TAM THE – Key Factor in the Made in Vietnam Lean Decision Making Method45294

TAM THE – Key Factor in the Made in Vietnam Lean Decision Making Method Minh Nguyen Dang(1)(*) (1) Vietnam National University, University of Economics and Business; * Correspondence: dangminhck@gmail.com Abstract: Vietnamese enterprises lack a good-quality support model for their management decisions It is necessary to carry out research to build an appropriate decision-making model for Vietnamese enterprises The first aim of this paper is to examine the effectiveness of Made in Vietnam lean decision-making model in eliminating and reducing existing wastes in decision- making process of Vietnamese enterprises The second aim is to determine the priority of variables involved in the model and the most important factor to ensure the application effectiveness The model was applied to 60 Vietnamese enterprises To achieve the purpose of the study, a multi-method design is used, which includes observation, semi- structure survey and in-depth interview The result of the research indicates that the model has succeeded in eliminating and reducing five existing types of wastes in decision- making process in Vietnamese enterprises In detail, there are wastes in human resources, waste in times, waste in information, waste in methods, waste in high failure rate Last but not lease, “Tam The” is the most important variable that needs to be considered firstly in Made in Vietnam lean decision- making model The Made in Vietnam lean decision-making model have been proved as a new and advanced decision-making model by Vietnamese enterprises This model can be used for enterprises in both developing and developed country Keywords: Made in Vietnam lean management philosophy; Decision-making model; Tam The Introduction Decision-making is a fundamental skill that each enterprise needs to maintain and expand for their business Incorrect decisions may lead to loss or even to the collapse of an organization There are a lot of decision-making research that has introduced theories, models, techniques and practical tools to maximize the effectiveness of decision-making in companies Božičković et al used some lean tools as well as statistical analysis, simulation and graphical tools to make decisions with higher efficiency and performance in production systems As introduced by Sack et al in the field of civil engineering, a new production model is combined between lean management and simulation model to make the decision Sacks et al proposed a simulation model of information for making construction decisions based on the views and principles of lean management Mao & Zhang integrated the principles of lean management into computer simulation techniques in the construction sector context The results of this simulation show that applying lean principles enhanced the performance of the construction process; reducing the project lead-time and increasing the process efficiency However, there are only a few authors in the extant literature who build the overall model based on simulation and lean philosophy Therefore, the purpose of this study is to fill this research gap There has not been any decision-making studies conducted in Vietnam There is no published official book (or documents) related to decision- making models, especially the ones combining both lean philosophy and simulation Furthermore, Vietnamese enterprises would not apply effectively and directly the decision- making models which have been studied and applied successfully in the world due to differences in organizational cultures, human resource characteristics, finances, and the development of science and technologies Thus, it is necessary to conduct research to build a appropriate decision- making model for Vietnamese enterprises In prior study, the author developed a Made in Vietnam lean decision making model for Vietnamese enterprises from the Made in Vietnam lean management In this reseach, the author applied the model to 60 Vietnamese enterprises to confirm the effectiveness of Made in Vietnam lean decision- making model in practice and finalize the model to ensure the highest effectiveness when applied in practice To fulfil the aim of this research, the following objectives were formulated: (1) investigate wastes that Vietnamese enterprises are facing in the decision-making process; (2) evalute the effectiveness of Made in Vietnam lean decision-making model in cutting existing wastes in decision- making process; (3) determine the priority of all variables involved in the model and find out the most important factor ensuring the application effectiveness The Made in Vietnam Lean Decision- Making Model: The Made in Vietnam lean decision-making model was built from the Made in Vietnam lean management thinking The model also involves the current situation of decision-making process in Vietnamese enterprises The model is explained as follows: AS-IS MODEL Variables: {X1, X2, X3…,Xn} Criteria: (SQCDE)AS-IS Identify wastes in The Made in AS-IS model Vietnam lean Variables: {Y1, Y2, Y3,…, Yn} management philosophy TO-BE MODEL Establish Lean alternatives Criteria: (SQCDE)TO-BE Figure 1: The Made in Vietnam Lean Decision- Making Model (Minh, 2018) The proposed decision- making model includes three main parts: • AS-IS model: Imitation decision context, input in decision-making process • The Made in Vietnam lean management philosophy: fundamental thinking to build the management decision- making alternatives • TO-BE model: Evaluation alternative, output in decision-making process AS-IS model Being considered as an input in the decision-making process, AS-IS model describes an imitation of the current decision context AS-IS model helps decision-makers to deeply understand the decision context (e.g the current operation management or the project situation…) AS-IS model includes: {X1, X2, X3…,Xn} Where: X represents the project essential variables n: number of variables The AS-IS model is established by a set of essential variables corresponding to the significant entities in the decision context Each project has differential essential variables which depend on decision’s objectives and are selected by decision-makers All variables are divided into groups namely: Group 1: “Tam The”: Including all variables that describes “Tam The” of all related people Group 2: Man: Including all variables that describes people who are related to the decisions (worker, supplier, competitor…) Group 3: Method: Including all variables that describes the methods used in decision- making context Group 4: Machine: Including all variables that describes the machines used in decision- making context Group 5: Material: Including all variables that describes the materials used in decision- making context To evaluate the decision fully and directly, the comprehensive criteria for the selection of alternatives needs to be established For each project, we have: S = {S1, S2, S3… Sn} is the set of all criteria measuring Safety Q= {Q1, Q2, Q3… Qn} is the set of all criteria measuring Quality C= {C1, C2, C3… Cn} is the set of all criteria measuring Cost D= {D1, D2, D3… Dn} is the set of all criteria measuring Delivery E= {E1, E2, E3… En} is the set of all criteria measuring Environment For different projects, the decision- making criteria will be different Decisionmakers and managers will directly select the criteria for decision- making on the basis of the actual situation and condition of each project The Made in Vietnam lean management- fundamental thinking in building the management decision- making alternatives In the context of decision- making process in Vietnamese enterprises, The Made in Vietnam lean management thinking is interpreted as follows: the Made in Vietnam lean management is the thinking of creating the optimal management decisions for an enterprise/organization by utilizing employees’ intellectual abilities to build alternatives which minimize existing waste (intangible and tangible wastes) in the decision-making context, and at the same time prevent potential wastes that can arise when decisions are deployed in practice After AS-IS model in each project has been built, based on the lean management philosophy, decision-makers will identify existing tangible and intangible wastes in AS-IS model The wastes can potentially cause the failure of achieving the initial target Then, the involved parties will build alternatives to minimize these wastes Alternatives are established based on the Made in Vietnam lean management which must meet two requirements: (i) Solve the existing wastes at the maximum level (tangible waste and intangible (ii) Prevent potential problems at the maximum level waste) Lean alternative includes: {A1, A2, A3…An} Where: A: represent solutions to reduce waste n: number of solutions All solutions also are divided into groups corresponding to variables, namely: (i) “Tam The”; (ii) Man; (iii) Method; (iv) Material; (v) Machine TO-BE model TO BE MODEL Simulation study base on Made in Vietnam lean management The Made in Vietnam lean LEAN ALTERNATIVE A management thinking Variables:{A1, A2, A3…,An} Criteria:(SQCDE)A The Made in Vietnam lean AS-IS MODEL management thinking Variables: {X1, X2, X3…,Xn} Criteria: LEAN ALTERNATIVE B Variables:{B1, B2, B3…,Bn} The Made in Vietnam lean Criteria:(SQCDE)B management thinking (SQCDE) AS-IS … The Made in Vietnam lean management thinking LEAN ALTERNATIVE N Variables:{N1, N2, N3…,Nn} Criteria:(SQCDE)N Figure 2: TO-BE model The TO-BE model is used to describe a future desired situation to implement a specific alternative to reality According to the characteristics of decision, a specific method is used to evaluate the alternative’s effectiveness is different Based on the result of the evaluation criteria set from the beginning, the before-after comparison will be conducted by the involved managers Then, managers