(Luận văn) failure in inventory management at fashion department in khatoco trading co , ltd

t to UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ng hi ep w n lo ad ju y th PHAM THI PHUONG LINH yi pl n ua al va n FAILURE IN INVENTORY MANAGEMENT AT FASHION DEPARTMENT IN KHATOCO TRADING CO., LTD ll fu oi m at nh z z k jm ht vb om l.c gm MASTER OF BUSINESS ADMINISTRATION an Lu n va ey t re Ho Chi Minh City – Year 2019 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business t to ng hi ep w n lo ad ju y th PHAM THI PHUONG LINH yi pl n ua al va n FAILURE IN INVENTORY MANAGEMENT AT FASHION DEPARTMENT IN KHATOCO TRADING CO., LTD ll fu oi m at nh z z vb k jm ht MASTER OF BUSINESS ADMINISTRATION om l.c gm SUPERVISOR: DR NGUYEN PHONG NGUYEN an Lu n va ey t re Ho Chi Minh City – Year 2019 LIST OF CONTENTS EXECUTIVE SUMMARY .1 t to PART – BACKGROUND ng Company background hi ep History of establishment and development 1.1.2 Mission of the company 1.1.3 Company’s size 1.1.4 Internal structure 1.1.5 Geographic distribution .2 1.1.6 Stakeholders w 1.1.1 n lo ad Current development and market analysis ju Organizational performance yi pl 1.1.8 y th 1.1.7 Complaints of clients about wrong shipping products n ua 1.2.1 al Symptoms n va 1.2.2 Differences between the stocks on count (floor) and stocks on system (sheet) .8 ll fu 1.2.3 Differences between stocks quantity on accounting system and that on warehouse system m oi Initial cause-effect map 11 nh at Updated cause-effect map 14 z PART – PROBLEM JUSTIFICATION .21 z vb Problem definition 21 Definition of inventory management 21 2.1.2 Central problem: Failure in inventory management 22 k jm ht 2.1.1 gm Problem existence 24 l.c Problem importance – consequences of the problems .24 om PART – CAUSE VALIDATION .26 an Lu Potential causes 26 Outdated and separated inventory control system 27 3.1.2 Insufficient inventory control procedures and regulations .27 3.2.1 Insufficient inventory control procedures and regulations .29 3.2.2 Outdated and inconsistent inventory system .30 ey Cause existence 28 t re 3.1.3 Culture miss-match: No connection between relevance departments in inventory control 28 n va 3.1.1 Cause importance .33 PART – SOLUTION AND IMPLEMENTATION 34 Alternative solutions 34 t to ng hi ep 4.1.1 Written working processes in inventory management 34 4.1.2 Setting up integrated system for inventory control 44 4.1.3 Solutions summary 48 Implementation 49 Objectives 49 4.2.2 Targeted outcomes 49 4.2.3 Project details and schedule 50 w 4.2.1 n lo ad y th ju Conclusion .54 yi SUPPORTING INFORMATION 54 Methodology .54 5.1.2 Research tool .55 pl 5.1.1 ua al n REFERENCES 58 va n APPENDIX 57 ll fu oi m at nh z z k jm ht vb om l.c gm an Lu n va ey t re LIST OF FIGURES Figure 1: Company structure Figure 2: Sale and Profits of The Company and Fashion section from 2016 to 2018 t to ng Figure 3: Number of agency's complaints from 2016 to 2018 hi Figure 4: Portion of customer complaints in 2018 ep Figure 5: Fashion Sale, Cost of goods sold and GPM in 2016, 2017 and 2018 11 w Figure 6: Initial cause-effect map 12 n lo Figure 7: Updated cause-effect map 17 ad Figure 8: Amount of client’s orders during 2016-2018 26 y th ju Figure 9: Final cause-effect map 32 yi pl al LIST OF TABLES n ua Table 1: Fashion sale and profit growth rate from 2016 to 2018 n va Table 2: Transportation cost from 2016 to 2018 .7 fu Table 3: Stock reconciliation at 31st December 2018 ll Table 4: Stock reconciliation between warehouse system and accounting system at 31st m oi December 2018 nh at Table 5: Stock clearance and normal sale in 2017 and 2018 10 z Table 6: Participants of second in-depth interviews in March 2019 .18 z ht vb Table 7: Inventory turnover days of fashion products 25 jm Table 8: Participants of third in-depth interviews in April 2019 28 k Table 9: ERP’s estimated costs .47 gm an Lu LIST OF FLOWCHARTS om l.c Table 10: ERP project schedule 51 Flowchart 1: Goods reception process 35 Flowchart 5: ERP implementation process 50 ey Flowchart 4: Goods return process 42 t re Flowchart 3: Inventory internal transfer 40 n va Flowchart 2: Goods delivery process 37 EXECUTIVE SUMMARY Nowadays, cost management is more concentrated by many corporations over the t to world, especially in highly competitive market Hence, to maintain the growth in long ng term and achieve sustainable competitive advantages over rivals, any business line or hi ep any company needs to be effective and efficient in managing its internal activities and Fashion business line of Khatoco Trading Co., Ltd is also not an exception Although w the financial results of fashion section in the company still show some positive signals n lo with an increase in sales and profits, non-financial aspects indicate some problems ad y th include: increment in customer complaints, discrepancies in inventory information ju between accounting system and warehouse system as well as between stock counts and yi pl system records These are the significant symptoms which should be focused and ua al analysed to find more inside problems Based on the deep interview technique of n qualitative research, secondary data analysis and literatures review, some potential va n problems and central problem of failure in inventory management are identified This ll fu problem does exist because of some causes related to insufficient inventory management oi m procedures and regulations as well as