative set of plans, long-term planning turns the mission, vision and strategy into real results. The exact time frame for long-term planning in organizations is unknown, since it can vary according to the organization’s size, complexity and characteristics and if the plan must be developed from the ground up or built upon something that already exists. Yet the key to determining this time frame may lie in what is referred to as the “commitment principle”: planning should specify a particular period of time in which to fulfill (through activities) the commitments for the future entered into by decisions made in the present. The principle of commitment must be subject to great planning flexibility. If plans can be changed to handle unexpected situations, the time frame may be shorter than predicted. Thus the concept of the “flexibility principle” arises: the more flexibility the plans, the shorter the delays incurred by unexpected events. According to the commitment required short, medium or long-term planning can be applied to any plan and decision deemed necessary. Short and long-term plans should be integrated and short-term plans should not be made if they do not contribute to the achievement of the long-term plan.

I.5.6. Objectives planning Objectives are goals and we use both terms interchangeably. What do these terms mean? They refer to results which individuals, groups or even entire organizations aim for; objectives and goals give direction to all management decisions and provide the criteria against which actual achievement can be measured. Therefore, they are the foundation of planning. The objectives set final results, but the overall objectives need to be supported by sub-objectives. Therefore, objectives are both a hierarchy and a network. Objectives form a hierarchy ranging from the overall objective to individual and specific objectives. The top of the hierarchy is its socio-economic purpose: it is like requiring the organization to contribute to the welfare of society by providing goods

Strategic Customs Planning and Management

MODULE 2

and services at a reasonable price. Below that is the organization’s mission. The next level of the hierarchy contains more specific objectives, such as those in key result areas, which are areas where performance is critical to the company’s success. The objectives then become division, department and unit objectives, descending to the lowest level of the organization.

I.5.7. Scenario planning This approach is particularly focused on the identification of strategic issues. 1. Select several external forces and imagine the related changes which could impact the organization. The purpose here is to identify discontinuities in the company’s external environment, which is achieved through “environmental scrutiny.” 2. A team from three to five managers, using information derived from environmental scrutiny, will interview experts within and outside the company and develop four to five alternative visions of the future with all the events that could lead to that future and submit them to all planning teams. 3. For each change within a strength, describe three future scenarios for the organization (the best-case, worst-case and reasonably-expected scenario) that could occur as a result of each change.

4. Suggest what the organization could do, or what the potential strategies could be in each of the three scenarios, in order to respond to each change. 5. Identify the strategies or considerations on which the group agrees and which should focus on responding to possible external changes. 6. Select the most likely external changes that could affect the company within a specific time period, and identify the most reasonable strategies the company should implement to respond to change. Since many people participate in scenario planning they are divided into groups, one for each of the resulting scenarios. Each team orders the events that could occur in scenario based on their probability of occurrence. Each team presents its scenario and shares the reasoning behind their decision during the process in an attempt to convince the other teams of the reliability of their arguments. The use of this tool involves managing a system of multidimensional thinking and, therefore, teams use matrix diagrams to better clarify interrelationships and points of conflict. For a step-by step approach to scenario planning using the example of a supplier to show how a supply chain can be protected in order to avoid disruptions in getting products to market see the YouTube clip ‘How to Protect Your Business with Scenario Planning…’: https:// www.youtube.com/watch?v=fXy6eMOXqDA

Strategic Customs Planning and Management

MODULE 2

I.6. Types of plans The plan is a product and immediate result of planning; it is the intermediate event between the planning and implementation process. Plans must respond to what (object), how (means), when (order), where (local) and by whom (executing body or person). The various types of plans include: mission, objectives or goals, policies, strategies, procedures, rules, programs, budgets Figure 1.5 illustrates.

Source: Prepared by the authors

Figure 1.5. Types of plans

I.6.1. Mission An organizationâ&#x20AC;&#x2122;s mission is its specific purpose, what distinguishes it from similar organizations. It identifies this organizationâ&#x20AC;&#x2122;s role in society and is thus why the organization exists. It mainly consists of: 1. Who receives the companyâ&#x20AC;&#x2122;s services? 2. What are the key services provided? 3. What corporate image does the company want to project?

Strategic Customs Planning and Management

MODULE 2

I.6.2. Objectives These are the ends or goals the organization intends to achieve and towards which the activities of the organization as a whole or one of its departments, sections or functions are directed. Higher goals usually represent the end towards which the company, management and staff works. A department can have its own objectives. While these may differ from those which form the companyâ&#x20AC;&#x2122;s basic plan, they still contribute to the scope of organizational objectives. Objectives or goals are plans and require a planning process like any other plan.

I.6.3. Policies These are plans to the extent that they constitute rules or standards that conduct the thoughts and actions of those to which these rules apply. With regard to policies it must be noted that: a. When drafting policies the opinion of those who must apply the policies must be taken into account.

b. Policies must be declared in writing. c. Policies should be periodically disseminated and revised and their interpretation should be uniform throughout the organization. d. There are policies related to planning, oversight, organization and coordination and which encourage teamwork, consultations on fundamental issues and the development of criteria and initiative within limits.

I.6.4. Strategies Strategies describe a course of action. Their purpose is to define and communicate a description of what the organization intends to be through a set of objectives and policies. The strategy itself is a combination of objectives with a broader policy and various programs.

I.6.5. Procedures These are plans which establish a method or usual way of handling future activities, that is, these plans are related to work or implementation methods. They serve as

Strategic Customs Planning and Management

MODULE 2

guidelines for action rather than thinking, as they indicate how certain activities must be done. Procedures usually correspond to operational plans and are represented by flowcharts.

I.6.6. Programs Programs are time-related plans and are understood as the correlation between time and the activities to be carried out. They can also be defined as a set of goals, policies, rules, procedures, tasks, steps, etc. The schedule can vary widely when performing a specific action and range from small and simple programs to complex and large ones in which mathematical techniques, databases, etc. are required. A primary program could require a number of sub-programs, which are usually dependent upon each other.

I.6.7. Rules Rules are the simplest form of a plan and deal with the behavior expected from people. Text box 1.9. Rules, policies and procedures Rules are often confused with policies or procedures, however, a rule requires the taking or not taking of a particular and specific action with respect to any particular situation. Rules represent guidelines for action, but do not define the time sequence to be a procedure. The rule may or may not be part of a process. Rules differ from policies because the purpose of the latter is to guide thinking in decision making while identifying areas for discretionary judgment.

The essence of rules themselves is that they reflect an administrative decision to either take specific action or not. Operational plans almost always seek to replace the individual decision-making process by limiting the degree of individual freedom in certain circumstances.

I.6.8. Budget Budgets provide a look at expected results expressed in numerical terms. They are related to financial resources, whether through income or expenses over a certain period of time. This type of plan may be related to a spending, investment, operations or cash budget. Although the budget is an accountability tool it does not serve as an accurate measure of this it does not reflect the plans.

Strategic Customs Planning and Management

MODULE 2

Budgets can be strategic plans if they cover the company as a whole and deal in the long term; they can be tactical plans when they include a unit or department in the medium term and they can be operating plans if the focus is local and short-term.

