Improvement of order processing scheme in Fuji xerrox Viet Nam supply chain management

1 By Phan Viet Hong  MBQPM4 Final Project HO CHI MINH CITY OPEN UNIVERSITY UNIVERSITÉ LIBRE DE BRUXELLES SOLVAY BRUSSELS SCHOOL OF ECONOMICS & MANAGEMENT MBQPM4 PHAN VIET HONG IMPROVEMENT OF ORDER PROCESSING SCHEME IN FUJI XEROX VIETNAM – SUPPLY CHAIN MANAGEMENT MASTER FINAL PROJECT MASTER IN BUSINESS QUALITY AND PERFORMANCE MANAGEMENT Ho Chi Minh City (2014) 3 By Phan Viet Hong  MBQPM4 Final Project Statement of authentication This project is about Fuji Xerox Vietnam - Supply Chain Management operations. The project named “improvement of order processing scheme” is developed and completed by Phan Viet Hong - student of MBQPM4 (2012) class in the final project of Master Degree. This individual study is based on actual scenarios of SCM operations in Fuji Xerox Vietnam. By finding the operations issues and developing the countermeasures base on PDCA cycle, the project helped the SCM team in FXV to improve some specific weak areas and also to suggest further countermeasures for improvement in the future 4 By Phan Viet Hong  MBQPM4 Final Project Acknowledgements I highly appreciate to the classmates in the group: Ms. Phuong Hanh, Ms. Yen Phuong, Mr. Van Binh, Mr. Van Thuy in class MBQPM4 (2012) who support me a lot during the time of the course, this group is very effective in many group assignments that we worked together. I would like to have special thanks to Professor Martin for giving me knowledge in the classes, providing guidance and answering to my questions and concerns during the time I do the final project. I also have special thanks to related managers and staff working in Fuji Xerox Vietnam for giving me the data, explanation in department operations and also sharing good ideas for me to complete the final project. I appreciate some Fuji Xerox HQ staff located in Singapore working in IM and SCM department for supporting me to speed up the action implementation, without their kind support, we are unable to meet the dead line of the project and also cannot see the result as of today. 5 By Phan Viet Hong  MBQPM4 Final Project Table of Contents CONTENTS Page PREFACE 8 PART 1: FUJI XEROX VIETNAM AND ITS SCM OPERATIONS 9 Chapter 1: FXV Introduction 9 1.1 Company profile 9 1.2 Organization Chart 11 1.3 FXV SCM Operations introductions 12 1.4 SCM current Process Overview 14 Chapter 2: Investigation of problem in FXV SCM 16 2.1 Inventory management (planning under SCM) 16 2.2 Support Logistics 16 2.3 Processing time of Indirect sales orders 17 2.4 Problem solution selection 19 Chapter 3: Review of Problem for improvement of SCM in FXV 21 3.1 Review current process to get understanding the current status 21 3.2 Setting the target for improving 24 PART 2: IMPROVEMENT OF ORDER PROCESSING SCHEME IN FXV SCM 29 Chapter 1: Countermeasures development 29 1.1 Low forecast accuracy (sales) 29 1.2 Low cooperate attitude from distributors 30 1.3 Job runs at low speed in system 31 1.4 Manual workflow in order process 34 1.5 Evaluation and selection for the countermeasure 35 1.6 Develop countermeasures and deploy actions (action plan to improve) 36 Chapter 2: Measure the results and compare to the targets 45 Chapter 3: Re-engineer and Standardize the process 49 3.1 Objectives and scope 49 3.2 PO Overview 49 3.3 Deliver 49 3.4 Process details 50 3.5 Further suggestion for improvement 53 CONCLUSION 57 Reference 58 6 By Phan Viet Hong  MBQPM4 Final Project List of abbreviations CCA Call Centre Agent HCM Hochiminh ALC Asia Logistic Centre HFSI High Frequency Service Items AR Account Receiveables IM Information Management AWMS Apeos Ware Management Suite ITSS This is an IT system of FXV APO Asia Pacific Operations IT Information Technology CON Consumables NEI Non Equipment Inventory CRM Customer Relationship Management OPB Office Product Business CS&Q Customer Service & Quality PDCA Plan Do Check Act DOS Days of Sales PC Personal Computer EI Equipment Inventory PO Purchase Order FXV Fuji Xerox Vietnam PSB Production System Business FSMA Full Service Maintenance Agreement SCM Supply Change Management FY Japanese Fiscal Year (1 Apr – 31 Mar) SMC Senior Management Committee HN Hanoi SP Spare Parts HR Human Resources 3PL 3 rd Party Logistic 7 By Phan Viet Hong  MBQPM4 Final Project List of Pictures Picture 1: Xerox network in the world Picture 23: Structure of Proxy Server in HCM and HN office Picture 2: FXV business scheme Picture 24: Structure of Internet Leased line Picture 3: FXV Organization Chart Picture 25: Current issue of limited bandwidth Picture 4: Customer Service & Quality Organization Chart Picture 26: Evaluation and selection of countermeasures Picture 5: SCM process Picture 27: Internal team meeting Picture 6: DOS report of Equipment Picture 28: Task schedule and due date Picture 7: Sample of consumables order taking from CCA to SCM Picture 29: Task schedule and duration Picture 8: Revenue contribution by direct and indirect Picture 30: Comparison before and after installed Proxy Server Picture 9: Current indirect sales Order process Picture 31: Dry run Order process Picture 10: Sample of cancel sales order Picture 32: Eliminate step 3 Picture 11: Problem summary Picture 33: Key performance index to monitor performance of Dealers Picture 12: Selection of the issues for resolution Picture 34: Key Roles and Responsibilities Picture 13: Current indirect sales Order process Picture 35: Launched forecast policy Picture 14: Current lead time for direct and indirect sales Order Picture 36: Compare the old and new