operation management final paper research about tinhloi garment factory

We will also point out limitations and flaws that cause factory lossesAfter studying every aspect of the process for a while, we realized that the company was having problems optimizing

TinhLoi Garment Factory

Instructor : Prof Soren R Kirchner

Group Member : Nguyen Khanh Hung - 11205414Nguyen Tuan Quang - 11206710Le Tuan Anh - 11200164Nguyen Hoang Viet - 11208467Ngo Quang Huy - 11201787Cao Duc Thach - 11203504

I.IntroductionExecutive Summary

The trip left us with a lot of experience in running a company and useful information to complete this report.

In this report we will show you step by step how to perform repetitive business operations to get the desired results In addition, we also show a diagram of the factory's operating apparatus to indicate limitations in the use of human resources.

By observing and studying TinhLoi's production process We will also point out limitations and flaws that cause factory losses

After studying every aspect of the process for a while, we realized that the company was having problems optimizing production time, which put pressure on workers, machines and line productivity production lines as well as other external factors, from which to make some suggestions to help improve the operation program, improve capacity, reduce the possibility of loss, build trust with customers.

The total of three investments are $85.500 Tinh Loi Garment will get back its investments in three months and start to get profits from the third month The first year after investing, the company will save $329.020and from the second year onwards, it will be $394.520 annually.

So that Tinh Loi Garment Co., Ltd continues its mission of bringing products to customers mine quality and more importantly, bring joy to everyone.

Tinh Loi Garment Factory

Tinh Loi Garment Co., Ltd is a member of Crystal Group Hong Kong, with 2 factories operating in Hai Duong province, currently the largest textile factory in Hai Duongprovince as well as in the North of Vietnam.

The products of Tinh Loi Garment are extremely rich and diverse, including knitting, knitting, and ancillary items such as washing, printing, embroidery, We are confident to meet the needs of customers Europe, Asia, Japan,

For Tinh Loi Garment, investment for the environment is an investment for development We always aim to reduce the amount ofwater, energy and reuse materials tothe maximum.

Gantt Chart

II Ishikawa

Despite the huge annual profit, we realize that Regent Garment Factory Ltd

also lost a lot of money because of defective products Products of Regent Garment Factory Ltd are defective due to manufacturing process, there are still some problems such as: short pants, wrong fabric color, seam error, moldy fabric, error when packing, missing print, sticky thread in print, missing buttons, etc These defective products will be taken off the

production line and sorted for processing Every year Acecook not only loses the cost of materials for defective products, but also has to spend money to repair, destroy or penalize customers for those products that are returned So what are the factors that can lead to the problem? After analysis, we have concluded the 4 main factors indicated in the Fishbone Diagram below.

We estimate the amount Regent Garment spends to resolve defective productsto be around 0.03% of annual revenue - that is about more than 480 thousand US dollars in 2022.

However, Regent Garment still does not stop researching and applying new technologies to production in order to reduce costs, improve product quality, and at the same time strictly follow the production process, supervision and control of raw materials quality assurance, meeting production requirements,

machinery and equipment are invested and maintained in a timely manner to minimize errors in the production process, etc The research and

improvement of product quality and handling handling of nonconforming products (if any) has brought about remarkable results, helping to improve product quality and reduce the level of nonconforming product handling The proof is that for many years, the Company has not received any complaints from customers about product quality.

Some considerable advice:

Errors caused by machines working all day: When machines work continuously for many hours in the summer, many sewing machines can be damaged But the number of employees repairing the company's machinery isnot enough to repair in time for the employees to continue working -> downtime Usually, the solution is that workers will make up for their time with another machine when normal working hours are over -> increasing work costs due to overtime, that machine is also likely to be overworked.So the best solution is to prepare redundant machines so that they can alternately operate for machines showing signs of overload To be able to avoid downtime.