For a detailed discussion on â&#x20AC;&#x2DC;Types of Plansâ&#x20AC;&#x2122; including goals, objectives, strategies, policies, procedures, methods, rules, programs and buget, complete with an example for each type of plan, view the YouTube clip: https://www.youtube.com/watch?v=QzmyvAdweHk

SUMMARY Planning involves setting the specific course of action to follow (choosing from among alternatives), establishing the principles which will guide the course of action, the sequence of operations to carry it out and the time and resources necessary to achieve the planned goals and objectives. It includes the definition of the overall aim, objective, strategy design and their implementation, evaluation and control.

It is necessary to distinguish between strategic, tactical and operational planning. Planning results in different types of plans: 1. Mission 2. Objectives 3. Policies 4. Strategies 5. Procedures 6. Rules 7. Programs 8. Budgets

Strategic Customs Planning and Management

MODULE 2

UNIT II

STRATEGIC PLANNING

Learning Objectives Know the variables of strategic planning: why, how and with whom. Determine the purpose and advantages of strategic planning. Understand how to carry out strategic planning.

II.1. Introduction The environment in which public administrations operate is ever changing and is strongly interconnected due to budget constraints, new and greater social demands, technological processes and the greater attention that people pay to the proper and efficient management of public resources. Therefore strategic planning, traditionally used in the private sector, is increasingly used as a tool to guide the future of public organizations, with appropriate adjustments made with respect to the techniques used in the private sector, to allow improved public decision making and ensure that problems are resolved in ways that benefit the organization, participants (stakeholders) and society as a whole. Think of the changes that have occurred in customs organizations in your country and in neighboring countries. You can see that many changes have been determined by the environment, especially regarding issues related to the new security and protection roles assigned to customs. Yet to fulfill that role customs cannot unconsciously make decisions; rather, the organization must establish a planning or strategic direction so that every step it takes makes sense in terms of their stated objectives.

Strategic Customs Planning and Management

MODULE 2

Text box 2.1. The scope of strategic planning Strategic planning must be implemented in all areas and sectors of customs organizations; together with its implementation and evaluation it will constitute the organization’s true seal of quality. What are the advantages of strategic planning in the public sector? It clarifies the organization’s direction and goals. It facilitates decision making by focusing managers’ attention on issues and key challenges. It improves relationships with partner institutions (stakeholders) by establishing partnerships. It improves public services and the image that people have of the institution. It achieves internal improvements in terms of teamwork, internal communication, corporate culture, staff morale, etc. It overcomes risk aversion, present in many areas of public administration, thereby achieving better use of public funds.

Conversely, we can say that strategic planning helps to overcome or mitigate some of the most frequent dysfunctions in public organizations: Excessive bureaucracy An organization’s lack of political-strategic definition Lack of management oversight Under-qualified human resource for performing specialized activities Administrative disorganization High staff turnover The priority of solving urgent problems over important issues Low awareness of the organization’s environment (public, binding institutions, laws) Inappropriate use of information and communication systems Excessive centralization of decision making What is strategic planning? Strategic planning is the map that guides an organization’s actions in the medium and long term. It is the compass that indicates the path to take from one situation to another. It tells us what we need to do and in what time frame.

Strategic Customs Planning and Management

MODULE 2

Strategic planning is a management tool that bases an organization’s decision-making around current activities and the path it should take in the future to adapt to changes and demands imposed by the environment and achieve greater efficiency, effectiveness, and quality of the services it provides. Strategic planning is an exercise in establishing priority objectives, whose main feature is to establish courses of action (strategies, projects, strategic lines) in order to achieve those objectives. Using an analysis of the current situation, strategic planning establishes what actions will be taken to reach a “desired future”, which may be referred to in the medium to long term. Text box 2.2. Questions that strategic planning answers Strategic planning is a process through which a customs organization establishes where it comes from, its current status (diagnosis), where it intends to go and how long it will take. In other words, it answers questions like the following: Where are we? Where do we want to go? How can we get to where we want to go? Strategic planning sets objectives and how they should be achieved based on the customs organization’s current status and an analysis of the current situation, environment, strengths and weaknesses. Strategic planning is an ongoing process that requires constant feedback about how the strategies are working. In the private sector, organizations have signs of their performance through clear indicators, such as return on investment, sales, etc. The signs are not as clear in public organizations, and designing indicators to monitor the evolution of strategies is a continual challenge. As an initial approach, and although there are many variations in terminology and graphic representation, we offer, in Figure 2.1, a first look at the main elements or components of a strategy plan in the following figure.

Strategic Customs Planning and Management

MODULE 2

Source: Prepared by the authors

Figure 2.1. Diagram of the strategy plan components

II.2. Variables of strategic planning All planning is bound by three variables. First, what the organization wants to achieve (strategic direction); second, how it is going to achieve what it wants (management capacity); and third, with whom it will achieve the objectives (strategic governance). Text box 2.3: Variables of strategic planning Guiding Capacity (What). Management Capacity (How). Governability Capacity (With whom).

A) Guiding Capacity (What) The first question which arises is: what is guided? A present situation is guided into another desired and possible situation, that is, the capacity to drive the future of the organization. Managers, involved with the inertia of day-to-day activities often fail to stop and think about the future; rather, they allow themselves to be driven by present events and put major problems aside to only resolve urgent issues.

Strategic Customs Planning and Management

MODULE 2

This type of pragmatism is what characterizes reactive organizations which, unlike entrepreneurial organizations, integrate thinking and action in a previously analyzed direction. Therefore, entrepreneurial organizations make a strategic commitment to the future, while reactive organizations are driven by events and, victims of their own inadequacies, are unaware of the situation. Strategic direction is composed of the following elements: vision, mission, objectives, policies and values, which will be discussed in more detail in another section. Vision: It represents the organizationâ&#x20AC;&#x2122;s objective and is related to the ideal or desired situation the organization wants to achieve in the future: what we want to be. The vision brings together the following elements: Consistency with the mission. It must be ambitious and challenging yet realistic, believable and possible. It should be written in clear and understandable terms. It must be shared by the people in the organization. Mission: Represents the organizationâ&#x20AC;&#x2122;s purpose and clarifies its nature, intentions and the scope of its activities. The following elements should be included when developing a mission: What needs are satisfied with the services the organization offers. How these needs are satisfied. Who uses these services: the organization meets the needs that the public demands. Objectives: These represent the desired and possible changes envisioned by the organization with the intention of fulfilling the mission, taking advantage of the organizationâ&#x20AC;&#x2122;s opportunities and strengths and reducing its threats and weaknesses today and in the future. The following elements should be considered when designing objectives: Vision of the organization. Mission of the organization. Weaknesses and strengths. Threats and opportunities. Identification of stakeholders. Policies: These represent the rules or guidelines that set the limits within which the course of action must be carried out. Policies clarify, drive and focus the action of institutional management.