outdated and inconsistent inventory system nh Therefore, to solve those causes effectively and efficiently, the recommendations of at compiling written working processes for all inventory activities and building ERP z z system for Khatoco Trading are raised in details These solutions will not only solve the vb jm ht main problem related to stocks control in short-term but also in the long-term of business om l.c gm company’s processes and save costs for the company k life More than that, they also help Board of Directors in managing and controlling entire an Lu n va ey t re PART – BACKGROUND Company background t to 1.1.1 History of establishment and development ng Khatoco Trading Co., Ltd (Khatoco Trading), one of the subsidiaries of Khanh Viet hi ep Corporation with 100% owned by the Parent Company, was establish on 21st May, 2002 under the Decision No 77A/2002/QD-UB of the Chairman of Khanh Hoa Provincial w People's Committee and officially wen to the business on 1st July, 2002 The company n lo was operated on the basis of separation and re-arrangement from the rooms and branches ad y th of Khanh Hoa Tobacco Import and Export Division, including: Textile and Garment ju Business Department; Cigarette Trading Department with branches at Hai Phong, Ha yi Noi and Can Tho Upon the establishment, the number of Khatoco ’s employees were pl n Corporation ua al 108 people who were recruited and chosen from other members of Khanh Viet va n The initial function of Khatoco Trading was to consume textile products of Tan Tien fu ll Textile Factory (one member of Khanh Viet Group) and men’s shirts produced by m oi Khatoco Garment Factory with the fabric supplied by Tan Tien Textile Factory In May at nh 2003, Khatoco Trading Company established a Cigarette Trading department on the z basis of withdrawing the cigarette market staffs from Khatoco Khanh Hoa Cigarette z Factory in Khanh Viet Group and recruiting new employees ht vb gm Cigarette trading: Specialize in wholesale and retail trading domestic cigarettes l.c - k and men fashion are the two key business lines: jm From 2014, the company have had three following business activities, in which cigarette Men Fashion trading: Design, process the textile products and distribution the men fashion products include shirts, T-shirts and trousers Ostrich and crocodile trading: Purchase and sell ostrich and crocodile meats, - ey 1.1.2 Missions of the company t re products from ostrich and crocodile meats, other food products (ostrich eggs) n va - an Lu - om that were produced and supplied by Khatoco Khanh Hoa Cigarette Factory Mastery over the nationwide 360-degree cigarettes trading chain including Distribution - Agency - Retail - Consumers Page | - Khatoco Men's shirts become one of the strong brands in the market segment of modern, masculine and stylish middle-age men from 30 to 50 years old t to 1.1.3 Company’s size ng Currently, Khatoco Trading is ranked as a large company not only in Khanh Hoa hi ep Province but also in Viet Nam with the total number of full-time staffs is more than 700 employees Moreover, the average annual turnover (profits before taxes) of the company w in recent years was approximately VND173 billion and the total asset calculated as at n lo 31st December 2018 was about VND1,777 billion ad ju y th 1.1.4 Internal structure yi The internal structure of Khatoco Trading is shown in the following chart: pl Figure 1: Company structure n ua al n va ll fu oi m at nh z z k jm ht vb om 1.1.5 Geographic distribution l.c gm Source: Company structure Decision No 27/QD-CTTM an Lu Khatoco Trading’s products are widely distributed throughout Viet Nam from northern area; Nghe An, Hue, Da Nang, Binh Dinh, Khanh Hoa, Binh Thuan, Dak Lak in Page | ey Nam such as: Ha Noi, Lang Son, Cao Bang, Hai Phong, Thai Binh in Northern t re The cigarettes are focused in many provinces spreading over regions in Viet n - va area to southern area In which: the Middle and Highland area; Ho Chi Minh, Long An, Ben Tre, Bac Lieu, Kien Giang, Ca Mau in Southern area t to - Towards men fashion products, Khatoco Trading concentrates mostly on middle ng area including Khanh Hoa, Binh Dinh, Da Nang, Nghe An and Can Tho province hi in Southern Vietnam Products are mainly distributed through agency channel ep and showrooms Besides, the products are also distributed in Ha Noi, Ho Chi w Minh, but the volume is not as many as mentioned area n Ostrich and Crocodile meats are mainly sold to the restaurants and food shops in lo - ad y th the whole country ju 1.1.6 Stakeholders yi pl To be a one of member of Khanh Viet Group – State owned entity, the major ua al stakeholders of Khatoco Trading include the Parent Company – Khanh Viet n Corporation, Khanh Hoa Province People's Committee as well and related parties and va n internal suppliers: Khatoco Khanh Hoa Cigarette Factory, Khatoco Garment Factory, ll fu Khatoco Ostrich - Crocodile Trading Company, customers, employees and managers of oi m the company at nh 1.1.7 Current development and market analysis z The increase in the legislations towards tobacco industry creates difficulties for the z ht vb company to develop this business line, even nowadays, cigarette product of Khatoco is jm one of strongest brands in Viet Nam market and directly compete with Thang Long k Tobacco Company and Sai Gon Tobacco Company Therefore, men fashion is gm l.c considered as key products that company