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KPMG Origin Implementation Project Proposal

KPMG Origin Implementation Project Proposal. 15 August 2012. KPMG Origin Implementation Project. 1. KPMG Origin Implementation Approach. Project Objective & Scope Key Benefits KPMG Implementation Methodology Project Deliverables Project Resource Plans. 1. Project Objective & Scope.

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KPMG Origin Implementation Project Proposal

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  1. KPMG OriginImplementationProject Proposal 15 August 2012

  2. KPMG Origin Implementation Project

  3. 1. KPMG Origin Implementation Approach Project Objective & Scope Key Benefits KPMG Implementation Methodology Project Deliverables Project Resource Plans

  4. 1. Project Objective & Scope • Key components for successful KPMG Origin solution implementation 1 2 3 Successful FTA Process and System Implementation Supplier Management (Solicitation) KPMG SystemImplementation HS Code Review(Classification) Supplier Management HS Code FTA OriginManagement Solution Post-Verification Support

  5. Project Objective & Scope • 1.1 HS Code Classification 1. Importance of HS code management of exporter HS Codes to ensure the correct determination Accurate HS codes are the fundamental base of the whole origin determination process. During a post verification on origin determination, suppliers of company would also be subject to the verification and errors on their origin determinations would lead company to additional imposition of duty and penalty, if applicable. Risk of suppliers' inaccurate origin determination 2. HS Code and origin determination • Used for starting point of customs valuation • Comparing sales value with that of raw material to test tariff shift Product/Parts HScode HS CodeClassification Raw material HScode • Comparison of sales value with raw material value (to test tariff shift rule such as CC, CTH or CTSH) • Long-term Certificate of Origin (“C/O”)verification for each supplier

  6. Project Objective & Scope • 1.2 Supplier Management 1. Importance of supplier management (Solicitation of Suppliers’ C/O) • Training suppliers for better understanding of the FTA to improve their accuracy in determining origin, which ensures company to procure more relevant origin information. • Minimizing redundancy to prepare for origin verification efficiently by upgrading suppliers Procuring of accurate origin determination in suppliers’ C/O Facilitated scoping (using system approach) the suppliers to be managed for the purpose of post verification, preferential treatment by reducing duty expense and risk of post verification not only of company but also that of suppliers. Maximizing tariff preference of FTA 2. Selection of targeted suppliers of company for efficient risk management Selection Step 1 Selection Step 2 Selection Step 3 Managing Targeted Suppliersby purchase amountor other index as applied Targeted suppliers for respective FTAs Raw material suppliers

  7. Project Objective & Scope • 1.3 KPMG FTA System Implementation • FTA Requirement • & Preliminary Analysis • K-Origin Implementation • Establishment of FTA work Process • Roles and Responsibilities of FTA work personnel • Management of suppliers • C/O application & retention documents management • Verification (audit) process • Review of HS Codes • Analysis of Rules of Origin (RoO) and its operational procedure • Analysis of local FTA rules • Analysis of C/O application forms C/O application form Proper analysis and logic establishment FTA BOM DB Standard Cost Structure FTA Cost DB • Commercial • Invoice Origin Determination • Establishment of logic for implementation • Analysis of books & transactions • RVC calculation logic • System implementation logic • C/O Application form logic Origin Info. DB Exporter-importer ID Card Users will enjoy benefit under FTA with less risk Adjusted Value DB Bill of Lading In order for a Company to feel secured against any Post Verification (Origin Audit), a solid, competent and automated FTA compliance system MUST BE established 6