will discuss to choose the best alternative The Made In Vietnam Lean Management Philosophy The Made in Vietnam lean management philosophy has been built to close the gap between international lean philosophies to Vietnamese culture This philosophy has been applied successfully in over 200 enterprises in Vietnam The Made in Vietnam lean management philosophy is a philosophy to gain profit and create added value for company/organization by empowering employees to use human intelligence to continuously improve the business process to minimize waste costs The concept of the Made in Vietnam lean management is explained by the following equations: Profit = Revenue – Cost (1) Costs = Actual costs + Waste (2) Waste = Tangible waste + Intangible waste (3) (Source: Minh, 2016) According to equation one, the better scenario to increase profits should be wastes cost reduction The Made in Vietnam lean management provides methods and tools to help enterprises to identify existing wastes in the business process and to gradually eliminate these wastes There are two types of wastes: tangible and intangible It is easy to identify tangible wastes in the business process, e.g., inventory, overproduction, waiting time, unnecessary transportation and motion, and defects It is harder to identify intangible wastes Intangible wastes include waste in mindset (such as the lack of true thinking power and skill, the reluctance to work, the conservative and traditional thinking), waste in working approach (such as lack of continuous improvement in terms of methods and processes to operate the business), and waste in missing opportunities (such as missing growth chances and business opportunities) Indeed, intangible wastes are generally considered more than tangible waste The Made in Vietnam lean management philosophy has been implemented in Vietnam since 2014 Today, the Made in Vietnam lean management philosophy has been applied by more than 200 Vietnamese’s private enterprises from manufacturing to service area This philosophy has not been only used by small and medium enterprises but also big ones Those enterprises have recognized the performance improvement in terms of productivity, products and service quality, and customers’ satisfaction after nearly months of applying the Made in Vietnam lean management philosophy Meanwhile, the production cost has decreased because of eliminating wastes in operation processes The enhanced cohesion between employees and the enterprises has been confirmed by the decline in employee turnover rate thanks to the application of the Made in Vietnam lean management Table 1: Summary of the improvements from implementing the Made in Vietnam in enterprises Increased productivity Improved quality Reduced cost year applying 2-3 years applying years applying 25-35% 75-100% 150-200% 7% 15-25% 30-40% 7% 10-15% 20-30% 30% 50-70% 50-60% Enhanced the cohesion between employees and enterprises Source: Summary from the annual report of efficiency after applying the Made in Vietnam lean management) The Made in Vietnam management philosophy have been recognized by Vietnamese enterprises as a new and advanced management method that is suitable for all type of businesses in Vietnam Methodology 2.1 Research Framework and Research Methods The research used the qualitative method that is suitable for the research objectives listed above The research framework is presented as in Figure 3: Made in Vietnam lean decision making model for Vietnamese enterprises Observation, survey and in-depth interviews Literature review Find out existing waste in decision making process in Vietnamese enterprises Assess the effectiveness of the model in cutting existing wastes Finalize the Made in Vietnam lean decision making model by determining the priority orders of all variable involved in the model Figure 3: Research framework 2.2 Data collection method Data collection methodology During one year, from June 2017 to June 2018, the model was applied to 60 Vietnamese private enterprises from manufacturing to service The reesearch data were colected by a multi-method such as observation, survey, and in depth interview (see Figure 4) Secondary data Company documents Observation Primary data Survey Interview enterprise’s managers In-depth interview Interview consultant experts Figure 4: Data collection methods Secondary data collection methods The collected secondary documents and information included historical data of actual business performance when enterprises applied the the Made in Vietnam lean decision making model in reality These data were to support the assessment of the effectiveness of the model in Vietnamese enterprises Primary data collection methods Primary data in the study was collected through methods: Observation method: Observations were conducted on the sample of 20 typical enterprises operating in mechanical manufacturing, retailing and logistic services in the scope of the research The