Strategic Customs Planning and Management

MODULE 2

Values: Values are the set of beliefs and rules that the organization creates and ingrains in their employees to maintain a relationship of shared affinity in pursuit of a collective interest. They provide support for the development of organizational culture by indicating skills, attitudes, behaviors, identities, and challenges, among others. Values are positive, challenging, accurate and inspiring in order for everyone in the organization to feel reflected in them and consciously assume the responsibility granted by the organization to fulfil his/her role. Text box 2.4. Institutional values in strategy plans The institutional values traditionally included in customs organizationâ&#x20AC;&#x2122;s strategy plans are: Honesty Commitment Responsibility Transparency Integrity

Respect Teamwork Innovation Accountability

B) Management Capacity (How) The second variable is management capacity. This consists in identifying the capabilities (structure, human resources, technology, financial resources) that the organization has to implement strategic projects. It also involves implementing a management control system that facilitates the measurement of the degree of progress relative to planned objectives. It is the phase which implements knowledge, experience and calculation to answer the question of how to implement the plan. C) Governability Capacity (With whom) Finally, there is the governability capacity phase. This consists in identifying the social groups, institutions or individuals who can maintain some degree of alliance, partnership or cooperation with the projects included in the organizationâ&#x20AC;&#x2122;s institutional plan. It is a phase of analysis and strategic calculation which answers the question of who the organization will have to develop strategic partnerships with in order to support project implementation.

Strategic Customs Planning and Management

MODULE 2

Given the regulatory and political complexity in which public organizations are involved, institutional management and performance is becoming more complicated. This is especially true for those civil servants responsible for decision making because they lack the technical tools to identify those bodies or institutions which may be for or against the strategic commitments that the organization has made. This study is based on identifying the positive or negative relationship with each of the stakeholders in order to design strategies that make the organizationâ&#x20AC;&#x2122;s objectives and projects viable.

II.3. Strategic planning requirements The strategic planning process should be the basis for defining operational plans and the budget plan. It must therefore be in line with the following premises: Its implementation must conform to the budget calendar. The process methodology and content must answer basic questions to move towards a results-oriented budget: what services do we provide, for whom, under what conditions, what results do we guarantee? Short-term goals and courses of action must be aligned with strategic definitions. This alignment should allow the identification of financial and operational aspects to prepare the budget. As part of the budget process the methodology used should have an annual application and should therefore not be complex. The emphasis should be focused on WHAT we hope to accomplish within a given period. We should be able to properly identify strategic objectives through the strategic planning methodology. Strategic planning must serve as the precursor to management control in order to determine if we have achieved the objectives set. A control system that allows management to record the goals, targets and indicators throughout the organization in order to set up subsequent monitoring and evaluation should be established. How do we know whether we are achieving results? Establishing indicators as a final phase involves identifying which are strategic indicators and which are part of the key performance indicators of the necessary monitoring activities for the implementation of plans, projects, etc.

Strategic Customs Planning and Management

MODULE 2

II.4. Phases of the strategic planning process Although the elements of the strategic customs planning phases can be categorized into distinctive groups and some phases even combined, in general terms the following phases can be distinguished: Customs mission statement and vision. Situation diagnosis (analysis of the customs organizationâ&#x20AC;&#x2122;s environment and internal organization). Stakeholder analysis. Determine strategic objectives. Establish indicators to measure the degree to which strategic objectives are achieved (strategic indicators). Determine strategies (or strategic action plans) and operational projects. Finally, the implementation of these plans and their monitoring and supervision. Figure 2.2 below illustrates.

Source: Prepared by the authors

Figure 2.2. Stages of the strategic planning process

Strategic Customs Planning and Management

MODULE 2

For this approach to be truly integrated into the day-to-day practices of a customs organization the following important elements should be taken into account: Strategic management is an ongoing process, not an “instrument” or an “action plan” to be applied at a particular time. The importance of the role of all employees at all levels of the organization. Strategic management is an ongoing process of interaction between different hierarchical levels. Middle managers play an essential role in this regard, as they are responsible for communicating information from the operational staff to senior management and vice versa. Therefore, strategic management is not just a top-down process but a bottom-up process as well. Updated information management through the use of information technology is essential. To apply strategic management in the best possible way, it is ideal to have correct and updated information on the organization’s results. Senior management needs information that provides them an idea of the overall strategic results, while middle managers should have more detailed data, etc. Strategic risk management. Risk management should be seen as a necessary complement to strategic planning. A risk management system should be integrated into the systems of all the organization’s activities. Risk management must be integrated into strategic, operational and tactical levels in such a way that the different activity levels support one another. Thus, the organization’s risk management strategy is driven by management and integrated into the organization’s standard procedures and activities. Staff must be aware of the important role risk plays in achieving desired objectives.

II.4.1. Defining the mission The task of defining the mission is limited to managerial decisions at the highest levels of organizational responsibility. This process involves defining strategic services and the results for which customs are held accountable by economic operators and the public in general. Text box 2.5. Questions the mission statement should answer The following questions must be posed when formulating the mission: Who are we, what do we do, who do we do it for and what are the effects or final results we expect?

The mission is a description of the organization’s purpose and establishes its activities, the services it provides, the justification for its existence and the main features that differentiate it and make it stand out from other institutions.

Strategic Customs Planning and Management

MODULE 2

Text box 2.6. What does the mission state? Ultimately, the mission expresses the organizationâ&#x20AC;&#x2122;s character and serves as a symbol of its identity.

Text box 2.7. Mission of the Colombian Tax and Customs Authority Mission of the Colombian Tax and Customs Authority â&#x20AC;&#x153;At the Tax and Customs Authority we are responsible for managing compliance with tax, customs and foreign exchange obligations through quality service, oversight and control; we facilitate foreign trade operations and provide reliable and timely information in order to ensure the fiscal sustainability of the Colombian state.â&#x20AC;?

As we can see in the example, a correct definition of the mission must include: What is the purpose of the organization: manage the tax and customs system. What it does: description of the services it provides (control, oversight and facilitation of foreign trade operations).

For whom: identification of users or beneficiaries to whom the services are directed (economic operators and citizens in general). What is the effect the organization wants to achieve: ensure fiscal sustainability. Text box 2.8. Elements that all mission statements must include REMEMBER: What aspects must be included in a mission statement? Major services or strategies provided Users, beneficiaries or target population to whom such services are directed. What users, beneficiaries and the public at large expect in terms of results (effects). The territorial scope of its implementation (central, national, local, international). What aspects are optional (since they should generally be included with the vision or values)? The standards with which the organization plans to achieve its purpose. The values with which the organization intends to focus management.

Strategic Customs Planning and Management

MODULE 2

What aspects should not be included in a mission statement? Minor ancillary services. The organizationâ&#x20AC;&#x2122;s internal users. The improvements that the company intends to make to become more efficient or effective (these should be stated as strategic objectives).

RECOMMENDATION: Modern systems used by developed countries to strengthen security focus primarily on controls in the exporting countries as a first line of defense. This tendency should be integrated into any strategic assessment role of customs in order to keep from adversely affecting the economy of the exporting nation.

The mission should be worded in such a way that the general public can understand what customs does. Text box 2.9. Example of developing a mission Oversight of foreign trade operations. Trade facilitation. Ensure citizen safety and security.