  8. Automated data retrieval and retention for verification Maximizing savings from FTA Flexible and scalable FTA management system 3 2 1 Key benefits • Key components for successful KPMG Origin solution implementation Key Project Deliverables Benefits to you HS Code Classification • Review of HS Code • Documentation of classification rationale for future reference • Quick adaptation of new FTAs • Systematic origin determination is much more efficient than manual process • Target suppliers training • KPMG Toolkit for declaration generation (if applicable) • Continuous monitoring Suppliers Declaration receipt rate Supplier Management • Ready to accommodate company’ ERP structure with multi-nations and plants • Easy to customize to meet special requests and requirements • In-depth analysis on current system and process to obtain to-be design results • Supplier management function • Automated data interface to KPMG Origin system KPMG SystemImplementation • Automated data retrieval from ERP system via standardized ERP interface • Automated data retention for origin determination and easy to generate verification-purposed report 7

  9. KPMG Implementation Methodology SolutionGo-Live • Full Scale KPMG Origin Implementation Methodology ILLUSTRATIVE 2M 1M 0.5M Consulting Phase Impact Analysis and Design ERP GTS Implementation Phase Realization and Testing To-Be Design UserTraining • Stabilization IntegratedTesting Business Consultants ProcessAnalysis Supplier Training Development Details(Requirement Analysis) HS Code Review Design and DevelopementAssistance Rules of Origin Origin Determination Simulation GTS ERPAnalysis IT ImpactAnalysis Results KPMGK-Origin Consultant Design Customization Rule Customization 8

  10. 2. Technical Details Overall System Architecture Proposed Software Components Dataflow of To-Be System Interface Approach Interface Target Details User Authorization Concept Proposed Maintenance & Support

  11. Overall System Architecture K-Origin DB Server SPEC To-be System ILLUSTRATIVE KPMG Origin WEB Application Servers • H/W Supplier: HP/IBM • 6 Core * 2EA • 32GB Memory • 1000GB HDD • N/W Dual Internal User Firewall DMZ Internal Web Server SPEC DB • H/W Supplier: HP/IBM • 6 Core * 1EA • 24GB Memory • 500GB HDD • N/W Dual Back-up Server WEB ERP Server KPMG Origin Database server Back-upLibrary External Supplier Module of KPMG Origin Internet External Web Server SPEC ConsolidateStorage • H/W Supplier: HP/IBM • 4 Core * 1EA • 8GB Memory • 100GB HDD • N/W Dual Supplier Supplier company ERP Infrastructure

  12. Proposed Software Components Software Components Software Specifications Category Components Unit Specifications EXTRANET (DMZ) INTRANET Web Server Apache Nescape WebtoB - 1 • Apache 2.x above Weblogic Jeus Tomcat WAS - 1 • Weblogic 10.x above ExternalWeb Server InternalWeb Server DatabaseServer ERP ECC DBMS ORACLE 10.X ~ - 1 • Oracle 10.x above KPMG Origin DBMS ERP or Legacy Supplier MgmtModule (KPMG Origin) RD Report UNIX/NT UNIX/NT WAS Spread Sheet TCP/IP TCP/IP ETC FarPoint Spread Sheet - 1 • Spread Sheet 8.x above HTTP WAS UNIX/NT RD Report - 1 • RD Report 5.x above HTTP TCP/IP JFree Chart - 1 • JFREE Chart 1.0.x above UNIX/NT Husdon - 1 • Husdon 2.x above TCP/IP

  13. Dataflow of To-Be System company KPMG Origin Interface company Interface Standards KPMG Origin Modules OtherI/F Tool DW/EAI SOAP/DB Link Excel ERP-RFC Company Item Supplier Customer Purchase Sales Raw Material BOM Transition Intermediate Materials Rule Engine Compliance Legacy ERP Others FTA RoO OriginSimulation CompanyRoO BOM FTA RoO CompanyRoO Intermediate Material Results Sales V.DManagement IntermediateMaterials Inter-factory Movement FTACosting Results Results GoodsLedger Register Supplier Declaration Appling computed Originating/ Non-Originating Ratio Simulation PurchasingLedger Origin Determination FTA Raw Material Ledger Other Entities Raw MaterialLedger FTA BOM Agency Origin Determination Merchandise Origin Determination Request Type? Products Products Origin Determination Suppliers Master Data C.OLeger Solution Configuration Item Company Supplier Customer FTA RULE Signatures FTA Setting HS Code Plants Tariff

