(TIỂU LUẬN) REPORT INTERNSHIP 2 CAT NGHI TEA MANUFACTURING AND TRADING CO , LTD

IS047IU Engineer Internship HOCHIMINH INTERNATIONAL UNIVERSITY SCHOOL OF INDUSTRIAL ENGINEERING & MANAGEMENT DEPARTMENT OF LOGISTICS AND SUPPLY CHAIN MANAGEMENT  REPORT INTERNSHIP CAT NGHI TEA MANUFACTURING AND TRADING CO., LTD Student’s name: LƯƠNG THANH BẢO NGỌC ID: IELSIU18096 Advisor: M.Sc DƯƠNG VÕ NHỊ ANH Ho Chi Minh City, Vietnam August, 2021 i IS047IU Engineer Internship VNU-International University School of Industrial Engineering & Management TABLE OF CONTENTS ACKNOWLEGDEMENT INTRODUCTION 2 2.1 Background 2.2 Supply chain network of Cat Nghi Tea Co,.Ltd _ PURPOSE 15 BUSINESS DESCRIPTION _16 4.1 Warehouse department 16 4.1.1 Business process and its function 16 4.1.2 Role 17 4.2 Sales department _ 19 4.2.1 Business process and its function 19 4.2.2 Role 20 TASKS _2 ANALYSIS AND IMPROVEMENT SUGGESTION _25 6.1 Problem proposal _ 25 6.2 Identification of Need _ 25 6.3 Identification relative characteristics with customer’s needs _ 26 6.4 House of Quality _ 27 6.5 Prioritization of technical performance measures (TPMs) _ 28 6.6 Feasibility analysis 29 6.6.1 Labor cost 29 6.6.2 Pick and move product time 30 6.6.3 Excess inventory 31 6.6.4 Productivity of machine _ 33 6.7 Timeline 34 6.8 Operational requirements 37 6.8.1 The anticipated mission of the new model of warehouse 37 6.8.2 Performance and physical parameters 38 6.8.3 Environment factors 38 6.9 Environmental sustainment factors 39 CONCLUSIONS _4 REFERENCES 41 ii IS047IU Engineer Internship VNU-International University School of Industrial Engineering & Management LIST OF FIGURES Figure 1: Logo and slogan of Cat Nghi Tea (Source: official website) _ Figure 2: Cat Nghi Tea Manufacturing process (Source: official website) Figure 3: Flow chart of the Supply Chain of Cat Nghi Tea Figure 4: Harvesting tea leaves activity on Bao Lam farm Figure 5: Operation flow chart _ Figure 6: Machine system in Bao Lam factory _ Figure 7: How defective product being utilised _ Figure 8: Finished products Figure 9: A small corner of Binh Duong warehouse 10 Figure 10: Inside the official store 11 Figure 11: Daily activities in the official store 12 Figure 12: Cat Nghi Tea in a trade fair in Dubai (2019) before Covid-19 _ 12 Figure 13: Distribution network for domestical sales _ 13 Figure 14: House of quality (HOQ) _ 28 Figure 15: Redundant part of tea trees 33 Figure 16: Activity-On-Arrow (AOA) network 37 LIST OF TABLES Table 1: My main tasks for each working week 24 Table 2: Warehouse’ statements, and it requirements _ 26 Table 3: Technical Performance Measures (TPMs) 29 Table 4: Methods to reduce labor cost _ 30 Table 5: The positive trend after implementing technology to reduce labor cost 30 Table 6: Methods to reduce moving and picking time _ 31 Table 7: Methods to remove excess inventory _ 32 Table 8: Method to increase productivity of machine _ 34 Table 9: Estimated timeline for each activity to improving warehouse 36 Table 10: Calendar production in Viet Nam 38 iii IS047IU Logistics & Supply Chain Management Internship VNU-International University School of IEM ACKNOWLEGDEMENT Thank Cat Nghi Tea Manufacturing and Trading Limited Liability Company for helping me to have a really rewarding opportunity to experience the work environment as a trainee The knowledge gained will help a lot for my future study and work Currently Cat Nghi Tea’s products are presented in most of the Asia, Middle East and Eastern Europe countries I hope products will be promoted more throughout all the continents so that everyone can use and enjoy the fresh and qualified tea This internship would not have been successful without the guidance and help from my supervisor – Ms Nguyen Hoang Minh Tuyet – a director of Cat Nghi Tea Therefore, I would like to express my special thanks to her who has supported me during the 3-month internship Moreover, it is my colleges and seniors, who gave me encouragement, great guidances to further understanding of my major, constructive comments, and supportive suggestions whenever I needed, so I really appreciate and respected them Besides, my appreciation also goes to the school of Industrial and Engineering Management who gives me a chance to participate in an internship when being a junior student Especially, with the support from the advisor – M.Sc Duong Vo Nhi Anh I gained more confidence to step out of my comfort zone and conquer new challenges IS047IU Logistics & Supply Chain Management Internship VNU-International University School of IEM INTRODUCTION 2.1 Background Figure 1: Logo and slogan of Cat Nghi Tea (Source: official website) Cat Nghi Tea Manufacturing and Trading Limited Liability Company (Cat Nghi Tea) was established in 2004, with the main factory located in Bao Lam - Lam Dong Province, Cat Nghi Tea Co,.Ltd is one of the few Vietnamese enterprises pioneering in traceability and quality control of finished tea according to a closed process Choosing the name which acts like a message that customers should maintain the majesty styles when enjoying tea, together with simple tones yellow as the dominant color together with the slogan “The taste of pure happiness”, Cat Nghi Tea Co,.Ltd commits that fresh and clean products completely come from the pure nature, which makes customers feel secure and happy about the quality of product Being a tea manufacturer, Cat Nghi Tea did and continues to apply the model “From tea leaves to finished product”, providing safe and quality tea products for both domestic and international consumers to enjoy With more than 15 years' experience in tea production and export, Cat Nghi Tea meets the standards to export to countries such as: Pakistan, Myanmar, Malaysia, India, The UK, Russia, Dubai, etc IS047IU Logistics & Supply Chain Management Internship 2.2 VNU-International University School of IEM Supply chain network of Cat Nghi Tea Co,.Ltd Figure 2: Cat Nghi Tea Manufacturing process (Source: official website) Packaging Supplier Factory Cat Nghi Tea Farm ‘Trial & Error’ Farm Figure 3: Flow chart of the Supply Chain of Cat Nghi Tea IS047IU Logistics & Supply Chain Management Internship  VNU-International University School of IEM Cat Nghi tea farm: Cat Nghi Tea choose Lam Dong province to locate their farms There are two main farms:  The first one is called “Trial & Error” farm: The area is about hectare served as the purpose to test and investigate before commercial planting as well as breed the tea seedling There are well-qualified experts, together with trained farmers, they try their best to create new varieties to adapt the changeable weather and meet the customers’ satisfaction day by day  The other is “Harvestable” farms: The area is up to hundred hectares, which is divided into many parts and being rent by local farmers After the head office as well as the food inspection organizations confirmed the tested tea trees are safe and agree this type of tea tree having a economic potential, these trees are cultivated and taken care of by farmers The soil source as well as the quality of plants and leaves are strictly controlled to ensure the best quality of tea  Cat Nghi Tea choose the tactic very wisely, they give the tree seedings to trained farmers to cultivate, and ensure all the harvested tea leaves being consume By doing this, as far as the company’s benefits are concerned, a number of labors are minimized, and they not have to allocate the manager to manage the farm on a daily basis In addition, it is local farmer who know best about geography and weather in the area, thus maximising the planting productivity Moreover, as far as the farmers’ benefits are concerned, their harvest is ensured to be consumed all the time; therefore, they are not worried about inventory or stock items Additionally, the plantation area is also provided, which is ideal for farmers who cannot afford to purchase and own a huge amount of area With the motto “Prevention is better than cure”, disease prevention is not only important but also essential in the tea growing process so as to ensure the same quality over different harvesting seasons In order to ensure bringing quality products to consumers, Cat Nghi Tea Company built an agricultural technical team with tea farmers to control the fertilization process, spraying pesticides and harvesting procedures so that they are scientifical and effective enough to confirm the quality of clean tea as well as ensuring food safety and hygiene Turning to harvesting part, after gathering in of the crops for at most three hours, tea must be processed to ensure that the natural quality of the tea tree remains at the highest level Chế độ bao tiêu IS047IU Logistics & Supply Chain Management Internship VNU-International University School of IEM Figure 4: Harvesting tea leaves activity on Bao Lam farm  Factory: The operation flow chart of Cat Nghi Tea is as the figure below Figure 5: Operation flow chart IS047IU Logistics & Supply Chain Management Internship   VNU-International University School of IEM Easy-to-do: no requirements of highly qualified staffs Long term value: Whether we should apply that method in the long term or not? Based on these limiting factors, we consider following methods:  Product location: slot