II.4.2. Defining the vision The view corresponds to the organizationâ&#x20AC;&#x2122;s intended future. It refers to how the company wants to be recognized and represents the values which underpin their public action. Vision indicates the direction that the organization has chosen. Vision answers the question: How do we want to be recognized? The vision statement needs to clearly define the organizationâ&#x20AC;&#x2122;s core strategies. It may be broader than the institutional mission and contain aspects that allow users and citizens to identify what they can expect from the organization in terms of values, the creation of opportunities, projection, etc. Repetition of the roles and services that characterize the mission should be avoided. It should also avoid identifying those aspects related to short-term modernization projects.

Strategic Customs Planning and Management

MODULE 2

Text box 2.10. Key elements of vision IMPORTANT Essential information to be included in the vision: The values that the organization wishes to communicate. How the institution wants to be seen or perceived in the future. Performance standards to which the institution commits.

You should also note that: Vision represents the organization within the strategic planning process, so defining vision alongside the mission is recommended. It is essential to revise the vision when strategic objectives are formulated, to the extent that the commitment set out in these objectives should be aligned with the aspirations, values and positioning the organization hopes to achieve. Text box 2.11. Example of developing a vision for customs authorities

1. Vision of the Colombian Tax and Customs Authority In 2020 the Colombian Tax and Customs Authority will generate a high level of voluntary compliance with tax, customs and foreign exchange obligations, support the country’s financial sustainability and promote the competitiveness of the national economy, managing quality and applying international best practices in its institutional activities. 2. Vision of the Costa Rica Customs Authority To be an efficient and effective organization with highly developed human potential, supported by technology and customs procedures to facilitate international trade and the management of customs operations; promote the country’s growth and economic and social development within the framework of a modern management model.

II.4.3. Situational diagnosis: SWOT analysis A key step in defining a custom authority’s strategic objectives is the analysis of the external environment and internal organization through a review of the institution’s strengths, weaknesses, opportunities and threats. This is what is known as a SWOT analysis (Strengths, Weaknesses, Threats, and Opportunities). A SWOT analysis tells us where we are and how much we have to do to fulfil the purpose of the mission.

Strategic Customs Planning and Management

MODULE 2

The environment consists of all the variables out of the organization’s control which could affect results and, therefore, are important for strategic planning. The type of restrictions can stem from both the organization itself (in this case they are called “weaknesses”) or from the external environment or context, called “threats”. Favorable conditions can come from the internal environment as well and are referred to as “strengths”, or from the organization’s external environment, called “opportunities”.

Source: Prepared by the authors

Figure 2.3. SWOT Analysis SWOT analysis is useful for identifying the conditions under which customs organizations work and the factors that affect the institution, for the purpose of formulating strategic objectives. Text box 2.12. The importance of SWOT analysis in organizations IMPORTANT The organization’s context must be known in order to formulate strategic objectives; otherwise, the resulting strategy will not be focused on solving real problems.

Strategies must be based on the organization’s strengths, taking advantage of opportunities that arise, and should minimize the effects of internal weaknesses and threats from the environment. REMEMBER: Strengths and weaknesses refer to internal organization, while opportunities and threats relate to external factors.

Strategic Customs Planning and Management

MODULE 2

As we shall see results, the obtained from the stakeholder analysis provides essential data used to describe the opportunities and threats from the external environment. Furthermore, the results of the WCOâ&#x20AC;&#x2122;s diagnostic report (obtained in the first phase of the Columbus Program) constitutes a vital source of information for describing the strengths and weaknesses of the internal organization. By way of example, table 2.13 below identifies some of the main strengths, weaknesses, opportunities and threats in a customs organization. Strengths

Weaknesses

Sufficient, highly-skilled human resources

Lack of human resources and poorly qualified staff

Possible of horizontal and vertical promotion of customs staff Commitment to the organization

Few opportunities for promotion for civil servants

Adequate wages and salaries

High staff turnover

the customs territory and the terminal entrances and exits

No or little control over the entry and exit of goods from the customs territory or port terminals

High motivation and identification with the organiza- Lack of commitment to the organizations objectives tionâ&#x20AC;&#x2122;s values Lack of motivation and interest Staff stability

Suitable customs facilities equipped with the neces- Very low wages sary equipment to perform controls Inadequate facilities for performing customs control Access control devices at the entrance and exit of

Non-intrusive control devices such as X-ray scanners and radiation measuring devices. Budgetary autonomy Sufficient infrastructure High percentage of electronic declaractions filing Clear and simple customs procedures Opportunity to submit scanned declarations documents Possibility of using centralized clearance procedures Automated risk management and analysis Single window system

Lack of material resources to carry out customs controls Lack of X-ray equipment to conduct non-intrusive inspections Lack of budgetary autonomy Underdeveloped infrastructure High percentage of submission of customs declarations on paper Complex and confusing customs procedures Inability of using scanned documents in clearnance Lack of centralized clearance Nonexistent risk management Lack of single window for customs procedures

Strategic Customs Planning and Management

MODULE 2

Opportunities

Threats

Favorable economic situation

Economy in recession

High levels of employment and economic activity

High unemployment and high inflation

Increased movement of containers in ports

Increased smuggling

Infrastructure improvements that connect containers arriving by sea to other forms of transport, such as rail

Decreased number of containers shipped by sea

Good airport infrastructure

Technologically deficit

Favorable technological situation High level of initiative of economic operators and external institutions

Obsolete infrastructure Economic operators and institutions have little initiative and interest

Table 2.13. Examples of strengths and weaknesses, opportunities and threats in a customs organisation External aspects of the organization Public organizations are active in a both a global and sectoral environment. In terms of the global environment we can distinguish: Economic situation: How will GDP growth or recession, the unemployment and inflation rate, the growth or decline in international trade, etc. affect the situation? Geographical situation. Political and regulatory issues: How will the tax, tariff and trade policy affect customs? Sociocultural aspects. Port, airport infrastructures. Initiatives and collaboration of external institutions related to customs (economic operators; health, phytosanitary, veterinary, quality control authorities, etc.). Technological aspects: How will the use of new technologies by the economic operators or the introduction of a new platform for customs declarations affect customs? In terms of the sectoral environment, the main collaborating organizations (stakeholders) or those who could have an impact on the organizationâ&#x20AC;&#x2122;s strategic objectives should be analyzed.

Strategic Customs Planning and Management

MODULE 2

Internal aspects of the organization It aims to identify the strengths and weaknesses of the organization in order to determine the suitable strategy for achieving the stated objectives. Different aspects must be analyzed, including: Organization, management and control: the suitability of the organizational structure should be studied, as well as if proper performance measurement systems are in place and if the organization has a suitable information channel. Human resources: how available human resources are structured; how many specialized staff members there are; the age pyramid; if staff are satisfied with the work they perform; if they are motivated; if working conditions are appropriate. Material resources: if there are sufficient resources to carry out the stated objectives; analysis of the organizationâ&#x20AC;&#x2122;s real estate portfolio, the number of vehicles it owns, the computer resources available. Budget Analysis. External image: the image the general public, the related economic operators, the main agencies working in the same field, etc., have of the organization.