author focused on the process of applying the Made in Vietnam lean decision- making model in those companies to assess the application effectiveness Survey method: The method was implemented by conducting investigation and survey via questionnaires on 60 enterprises which applied the Made in Vietnam lean decision-making model Table 2: Number of respondents in the survey Enterprises Big Enterprises SMEs Respondents Top Managements 10 Middle Managements 20 Top Managements 50 Middle Managements 50 10 50 The content of the survey covered two main parts: Part 1: Information about enterprises and participants involved in the survey This section was used to group the survey's enterprises and survey's respondents Section provides the following information: the size and the field of each enterprise and basic information of survey participants (occupation, position in the enterprise and contact information) Part 2: The effectiveness of the Made in Vietnam decision-making in practice This section was designed with 14 semi-closed questions to confirm the validity of the model in Vietnamese enterprises through main parts: (i) Find out the existing wastes; (ii) Evaluate the effectiveness of application ; (iii) Find out the most important variables in the decision- making model In-depth interviews method In-depth interviews were conducted after the survey data is analyzed Twenty enterprise’s top manager and middle managers were selected in the survey respondents by the representative sampling method On average, each interview lasts 30 minutes to reaffirm the results obtained through the survey, explore the most important factors that determine the effectiveness of the model Results 3.1 Wastes in Decision- making Process in Vietnamese Enterprises: After analyzing the primary data, the author identified five types of wastes in decision- making process in Vietnamese enterprises These wastes are summarized in Table below Table 3: Five existing types of wastes in decision-making process in Vietnamese enterprises: Wastes Details Waste in human Decentralization and empowerment in decision-making are not resources effectively implemented in Vietnamese enterprises Top level employees in company are usually overloaded by the number of decisions to make Subordinates try to evade decision- making and push the responsibility higher up 75% of decisions were made by senior executives in the business; only 25% of decisions were made from lower level Waste in time Time is not used effectively in the decision-making process in Vietnamese enterprises For example, group discussion is often employed by companies to make important and complicated decisions This method is likely to provide more accurate decision- alternatives due to the diversity of experience and multi-dimensional perspectives of all the involved members However, due to the unique cultural characteristics of Vietnamese working environment, decision-making by group discussion often takes a lot of time before consensus among different members are reached Sometimes these discussions are not very effective Waste in information Lack of input information often occurs in the decision-making process in Vietnamese enterprises Due to the lack of standard criteria to collect input data, too much unnecessary information is collected On the other hand, the necessary information is often missing Waste in methods Vietnamese enterprises lack a lot of useful methods to support decisionmaking process effectively, such as: decision- making thinking, decisionmaking model, alternative evaluations… Waste in high failure Vietnamese enterprises experience a high failure rate when making rate decisions in reality, which has created a big waste for the enterprises The success rate of making decision in enterprises is only 57%, which means that 57% of decisions applied in practice effectively met the original goal The failure decision creates both tangible and intangible waste to company The tangible wastes are easy to identify such as waste of money, time and human resources On the other hand, the intangible wastes are the biggest waste of business, but harder to identify An example of this is waste of opportunity for development, reducing the competitiveness of enterprises in the market 3.2 The Results of Applied the Made in Vietnam Lean Decision-making Model in Vietnamese Enterprises After applying in practices, the validity of the model has been confirmed The result (Table 3) shows that existing wastes in decision-making process have been reduced as a result of applying the Made in Vietnam lean decision-making model Table 4: Results of applying Wastes Average Reduced waste in human resources 35% Reduced waste in time 55% Reduced waste in information 40% Reduced waste in methods 55% Reduced waste in high failure rate 45% Source: Authors 3.3 “Tam the”, the most important factor of The Made in Vietnam lean decision-making model During the application process, “Tam