process Picture 15: Number of dummy order in FY13 Picture 37: Results of order from Apr- May‟14 Picture 16: Time consuming in each steps in FY13 Picture 38: Dealer Feedback Improvement Picture 17: Identify the target for improving areas Picture 39: Correct order contents comparison Picture 18: Target setting for the improvement Picture 40: Results after implementation of new process Picture 19: Fishbone analysis Picture 41: Time Results after implementation of new process Picture 20: Team survey for evaluation the causes Picture 42: Current status of Dealer outstanding Account Receivables Picture 21: sample of forecast form Picture 43: New standardized indirect sales order process Picture 22: Forecast scheme 8 By Phan Viet Hong  MBQPM4 Final Project Preface This project is based on actual scenario and actual data collected from FXV SCM operations. None of the text in the project is taken from any previously published project All the SCM operations including current process are illustrated in chapter 1 that is referred to the process collected by SCM team, company process. Chapter 2 is the investigation of some keys problem happening in FXV SCM that can be resolved in short term, it is very obvious issue in daily operations, I am not trying to touch the big issue which is very general that may be out of the scope or need long time to resolve it. For example changing the supply vendor or outsourcing some operations… base on 3 selected problems, I chose the problem to resolve in this project that is most feasibility and can help the current operations. Chapter 3 is to review the current status and setting the target for improvement. Part 2 is focused mostly on countermeasure developments and implements the action plan to resolve the problem. After the actions are taken, the result is measured and compared to the target to see the improvement. Once it is confirmed that countermeasures are confirm to work and help the operations, chapter 3 of part 2 to explain about re-engineering and standardizing the process and document it. To continuous follow up and improvement, I have some further suggestion for the operations to improve in longer term in last chapter of part 2. The entire project was done within FXV SCM scope using systematic thinking, data analysis and QC tools. The data in the project is Confidential and not Published. 9 By Phan Viet Hong  MBQPM4 Final Project PART 1: FUJI XEROX VIETNAM AND ITS SCM OPERATIONS Chapter 1: FXV Introduction 1.1 Company profile Fuji Xerox Co., Ltd. has been established in 1962 as a joint venture between Xerox Limited and Fuji Photo Film Co., Ltd. The Company oversees Group activities in South Korea, Taiwan, the Philippines, Indonesia, Thailand, Australia, New Zealand, Singapore, and Malaysia. Picture 1: Xerox network in the world Fuji Xerox Vietnam (FXV) is established in 05/2010 aiming at business expansion in a rapidly growing market in Vietnam. The establishment of FXV not only reinforces the activities of the dealers, but also enables direct sales and direct maintenance services operations, which will satisfy demands from customers who expect even higher value in products and services. Company products: 10 By Phan Viet Hong  MBQPM4 Final Project Currently, FXV is providing 3 kinds of main photocopy multi-function product including the network and personal printers (OPS), Office multi-function machines (OPB) and High end production printers (PSB). Beside, FXV is also selling office software product such as Docuworks, AWMS, Docushare and paper as the newly established business in the year 2014. The main revenue come from box selling to direct and indirect end user and also from the service that called “click charge” revenue which the customer sign full service contract with FXV and just pay bill base on how many pages they prints per month that later call in this project Full Service Maintenance Agreement or FSMA. Company business structure FXV is currently doing business directly and indirectly with end customer, there are 6 distributors in Vietnam and 2 Dealers in Cambodia under indirect sales, these channels also have their own sales and service team. FXV just provide support to Distributors such as marketing support, technical support but without touching their end customers. In the designed stage when company is establishment, to avoid business confliction with current Distributors, FXV just sell their products to “new customer”, “global customer” that they found and they also will service those machines for after sales service. With the current customers who want to buy additional machines, FXV will have to introduce to Distributors. If current customer want FXV to service their machine, FXV has to refuse and inform to Distributors for more handling. If the customer still wants to buy from FXV and do not want to buy from Dealer, in this case, FXV must install the machine and service it but FXV has to pay some amount of money to Dealer in so called Alliance scheme. Below is the summary of scheme FXV provide direct service to its own customer: Picture 2: FXV business scheme 11 By Phan Viet Hong  MBQPM4 Final Project 1.2 Organization Chart Picture 3: FXV Organization Chart In the company, the president is legal representative and under the president are department head who are also members of Senior Management Members or SMC (in blue box). This is the management board of the company who has responsibility to issue company policy, monitor the company financial performance and decides the direction and business strategy for the company. The organization