II.4.4. Identification of actors: stakeholder analysis The analysis of actors or stakeholders is strategic in that it identifies the impact each would have on the organizationâ&#x20AC;&#x2122;s objectives and strategic goals. The stakeholder analysis can be used to identify the different external and internal actors which have an interest in the organization. This analysis clearly establishes the importance of each of the stakeholders, their interests and specific demands and the communication channels they use in their relationship with the organization. The best way to conduct a stakeholder analysis is to regroup the key people within the customs organization who work in different areas and levels in order to obtain a complete picture of potential stakeholders. The main information related to each of these stakeholders is as follows: Name and title (job). The stakeholderâ&#x20AC;&#x2122;s level of interest in the customs administration. Level of power.

Strategic Customs Planning and Management

MODULE 2

Text box 2.14. Purpose of the stakeholder analysis In customs this analysis should lead to the identification of: The public agencies that should work closely with customs in the border management process. For example, sanitary, phytosanitary, commercial control, etc. The agencies that should work with customs to control the customs facility. For example, excise officers, port police, etc. The agencies that should provide information to customs under the established regulations. For example, shipping companies, consignees, customs brokers, warehouse owners, importers and exporters, etc. The operators who act as warehouse keepers for goods subject to customs control. The institution that manages the port or airport where customs is located. For example, Port Authorities.

II.4.5. Definition of strategic objectives Once the mission and vision have been established and the customs diagnosis performed the next step is to define strategic objectives. This constitutes the beginning of the strategic planning process which will result in the definition of the organizationâ&#x20AC;&#x2122;s annual objectives plan and annual budget. The questions to answer are: Where do we want to go? What results do we expect to achieve? Strategic objectives are the achievements or goals that the organization expects to complete within a specific period of time (longer than one year) in order to effectively and efficiently fulfill its mission. Text box 2.15. Characteristics of strategic objectives Characteristics: They are directly related to the mission. They are focused on defining expected results in order to specify the mission in a given period of time. They express the expected performance variables or criteria and serve as the basis for defining performance indicators. They are the main tool for establishing courses of action in a specific period of time (usually medium term) upon which the major resources needed are established.

Strategic Customs Planning and Management

MODULE 2

EXAMPLE TIME FRAMES: VISION: LONG TERM (10 YEARS) MISSION: MEDIUM TERM (5 YEARS) STRATEGIC OBJECTIVES: SHORT TERM (2-3 YEARS)

Strategic objectives guide the organization’s activities and resource allocation; they identify priorities and how to achieve desired results through strategies (performance objectives), projects and operational actions (action plans). As seen above, the organization’s identification of strategic objectives requires a foundation in an analysis or diagnosis drawn from the institution’s internal and external aspects, as well as knowledge about key stakeholders. The strategic objectives that organizations develop are often a list of ongoing roles, with little room for innovation and challenges. Therefore, the following recommendations should be followed when developing these objectives:

Strategic objectives should state an expression of achievement, providing evidence of the expected change or transformation with policies or services that the institution is responsible for, such as: “Improving standards of competitiveness”, “Reduce levels of smuggling”, “Help to improve the level of safety in the supply chain”, etc. Avoid terms like “support”, “seek”. Express objectives in concrete terms of expected results and not set them as permanent features of the organization or program. Respond to a specific problem or issue related to fulfilling the mission. Respond to the expected benefit for the users to whom the institution’s policies and/or programs are targeting and what they can expect with the allocated budgetary resources. Text box 2.16. Formulating strategic objectives FIRST STRATEGIC OBJECTIVE OF THE COSTA RICA CUSTOMS AUTHORITY: Improve customs processes through the use of information and communication technologies FIRST STRATEGIC OBJECTIVE OF THE COLOMBIA CUSTOMS AUTHORITY: Increase voluntary compliance with tax and customs obligations

Strategic Customs Planning and Management

MODULE 2

Strategic objectives form the foundation for establishing indicators to measure the progress towards results. The definition of strategic objectives should take the previous steps of strategic planning (mission and vision) as a point of reference along with indicators that the organization has to monitor and evaluate their performance. It is also crucial to consider the different levels of the organizationâ&#x20AC;&#x2122;s decision making and ensure coordination between the different levels of strategic objectives. If the institution as a whole (ministry, decentralized organization, etc.) establishes a set of strategic objectives for a specified period, these should be the priorities to consider for programs or projects that depend on those entities, whether ministries, departments, affiliated organizations, etc. Program or project objectives must be aligned with strategic corporate objectives; this allows for the use of cascading indicators. Text box 2.17 Strategic objectives and program objectives EXAMPLES OF STRATEGIC OBJECTIVES AND PROGRAM OBJECTIVES Strategic objectives: SO 1: Increase voluntary compliance with tax and customs obligations. Strategic program or project objectives in the first strategic objective: SPO 1.1. Simplification of the applicable regulations, consolidating the current yet scattered rules into a single regulatory text. SPO 1.2. Improve the information available on the customs website to make it more organized and more easily accessible.

Strategic indicators Strategic objectives should be monitored and evaluated using indicators. The type of indicators that can monitor the achievement of strategic objectives are strategic indicators related to final results. An indicator is a tool that provides quantitative information about the results of the services provided by the customs organization and can refer to quantitative or qualitative aspects of this result. An indicator serves a descriptive function (provides information on the status and development of an objective or program) and a valuation function (by comparing it to its evolution over time or to external indicators).An indicator is a sign that provides objective-related information. Figure 2.4 illustrates the linkage from situation analysis to performance measurement.

Strategic Customs Planning and Management

MODULE 2

Source: Prepared by the authors

Figure 2.4. Indicators for measuring results We can distinguish two main groups of indicators: Those that provide information on results by taking into consideration the organizationâ&#x20AC;&#x2122;s performance in providing public services: inputs, processes, services and results indicators.

Those that measure the progress of courses of action with respect to their effectiveness and efficiency. It is also possible to link different types of indicators to the level of organizational hierarchy, as shown in the following figure.

Source: Prepared by the authors

Figure 2.5. Indicators and the organizational hierarchy

Strategic Customs Planning and Management

MODULE 2

Text box 2.18 Examples of performance indicators Some examples of general performance indicators are: Percentage of declarations filed electronically. Percentage of declarations subject to physical control. Percentage of revenue in the voluntary period compared to the total liquidated debt. Percentage of checks made with non-intrusive means of inspection. Average amount of customs debt discovered by physical controls. Number of inspections of customs warehouses. Percentage of summary declarations submitted by computer. Number of Authorized Economic Operator applications. Percentage of AEO inspections compared to the total.

II.4.6 Strategies How can we achieve strategic objectives or expected results? The answer is through strategies. Strategies are guidelines to help organizations choose the right courses of action for achieving its objectives or strategic goals. They allow for the definition of action plans and form the basis for setting priorities in resource allocation. It is necessary to establish “how” these will be developed, starting from a strategic objective. Text box 2.19. Strategies Strategic objective: INTERNATIONAL TRADE FACILITATION Strategy: Improve customs procedures through the use of information and communication technology and by setting clear, simple and easy-to-control customs procedures.