product based on variation in customer demand for optimal product flow and velocity through the warehouse  Automation: consider an automated solution, such as conveyor, to reduce their extensive travel time  Picking method adjustment: use discrete picking, zone picking, batch picking, or zone-batch picking methods for each situation suitably  Voice picking: each operator is equipped with a mobile device or voice dedicated terminal and a headset with microphone Table 6: Methods to reduce moving and picking time Best method: Product location 6.6.3 Excess inventory The basic feature of warehouses is that there is always stock Currently, we cannot control the amount of stock required, therfore causing excess inventory Of course, minimising excess inventory should be taken into account, however, what is the best solution to deal with this type of inventory, even when tea is out of date I need to consider the following factors:  Capacity: how much of excess inventory this method can reduce 31 IS047IU Logistics & Supply Chain Management Internship   VNU-International University School of IEM Cost: the paying cost when applying this method Long term value: Whether we should apply that method in the long term or not? Based on these limiting factors, I consider following methods:  Return goods to traders: deal with traders to return their product with lower price Clearly, it is impossible because we promise to buying all tea leaves from them not matter what happens (part 2.2 mentioned this policy)  New customer: find new customer  Discount policy: deal with our customer for a discount price with larger quantity of orders  Resale product at salvage value: many activities on a daily basis need tea leaves such as funeral service companies which use tea as preserving the body remains purpose Clearly, the warehouse can sell excessive inventory level with the low price for those business Table 7: Methods to remove excess inventory Best method: Resale product 32 IS047IU Logistics & Supply Chain Management Internship VNU-International University School of IEM Figure 15: Redundant part of tea trees For example, the excessive inventory level is 50 tons The price of resale product for a funeral service is about 22,000 VND/kg, however, the average purchasing cost of tea (buying from farmers) is 130,000VND/kg I assume that there is not exist additional cost (holding cost, transportation cost, etc.) to simplify this problem If the warehouse cannot handle excessive inventory level, we will loss = 130,000 × 50000 = 5,500,000,000 VND However, by selling this at salvage value, the company will have = + 22,000 × 50,000 25,000,000 3= 1,075,000,000 VND Therefore, we just bear the loss of 4,425,000,000 VND As can be seen from this calculation, nearly 20% of the loss can be reduced, which is significantly remarkable However, to find these type of customers who are willing to buy redundant or stock tea leaves is not easy; therefore, although it is a good idea, the company would make an extreme effort to introduce tea products to them As mentioned in part 2.2, Cat Nghi find the potential customer is funeral service, which is a very smart tactic 6.6.4 Productivity of machine One of the most important factors to control the operation of warehouses is control the level production of machines Our warehouse needs to increase production capacity of machines To deal with this problem, we need to consider the following factors: Be known as salvage value Estimated transportation cost to deliver redundant tea products 33 IS047IU Logistics & Supply Chain Management Internship VNU-International University School of IEM  Capacity: how much products this method can increase  Cost: the paying cost when applying this method  Long term value: Whether we should apply that method in the long term or not? Based on these limiting factors, we consider following methods:  Buy new machine  Rent machine  Control waiting time: reduce the ideal time of machine because of waiting for other steps Table 8: Method to increase productivity of machine Best method: Buy a new machine and control waiting time I will have the operation team investigate further these methods in the future to find out the best solution because it is not my strength if having a chance to offer these idea 6.7 Timeline The table below shows all the main tasks needed and their precedence for the project of upgrading the warehouse The ending of rainy season is chosen to starting the process, so as to upgrading process will occur in sunny season, to be specific, it is Lunar New Year Holiday when storing activity is at the lowest point (the peak season