Failure In New Customer Approach In Tan Cang Shipping’s Reffer Service.pdf

Microsoft Word Final thesis Thi Huong Giang Nguyen doc 1 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Thi Huong Giang Nguyen (FAILURE IN NEW CUSTOMER APPROACH IN TAN CANG[.]

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Thi Huong Giang Nguyen (FAILURE IN NEW CUSTOMER APPROACH IN TAN CANG SHIPPING’S REFFER SERVICE) MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2018 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Thi Huong Giang Nguyen (FAILURE IN NEW CUSTOMER APPROACH IN TAN CANG SHIPPING’S REFFER SERVICE) MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Trần Hà Minh Quân Ho Chi Minh City – Year 2018 Table of Content Executive summary Background information Methodology Problem Identification 4.1 Situation analysis 4.2 Symptoms 11 4.3 Potential problems……………………………………………………………… 13 4.4 Central problem 16 Figure 1: Initial cause – effected map .16 4.5 Potential root causes 17 4.6 Central root cause .20 Figure 2: Cause – effected map .21 Problem Solving 22 Action Plan 23 References 27 Appendix 01: Interviewees Information 29 Appendix 02: Interview guides 30 Interview Guide: Customers using referred container service 30 Interview Guide: Vice Director 30 Appendix 03: Questionnaire …………………………………………………… 32 Appendix 04: Transcript …………………………………………………… 33 Appendix 05: Estimated output/month for 40RH of TCS’s dry container customers…….38 Professional terminology and abbreviation: No Professional terminology Meaning and abbreviation 20GP 20 feet general dry container 40HQ 40 feet high cube dry container 45RH 45 feet high cube reefer container Teus Depot The production of liner shipping and slot on vessel 20GP = TUES, 40HQ=40RH=2 Tues The yard contains empty container The truck go to nearby the vessel to receive Shipside container directly does not drop container on terminal yard Closing Time Freight Plugging Fee The time which vessel will stop loading container to prepare for departing Price for transporting container by vessel Fee charge for plugging electronic of reefer container on terminal, on vessel 10 OPS Operation Service in Terminal 12 TCS Tan Cang Shipping Joint Stock Company Executive Summary In the beginning of 2017, Tan Cang Shipping expanded its service to reefer service After months of operation, the company realized that the operation of TCS’s reefer container service was not effective because the revenue could not be as expected One of the potential problems leaded to that system – failure in new customer approach was selected to analysis deeply basing on in-depth interview outcomes, market information and business report The purpose of this thesis is to use literature review, in-depth interview and survey in order to determine factors that influence sale organization effectiveness, which helps to identify why there is failure in new customer’s approach The cause – effected map is the drawn to find out the root cause The thesis intents to use groups of factors affected to sale organization effectiveness to TCS’s reefer service The result shows that most factors have faced trouble in some indicators In particular, Evaluating sale service and Rewarding are the two most noticeable indicators because of their significant influence to sale performance Setting sale performance measurement then is chosen to as problem solving for the company’s current situation Background information Tan Cang Shipping Joint Stock Company (or Tan Cang Shipping – TCS) was established on 28.11.2013 by Saigon Newport Corporation, to develop maritime transport service The beginning mission of Tan Cang Shipping is developing the transport services of Sai Gon New Port Corporation while their vision is "Leading in quality of service, customer oriented; Advanced management, professional and high quality in human resources; Military discipline, corporate culture, community responsibility " After almost years of operation, strategic direction is to develop sustainable production and business based on three pillars: Port Operation, Logistic Services and Sea Transport Despite its short time of operation, the company worked quite well, completed all the missions and developed Tan Cang Shipping becomes a prestige brand, having a strong position in the shipping industry in Vietnam nowadays With the motto "Coming to Saigon New Port, coming to one of the top quality services", Tan Cang Shipping always tries to provide their customers best quality shipping service To the Sea Transport Service, Tan Cang Shipping provides customers with domestic transport services by sea line including main routes: Ho Chi Minh - Da Nang - Hai Phong and opposite or Ho Chi Minh - Hai Phong and opposite To Logistics, they provides a full range of professional logistics services such as freight forwarding, customs clearance services, warehousing services, And to Shipping Agent, we now are acting as an agent for vessels to import and export in domestic ports as well as international port in Vietnam In addition, we are ready to provide ancillary services such as customs clearance, fresh water supply, fuel, crewmembers supplying and other support services when the customer needs Besides developing shipping service, Tan Cang Shipping also focus on hiring and training their employees With the core value: "Satisfaction, Trust and Long-term commitment of our customers", all the employees of Tan Cang Shipping are always enthusiastic, hardworking, having responsibility with work and more experience to solve customer’s requirements quickly in all situations happened during transportation Moreover, Tan Cang Shipping usually has the policies of supporting and consultation so that they can make their customers feel