iii ABSTRACT This thesis focuses on Balanced Scorecard/Key Performance Indicators BSC/KPIs and their efficacy for the package manufacturing business Phu An Packaging JSC.. KPIs can be us
COMPANY BACKGROUND
Key facts
- Registered company name: Phu An Packaging Joint Stock Company
- Headquarters: Phong Khe II Industrial Zone - Phong Khe Ward - Bac Ninh City –
Bac Ninh Province,Viet Nam
- Scope of business licensed: packaging production
Website: www.baobiphuan.bizz.vn
History of development
Founded in 2005, Phu An Paper Joint Stock Company specializes in manufacturing Kraft paper It is growing and developing continuously until now, Phu An Packaging Joint Stock Company has become one of the regional leaders in the packaging industry Phu An Packaging Joint Stock Company with the international name "PHU AN PACKAGING" specializes in manufacturing and exporting all kinds of Kraft paper and paper packaging Serving in the industries:
- Milk packaging and other consumer goods
- All items related to carton packaging
Mission, Vision, Core values
Phu An Packaging is a printer and converter of flexible packaging that is committed to relentlessly pursuing company principles and values that focus on developing our people and creating life-long customer relationships
Our goal is to be the best flexible packaging company in the industry – by delivering packaging excellence defined by superior quality, unmatched service, relentless continuous improvement, and constant innovation
Phu An considers its employees, customers and suppliers to be its partners and as such, they are among its most valuable assets Phu An therefore, treat them with the utmost respect
Building, creating and performing are key components of all our processes Continuous improvement drives Phu An’s commitment to excellence, which allows us to offer high-quality products and services
We encourage the creativity and commitment of all its partners and we recognize its contribution
Phu An strives to listen attentively to its partners It commits to making every effort to provide immediate answers to all their questions, and we aim to communicate its objectives and action plans clearly at all levels of the company.
Product
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4 Phu An Packing only produce paper (carton) package for local and for export as below:
PAKAGE FOR TH TRUE MILK
SẢN PHẨM SỮA BA VÌ
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PAKAGES FOR DUC NHAT CERAMICS
PAKAGES FOR HẢI CHÂU BAKERY
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Factory
Below are some images of package making machines in Phu An Factory
Customer
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Main customers are enterprises producing food, pharmaceuticals, consumer goods at for local and export
With the prestige and quality of our products, in the past time we have provided products to a lot of customers in many different fields Currently, Phu An is providing carton boxes for some typical customers such as:
- TH true milk Food Chain Joint Stock Company
- International Fresh Fruit and Vegetable Production and Supply Joint Stock Company
- Hai Phong Leather Shoes and Development Joint Stock Company
- Hai Chau Confectionery Joint Stock Company
- Huu Nghi Food Joint Stock Company
- Hanoi Milk Joint Stock Company
- Ba Vi Milk Joint Stock Company
- GELEX - EMIC Electrical Measuring Equipment Company Limited
• Focusing on expanding and expanding the high-end packaging market, diversifying product categories to meet key customers: Food industry; Medicine; Electronics, Export goods
• Customer-orientation for all efforts and allocate the resources of the business in a logical and scientific manner to meet and satisfy the increasing demands of customers
• Applying a quality management system into production to constantly consolidate and enhance product quality to create value chains for customers
• Making the best use of available human resources by strengthening and maintaining regular training on appropriate topics, especially managers and technicians to further improve skills, job knowledge, mastering modern technology, improving labor productivity and improving product quality
The company do not want to leak out the data because they consider this is top secret They just let me know that the sales revenue in the year 2016, 2017, 2018 respectively is 25 Billion VND, 30 Billion VND and 110 Billion VND They go too fast so that is the reason why they need o strategic management method like BSC/KPIs for them to manage and measure their operations and staff’s performance.
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COMPANY STRUCTURE AND ORGANIZATION CHART
Explanation
As the head of the company, Board of Management (BOM) is in charge of governing mission and has full authority to make decision in development strategy and annual business plan in the name of Phu An BOM directly supervises the daily work of Board of Directors
BOM includes 3 persons which are Chairman (Ms.Nguyen Thi Hoa), Vice Chairman (Nguyen Van Tien) and a member Ms Nguyen Thi Hoa is the person who makes all important decisions
The Board of Directors (BOD) members are appointed by BOM Mr Nguyen Manh Ha is the CEO of Phu An He has outstanding organizational skills Under the direction of BOD, all divisions work fluently to reach BOM targets He has a deep knowledge and extensive experience in packing business
The company has 3 divisions: Administration, Production and Sales and Marketing
Administration division is divided in to Accounting, Human Resources, and IT
Production division has 5 departments which are Research & Development, Production, Planning, QC/QA, Planning and Maintenance
The department directly responsible for the implementation of marketing activities and sales in domestic and oversea markets, finding potential customers and making them become company’s partners in order to achieve sales target
Sales & Marketing division has 4 departments which are Sales & Marketing, Logistics and Warehouse and After sales service
During the internship, I worked as a assistance and consultant to CEO Nguyen Manh Ha I evaluate all the activities of the companies and then persuade him to apply BSC/KPIs in management
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THE MISSION: ASSIGNED TASKS AND GOALS
The tasks assigned
Phu An is developing fats and facing the issue of effective governance, so I have a roles to:
1 Advise Phu An on BSC / KPI tool as an administrator
3 Apply BSC/KPI to a simple department first (IT Dept) then replicate.
The link between the subject matter and the mission
Under instruction of company’s supervisor, my mission is linked directly with the subject matter Firstly, I had studied about company, its rules and operation structure in order to have a comprehensive understanding of the company and its business operation Then, I help them to build the BSC/KPIs for them to
The desired goals
During this period, my general goal is to consult and build the BSC/KPIs for Phu An
Packing Following is my individual action plan to complete the subject matter and goals during the internship time:
Task Goal How to achieve Deadline
- Find the information about the company: its main business activities, financial situation, company structure, culture, its products, customers and competitors and the problems that they are facing and need to be improved
- Discuss to peers at different department to have a clear overview of company
- Study on its competitors to know more about the company strengths and weaknesses
Study the strategy of company in management
- Understand the all the activities and processes of the company in strategy management
- Read documents related to strategies and processes
- Join the discussions with colleagues
- Attend the company’s meetings to find more about their operations and people mindsets
- Collect related information about the targeted market: politics, economy, social culture, legislation, technology, nature environment factors and I collected data about market demand, target customers, the suppliers, distributors and competitors
- By using both primary and secondary method
- Analyze the data collected to give a solution for the company
- Collect and analyze the data collected by using SWOT analysis 30th
- Based on the analyzing of the company strategies on management, draft developing the strategy
- Give advises to CEO and BOM on developing strategy management to cope up with the fast development of the company
- Train the BOM and its key staff on BSC/KPIs
- Develop BSC/KPIs for the company
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The Contribution to the Company
During my internship period, I gathered a lot of information about Phu An Packing and its operation as well as packaging market I carry out training for them on the BSC/KPIs and consult them to use the BSC/KPIs model to control and measure their business and its staff performance to cope up with their fast developing.
The theoretical knowledge to be put into Practice
With all the knowledge I have achieved during the AMI Master program, they support me so much in understanding the operation of Phu An and help me develop good BSC/KPIs for them There are some subjects that I have learnt during the AMI program that gave me a vital theoretical knowledge for me to apply into practice during the internship time:
- Helps to select and build up the suitable strategies for international expansion
- Provides different methods and tools to analyze market by using models such as PESTEL, Porter’s five forces and SWOT analysis
- Supply the background of the globalization process and tendency
- Present both potential opportunities that the company may have to expand the business oversea and challenges during its performance
- Provides useful knowledge for the penetrating market
- Supply me with a lot of factors for taking into consideration while doing international transaction
- Helps to understand how to manage business internationally
- Provides general overview of business and management
- Provides an overview about different distribution channels
- Helps to choose suitable channel to distribute and promote company’s product and set up KPIs for them
- It helps me learn to analyze problems in companies and organizations and to transform the results into specific communications in various contexts; from political crises and organizational changes to the introduction of new products in the global market
- Equipped us with the knowledge about cultures and the influence of cultures in doing international business
- Helps to analyze different culture through various methods, such as Hofstede’s Model and Hall’s Model and figure out the most effective ways to do business in this country, is an essential part of my internship work
Provides information about potential market and teaches us experiences which can apply in practice for market expansion, business management via playing business game online I have come to a realization that all subjects in AMI Master Course have influence significantly on my work at my company and especially my ideas for finding the strategic management method for Phu An
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DEVELOPMENT
Stakeholder’s Matrix
Stakeholders management is crucial to success of any organization in implementing new method of management like BSC/KPIs
Stakeholders Stakeholders’ power Stakeholders’ expectation
1 Shareholders - Decide to invest for the projects
- Decide the key staff of company
- Having more customers: Customer base increases by 30%
2 Managers - Manage all staff to operate daily business activity to meet shareholders’ requirements
- Promulgate internal regulations, culture of the company
- High salary: Higher than competitors 5%, increased regularly
- Good working environment: Motivated environment, good workplace relationships
3 Customers - Who actually pay the salary for all staff of the
- High quality of products and services
- company by the purchasing company’s products and refer to others
- Keep developing new high- quality products
4 Suppliers - Key supply chain of the company
- Farmers: the company works well and pays high price regularly: stable financial source
- Regular and long-lasting trading relation
- Directly make the targets of shareholders become the truth
- Sustainable occupation: good financial compensation, espect, working condition and insurance
- Monitor the company by the laws
- Increase export, decrease deficit of trade balance
- Comply the law and regulations
7 Society - Create reputation of the company
- Creating suitable jobs for local people