The” has been confirmed as the most important factor of The Made in Vietnam lean decision making model “Tam The” also has been proved to be the factor that had the greatest impact on the effectiveness of the model “Tam The” has been recognized as a unique Vietnamese management; “Tam the” is defined by the following management function: Tâm Thế = Thấu + Thấu + Ý (Vietnamese concept) Tam The = Deep Understanding + Deep Understanding + Consciousness (Source: Minh, 2016) “Tam The” includes Understandings and Consciousness) Deep Understanding is to comprehend that a work (job/study) that a person implements benefits himself/herself Deep Understanding is to comprehend that by doing the work seriously (job/study) can he/she improve their thinking capacity (when studying) and working possibilities (when implementing a job), therefore bring benefits for himself/herself Consciousness is to understand that people should have good behavior, attitude and morality with the work to reflect and implement understandings Human factor determine the success of the Made in Vietnam lean decision-making implementation in practice When we mention the human factor, the main thing that we should be consider as the most important is “Tam The” “Tam The” related to two type of persons: (i) Tam the of decision maker and (ii) Tam the of person who implement decision Tam the of decision maker: Decision makers need to build and maintain their own “Tam The” before making the decision A decision maker with good Tam the always will try to implement all the decision-making steps in detail to give best result To group of decision makers, results of research also appointed that “Tam The” could direct the thinking of each member to a common axis “Tam The” also could help to generate a synergy of knowledge and strengths of all members to create best performance in decision-making process Tam the of person who implement decision: When the people who implement decision in practice have good “Tam The”, they will actively participate and contribute to the implementation progress of decision to create real benefits for enterprises Therefore, in TOBE model part of the Made in Vietnam lean decision making model, solutions for building and improving “Tam The” for “man” should be focused and prioritized These solutions also need to be implemented before other solutions related to “Man”; “Method”, “Material”, “Machine” 3.4 Case study applying the Made in Vietnam lean Decision-making model in food &beverage service Restaurant A is a take away restaurant; it offers a variety of Vietnamese dishes At the beginning, the restaurant‘s managers designed delivery process to commit that a total delivery time of no more than 30 minutes for all customers within a km radius (with the time starting from when the customer’s order is received) After months of operation, the restaurant A experienced problems with its delivery process It received numerous complaints from the customers about long delivery time, delivery of wrong shipment, etc In order to enhance customer satisfaction, restaurant A's managers need to make a decision to improve delivery performance to achieve initial commitment They decided to employ the Made in Vietnam decision-making model in their decision-making processes The Made in Vietnam decision-making model applied in the restaurant is presented in figure 5: Building AS-IS model: Current delivery process Investigate current delivery process to identify existing wastes (tangible and intangible) Building alternatives to eliminate existing waste Evaluate the alternatives based on TO-BE model Decide alternatives to apply in practice Figure 5: Decision-making process base on the Made in Vietnam lean decision-making model The Made in Vietnam lean decision-making model applied in the restaurant is as follows: Step 1: AS-IS model: Current delivery process of Restaurant A Process 1: Ordering Process 2: Preparation & Process 3: Delivery Receiving orders over Cooking Delivery by motorcycle the phone Manual staffs staffs staffs Target delivery time Process Process Process Current delivery time Process Process Process 30 minutes 40 minutes Total delivery Figure 6: The current delivery process situation of restaurant A time/ orders After the time of operation, current total delivery time is 33% higher than the initial target Table 5: AS-IS model Man Method “Tam the” Machine Management skills of staffs Management skills of staff not meet requirements Technical skills of staffs Technical skills of staff are not homogenous Management methods Management methods are not applied Technical methods Lack of standard operating procedure “Tam the” of staff “Tam the” of staff are not homogenous All work is done manually Materials High rate of broken materials Step 2: Identifying wastes in the current delivery process base on the Made in Vietnam lean management Table 6: Existing wastes in delivery process of Restaurant A Tangible Wastes Intangible