will invest in to gain the competitive advantages in long-term period Moreover, the potential growth of Vietnam apparel om market is supposed to be high expected to rise by 12-14 percent from 2019-2022 and an Lu gained annual growth rate of 10 percent in 2017 according to the statistic of Vietnam reaches the second place and closely behind foods spending This is the reason why fashion market is more attractive The main markets of Khatoco Trading’s fashion Page | ey increased disposable incomes In addition, spending on apparel keeps going up and t re powered by young aged to middle aged consumers who are living in the urban with their n va Textile and Apparel Association (1) Furthermore, the domestic demand is climbing products are Nghe An, Da Nang, Binh Dinh, Can Tho and Nha Trang, and these markets are also developing in the number of young citizens who desire to express their t to characteristics and status via outfits Khatoco Trading is also focusing on exporting ng clothing by processing orders from foreign partners in EU and USA Therefore, a hi positive signal for export section of Khatoco Trading is that export was forecasted to ep rise by 15 percent per annum from 2016 to 2020 [1] As a result, the bright sight of the w market in the near future creates more opportunities for men fashion products of n lo Khatoco Trading ad y th Currently, the close competitor of Khatoco Trading in apparel industry is Owen at the ju middle-age and middle-class men segment yi pl 1.1.8 Organizational performance al ua The growth in revenue and profits of the whole company are shown in the following n chart: va n Figure 2: Sale and Profits of The Company and Fashion section from 2016 to 2018 ll fu 5,000,000 149,019 vb jm (6,639) 2017 213,064 2018 (50,000) Total sale of Fashion Total net profit of Company Total net profit of Fashion n va Source: Company’s financial statement 2016, 2017 and 2018 an Lu Total sale of Company om 2016 197,655 - l.c 183,259 3,211 gm (10,364) 50,000 k - 100,000 ht 3,000,000 1,000,000 150,000 132,570 4,000,000 2,000,000 200,000 5,722,753 z 193,112 5,691,625 z 6,000,000 250,000 at 7,000,000 7,363,363 nh 8,000,000 oi m Sale and profits from 2016 to 2018 billion in 2016 to VND 133 billion in 2018 respectively The decrease in total sales and Page | ey company from VND 7,363 billion in 2016 to VND 5,722 billion and from VND 193 t re According to the above chart, there is the down trend in revenues and profits of the (13) Kumar SA, Suresh N Production and Operation Management 2nd ed New Delhi: New Age International; 2008 t to (14) Russell RS, Taylor BW Operations Management: Creating Value Along the ng Supply Chain 7th ed United States; John Wiley and Sons; 2011 hi (15) Oluwaseyi JA, Onifade MK, Odeyinka OF Evaluation of the Role of Inventory ep Management in Logistics Chain of an Organisation LOGI–Scientific Journal on w Transport and Logistics 2017;8(2):1-11 n lo (16) Kontuš E Management of inventory in a company Ekonomski vjesnik: Review of ad ju 256 y th Contemporary Entrepreneurship, Business, and Economic Issues 2014;27(2):245- yi (17) Özer Ö Inventory management: information, coordination, and rationality pl n ua 321-365 al Planning Production and Inventories in the Extended Enterprise: Springer; 2011 p n va (18) Agbola RM, Amoah A Coding Systems and Effective Inventory Management of ll fu SMEs in the Ghanaian Retail Industry Central Inquiry 2019; 1(1): 46-65 nh and People 1984;2(2):133-154 oi m (19) Suchman L, Wynn E Procedures and problems in the office Office Technology at (20) Schwartz H, Davis SM Matching Corporate Culture and Business Strategy z z Organizational dynamics 1981;10(1):30-48 vb ht (21) Patterson MG, West MA, Lawthom R, Nickell S Impact of people management k gm 1997 jm practices on business performance: Institute of Personnel and Development London; l.c (22) Kaplan Publishing ACCA Strategic Business Leader (Study Text) USA 2018 om (23) Antonova R, Georgiev G ERP Security, Audit and Process Improvement Smart an Lu Technologies and Innovation for a Sustainable Future: Springer; 2019 p 103-110 (24) Hitt LM, Wu D, Zhou X Investment in enterprise resource planning: Business n va impact and productivity measures Journal of management information systems ey t re 2002;19(1):71-98 Page | 57 APPENDIX First round of depth interview t to Purpose of the interviews: To find the potential problems of three symptoms ng Customer’s complaints about wrong shipping products hi Differences between stocks on count and stocks on the system ep Differences between stocks quantity on accounting system and that on warehouse w n system lo 7.1.1 Transcript 1: Interview guide – Warehouse staff – Mr Pham Hoai Phuong ad y th Part 1: Introduction ju Interviewer: Thank you for your time to join the meeting today My name is Phuong yi pl Linh and I am an internal controller of Khatoco Trading allocated from Parent company ua al Currently, Khatoco Trading’s internal control department and I are conducting the n research related to problems in inventory management Hence, we need your support in va n sharing your idea as well as your experiences and evaluation following to interview’s fu ll questions and the discussion will take around 10-30 minutes We highly appreciate your m oi collaboration because your answers will help the company much in finding the root at nh causes of these problems and solve them effectively z To avoid the information missing