has 3 direct Sales Operations: North sales operations, South sales operations 1, South sales operations 2. These sales teams will directly find customers and sell the products. These teams are in charge of selling OPB or office products including OPB equipment and OPB software that most of the office is using now for office environment. Productions system business (PSB) provides direct sales for production machines. These are the very big machines that mostly target to printing house, commercial print customer, print on demand or minilab who makes the photo book. Channel business group is in charge of indirect business or channel business, they are looking after the Dealers which has another name called Authorized Distributors. These Dealers also has their direct sales and service, they are independent in finance and mostly are exclusive Dealers that are supposed to sell only Fuji Xerox Products. [...]... profit 2.3 Processing time of Indirect sales orders Since Fuji Xerox entered Vietnam Market in 1994, the company was named IndoChina Operations (Fuji Xerox Asia Pacific Rep office), all the business was under Indirect (Dealer Business) Until May 2010, Fuji Xerox Vietnam established and the 17 By Phan Viet Hong MBQPM4 Final Project company starts providing direct business to customer Now in 2014, the... on inventory plan or target and stock keeping units Green zone, Yellow zone & - Red Zone The color of the zone indicating their frequency and volume of sales Economic order quantity and periodic ordering which deals with inventory planning and being inventory tracking As inventory planners, their main job consists in analyzing demand and deciding when to order and how much to order new inventories In. .. Operations introductions FXV SCM overview consists of planning (supply & demand), logistics, distributions, customer service As first role in supply chain, supply demand planning is an important part Responsibility is balancing inventory level and fulfillment ratio, forecast 12 By Phan Viet Hong MBQPM4 Final Project accuracy So, this project scope is pointing out ordering processing scheme management for improvement. .. stock on hand (including in In terms of measuring a sales performance in relation to Inventory, FXV often uses the refers to the number of times the inventory is sold or used in a period of one year Inventory turnover is also termed as stock turn which is measured by unit is DOS (Day of Sale): DOS = value of inventory end of month / average past 6 month cost of goods sold x 30 days A higher inventory turnover... Xerox Co Ltd Fuji Xerox Co Ltd Fuji Xerox Co Ltd Fuji Xerox Co Ltd Fuji Xerox Co Ltd Fuji Xerox Co Ltd Fuji Xerox Co Ltd Fuji Xerox Co Ltd Fuji Xerox Co Ltd Fuji Xerox Co Ltd Fuji Xerox Co Ltd Fuji Xerox Co Ltd Fuji Xerox Co Ltd Fuji Xerox Co Ltd Fuji Xerox Co Ltd Fuji Xerox Co Ltd Fuji Xerox Co Ltd IGEN3 EQP DOCUPRINT NAUSICAA FUHJIN SAN REMO KISYU HIGH IGEN3 EQP SORRENTO DPS FUHJIN FUHJIN NUVERA DPS... indirect order Normally, order lead time takes about 110 minutes since receive the order till completion of pick & pack while direct sales order takes about 45 minutes There are lots of incorrect order data input by Dealers caused by human mistakes and this lead to low productivity and waste resources in SCM operations Example of cancelling the order and diverting the order quantity to the next order. .. DOS) indicates a healthy trend of increased sales and indicates the need to maintain adequate inventory levels to avoid stock outs Inadequate stocks can result in loss of business opportunities that SCM needs to keep watching closely On the other hand a lower inventory turnover (high DOS) shows that either the sales of the said inventory which is slowing down or that the unused inventory is building... direct customer but not moving lead to consumable order - Not able to track order history - Wrong outlook model - Customer miss the order make slow turnover sales or sometimes double order model - What customer order, SCM just supply but not check the history Problem 3: Processing time of Indirect sales orders Long processing time from final PO confirmation to FOB outstanding orders in (unnecessary mistake)... productivity in the team performance The Picture below shows the comparison of handling one direct sales order and one indirect sales order: Picture 14: Current lead time for direct and indirect sales Order The lower chart is the steps that FXV SCM handles indirect sales The time shows in minutes is the time that each step spending in the process Looking at the indirect sales order in the lower chart, in the... 35 minutes including communication time between FXV and ALC Singapore site By adding all the time of 5 steps in Indirect sales order, It takes average 110 minutes to proceed one order from beginning till completion 22 By Phan Viet Hong MBQPM4 Final Project Besides the time consuming that each steps use, as it is mentioned before that using dummy PO can also make mistake because the Dealer has to input . IMPROVEMENT OF ORDER PROCESSING SCHEME IN FUJI XEROX VIETNAM – SUPPLY CHAIN MANAGEMENT MASTER FINAL PROJECT MASTER IN BUSINESS QUALITY AND PERFORMANCE MANAGEMENT Ho Chi Minh. Viet Hong  MBQPM4 Final Project Statement of authentication This project is about Fuji Xerox Vietnam - Supply Chain Management operations. The project named improvement of order processing. 2.3 Processing time of Indirect sales orders Since Fuji Xerox entered Vietnam Market in 1994, the company was named Indo- China Operations (Fuji Xerox Asia Pacific Rep office), all the business