satisfaction when they choosing their service and want to build a long-term stable cooperation The organizational structure of Tan Cang Shipping consists of departments: Methodology This thesis was developed and supported by both primary and secondary data with particular following methods and resources: Business reports: TCS's business performance report for dry service and reefer service in 2017 checked in order to analyze how TCS achieve the target revenue as well as how each trip follows the golden structure The report on reefer container’s revenue in 2017 be classified by customer’s name and trip In-depth interview: From the results of data analysis in business report, classify the customer using TCS services into focus-group, build an interview guide and in- depth interview for each group and TCS’s Vice Director Survey: 10 questions was designed for sale team with 5-point scale and based on standards of procedures of control system Secondary Research: Online research in Viet Nam shipping line market as well as interview TCS’s customers to understand refer container market size Literature review: Classical theory of shipping line operation and management Also, contents relevant to sale management effectiveness are applied to estimate how TCS performs and how to improve the current situation Problem Identification 4.1 Situation analysis Under Sea Transport field, TCS provides customers with domestic transport services by sea line including main routes with one-way or round trip from Ho Chi Minh - Da Nang - Hai Phong and Ho Chi Minh - Hai Phong There are two main categories of container, which are dry and reefer containers In the liner industry, the twenty- foot equivalent unit (often TEU) is the unit of measurement of cargo, often used to describe the capacity of container shops and container terminals The standard intermodal container is designed as 20 feet long and feet wide Additionally, there is a standard container with the same width but a doubled length of 40 feet called 40-foot container, which equals two TEU For more example, container 40 feet = containers 20 feet = TEUS TCS’s dry containers service has been exploited quite well since the day company has opened with two types: 20GP (20 feet) and 40HQ (40feet) It is considered as core service of the company, which operated vessels per week with routines from South to North and reverse trip (Table 1) Besides TCS, there are other popular liners in Vietnam Domestic Shipping industry such as Hai An, GLS, Germadept, Vinafco, Bien Dong, Vosco, Viet Sun, … In general, TCS and Hai An currently keep significant output in comparing to others After years of operation, TCS has gained great performance and customers’ trust, Broad of Director decided to expand its service and reefer container service is a potential field to develop in the near future Therefore, in early 2017, TCS launched reefer container service, which mainly transported 45RH (45 feet) with two following objectives: • Diversifying TCS’s service: Currently, most freight forwarders – TCS’s customers are looking for both dry and reefer container service Thus, TCS want to offer variety of service choices to customers, which is not only dry container service but also reefer container field • Achieving opportunity costs: as domestic shipping lines not own empty reefer containers, customers who are owners of reefer containers have to pay for all the fee occurred Reefer service is more cost effective in comparing to dry service In details, dry service incurs many costs for the company such as repairing, stock in yard, cleaning While empty reefer containers are owned by the customer (domestic liner does not own empty reefer containers), so that customers will pay all of these fees Regarding the freight, reefer container cost 10 million VND while the dry one is million VND To calculate the opportunity profit of transport a reefer container, TCS will gain million VND from difference freight while 40HQ and 40RH is cover similar slot (2 TUES), TCS will not pay the clean (200.000 VND) and storage fee (100.000 VND/ day) because 40RH are customer’s owner Currently, there are nearly 20 customers, who used TCS’s dry container service, also has demand on reefer container service (see Appendix 05 Source: Marketing Department Report, December, 2016) TCS expects to attract 20-30% of this total number TCS has vessels with different loading capacity, Tan Cang Foundation (TCFD), Tan Cang Victory (TCVR), Tan Cang Pioneer (TCPNand Tan Cang Glory (TCGR) (see Table 1) With limited capacity and different freight of 20GP (3 million VND), 40HQ (7 million VND), 40RH (10 million VND) Table 1: Tan Cang Shipping Vessels information 10 In order to proceed reefer service, the operators and sales departments were based on the actual situation, TCS’s infrastructure conditions and freight rate to calculate a “golden structure” as the benchmark for comparison This is an effective structure to ensure the feasibility, maritime safety and maximizing profit Table 2: Golder Structure of TCS’s vessels 40RH 20GP 40HQ TCFD 15 120 110 TCVR 20 125 80 TCPN 20 125 115 TCGR 20 135 125 Freight 10.000.000 3.000.000 7.000.000 (VND) As a new service, comparing revenue each month to identify how effective the new service is not accurate The output and service performance not stable Thus, it can only be evaluated objectively based on expectations of the company The golden is the optimum structure of the company with low cost and high profitability, which in fact are based on current company’s situation, structure of ships and estimated output attract to TCS’s current customers (see Appendix 05) Comparing months and months is not accurate due to the new service, the output is not stable, so it