for storage activity is at the tea-harvest time (from June to October) I also estimated activity duration for each activity 34 IS047IU Logistics & Supply Chain Management Internship ID VNU-International University School of IEM Activities Collect data and identifying problems A B C D E F G H I J K L M N Hiring staff and experts for collecting data and identifying problems Internal Assessment: Following and recording all activities in our current warehouse Internal Assessment: Consulting with experts and owner of our warehouse External Assessment: Doing research (visit other warehouses, sending survey on social media channel, questionnaire (for suppliers, employees, thirdparties…), identifying the market demand, ) Analysing collected data Understanding and identifying the circumstances and problems Build model and apply data and solving Install an up-to-date warehouse management software Forecasting the prime time of each season (based on customers and market's demand) Build mathematical model to optimise operation activities (Objectives, constraints (budget, area, weather, etc.),etc.) Coming out the result and simulating Consider the feasibility of this result (objective and subjective factors, etc.) and making changes (if necessary) Reaching the optimal result Planning detailed steps (milestones,…) Ask for upgrading permission (owner, local government,…) and notifying our customers, employees,….) 35 IS047IU Logistics & Supply Chain Management Internship O P Q R S T U V W Stopping the ongoing process to start innovating warehouse Upgrade facilities (Forklift, conveyor belts, electricity supply system, lighting system…) Purchasing modern and automatic equipment (tea leaves drying machine, crumpling machine, killing yeast equipment…) Removing redundant steps, labour and relocating working area to suit the new policy Applying the contemporary strategy (5S) Training employee to adapt the new system and hiring skilled staff (if necessary) Project implementation Reopening the warehouse and running new model Monitoring closely and reporting everyday Considering the effectiveness of new method Table 9: Estimated timeline for each activity to improving warehouse The following Activity-On-Arrow (AOA) network represents the relationships between the activities Each node illustrates an activity; each arc illustrates a predecessor relationship Note t0 is starting point, t14 is ending time 36 IS047IU Logistics & Supply Chain Management Internship VNU-International University School of IEM Figure 16: Activity-On-Arrow (AOA) network 6.8 Operational requirements 6.8.1 The anticipated mission of the new model of warehouse  Labor cost: In the warehouse, labor cost is one of the significant factors which the factory has to face The goal is to find the way that can help to lower the labor cost at least 5%  Time for moving and picking in the warehouse: In average, the total time for move and pick product is calculated about hours, but after improvement, I expect this time can be reduced about hour  Inventory: The average amount of inventory is 50 tons, but after improvement, I expect the amount of inventory is about 35 tons  Productivity of machine: 37 IS047IU Logistics & Supply Chain Management Internship VNU-International University School of IEM Normally, processing machines can operate with 1.5 tons per house Through many of methods for improving, I expect the capacity increases to tons per hour 6.8.2 Performance and physical parameters Weighing: Weighing is the most important step, requiring accurate weighing to ensure the same quantity of tea in each package, therefore ensuring the product’s uniformity Unit: kilogram  Standard deviation: ± 0.05% for finished products (maximum net weight of each package of all types is kilograms) ± 0.2% for semi-finished products (maximum net weight of each package of all types is 75 kilograms) 6.8.3 Environment factors  Topographic: high mountainous form → it is somehow difficult for factory and warehouse construction However, the distance between suppliers (tea farm) to the warehouse is relative close This is the advantage because it can lead to the exponential decrease in transportation cost, which is remarkable with a huge quantity of tea leaves that need to be transported  Climate: located in the area with cool climate (about 20-30 degree Celsius) since tea leaves is well-grown in cool and rainy area    Rainy season: from May to October Dry season: from November to April Table 10: Calendar production in Viet Nam Average temperature: 23°C 38 IS047IU Logistics & Supply Chain Management Internship     VNU-International University School