Defining strategies - how the proposed objective will be achieved – requires previously established strategic objectives as well as the identification of the expected performance level (indicators). The following criteria must be address to evaluate strategies: Check if the defined courses of action lead to the achievement of the objective.

Strategic Customs Planning and Management

MODULE 2

Determine the costs and benefits of the courses of action. Check if the courses of action generate negative or positive impacts on other objectives. Check if the objective to be implemented with the strategy is central to the success of another goal. The amount of time the changes will require. Once implemented, the changes in procedures required and the impact it has on the organization. What steps are necessary to implement courses of action and how much time is required for each step? Text box 2.20. Resources needed for strategies Points to be checked to verify the necessary resources for each strategy: Are the necessary resources to implement the strategy available: budget, staff, training, technical equipment, other? Does the information required have a suitable technological platform?

Are additional resources needed? Does the implementation of the strategy require additional resources in the next budget?

Once preliminary strategies have been established it is important to define, considering the goals of the strategic indicators, how far or close the organization is to achieving the strategies either through planned resources, with human resources, available technology, etc.

II.4.7. Projects or action plans (operational plans) Plans or projects are operational and are developed at the level of each of the units or areas, centers of responsibility assigned to generate a final product, and establish the respective human resource and financial requirements which will later be considered in the budget. It also identifies the party responsible for its implementation and the deadline for its completion. The action plans or set of tasks that the organization will establish to achieve results must facilitate the closing of the gaps that exist between the current and desired situation. A useful format to consider could be:

Strategic Customs Planning and Management

MODULE 2

MISSION: STRATEGIC OBJECTIVES: STRATEGIES: Steps to follow (projects or action plans)

Managers

Time frame

Resources required

Source of funding

Projects or action plans are the instrument that channels and turns the vision, mission and strategic objectives into concrete actions. This establishes the link with the budget plan. To design projects it is essential to: Identify the project name. Define specific goals: in line with the analyzed situation and identified causes, the project contains a set of goals designed to bring about real change for that situation, either to eradicate causes or minimize their effects. In this case, the goals should be quantified in terms of quantity, quality, time and space in order to later evaluate their results. Assign responsibility: every internal project in an institution or organization has someone who is responsible for coordinating, communicating, leading and controlling each of the project’s established goals. In turn, these project managers are held accountable by the organization’s managing bodies. Estimate the time needed to implement the project. Assign human, material and financial resources: the cost of implementing the courses of action in terms of human, material and financial resources should be estimated in order to budget and estimate the project’s cost. Develop performance indicators: the way to control the actions undertaken is through indicators. These can be indicators of economics, efficiency, effectiveness, quality and impact.

Strategic Customs Planning and Management

MODULE 2

SUMMARY Strategic planning is the map that guides an organization’s activities in the medium and long term. Strategic planning is a management tool that bases an organization’s decision-making around current activities and the path it should take in the future to adapt to changes and demands imposed by the environment and achieve greater efficiency, effectiveness, and quality of services it provides. Strategic planning is an exercise in establishing priority objectives, whose main feature is the establishment of courses of action (strategies, projects, strategic lines) to achieve those objectives. Various phases of the strategic planning processes can be distinguished: — Customs mission statement and vision. — Situation diagnosis (analysis of the customs environment and internal organization) and stakeholder analysis.

— Determine strategic objectives. — Establish indicators to measure the degree to which strategic objectives are achieved. — Select (rank) strategic action plans and specific projects. — Implementation. — Monitoring, supervision and modification of action plans.

Strategic Customs Planning and Management

MODULE 2

UNIT III

A PRACTICAL APPROACH TO STRATEGIC PLANNING IN CUSTOMS ORGANIZATIONS

Learning Objectives Discover the balanced scorecard as an integration tool Establish the relationship between programs, strategies and strategic objectives Learn about what other planning tools exists So far in Unit 1 we have discussed the fundamentals of planning in general, and in Unit 2 we have taken an educational approach to the main components and phases of the strategic planning process and their application in customs authorities. The objective of this third unit is to conduct a comprehensive practical application of strategic planning in customs using the balanced scorecard tool, which discerns the relationship between vision, mission, strategic objectives, strategies, projects and courses of action. This is a simplified model of reality which is solely intended to give the reader a comprehensive view of strategic planning applied to a particular customs authority. In order to understand and relate strategic planning with annual planning we will also briefly discuss other key planning tools that any modern customs organization should take into account, such as: The annual customs control plan: what to do each year. The annual objectives plan: how much to do each year. Other: investment, internal audit plans, training plans, internal and external communication plans, institutional partnership plans, etc.

Strategic Customs Planning and Management

MODULE 2

That is, considering that a multi-year strategy plan which defines the framework of balanced action over time should be the first planning tool for any customs organization, this strategic framework will be specified yearly in annual prevention and control plans that stress effort in certain areas depending on the customs authorityâ&#x20AC;&#x2122;s needs and priorities.

III.1. Balanced scorecard This section presents simplified examples of strategic customs planning, including its mission, vision and three strategic objectives, using the balanced scorecard. Any strategic framework of action for existing customs authorities must necessarily conform to the two fundamental pillars of the WCOâ&#x20AC;&#x2122;s SAFE framework: Customs-to-Customs, which seeks greater interaction between the customs authorities. Customs-to-Business, which seeks greater collaboration with the private sector, identifying those operators considered reliable in the international supply chain.

As part of this multi-year action plan, the CUSTOMS-TO-CUSTOMS PILLAR aims to establish a common regulatory framework to achieve a balance between protecting the international supply chain and preventing it from being used for terrorist acts or other form of illegal trade that threatens the safety of citizens and the facilitation of global trade. Three elements are required to accomplish this: Background information on the containers a specific vessel carries provided to customs via electronic means, based on uniform electronic messages which are interoperable. Use of this information to detect high-risk shipments which should be inspected, using risk analysis techniques. Use of non-intrusive inspection techniques (X-ray scanner) to streamline the control of goods while ensuring shipment integrity. For its part, the CUSTOMS-TO-BUSINESS pillar seeks to create an international system for identifying private companies (economic operators in general) which offer a high level of security regarding their role in the supply chain. These types of partnership will bring concrete benefits to companies, such as faster transactions and other measures. Taking into account these two pillars, we describe a balanced scorecard model for the customs authority in country X for the 2012-2016 period.

Strategic Customs Planning and Management

MODULE 2

COUNTRY X CUSTOMS CASE STUDY CURRENT SITUATION The customs authority in country X is inefficient and does not comply with the doctrine and recommendations of international organizations such as the WCO. It is characterized by the following: Lack of computerization. More than 80% of customs declarations are still submitted on paper. Lack of information in the organizationâ&#x20AC;&#x2122;s computer system. No computerized risk management system is applied. X-ray equipment for the non-intrusive inspection of containers was purchased but they are not used because criteria for applying this technique has yet to be specified. There is a sufficient number of staff, but they are unmotivated and inefficient, considering the limited computerization. Inspection rates are high and are carried out on over 60% of declarations, although irregularities only account for 2% of inspected goods. It is not possible to distinguish between operators, only whether they have committed offenses or not, but there is no systematic analysis of all the operators involved in a particular transaction. Based on the diagnosis of this customs authority, we will formulate a strategic plan to align the organization with the recommendations of the World Customs Organization in a period of five years. To do this we develop the vision, mission and strategic objectives and the strategies and action plans to achieve them.