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SWOT Analysis is a well-known model in the analysis of a company’s business which is a very important step in developing a strategy of a company SWOT to analyze the strengths, weaknesses, opportunities and threats of Phu An Packing The table below is SWOT analysis of Phu An:
- Lack of International management methods and certificate in recycling product
Price - Reasonable - Higher than some competitors’ products
Managers - They are dynamic, a s s e r t i v e and have strategic vision
- They haven’t got good strategic management system like BSC/KPIs
Staff - The staff is dynamic and well educated and trained
- They are all young and lack of experiences
Finance - The company has good financial situation
- Well-known in Vietnam - Not well known to foreign market
Customers - Good customer based i n Vietnam and some Asia countries
- Not well known to foreign market
Demands - High demand in Vietnam and foreign market
- Demand of high-quality product
Develop BSC/KPIs for Phu An
- Consumer is very fond of new thing which attract them and the thing consumers hit at first sight is its attractive packing
Competitors - There are many competitors in
Vietnam and many from China and Korea
4.3 DEVELOPPING BSC/KPI FOR PHU AN JSC
In Vietnam, the demand for packaging is also increasing This encourages every company to remain competitive by improving its performance continually
Phu An is a company committed to being the best flexible packaging company and focusing on consumer satisfaction Fierce competition in the present era encourages companies to improve their performance continuously Currently, PHU AN only focuses on assessing their performance by using modern strategic management system such as BSC/KPIs
By using BSC/KPIs developed by Robert S Kaplan and David P Norton and with reference to the The equilibrium scorecard (BSC) and Analytical Hierarchy (AHP) developed by Laksana Widya Peryoga and Bustanul Arifin Noer [1] I build the BSC/KPIs model for Phu An
Following is the summary of BSC/KPIs to develop the model for Phu An
In this development, the Balanced Scorecard Process (BSC) and Analytical Hierarchy (AHP) were conducted to design a performance measurement system While the results from the implementation of the performance measurement system based on the objective Matrix scoring system (OMAX) represent the traffic light system The methodology detailed in this
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22 study is explained in the following list:
Balanced scorecard (BSC) was first introduced by Robert S Kaplan and David P Norton in
1992 This model is the most popular model in the world
The Balanced Scorecard (BSC) approach aims at strategic and performance indicators based on the company's vision and strategic mission to meet the organization's desire to measure performance through its management system It consists of four perspectives:
Fig 3 Perspective from Balanced Scorecard
The application of the Hierarchical Analysis (AHP) method is to organize and analyze weights based on decision-making preferences (directors and managers) according to the priority of each view regarding the performance of a company
The procedures for decentralized decentralization (AHP) preparation in this study consist of three (3) steps:
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Objective Matrix (OMAX) with Traffic Light System
The OMAX model is a model developed in the 1980s by Professor James L Riggs from the Department of Industrial Engineering at Oregon State University.The Objective Matrix (OMAX) method is a scoring system method that takes into account the measurement metrics of existing KPIs by consolidating the metric into a single measure often called the Current Performance (Vanany, 2009)
Objective Matrix (OMAX) model in which there is a matrix consisting of:
Criteria in it is a performance measurement indicator (KPI) to be measured
It is an achievement of performance measurement indicators (KPI) as the basis of comparison
It is an achievement level that stretches to 10 levels, from lowest to highest, level 0-10
The measurement results of achievement data are classified according to the closest performance level
The weight of each performance measurement indicator (KPI) that has been obtained from the weighting step with AHP
It is the result of a multiplication of Score with Weight
The result of the total sum of all Value of each KPI that has been calculated
Scores consisting of a range score of 0 to 10, the following explanation:
Score 0, the lowest conditions specified by agreement
Score 3, normal or standard conditions taken from the previous actual data as the reference base between Score 10 and 3
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Fig 5 Framework Objective Matrix (OMAX)
There are 3 categories of Traffic Light System according to Prianto (2003) include:
Indicators are in the green color category when the result of achieving a performance indicator has been reached or succeeded according to the target set This category, if the result of the assignment is at a value between 8 - 10
The indicator is in the yellow category when the outcome of a performance indicator has not been achieved or has not succeeded but its value is close to the target so it is advisable for the company to be careful to avoid any possibility This category, if the result of the assignment is at a value between 4 - 7
Indicators are in the red category when the outcome of the achievement of a performance indicator is far below the target set by the company so it is advisable that the company immediately make improvements This category, if the result of the assignment is at a value between 0 - 3
4.3.2 Designing Performance Measurement System a) Objective Strategies
Objective Strategies are obtained by distributing questionnaires to the respondents who have been determined based on vision and mission
Table 5 Objective Strategies b) Key Performance Index (KPI)
Key performance index are obtained by distributing questionnaires to the respondents who have been determined based on objective strategies The second of the questionnaire is aimed at establishing agreed KPI through interviews and discussion based on the level of importance.