in this interview, please allow me to record your z ht vb answer I promise that your sharing will be confidential and be an important document n va Part 2: Main questions an Lu Mr Phuong: Yes, of course om Could we start the interview now? l.c Mr Phuong: No gm Do you need more explaination? k you have the questions for me jm for the company to the business actitives So, please feel comfortable and free whenever you know any reason caused from warehouse activities? Mr Phuong: No, of course not Page | 58 ey products are different from their order in terms of quantity and kinds of good also Do t re Interviewer: Recently, there are some complaints of our customers about received Interviewer: We have checked at customers’ sites that all package seals were in good condition Further, our seal is unique and very hard to counterfeit The problem should t to be come from our warehouse activities Could you please tell me any possibilities? ng Mr Phuong: hmm… I think that maybe mistakes come from picking order before hi ep delivering to customers Interviewer: Could you please tell me more? Are there any objective reasons that can w n cause wrong picking? lo ad Mr Phuong: There are a lot of SKUs in the warehouse at a time and sometimes, it y th ju becomes very difficult to distinguish visually each type of products because they are yi somehow similar in color, especially, in size We just distinguish each SKU by a small pl ua al tag on each item n Oh! I’ve just thought of a case which may not be resulted from us There is one separated n va position to place ready-to-shipping goods but the package for each customer was not ll fu marked clearly and this results in the shipment errors oi m Interviewer: Your answer is very informative Thank you so much, Mr Phuong at nh 7.1.2 Transcript 2: Interview guide – Warehouse staff – Mr Doan Minh Thong z z Part 1: Introduction ht vb Interviewer: Thank you for your time to join the meeting today My name is Phuong jm Linh and I am an internal controller of Khatoco Trading allocated from Parent company k Currently, Khatoco Trading’s internal control department and I are conducting the gm l.c research related to problems in inventory management Hence, we need your support in om sharing your idea as well as your experiences and evaluation following to interview’s an Lu questions and the discussion will take around 10-30 minutes We highly appreciate your collaboration because your answers will help the company much in finding the root for the company to the business actitives So, please feel comfortable and free whenever you have the questions for me Page | 59 ey answer I promise that your sharing will be confidential and be an important document t re To avoid the information missing in this interview, please allow me to record your n va causes of these problems and solve them effectively Do you need more explaination? Mr Thong: No, I not t to Could we start the interview now? ng Mr Thong: Yes, I’m ready hi Part 2: Main questions ep Interviewer: I have asked Mr Phuong about the discrepancies in shipping orders w resulted from picking errors and part of it comes from the fact that it seems difficult for n lo you to clarify each SKU Do you have any comments about it? ad y th Mr Thong: Yes, I agree with Mr Phuong ju Interviewer: Could you please specify it? yi pl Mr Thong: I think wrong pickings likely incur in peak season, especially, the period al ua prior to Tet holiday due to large amount of shipping goods and orders because we don’t n have enough time to check them all manually carefully In peak season, we mostly focus va n on big orders and recheck them before shipping, for small orders, we can easily replace fu ll the wrong picked items quickly In normal cases, we usually check them carefully before oi m shipping nh at Interviewer: Recently, we have reconciled inventory amount between your system z (inventory management system) and accounting system and there are some differences z ht vb between them Could you tell me the reason of it? k jm Mr Thong: I don’t know what you exactly mean but our system is only subject to our l.c Ms Hoa (accountant) only gm inventory management purpose We only confirm the total amount of each category to om Interviewer: We also found many unusual transactions in your system What are they? an Lu Mr Thong: As mentioned above, sometimes, we randomly stock count for those information input in the system and he has made adjustments Interviewer: Thanks for your sharing! Page | 60 ey system but sometimes Mr Long finds out that there are some small mistakes of t re amount Further, we are responsible to input transactions into inventory management n va items that have many transactions during the period and correct them to reflect the actual 7.1.3 Transcript 3: Interview guide – Warehouse keeper – Mr Bui Van Long Part 1: Introduction t to Interviewer: Thank you for your time to join the meeting today My name is Phuong ng Linh and I am an internal controller of Khatoco Trading allocated from Parent company hi ep Currently, Khatoco Trading’s internal control department and I are conducting the research related to problems in inventory management Hence, we need your support in w sharing your idea as well as your experiences and evaluation following to interview’s n lo questions and the discussion will take around 10-30 minutes We highly appreciate your ad y th collaboration because your answers will