can only be evaluated based on expectations of the company 4.2 Situation analysis After putting into operation for the first months in 2017, the company realized that vessels could not achieved “gold structure” and the total revenue is not as expectation Under expected revenue for reefer service 11 Based on the current freight rate, in comparing the optimal revenue for each trip with the actual data from January to July 2017, it is figured out that 95% of the transfer below the expected level, only 5% achieved as equal or more than expected For more detail, 5% achieved the expected is on March, after Lunar New Year, when the market in in the peak But only 5/ 16 routes on March achieved, while the market is in the peak on March Chart 1: Revenue and target revenues by vessel in the beginning of 2017 For detailed analysis, for 20GP and 40HQ dry container, it is easy to see that dry sales nearly achieve the expected level, especially some trips are more remarkable Chart 2: Revenue and target revenues by Dry container in the beginning of 2017 For revenue of reefer container, the output was completely below expected and unstable on each ship Therefore, symptom was identified as the operation of TCS’s reefer container is not effective Chart 3: Revenue and target revenues by Reefer container in the beginning of 2017 12 Additionally, from market information, the monthly output of reefer container is around 400-500 containers, mainly for fruits, seafood, tapioca, coconut milk, ice cream However, the output of TCS is lower The least is 12 containers / month, the highest is 146 containers / month (see Table 3) in comparing to Hai An Liner, who also has vessel similar with TCS, but each vessel they have 200-300 containers 40RH Table The sale volume of 40RH TCS from Jan 2017 to July 2017 3.1 Potential problems Currently, the reefer container market has 18 companies transported route NorthSouth According to marketing report, there was 15 companies have used TCS’s reefer service Standing on business metrics analysis, TCS’s customers can be group into three main groups (see Table Source: TCS’s Business Report, June 2017): - Key account group: only customers sign the contract with fixed slot on each trip and given more slots on TCS than other liners So that they have gained more promotion from TCS’s policies of contracted-customers such as lower freight, free electronic fee, receive their container in the peak season,… - Regular customer group: customers who have more than 1% of total quantity in months, and they book in more than consecutive trips, but they did not sign the contract with fixed slot so that they have not gain more promotion from 13 TCS’s policies We called them are Regular customers, who are potential to become key accounts - New customer group: this group is divided in two sub-group such as irregular customers and unreached customers In detail, there are out of 18 popular companies in reefer market who only used TCS’s service for 1-2 times They just choose TCS when they have emergency reefer container need to be transported immediately while TCS’s shipping schedule is suitable On the other hand, unreached group which contains out of 18 popular companies have heard about TCS’s reefer service but have never used Table 4: List of 18 biggest companies in reefer container market Type of customer KEY ACCOUNT REGULAR CUSTOMERS NEW CUSTOMERS - irregular customers NEW CUSTOMERS - unreached customers How to they knew TCS Number of 40RH in months (79 routes) Quantity in month/ total quality HNC TCS’s dry service shift 233 46,88% VINACONNECT Director introduced 143 28,77% HAI DANG PHAT TCS’s dry service shift 22 4,43% TCRF TCS’s dry service shift 22 4,43% COLLYER Market information 21 4,23% VINALINES HP Market information 21 4,23% VIET SAC TCS’s dry service shift 18 3,62% SCL TCS’s dry service shift 0,80% HAMITRANS TCS’s dry service shift 0,60% TNN TCS’s dry service shift 0,60% GL TCS’s dry service shift 0,40% GREEN LOG Market information 0,40% DE LTA Market information 0,20% GMD TCS’s dry service shift 0,20% KIM THANH SINH TCS’s dry service shift 0,20% Customer’s name TTO NHAT PHUONG TIEP VAN XANH 14 Source: TCS’s business report A qualitative research method, which emphasizes the socially constructed nature of reality, was conducted as in-depth interview to record, analyze and attempt uncover the deeper insights about customer’s experience and their point of view toward TCS’s reefer service This group consists of customers represented to main categorizes, who use this TCS’s new service permanently, regularly and irregularly The findings then could be divided in two points as follows: Low customer satisfaction of regular customers group Currently, there are just only customers standing as TCS’s key account group Moreover, the key accounts of TCS are satisfied with TCS’s service and they are giving more slots in TCS than in the other liners The regular customers, who are not satisfy with TCS’s service, policies, freight and support They use TCS’s service to keep the relationship for peak season They have no plan to shift more volume from other liners to TCS Therefore, it seems like this customer group does not intent to increase the volume According to the interview result, while being ask “do you intend to increase slot in the future”, both regular group and new customer group thought that their current regular shipping line is quite well, thus no plan to switch to TCS (see Appendix 04) There is only key account agreed to increase their volume if they have more contract and shift more in the future Failure in new customer approach There are over 18 customers, who have known about TCS’s reefer service by market information (see Table 4) To understand customer’s