Wastes Incorrect order information Does not optimize worker’s productivity Missing orders The level of worker skills is not homogenous Defects (poor quality) Wrong delivery of shipment Miscommunication between processes Step 3: Building alternative based on the Made in Vietnam lean management Table 7: Two alternatives for Restaurant A Priority Alternative Alternative implementation “Tam The” Man Training “Tam The” for employees Decreasing Method one staff in process and one staff in process Standard process and visual management for kitchen process Training “Tam The” for employees Increasing one staff in process and two staffs in process Standard process and visual management for kitchen process Deploy online ordering system Machine Using extra automatic equipment to support worker in process Material Changing supplier for perish Changing supplier for perish product product TO-BE model for each alternative Process 1: Ordering Online ordering system staff Process 2: Preparation & Cooking Process 3: Delivery Workers + Automatic Delivery by motorcycle equipment staffs staffs Figure 7: TO-BE model for the alternative Process 1: Ordering Process 2: Preparation Receiving orders over & Cooking the phone Manual staffs staffs Process 3: Delivery Delivery by motorcycle staffs Figure 8: TO-BE model for the alternative Both alternatives have been established based on the Made in Vietnam lean management philosophy Each alternative has different advantages For example, the alternative will reduce labor cost while the alternative will save investment costs Step 4: Evaluating the alternative base on TO-BE model Table 8: Summary changing Cost and Time of each alternative Alternative Alternative Investment cost $ 200/month Labor cost $1600/month $2200/month Defect cost $120/month $140/month Time 10 days (for setup equipment, days (for rebalance the worker load rebalance worker load and training) and training) Step 5: Decide alternatives to apply in practices Based on the result in steps 4, the total cost changing of Alternative is $1920/month Meanwhile, Alternative is $2350/month that is more than 122% of Alternative Defect cost of alternative is lower than 10% of Alternative However, alternative takes 10 days to setup equipment and training worker, meanwhile alternative takes only days to training workers After discussing, the Restaurant A manager decided to choose the Alternative 1, because Alternative is more economic than Alternative Then, they decide to focus on the on-time delivery factor by training both professional and “Tam The” for employee and investing in online delivery system and automatic equipment to support staff After applying the model, the before-after comparison was conducted by the involved managers By using “Tam The” like filter, that helps manager to make decision more correctly Most interviewed managers in Restaurant A confirmed that the proposed model supported the decision-making process easier and reduce the waste Table 9: Results of applying model in Restaurant A Wastes Average Reduced waste in human resources 30% Reduced waste in time 60% Reduced waste in information 45% Reduced waste in methods 45% Reduced waste in high failure rate 55% Source: Restaurant A Conclusion The Made in Vietnam lean decision-making model has been recognized as an useful model for improving efficiency of decision-making process of Vietnamese enterprises The model helps to reduce five types of wastes in decision-making process These wastes include: Waste in human resource; Waste in time, Waste in information, Waste in method, Waste in high failure rate Moreover, this research also confirms that “Tam the” is the most important factor of The Made in Vietnam lean decision-making model “Tam the” is not only important for decision-making process in Vietnamese enterprises but also important for other enterprises in both developing and developed countries Acknowledgments: This research is funded by Vietnam National Foundation for Science and Technology Development (NAFOSTED) under grant number 502.02-2015.11 References Božičković, R., et al (2012) Integration of Simulation and Lean Tools in Effective Production 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Construction, 19: 641-655 Verma, D (2014) Study and Analysis of Various Decision-making Models in an Organization IOSR-JBM, 16: 171-175  ... variables involved in the model and find out the most important factor ensuring the application effectiveness The Made in Vietnam Lean Decision- Making Model: The Made in Vietnam lean decision- making. .. facing in the decision- making process; (2) evalute the effectiveness of Made in Vietnam lean decision- making model in cutting existing wastes in decision- making process; (3) determine the priority... In the context of decision- making process in Vietnamese enterprises, The Made in Vietnam lean management thinking is interpreted as follows: the Made in Vietnam lean management is the thinking