VISION: To be a customs authority which ensures the protection of financial interests, the security of the international supply chain and the balance between the facilitation of legitimate trade and the control of customs operations through modern electronic customs procedures in line with the recommendations of international organizations. MISSION: It is the organization responsible for managing the customs system in its dual purpose of fighting against and preventing fraud and smuggling and providing service to economic operators, and ensuring the safety of goods in the international supply chain through modern electronic systems.

Strategic Customs Planning and Management

MODULE 2

STRATEGIC OBJECTIVES: SO1: Establish modern customs procedures based on computerization. SO2: Improve efficiency in customs controls. SO3: Establish a safe supply chain. We can see how these strategic objectives are perfectly aligned with the recommendations included in the WCOâ&#x20AC;&#x2122;s SAFE Framework: Establish standards to ensure the safety of the supply chain and facilitate global trade in order to increase certainty and predictability (CONTROL AND FACILITATION). Enable comprehensive supply chain management for all modes of transport (CONTROL). Enhance the role, functions and capabilities of customs so that it can meet the challenges and take advantage of the opportunities of the twenty-first century (CONTROL). Strengthen cooperation between customs authorities to improve their capability to detect high-risk shipments (CONTROL).

Strengthen cooperation between customs and businesses (CONTROL AND FACILITATION). Promote the seamless movement of goods through safe international trade supply chains (FACILITATION). STRATEGIES (S) and PROJECTS (P) SO 1: ESTABLISH MODERN CUSTOMS PROCEDURES BASED ON COMPUTERIZATION: S1. Design and implement a web-based platform and service that allows economic operators to submit customs declarations and other communications via internet and their subsequent management by customs officers P1.1.1 Establish a web-based platform (INTERNET) for the presentation of customs declarations. Responsible party: General Directorate of Customs Services. IT Department. Indicators: Percentage of declarations submitted via INTERNET. Benchmark levels: 2012: 70%. 2016: 95%. Period: 2012-2013.

Strategic Customs Planning and Management

MODULE 2

P1.1.2 Establish an intranet that enables staff to manage declarations (clearance and control) Responsible party: Directorate General of Customs Services. IT Department. Indicators: Percentage of clearances granted via computer applications. Benchmark levels: 2012: 70%. 2016: 95%. Period: 2012-2013. S2. Standardization of customs procedures in accordance with the recommendations of the revised Kyoto Convention which are clear, simple and easy to control P1.2.1 Establish a standard for the different customs destinations goods may have, systemizing them according to use. -Transportation: Transit. -Storage: Temporary storage, customs warehousing and free zones. -Transformation: Inward and outward processing. -Use: Temporary import and special destinations or uses. Responsible party: Legal Department. Period: 2012. P1.2.2 Establish a single window system that enables the declaration of all documents required by the various agencies to carry out a foreign trade transaction via a single web address. Responsible party: Department of Border Management and IT Department. Period: 2015-2016. P1.2.3 Establish a paperless clearance system at the exit of the port facilities, replacing the submission of a copy of the clearance with electronic validation. Responsible party: Department of Border Management and IT Department. Period: 2013-2014.

Strategic Customs Planning and Management

MODULE 2

SO2: IMPROVE EFFICIENCY IN CUSTOMS CONTROLS E1. Implementation of the culture of automated management of customs risk P2.1.1 Design and implement a computerized risk analysis system which enables the detection of higher risk containers and transport through objective and subjective parameters. We can consider different groups of risk indicators related to the mode of transport, protection of the countryâ&#x20AC;&#x2122;s fiscal interests, detection of drugs or contraband tobacco, risks related to protection and security or to prohibited or restricted products. For its part, risk indicators can be very diverse and can include data for transport documents (bill of lading); identification of high-risk countries; factors of goods and transport that may indicate high-risk conditions; high-risk goods used for concealment; list of dangerous goods that may potentially be used in a terrorist attack; and indicative high-risk factors such as container, importer/exporter, shipper, customs or forwarding agent, owners of customs warehouses or storage, etc. Responsible party: General Directorate of Customs Services. IT Department. Department of Border Management. Indicators: Percentage of statements affected by automated filters of the risk analysis system.

Benchmark levels: 2012: 70%. 2016: 95%. Period: 2012-2013. P2.1.2 Establish as a rule the obligation of supplying the customs authority electronic information prior to entry and exit of goods from the customs territory in order to allow for appropriate risk analysis. Even with proper legal support, it will be possible for the customs authority to have access to the economic operatorâ&#x20AC;&#x2122;s customs electronic systems. Responsible party: General Directorate of Customs Services. IT Department. Department of Border Management. Indicators: Percentage of exit and entry summary declarations made before the goods enter and exit the customs territory. Benchmark levels: 2012: 70%. 2016: 95%. Period: 2012-2016. Gradual implementation.

Strategic Customs Planning and Management

MODULE 2

E2. Establish a 3x3 control strategy which seeks a balance between controls prior to the arrival of the goods, controls at the time of clearance and post controls P2.2.1 Establish risk profiles that enable selecting certain high-risk containers and means of transport for control prior to arrival. Responsible party: Department of Border Management and Department of Inspection. Indicators: Percentage of selected containers based on risk profiles established on entry summary declarations. Benchmark levels: 2012: 5%. 2016: 20%. Period: 2012-2013. P2.2.2 Establish clearance filters that separate declarations into green (no check), orange (document check) and red (physical and document checks) channels. Responsible party: Department of Border Management and IT Department. Period: 2012-2014. P2.2.3 Establish a post declarations control plan which fundamentally focuses on those declarations assigned the green channel. Responsible party: Department of Border Management and Department of Inspection. Period: 2012-2014. SO 3: ESTABLISH A SAFE SUPPLY CHAIN E1. Implementation of the Authorized Economic Operator P3.1.1 Design a program for the Authorized Economic Operator which contributes to raising awareness of this figure. Responsible party: General Directorate of Customs Services. Department of Border Management. Indicators: Number of training and awareness activities carried out throughout the country. Benchmark levels: 2012: Awareness of 70% of economic operators. 2016: Awareness of 100% of economic operators.

Strategic Customs Planning and Management

MODULE 2

Period: 2012-2016. P3.1.2 Establish audit guidelines for testing the requirements of economic operators who submit an application to be certified as an Authorized Economic Operator. Responsible party: General Directorate of Customs Services. Department of Border Management and Legal Department. Indicators: Percentage of AEO applications submitted by economic operators. Benchmark levels: 2012: 30%. 2016: 80%. Period: 2012-2016. S2. Implementation of modern technologies for the non-intrusive inspection of modes of transport. P3.2.1 Investment in the purchase or rental of X-ray equipment for the non-intrusive inspection of containers and packages.