insight about TCS’s service, the elements affect to their decision to find out which TCS missed, we conducted an in-depth interview on focus group As reported by interviewee’s feedback, both key account and new customer were agreed that they know about TCS through transport market information Especially, Ms Le Thi Ngoc Anh – 15 GL Viet Nam (new customer) said that she did not see anyone come to introduce about this TCS’s new service (see Appendix 04) GL Viet Nam decided to use TCS’s service because in the high season other regular shipping lines were almost full There is just only the regular customer knew TCS by the company’s staff The new customers group has been known TCS by market’s information instead of marketing activities of TCS or sales team 3.2 Central problem In the high season, the new customers group tends to voluntarily use the service when they have emergency good to transport as well as TCS’ shipping schedule is suitable instead of waiting for the offer However, they did not have plan to use TCS’s reefer service permanently or shift a substantial proportion output in order to sign a fixed contract with TCS Additionally, there are still some well-known customers in the market that have not used TCS’s reefer service (see Table 4) Related to TCS’s reefer service field, unreached customers included TTO, Nhat Phuong, Tiep Van Xanh seem to have large influence and significant volume in the market TTO has the lowest output 100 containers/month and the highest output 300 containers/ month One of current challenges of 70% customers choosing Hai An is difficult to book this line with high output at the same time therefore customers have to divide their output to other lines in the peak season TTO’s main products are seafood, frozen food, coconut water This company is well- known as having the most reefer cargo shipping by sea because TTO itself, which is not only the transport company but also the trading company, invests in the fields of food and seafood According to TTO side, this company has not used TCS’s service because they did not know who to work with Also, a big company like TTO is accustomed to being invited by others, they would not actively look for other transport partner unless there are any incentives or great benefit to them Nhat Phuong has smaller scale than TTO and HNC with production around 50-100 containers/month, which mainly went through Hai An, the rest was splited into other 16 lines They also have not book through TCS because of unknown any direct contact Nhat Phuong’s structure is similar HDP’s, a forwarder merely collect goods In general, the common characteristic of these two unreachable customers is that they have signed seafood and foodstuff contracts of big companies such as Vissan, Camimex, Seaprodex and Kisimex so that their volume is constant throughout the year Ultimately, there are two main potential problems leaded to TCS performs under expected revenue: low customer satisfaction of regular customers group and failure in new customer approach in reefer service (see Figure 1) It is undeniable that acquiring a new customer would cost from 5-7 times more expensive than remain existing one Also, consider research done by Harvard School of Business that shows increasing customer retention rates by 5% would increase profit by 25-95% However, the hardest thing to start not only a new business but also new service is to look for the first customers As there is no customer, the service would not exist It clearly shows that TCS could not reach potential customers even acquiring new customers is extremely important New customers increase the amounts of sales and companies get more endorsement which will help to accelerate the cycle of money for the companies Thus, failure in new customer approach is focused as central problem to analyze deeply in this thesis Figure 1: Initial cause – effective map for reefer service in Tan Cang Shipping (TCS) 3.4 Potential root causes As a central problem, failure in new customer approach was found out by two potential root cause: new customers knew TCS by market information instead of sale team and new customers 17 tends to only use the service in high season when other regular shipping lines were almost full The lack of updating customer’s reefer service information leads to questioning the effectiveness of sale team Nigel F Piercy, David W.Cravens & Neild A.Morgan(10) have said sale volume is the most frequently used criteria to measure sale organization effectiveness Hence, to identify why there is failure in new customer approach, sale organization effectiveness is considered to deepen Effectiveness is a brief evaluation of sale organization’s outcome and can be defined for either entire organization or smaller units such as regions or district It is related by sale management control system, sale territory design and salesforce performance However, on finding research literature, sale territory and salesforce performance have contributed to the sale effectiveness, but not completely specify (Nigel F Piercy, David W.Cravens & Neild A.Morgan 10) This thesis concentrates on sale organization management under sale management control system direction to discover thoroughly as its influence on sale volume is strongly believed Sales management is the process of developing a sales force, coordinating sales operations, and implementing sales techniques that allow a business to consistently hit, and even surpass, its sales targets Therefore, to manage sale effectiveness, the organization should have the reasonable policy in sale incentives and discover sales best practices, which motivate and lead an effective sales team (Eric Longino4) If your business brings in any revenue, the sales