of IEM Average rainfall: 1,834 mm Relative humidity: 79% Total sunny hours: 2,032 Drainage system: The drainage system has not been built yet, currently it flows itself into the sewer around the area  Dirty water drainage system and environmental sanitation This area does not have a dirty drainage system, all wastewater is drained naturally Waste is collected and gathered together in one place  Fire extinguishing system Fire extinguishing systems are installed in places which are easy to control and often have passersby Fire-fighting system is currently equipped, including zinc coated pipe, fire extinguisher, fire extinguisher box, etc 6.9 Environmental sustainment factors There shall be no degradation to the climate, air quality, soil quality, which can affect the tea growing process In the future, sewage after treatment is led to manholes through the factory 's sewage treatment area After that, it is led to the regional drainage system by pipes of Ø600 mm along the internal roads and flow into the sewer collection and treatment system before discharging into the environment Rubbish is collected on a weekly basis by special vehicles and taken to the public waste treatment site We will build a closed sewer system D = Ø400 - D = Ø1200 for surface water drainage These pipes will discharge directly to the water drainage system in the back of this area 39 IS047IU Logistics & Supply Chain Management Internship VNU-International University School of IEM CONCLUSIONS At a whole, during twelve weeks internship, I had the opportunity to work in factory in Bien Hoa – Dong Nai province in three months I witnessed the whole operation process to make tea packages, observing how to preserve the products as well as gaining hang-on experience about how to deal with inventories Thanks to working in Cat Nghi Tea, I realise myself more clearly, besides some strengths, I still have some weaknesses that must be improve in the near future As far as the good points that I learnt are concerned, I understand that to be respected, I have to devote 100% myself for the work, which I did in this short internship Moreover, I also learnt how to communicate well and create a strong personal network with seniors and my boss in the working condition In addition, having a chance to observe the business operation process helps me to see these procedures in a real viewpoints, therefore I can give comparison between real-life situations and theoretical lectures that I learnt in university, which helps me a lot in changing and completing my perceptions about society I engaged in an ongoing process of hypothesis testing and revision by exploring the working environment day by day and therefore moving from a less to more accurate pictures of the life Besides, I also realise my drawbacks Firstly, I still have a little bit inconsistency in decision making, which sometimes makes me unprofessional with my supervisors Secondly, my health and bearing ability are also my Achilles’ heels Having to commute a long journey between the factory in Dong Nai Province and my shelter in Binh Thanh District, Ho Chi Minh City makes me stressed and have an apoplexy at the very beginning of the internship Clearly, it is adaptability that I have to improve and strengthen in order to seek for any permanent job after graduation 40 IS047IU Logistics & Supply Chain Management Internship VNU-International University School of IEM REFERENCES [1] Official website of Cat Nghi Tea Retrieved from https://catnghitea.com/ [2] Button K & Pels E (2010) International air transport: The impact of globalisation on activity levels In Braathen N A (Ed.), Globalisation, trangsport and the environment (pp 81-118) Guadalajara: OECD [3] How to grow tea trees Retrieved from https://www.lovethegarden.com/uk-en/article/how-grow-tea 41 IS047IU Logistics & Supply Chain Management Internship VNU-International University School of IEM 42 IS047IU Logistics & Supply Chain Management Internship VNU-International University School of IEM 43 ... handle excessive inventory level, we will loss = 13 0,0 00 × 50000 = 5,5 0 0,0 0 0,0 00 VND However, by selling this at salvage value, the company will have = + 22 ,0 00 × 5 0,0 00 25 ,0 0 0,0 00 3= 1,0 7 5,0 0 0,0 00... Logo and slogan of Cat Nghi Tea (Source: official website) Cat Nghi Tea Manufacturing and Trading Limited Liability Company (Cat Nghi Tea) was established in 20 0 4, with the main factory located... of IEM Supply chain network of Cat Nghi Tea Co, .Ltd Figure 2: Cat Nghi Tea Manufacturing process (Source: official website) Packaging Supplier Factory Cat Nghi Tea Farm ‘Trial & Error’ Farm Figure