help the company much in finding the root ju causes of these problems and solve them effectively yi pl To avoid the information missing in this interview, please allow me to record your al ua answer I promise that your sharing will be confidential and be an important document n for the company to the business actitives So, please feel comfortable and free whenever n va you have the questions for me ll fu Do you need more explaination? oi at nh Could we start the interview now? m Mr Long: No z Mr Long: Yes, let’s start because I don’t have many times z ht vb Part 2: Main questions jm Interviewer: I have asked your staffs, Mr Phuong and Mr Thong and found out that k packages for each customer are placed in ready-to-shipping area but they are not clearly l.c gm marked for each customer, aren’t they? om Mr Long: Yes, we have worked for long time and we know which package is about an Lu to ship to corresponding customer So, I think that it is not necessary to mark them Interviewer: Do you realize adjustment transactions in inventory management system? random count Page | 61 ey adjustments in case of differences, also we will make adjustment when we perform t re the input amount with document, I will make adjustments or tell my staff to make n va Mr Long: Yes, we have to input all information manually, sometimes I randomly check Further, sometimes, system went down, became slow and we have to start input over if we had not saved the pending workdone I think mistakes in inputting information is t to also attributable to this ng Interviewer: Do you perform reconciliation between your system and accounting hi ep system timely to prevent any wrong input? Mr Long: Yes, of course we did Monthly, Ms Hoa (accountant) sends me a report w n from accounting system, I will check the amount with the information in our system in lo ad terms of total amount of each category, then, I will sign on her printed report y th ju Interviewer: Thank you for your information yi 7.1.4 Transcript 4: Interview guide – Accountant in-charge – Ms Le Thi Phuong pl n Part 1: Introduction ua al Hoa n va Interviewer: Thank you for your time to join the meeting today My name is Phuong ll fu Linh and I am an internal controller of Khatoco Trading allocated from Parent company oi m Currently, Khatoco Trading’s internal control department and I are conducting the nh research related to problems in inventory management Hence, we need your support in at sharing your idea as well as your experiences and evaluation following to interview’s z z questions and the discussion will take around 10-30 minutes We highly appreciate your vb k jm causes of these problems and solve them effectively ht collaboration because your answers will help the company much in finding the root l.c gm To avoid the information missing in this interview, please allow me to record your answer I promise that your sharing will be confidential and be an important document om for the company to the business actitives So, please feel comfortable and free whenever n Ms Hoa: No, I not va Do you need more explaination? an Lu you have the questions for me t re ey Could we start the interview now? Ms Hoa: Yes, ok! Part 2: Main questions Page | 62 Interviewer: Do you perform reconciliation between accounting system and inventory management system? t to Ms Hoa: Yes, because systems are not integrated, I have to perform reconciliation ng monthly hi Interviewer: Please tell me about how you perform reconciliation in details ep Ms Hoa: Monthly, I extract inventory balance report at the end of each month and send w them to Mr Long, warehouse keeper, his responsibility is to check the ending balance n lo of each category in the report and confirm with me, after all, I will print the report and ad y th he has to sign on it as a proof of confirmation ju Interviewer: Are there any discrepancies between systems so far? yi pl Ms Hoa: No, in case of difference, warehouse keeper has to check the differences and al n ua adjust the system to make sure total amounts are matched va Interviewer: How about stock count’s results? I have checked those reports and found n out that there was no discrepancy happened ll fu oi m Ms Hoa: No, of course, there are discrepancies However, warehouse keeper and his nh staffs are responsible to control all stock in their warehouse, any discrepancies would at be compensated by them That’s our practice so far z z vb Interviewer: Thank you for your answer k Part 1: Introduction jm ht 7.1.5 Transcript 5: Interview guide – Chief accountant – Mrs Nguyen Thanh Tam gm l.c Interviewer: Thank you for your time to join the meeting today My name is Phuong Linh and I am an internal controller of Khatoco Trading allocated from Parent company om Currently, Khatoco Trading’s internal control department and I are conducting the an Lu research related to problems in inventory management Hence, we need your support in causes of these problems and solve them effectively To avoid the information missing in this interview, please allow me to record your Page | 63 ey collaboration because your answers will help the company much in finding the root t re questions and the discussion will take around 10-30 minutes We highly appreciate your n va sharing your idea as well as your experiences and evaluation following to interview’s answer I promise that your sharing will be confidential and be an important document for the company to the