  14. Interface Approach Interface Methodology via Remote Function Call ERP KPMG Origin Interfaced Data • Daily Pull from ERP • Manual Pull from User menu in case urgent extraction is required • Temporary interface space in ERP will be removed Master Data Factory Transitions Cost Adjustment Intermediate Purchase Company FTA BOM Customer Material Supplier BOM Item Sales Item Supplier Customer Company Monthly Data • Monthly closing data • Temporary interface space in ERP will be removed PurchaseLedger Sales Material Ledger IntermediateMaterial BOM FactoryTransitions CostAdjustments

  15. Interface Target Details ILLUSTRATIVE

  16. User Authorization Concept Company A Description • Authorization groups can be set per Company or Plant level • Available menus can be set per Company or Plant Level • CRUD authority can be set per each group • C: Create • R: Read • U: Update • D: Delete • Data sets are separately stored by each Company or Plant, thus users in one Company or Plant are not allowed to manage /use the data of the other Companies or Plants • Menu Group PO Ledger Sales Raw Material Ledger Purchaser Origin Determination … Certificate of Origin System Admin Item Master Solution Configuration Company B • Menu Group Supplier C/O Request Sales FTA BOM R&D Center Origin Determination … Certificate of Origin HS Code Reference System Admin Solution Configuration

  17. Centralized approach (Shared Service Center) • Quick resolution to the issues and troubleshooting of errors • Source code for customized functions / logics and Presentation Layer will be provided to company. • Support history maintained for the better service Sufficient Testing Quick Issue Resolution &Modification Support history and analysis Development Incidents Issue Resolution Proposed Maintenance & Support Maintenance Process Maintenance Details * Purchasing Rules of Origin from 3rd party vendor is recommended. KPMG Origin team will convert the rule to fit KPMG Origin solution

  18. 3. Why KPMG History of KPMG Origin Strengths of KPMG Origin KPMG Origin Key Features Success Track Records

  19. History of KPMG Origin #1 FTA Consulting Firm • Suggested improvement on legislation and pioneered rulings as FTA leader • Designed and developed by KPMG KPMG OriginImplementations (2010 ~ 2011) • For recent five years, KPMG Korea has provided FTA advisory services with professionals who were former employees of International commerce committee • Published textbooks regarding FTA consulting services and advisory Korea’s firstFTA SolutionGo-Live (2009.10) KPMG Origin Developed (2008.12) Initiated FTA Business (2007)

  20. ERP, Oracle ERP Experts • Trade & Customs focused IT Specialists • Efficient HS Code Classification • Industry Specialized Expert Group • Requirement Analysis based on Understanding of KPMG Origin Solution Strengths of KPMG Origin KPMG FTA Advisory Solution - FTA solution blended with KPMG Knowledge • Accounting & Finance • Analysis of books, costs &transactions • Origin calculation logic design • Issue identification and to-bedesign • Customs Interface • Review of HS Codes • Analysis of RoO and its operational procedure • Analysis of local FTA rules • IT Consultants • ERP Analysis and Interface Design • RoO Customization • C/O Application Form customization • Prototype Developed in 2009 • First implementation in 2010

  21. Automated Process ReducingCustom Authorities’ Verification Risk KPMG Origin Key Features • KPMG FTA Advisory Solutions’ Strength over Other Solutions in the Market: Standardized ERP Interface Integrated KPMG FTA Implementation Methodology Supplier Managementat both KPMG Origin and Public Sector(Web Based) Automated Compliance Data Management

  22. Success Track Records • KPMG Origins have been successfully implemented for major global companies in Korea benefiting them the FTA preferential treatment which is leading them to the market expansion and the competent pricing/costing. • Even Korean Government introduced KPMG Origin to Korea International Trade Association (“KTNET”) to be of service to the public as an infrastructure for small and medium enterprises.

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