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Table 6 Key Performance Index (KPI) c) Preparation of Hierarchy
Preparation of hierarchy aims to classify KPI, strategic objectives in the performance measurement system in accordance with 4 BSC perspectives that are supported by the concept of Analytical Hierarchy Process (AHP) method
Fig 6 Hierarchy of Performance Measurement
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The Strategy Map is a summary of the links between strategic objectives, the causal relationships and the effects of each Balance Scorecard perspective 4 Balance Scorecard perspectives from bottom to highest are growth and learning perspectives, internal business process perspective, customer perspective, and financial perspective
31 e) Weighting Perspective, Objective Strategies, and KPI
Table 7 Weighting Perspective, objective strategies and KPI
4.3.3 Application to IT Department of Phu An Packing
IT department is simple and chosen to test Here, I build the model for the whole department and for each staff in there Bellowing is are the result
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Table 6 Work performance (KPIs) and salary based on the KPIs of IT Dept
Table Work performance (KPIs) and salary based on the KPIs of IT Dept staff
No CODE DEPT NAME POSTION KPIs Total Salary ACTUAL
No of Day off Working day Total of
1 0642 IT Nguyễn Hữu Tài IT Manager 100% 12,000,000 12,000,000 4,800,000 0.0 461,538 4,800,000 7,200,000
2 1282 IT Nguyễn Thanh Hiếu IT 100% 4,699,000 4,699,000 1,879,600 0.0 180,731 1,879,600 2,819,400
3 1345 IT Đinh Nguyễn Nam Khánh IT 100% 5,500,000 5,500,000 2,200,000 0.0 211,538 2,200,000 3,300,000
WORK PERFORMANCE ( KPI) AND SALARY OF IT DEPT
Percentage of the number of complaints, on receiving support number (not exceeding 10%)
Compliance: 05 points Exceed 13%: 03 points Exceed 15%: 0 points
TC.02 Time to receive requests and handle user errors (Not to exceed 8 hours) No of hours Mothly
Compliance : 05 points Exceed 10 hours : 03 points Exceed 13 hour/time : 0 points
Time to fix applications on the server system within 5 hours (Exclude hardware damage)
Compliance: 05 points Exceeding 5 hours: 03 points Exceeded 6 hour/time: 0 points
Time to fix application errors on workstations within 1 hour Eliminates hardware damage
Compliance: 05 points Violating more than 3 times: 03 points
Violating 5 or more times: 0 points
Ensure that data stored on the server are restored intact before 1 day (excluding data stored on the workstation)
Compliance: 05 points Less than 90%: 03 points Less than 85%: 0 points
QT.04 Service downtime (not to exceed 1 hour) No of hours Mothly
Compliance: 05 points Exceed 2 hours: 03 points Exceeded 3 hours: 0 points
QT.05 Follow ISO correctly Daily work Daily
Compliance: 05 points Violating less than 3 times: 03 points
Violating 3 or more times: 0 points
QT.06 Number of authorized absences in the month
Leave of absence Form Mothly
Take 1 day off: 5 points Take 2-3 days off: 4 points Vacation 4 days or more: 0 points
5% No absence không nghỉ OK 5 0.25
QT.07 Violating company rules Daily report Daily
No offense: 5 points Excused violations, reported: 03 points
Violation without reason, reported: 0 points
KH.01 Receiving and answering questions of employees related to the field of charge Users Daily No complain: 05 points
KH.02 Provide the necessary data for new employees email and phone Daily
Information to employees: 5 points Information not available to employees: 0 points
HH.02 Attend on-demand training from the company Training List Mothly Participation: 05 points
No participating: 0 points 10% Attend Attend OK 5 0.5
Weight Plan Actual Pas s ratio Evaluation
STT KPIs Me as ure Fre que ncy of re port Point
Name Nguyễn Hữu Tài Manager Hàng Sấm Năng
PHU AN WORK PERFORMANCE ( KPI) AND SALARY OF IT DEPT