business actitives So, please feel comfortable and free whenever t to you have the questions for me ng Do you need more explaination? hi Mrs Tam: No ep Could we start the interview now? w Mrs Tam: Ok! n lo Part 2: Main questions ad y th Interviewer: Ms Hoa said that reconciliation is performed monthly Do you check the ju reconciliation workdone of Ms Hoa? yi Mrs Tam: Yes, of course I Monthly, she will send me the report with signatures of pl al her and warehouse keeper as confirmations for the reconciliation I check those printed n ua and confirmed amounts with system and finally sign on this report as a reviewer ll fu of those differences? n va Interviewer: What’s your solution to differences after stock count? What are the causes oi m Mrs Tam: Warehouse keeper and his staffs would compensate for the any differences nh After that, we will adjust the amount as a sale transaction to him and receive his at compensate We all agree with this practice for a long time without deeply finding the k jm ht vb Second round of depth interview z Interviewer: Thank you so much, Mrs Tam z root causes leading to discrepancies gm Purpose of the interviews: To find more potential problems referred from literatures l.c Part 2: Main questions an Lu Part 1: Introduction (refer to interview guideline) om 7.2.1 Transcript 1: Interview guide – Warehouse staff – Mr Pham Hoai Phuong ey problems incurred in warehouse activities? t re ordering picking before shipping to clients So, Do you think if we have any other n va Interviewer: Based on your sharing in the first interview, you realized some mistakes in Mr Phuong: Let me think Hm…m, probably yes Warehouse have very small tasks, even they are not complex, but sometimes I and my colleagues did not know who will Page | 64 be responsible clearly Jobs sometimes are allocated orally based on the work load of each person and I think we got troubles in conducting our works because every task t to seem not be clear at the beginning ng Interviewer: Did your department have any regulations or procedures about checking hi stock before delivering or receiving? ep Mr Phuong: As I shared with you, everything is unclear even the regulation or w procedure All activities of the warehouse belong to management of warehouse keeper n lo and staffs, so we discussed to conduct job based on the most suitable ways as we agreed ad y th Therefore, no document regulated about checking methods ju Interviewer: Do you know why we did not have any regulations about this? yi Mr Phuong: Sorry, I not know pl al Interviewer: So, have you ever raised this issue to your manager? n ua Mr Phuong: We all know about this problem include my manager, my colleagues and n va I And we are waiting higher level for making the right decisions to solve this problem ll fu Interviewer: Thanks for your sharing! at Part 2: Main questions nh Part 1: Introduction oi m 7.2.2 Transcript 2: Interview guide – Warehouse staff – Mr Doan Minh Thong z z Interviewer: As you mentioned in the first meeting of us, there were some problems like vb k jm you get any different troubles in doing workdone, or not? ht difficulties in clarify each SKU or some mistakes in recording on system So, whether gm Mr Thong: Yes, sometimes, but they are not important For example, Mr Phuong and l.c I were confusing in conducting tasks like one task was done twice by Mr Phuong and I an Lu thought it was me om or missing in doing something because I thought Mr Phuong was in-charge but he Interviewer: It seems that you and Mr Phuong were unclear about your jobs sometimes, n va doesn’t it? Interviewer: So, how about the regulations? Have you ever thought you need a clear regulation in doing some tasks like for stock checking or something like that? Mr Thong: Yes, I remember that our company did not have any regulations for Page | 65 ey t re Mr Thong: Yes, I agree with you checking stock The regulations are very important to us because we can refer to them to perform our jobs t to Interviewer: It mean that in the past, you did not read any regulation about checking ng stock before delivery, did you? hi Mr Thong: Yes, you’re right Since the first day of work, I have been working ep following to directions of warehouse keeper and never seen official instructions or w regulations of company about stock checking process I think every member in our n lo warehouse all knew, you can ask Mr Phuong or Mr Long because they and I talked ad y th about this issue sometimes ju 7.2.3 Transcript 3: Interview guide – Warehouse keeper – Mr Bui Van Long yi Part 1: Introduction pl ua al Part 2: Main questions n Interviewer: Have you ever re-checked your staff workdone? n va Mr Long: Yes, I have had performed re-check their works However, in the peak ll fu seasons when workloads were huge, I did not have enough time to review all nh could incur? oi m Interviewer: Do you think that in case you could not re-check their jobs, some mistake at Mr Long: Hm…mm You are right, mistakes could incur For example, there are many z z product codes which are not completely distinguished, so sometimes my staffs or even vb ht I cannot ensure entirely correct inventory input information Moreover, we input number gm interview k jm on the system by hand, so human error may be unavoidable like I said in the first l.c Interviewer: Your staffs mentioned that both of them realized that our company had an Lu there any difficulties to you in performing