management strategy is absolutely necessary When it comes to boost sales performance for every scale of operation, regardless of industry, the secret to success is always the precise sales management process Understand effectiveness sale management from both perspective of sale manager and salesperson is extremely crucial while running business In order to measure the effectiveness level, the businesses need to have system of sale management control It was divided into two separate dimensions: outcome- based system evaluated whole process outcome via sales and profit results and behavior- based system assessed individual stages in whole process In detail, Anderson & Oliver (1) believed that sale managers would less involve directly with sales team if the sale control system are more outcome-based as the main sale manager’s control device is the compensation system On the other hands, in reality sale managers should actively involve 18 with salespeople, work with them and try as much as them can to improve sales team’s performance Anderson & Oliver(1) described that sale management control system as a set of procedures, which contain supervision, guide, evaluation and compensation, accepted in 1987 by Journal of Marketing • Monitoring: supervising activities in progress to make sure they are on-track toward reaching its objectives and to guide management decisions Monitoring usually focuses on processes such as time spend with salespeople, day-to-day activities, observing performance of sales team Tải FULL (38 trang): https://bit.ly/3RfWD6k Dự phịng: fb.com/TaiHo123doc.net • Directing: guidance or supervision of action in order to ensure people working under the direction Training people actively, discussing about the performance evaluations or assisting employees improve their abilities represents for this stage • Evaluating: the assessment of an activity or project, focused on an expected and achieved accomplishments, examining the results to determine the relevance, effective, efficiency and the contributions of the interventions to the results achieved In this case study, it relates to profit contributed by each salesperson, number of sale calls, sale results • Rewarding: providing satisfaction or bringing benefits for employees which is considered as motivation to change employee’s behaviors To identify whether the business applies this step in its management control system, there are some questions we should clarify such as incentive compensation, non- incentive compensation and performance feedback Basing on this concept and adding on an in-depth interview with Vice Director, who currently has main responsibility and authority in TCS’s sale activities, the survey was then designed for sale team to clarify how sale management applied in TCS and whether sale management control system is effective or not The extent to which sale management control was measured by series of questions (5 point scale from never to always) The questions is set in the survey based on criteria to be assessed under four 19 above procedures of control system (see Appendix 03) All sale team including people, are selected to conduct the survey 3.5 Central root cause According to the survey feedback, TCS’s sale management control system has trouble in many indicators: policy of sale achievement, evaluating sale performance, time spend with sale team, consistency of training sale team, frequency of performance feedback In particular, there were sellers agreed that the manager rarely spend time with sale team, also other left said the manager just spent time with sale team one in a while It was showed that sale management control system somehow lacked of monitoring process On the other hand, all members of sale team agreed that sale manager never participate actively in training sale people, which means that directing in sale management control system is also one of TCS’s weakness However, the highlight is Evaluating sale service and Rewarding, the indicators strongly affected to sale performance In detail, most of salespeople in TCS said that sale manager seems to rarely evaluate sale team’s performance Additionally, out of people graded at point while asking does sale manager provide performance feedback to each salesperson It is illustrated TCS has ineffective evaluating process, even Vice Trade Director as well as sale manager have spent time with sale team to look back sale performance, no lesson to be learned to improve as well as no criticism to draw experience On the other hand, all salespeople voted for “never” while they are asked in the survey “does the company has policy to encouraging sale people to increase their sale result by rewarding them for their achievement” It is illustrated that TCS’s sale team is not motivated to find new customers and there would be no reward for that effort After all, Low sale management control system is the potential root cause that this study was focused to analysis, in particular Evaluating and Rewarding As TCS did not have plan to criticize and appreciate in sale outcome, which would bring potential 20 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HO CHI MINH CITY International School of Business Thi Huong Giang Nguyen (FAILURE IN NEW CUSTOMER APPROACH IN TAN CANG SHIPPING’S REFFER SERVICE) MASTER OF BUSINESS ADMINISTRATION... missions and developed Tan Cang Shipping becomes a prestige brand, having a strong position in the shipping industry in Vietnam nowadays With the motto "Coming to Saigon New Port, coming to one of the... shift more in the future Failure in new customer approach There are over 18 customers, who have known about TCS’s reefer service by market information (see Table 4) To understand customer? ??s insight