The company will need to prepare about 200 spare sewing machines, each costing $200, then the company will need $40,000 to buy the spare This is a relatively small cost for a large company like Regent Garment, but it brings stability in long-term production to the company if there is a technical problem with the machine.

Number of backup machines

Price per pieceTotal amount invested

save $98.630 each year

Solution for human resources: Because the quality of human resources in Vietnam is still low, the production capacity is still poor, this is due to the lowlevel of education as well as the awareness of the Vietnamese people themselves So the company can do propaganda in high schools, vocational schools, training institutions to change the perception of children and their families In Vietnam, the trend of vocational training is becoming more and more popular because university education is no longer as easy as before In the context of many unemployed people, they will go to work in factories or industrial zones without the opportunity to apprentice and do long-term internships Therefore, if the company does well in propaganda, it will have ahighly qualified, young, dynamic and long-term trained workforce because after the students graduate from school, they can work at the company immediately and can stay with the company for a long time without fear of quitting midway.

Decision Matrix

Current Standard Operating Procedure

Current SOP of the TinhLoi’s Garment Factory

SOPs are step-by-step instructions that specify how to undertake repetitive business operations in order to obtain desired results By observing and studying about TinhLoi’s production process, we have created a simplified flowchart showing the SOP that the company is currently applying The production process has 11 main steps which are mostly done by machines and supervised by well-trained employees TinhLoi ‘s garment production process is equipped with million-dollar equipment and a closed, clean factory system, ensuring workplace safety and hygiene at the highest level Possessing technology completely transferred from the parent company in HongKong and a team of both

Vietnamese and HongKonger quality management experts, every year TinhLoi 's factory provides nearly 215 million pieces of clothing for many big customers from nations, bringing millions of dollars in profit for the company.

Production procedure in real life

In order to achieve the most closed, orderly, and affordable manufacturing model feasible, the firm uses the C2B model, or "Cut to Box," to the production model All processes, including raw materials, cutting, tailoring, finished goods, and packing, are completed on a single production line The C2B model has been used in the production model to assist achieve the "Low cost-high efficiency" requirements by lowering the cost of management apparatus, relieving strain on factory management, and increasing the factory's operational capacity.

Recommendations for the Operating Problem

Recommended SOP for the factory

After a period of research on every aspect of the process, we realized that the company was having problems in optimizing production time, which put pressure on workers, machines and production line’s productivity External factors such as human’s working culture or environment are really hard to change, so we believe in order to boost production in the most efficient and economical way, we should change the human management problem and improve the machinery Therefore, we recommend that the company could amend the production process by improving the operating procedure We recommend a small step before flattening the fabric, that is we will put the rolls of fabric into the automatic fabric softener to soften and reshape the fabric This

aims to remove excess fabric and impurities on the fabric batch, and at the sametime, straighten the wrinkles and curls of the fabric, making it easier for the fabric to be cut According to

calculations, fabric softening only takesabout 2-3 minutes for a batch of fabric,but can reduce nearly 71% of fabricspreading time for workers (from 7minutes to 2 minutes), making flatteningsimple as well as ensure the hygienicquality of input materials for the nextstages This fabric discharge stage helps

to reduce the workload for spreading and cutting the fabric, saving the working time frame for the semi-finished sewing department about 25-30% compared to before (no fabric washing step).

At the same time, we proposed to the head of the production line to apply the SAM-Standard Allowed Limit- the concept of Standard Allowed Minutes is used to measure the work content of a garment, so the time taken for an operator or machine to complete a specific task when working at 100% efficiency Tinh Loi Company can refer to manufacturing business managementsoftware provided by Motadata company, brand name of Mindarray Systems Pvt Ltd, a Global software organization providing solutions for IT operations through AIOps and ServiceOps platforms Instead of having to keep track of theprocess progress reports on manual records, which is difficult to control closely and takes a lot of effort, after applying SAM, the production line manager only

needs to track data on a small electronic board with production progress monitored and updated automatically every second The application of this technology both improves the ability to control work progress and efficiency, while minimizing human data errors, ensuring that each production line meets its targets.