Responsible party: General Directorate of Customs Services. Budget and Expense Department. Indicators: Percentage of scanner coverage of the countryâ&#x20AC;&#x2122;s customs facilities. Benchmark levels: 2012: 30%. 2016: 90%. Period: 2012-2016. P3.2.2 Implementation of specific risk management profiles for choosing modes of transport and packages which should be subject to a non-intrusive inspection. Responsible party: Department of Border Management and Department of Inspections. IT Department. Indicators: Percentage of checks performed with non-intrusive technology compared with total checks. 2012: 25%. 2016: 70%. Period: 2012-2016.

Strategic Customs Planning and Management

MODULE 2

S3. Negotiate mutual recognition of controls in other countries P3.3.1 Negotiate mutual recognition agreements of the countryâ&#x20AC;&#x2122;s AEO certifications with other countries so that AEO goods inspected in this country are not subject to a new inspection in the country of import and vice versa. Responsible party: Department of International Relations. Legal Department. Benchmark levels: Number of mutual recognition agreements signed with countries with which the country has trade relations. 2012: 25%. 2016: 100%. Period: 2012-2016.

III.2. Other customs planning tools The strategy plan defines the main objectives, aligned with the mission and vision of the customs, to be achieved in different areas and the key strategies and action plans to be implemented to achieve them. This strategic framework must be specified yearly using other instruments that we briefly mention below:

III.2.1. Annual control plan The annual control plan is a short-term planning tool that yearly defines priority areas and sectors on which customs should focus. It states what we want to do in the field of customs control each year to achieve the benchmarks established in the annual objectives plan. It is usually recommended that the general guidelines included the control plan, which should only list in very general terms sectors or areas on which customs activities will be focused in the particular year, be made public. This will obviously depend on the internal regulations of each country, but it is a step that will no doubt contribute to increased legal security of citizens and economic operators in general. Thus, the guidelines of a control plan typically contain measures such as: Monitoring of foreign trade transactions conducted through customs in order to detect undeclared economic activities. Thus, the consistency between import and export operations conducted through customs and the economic activity declared by the importer or exporter will be analyzed in order to detect those cases

Strategic Customs Planning and Management

MODULE 2

in which the party performing the foreign trade operation remains part of the underground economy. Monitoring of economic activities resulting from the importation of goods. The phenomenon of the undervaluation of imported goods and the economic activities surrounding it has significant consequences on the revenue from both tariffs and internal taxes, since the lower value at which goods are imported has direct consequences on the taxes levied for the movement of goods within the country. The following measures can be taken in this area: Investigation of the sales channels of imported goods, including on-site activities. Effectively, the control method based on a transaction in a particular import and export operation must be overcome. It is clear that certain import or export operations, identified through suitable computerized risk analysis techniques, must be physically controlled, but it needs to be taken a step further. It is necessary to analyze a product or a product sectorâ&#x20AC;&#x2122;s entire sales channel in order to verify if all operators are reliable or not, if there is a history of operator irregularities, if transport is made safely and if the load is sealed. That is, a control model based on systems analysis (understood as the entire import or export flow or channel for goods). Possible ties between companies operating in a given sector should be investigated in order to understand the real operation and establish reasonable grounds of non-compliance.

Intensification of customs inspection of imported goods in areas such as the value of goods applied by customs, detection of counterfeit goods, preferential arrangements, breaches of trade policy and anti-dumping laws. Preventative activities. Thus, if the customs authority has jurisdiction over maritime or air surveillance it could organize sea or air patrols in order to control drug smuggling. Activities aimed at fighting illicit activities that transcend the scope of customs and tax and affect public health, such as health checks (in collaboration with the competent authorities in border health controls), as well as activities that affect the quality of products ensuring consumer safety and the protection of intellectual property. Special attention should also be paid to controlling the export of sensitive goods, such as defense and dual-use equipment, chemicals, substances that can be used as ingredients to manufacture narcotic drugs and psychotropic substances, cultural property, as well as the plants and wildlife protected by the CITES Convention. Safety and security controls in customs. This involves the availability of better tools to detect potential threats from the moment when the customs authority receives information about the entry or exit of goods, which includes the security parameters recommended by the WCO. In terms of international trade supply chain safety, compliance with the requirements for operators who want to be credited as reliable operators (AEO) should be assessed.

Strategic Customs Planning and Management

MODULE 2

Investigation of smuggling, drug trafficking and money laundering resulting from these activities. Here it is advisable to undertake a series of actions aimed at the control of extreme forms of customs fraud: Actions aimed at the interception and seizure of contraband (drugs, tobacco, counterfeit documents and other illegal goods) both in the customs facilities and at sea, promoting special investigations and techniques such as monitored or controlled deliveries. Actions aimed at dismantling the financial networks of drug traffickers and smugglers. Location and freezing of assets gained from smuggling, drug trafficking and money laundering. Performances in the customs area for the discovery of undeclared currency movements. Activities in customs facilities to discover the movement of undeclared currency.

III.2.2. Annual objectives plan The annual objectives plan quantifies results and the actions to be performed in the various areas of control defined in the annual control plan. It establishes HOW MUCH WE HAVE TO DO. This plan must be specified through a series of indicators that can measure what has been done. There are many types of indicators, some related to results and other to activity. For example, a results indicator is the level of revenue in a given year earned from customs controls. An activity indicator may be the number of documented import declarations managed. Adopting a mixed approach is normally recommended, that is, an approach that measures both the result of our actions and the actions taken to achieve such results, in order to conduct an effectiveness-efficiency analysis.

III.2.3. Additional planning tools Finally, to complete this module we would like to simply list a set of useful tools that can be used in customs planning, specifically: Human resource management plan Training plan

Strategic Customs Planning and Management

MODULE 2

Investment plan Internal and external communication plan Internal audit plan Collaboration and external partnerships plan

SUMMARY The balanced scorecard is a tool to visualize the components of strategic planning by providing a comprehensive vision. The first planning tool for any customs administration should be a multi-year strategy plan that defines the framework for action consistently over time. This strategic framework will be specified yearly in annual prevention and control plans that emphasize efforts in certain areas according to the needs and priorities of the customs authority. It establishes WHAT WE HAVE TO DO.

The annual objectives plan quantifies results and the actions to be performed in the various areas of control defined in the annual control plan. It establishes HOW MUCH WE HAVE TO DO. Other complimentary customs planning tools are: • Human resources management plan • Training plan • Investment plan • Internal and external communication plan • Internal audit plan • Collaboration and external partnerships plan

Strategic Customs Planning and Management

MODULE 2

References Strategic Planning, What Every Manager Must Know. Steiner G. (1998). Editorial CECSA. The Fall and Rise of Strategic Planning. Mintzbeg, Henry [1994]. Harvard Business Review. SAFE Framework, WCO WCO Trends and Practices Report: A capacity building estimate (COLUMBUS Programme) Strategy Plans in Central American Customs Authorities (El Salvador, Colombia, Panama, Costa Rica, etc.) Spanish Tax Agency planning tools http://www.agenciatributaria.es/AEAT.internet/Inicio_es_ES/La_Agencia_Tributaria/Planificacion/Planificacion.shtml