your jobs? om insufficient regulations about warehouse activities like stocks check regulations Are Mr Long: Maybe, a clear regulation can help me and my staffs a lot However, because understood clearly how to operate the warehouse that can adapt to the requirement of sale department in distributing and arranging goods Page | 66 ey guideline documents I have been working for the company for a long time, so I t re activity, so I guided my staffs based on my experience without any regulations or n va our company still did not pay attention much in issuing fully regulations for every Interviewer: You knew that warehouse system is separated with accounting system So have you ever thought that our company should integrated two systems into one single t to system? ng Mr Long: I think it is depended on the purpose of higher levels But for me, I not hi need an integrated system because warehouse system is just used for our reference and ep management Accounting system belongs to accounting department Whenever w accountant needs us to confirm accounting amounts We will compare with our system n lo and sign on their report if total quantity is matched because the accountant is mainly ad y th focus on total stock amount Therefore, no direction of managing inventory records were yi yet” ju agreed by both of us as well as I have never seen any regulations about this situation pl al Interviewer: About warehouse arrangement, as confirmed in previous interview, your n ua employees chose a place for ready-to-shipping goods without clearly mark on each ll fu lost? n va package, so you use any techniques in arranging or storing your stocks to avoid goods oi m Mr Long: No official or profession methods about arrangement were used because nh balance of goods is really large in peak season However, we totally control stocks based at on its tags from suppliers and they are distinctive to each other z jm ht vb Third round of depth interview z Interviewer: Thanks for your sharing! k Purpose of the interviews: To find the potential causes of central problem: Failure in l.c gm inventory management 7.3.1 Transcript 1: Interview guide – Warehouse keeper – Mr Bui Van Long an Lu Part 2: Main questions om Part 1: Introduction Mr Long: Yes, I agree with your idea There were some mistakes incurred due to human error that I did not have enough time to check and I was not always available when staffs Page | 67 ey ones may due to insufficient written processes? t re some problems related to warehouse activities, so you think the root cause of these n va Interviewer: According to your sharing in the second interview, you mentioned about needed my advices Moreover, the consequences of these issues did not solve immediately because there was no written guideline for staffs to refer Therefore, a clear t to procedures and instructions related to inbound and outbound activities, organization ng chart, and some common mistakes can help me and my staffs work more effectively hi Unfortunately, I have never seen it before ep Interviewer: Is there any other causes of these problems you think about? w Mr Long: No, I don’t have any additional idea n lo Interviewer: Thanks for your sharing! ad y th 7.3.2 Transcript 2: Interview guide – Fashion deputy director – Mr Ho Ngoc Chung ju Part 1: Introduction yi Part 2: Main questions pl n fashion products? ua al Interviewer: Have you ever heard about some problems in inventory management of n va Mr Chung: Hm…., actual yes, but not frequently I saw that some problems were not oi m keeper and accountant ll fu significant as well as they are solved quickly by the coordination between warehouse nh Interviewer: Can you share more problems that are raised to you? at Mr Chung: Last year, Mr Long told me about some inventory items were stolen, some z z customers had complaints about wrong received goods or Mrs Tam responded that there vb k Mr Chung: Yes, I thought they could solve the problems together l.c gm Interviewer: You did not verify more reasons, did you? jm found the solutions and said this was not significant ht were few differences between her record and warehouse’s record, but after that they om Interviewer: Based on the inspection of our internal control, there was some issues an Lu increased related to inventory activities include the miss-match in inventory record as you know, the confusion in doing tasks of employees due to unclear guideline as well Mr Chung: Well, I understand your finding about the confusion of our employee I think all activities related to inventory in our company mostly had verbal processes instead of written one such as sale, purchase, inbound and outbound logistic and this Page | 68 ey t re causes? n va as regulations or directions Do you think these problems are important to find the was a big problem Interviewer: You said that all activities are mostly conducted through verbal processes, t to you think this situation has potential risks toward stocks control? ng Mr Chung: Yes, I also think too In the fact that, the verbal processes are very risk for hi our activities because staffs not have guidelines and references to follow and ep managers will get trouble in observing staffs’ work done So, we need to improve this w problem by compiling written processes as soon as possible n lo Interviewer: You knew this problem before, why our company did not have any solution ad y th to solve this problem? ju Mr Chung: Because the company mainly focused on sale as following to the yi requirement of parent company and tried to ensure to complete tax liabilities as pl al delegated annually, so internal activities were not be taken care comprehensively n ua However, our company is in equitization period now, so I think this is the most suitable n va time to solve this problem immediately ll fu Interviewer: Thanks for your valuable sharing! at Part 2: Main questions nh Part 1: Introduction oi m 7.3.3 Transcript 4: Interview guide – Chief accountant – Mrs Nguyen Thanh Tam z z Interviewer: Do you have any comment about the current accounting system – An Linh ht vb that our company are using? k jm Mrs Tam: Yes, recently, my staffs and I have had some issues with An Linh software l.c functions gm there are some weaknesses in adding more product codes resulted from limited an Lu Can you share your idea about this? om Interviewer: You know that accounting system and warehouse system are separated Mrs Tam: I agree that the problems that accountant cannot control will lead to some reduced, I think Page | 69 ey and accounting are linked together, the problems of inventory differences will be t re the mistakes still incur Therefore, if our company can equip a system that warehouse n va unexpected consequences as we saw in recent years Even we reconciled frequently but Interviewer: You mentioned that a new advanced system should be equipped, but it can take many times because we have to get the approval from BOD, or even parent t to company Thus, you think about other solutions to fixed problems of inconsistence ng in inventory tracking? hi Mrs Tam: Uhm…, may be any written direction or clearer procedure can help both of ep us We know how to work with each other, but until now, everything is determined w according to our agreement without based on any documents Hence, mistakes still n lo incurred ad y th Interview: Why did not you prepare the written processes or guideline for inventory ju control before? yi Mrs Tam: Managers did not require me to that and I did not have enough time to pl al write it n ua Interviewer: Thanks for your valuable sharing! ll oi m Part 2: Main questions fu Part 1: Introduction n va 7.3.4 Transcript 5: Interview guide – IT manager – Mr Tran Nam Cuong at Mr Cuong: Yes, I was nh Interviewer: Were you in-charge in building warehouse system? z z Interviewer: You know that warehouse system and accounting system is not linked ht vb together, you? k jm Mr Cuong: Yes, of course An Linh is designed and installed first by outside party gm Interviewer: Why did not we require An Linh to create warehouse system in the past? l.c Mr Cuong: Accounting system was set up before warehouse system As according to om the requirement from higher level about designing a system for warehouse to observe an Lu stock, I was in-charge of this task I think that warehouse system is quite simple with few functions and not need to sync with accounting system, so we did not hire Seasoft ey t re outside party to self-designing n va Co to design it Moreover, to save the cost for our company BOD was not prefer hiring Interviewer: What you think about the quality of An Linh system? Mr Cuong: I have to work with An Linh frequently because accountant raised many complaints about this system like limited functions, wrong report extraction Page | 70 Interviewer: Can you share with me more information about this? Mr Cuong: In recent years, accountants get stuck in adding new details of goods into t to accounting system for their control Even I have required supplier to update and extend ng system for these details but they could not adapt to this requirement thoroughly An Linh hi system is quite outdated and seems not to be suitable to a variety of accounting ep requirements in a big company like Khatoco Moreover, the warehouse system was w created by IT, so it could not be consistent with An Linh, warehouse staffs and n lo accountants have to reconcile manual if they need ad y th 7.3.5 Transcript 6: Interview guide – Director – Mr Doan Huu Thanh ju Part 1: Introduction yi Part 2: Main questions pl ua al Interviewer: Have you ever received any feedback of accounting department about the n problems with current accounting system? n va Mr Thanh: Yes, I have I heard Mrs Tam and Mr Chung mentioned about this issue oi m budget ll fu and I am considering which system can adapt to company’s requests and restricted nh Interviewer: Another aspect I would like to ask you, this is our culture There was the at failure in inventory management and one of some reasons is that our departments did z z not connect to each other to control it such as inadequate reconciliation or ineffective vb k jm partly come from our miss-match culture? ht communication and discussion about inventory problem So, you think this issue gm Mr Thanh: You know that our culture was built during a long-term period of business l.c Thus, even the connection between many departments was not focused, culture can not om change immediately As a member of BOD, I need more time to improve our culture an Lu day by day And I think, there will be another solution to make every related department be responsible for their general tasks like setting up a thoroughly procedure, this action n va will bind employees to standard framework ey t re Interviewer: Thanks for your valuable sharing! 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