All production improvement costs we mentioned above are calculated in the following table.

Bulk Washing Machine

After having discussed with the Production Manager Department, we agreed that 3 bulk washing machines would afford all needs of 1 factory Maintenance costs will be around $500 quarterly.

$8.500/each$8.500 x 3 units

SAM Motadata Inc commits to becoming a long-termbusiness management software supplier with Tinh Loi.

Improvement Costs

The total cost is expected to be around $47.500. This is not a huge number compared to the annual profit of the company However, we expect that after the improved operating procedure, the factory will reduce the unnecessary timebefore cutting into parts (from 7 minutes to 2 minutes), which can significantly increase production time and save time wasted

V Executive Dashboard

representation of organizational KPIs, metrics, and statistics for 2022 after making recommendations to enhance the production process while also resolving the unqualified-product issue Based on the information that was available and the scenario at hand, all of the figures were computed rationallyand approximated Take a closer look at the three major KPIs that we calculated on the executive dashboard

1, On-time Delivery KPI (OTD)

On-time delivery (OTD) is a key metric to measure delivery performance andsupply chain efficiency It assesses the ability in fulfilling the shipment withinthe period of order within the time limit.

According to data from Tinh Loi garment company, every day from 8 to 9 containers are shipped to the port, the transportation time from the factory to the seaport varies from 2 to 3 hours and the time at sea to arrival about 25 to 30 days Total time for an order will be about 30 to 40 days

In 2020, the number of goods delivered on time is about 171.4 million pieces,accounting for 97% and only 3% of the overtime delivery rate which is represented by 5,3 million pieces.

In 2021, Due to the more serious covid situation, the delivery of goods will

be slower, accounting for 9%, or over million pieces, but in return, the 18

number of goods shipped on time is more, approximately 184 million pieces.In 2022, The epidemic situation has improved because the Vietnamese government has many solutions to support businesses after the pandemic, so the on-time export volume accounts for 94%, or about 199 million pieces, and only about 6% is overdue which is represented for 12,7 million pieces.

2, Production Downtime

The total downtime in 2020 is estimated to be 25256 minutes, which is equivalent to about 70 minutes per day But in 2021, the total production downtime is approximately 29967 minutes – about 82 minutes a day, which issignificantly more than 2020 because of the Covid outbreak.

But by 2022 when things improve, the number of daily orders is increasing, the downtime will decrease to 23077 minutes, which is represented for 63 minutes per day

There are two causes for this improvement First, workers would receive newtraining on how to operate and maintain the factory's machinery The establishment of a reward and punishment system would increase employee ownership in the factory's management Second, production equipment will undergo more frequent inspections and maintenance Maintenance will now take place every three days for 20 minutes, as opposed to once a month (which lasts for 1-2 days) This should cut down on unscheduled outages To better keep items, the warehouse storing method will also be upgraded.

The production process will be more fluid, and there will be less movement

throughout the process, which can assist boost output and boost revenues

We predict a 30% reduction in production downtime after improving operations We also think that this upgrade could result in annual revenue savings of almost 5.5%.

VI Organizational Chart/Grid1 Organizational Chart

2 Organizational Grid

VII Return on Investment (ROI)

After analyzing the portfolios, there are three main categories we think that Tinh Loi Garment should invest in, which can increase the revenue, net-

income of the company and also save money We estimate that the total investment is $85.500, payback after 3 months and save $394.520 each year.In details:

The first investment in back-up machines for the sewing process If the staff is sewing and meet some problem with the sewing machine, especially if the machine breaks down and can not be fixed right away, it will affect the production process And the investment is $40.000 for 100 backup machinesThe second investment in bulk washing machine to reduce the time of fabric spreading time for workers, there are three machine, with cost $25.500 and the maintenance cost $2000 annually (three machines)

The third investment in SAM software to reduce time for finding products