Improving the supply chain of angimex company

1 ABSTRACT The linking between the companies to become the larger supply chain has become an inevitable trend to decide the survival of businesses in the global economy Supply chain management becomes one of the ‘hot’ themes which are most interested in the current, the supply chain continuously improve performance in order to improve its competitiveness at any way So, the titled "Improving the supply chain performance of Angimex” will be focused on the theoretical studies of the supply chain structure, function, supply chain management Thereby, the thesis is studied in depth of performance and how to improve the performance of supply chain, analyzing and evaluating to improving the performance of specifically a supply chain, rice supply chain of Angimex Contents List of Figures List of tables INTRODUCTION 0.1 PROBLEM STATEMENT AND INTEREST 0.2 RESEARCH QUESTION AND HYPOTHESES 0.3 DATA COLLECTION AND METHODOLOGY 0.4 STRUCTURE OF THE PAPER PART 1: ANALYSIS OF SUPPLY CHAIN IN ANGIMEX 10 CHAPTER 1: SUPPLY CHAIN ANALYSIS 10 1.1 LITERATURE REVIEW ON SUPPLY CHAIN 10 1.1.1 Difinations and terms and on Supply Chain 10 1.1.2 The Supply Chain Structure 11 1.1.2.1 Supply management 13 1.1.2.2 Demand management 14 1.1.2.3 Distribution management 15 1.1.2.4 Supply Chain Integration 16 1.1.3 MRP, MRP II and ERP 17 1.1.3.1 MRP 17 1.1.3.2 MRP II 17 1.1.3.3 ERP 17 1.2 THE PERFORMANCE AND IMPROVING ON SUPPLY CHAIN 18 1.2.1 Supply Chain Performance Measurement Systems 18 1.2.2 Agri-Food Supply Chains 20 1.2.3 Agri-Food Supply Chain Performance Measurement 21 CHAPTER 2: THE PERFORMANCE OF SUPPLY CHAIN IN ANGIMEX 24 2.1 ANGIMEX COMPANY INTRODUCTION 24 2.1.1 History of ANGIMEX Company 24 2.1.2 Vission, Mission, Core value, objectives and policies 25 2.1.3 Struture organization 27 2.1.4 The business development strategy 28 2.2 RISKS 28 2.2.1 Economic risk 28 2.2.2 Risks of exchange rate and interest 28 2.2.3 Business risks 28 2.2.4 2.3 Risks from strategy, the goverment policy 29 SUPPLY CHAIN OF ANGIMEX COMPANY 29 2.3.1 Supply chain structure 29 2.3.1.1 The market and customers 29 2.3.1.2 Purchasing order time: 31 2.3.1.3 Supplier 33 2.3.2 The operation fuctions 33 2.3.2.1 Plan 33 2.3.2.2 Purchasing 34 2.3.2.3 Production 34 2.2.3.4 Distribution 35 2.3.3.5 Return 35 2.4 PERFORMACE MEASUREMENT OF SUPPLY CHAIN OF ANGIMEX 35 2.4.1 Scope 35 2.4.1.1 The scope of supply chain 35 2.4.1.2 The indicator performance 36 2.4.1.3 The time of survey 37 2.4.2 The measure the quality metric in Angimex’s supply chain 37 2.4.2.1 The quality reliability 37 2.4.2.2 The volume flexibility of supply chain 38 PART 2: IMPROVEMENT OF ANGIMEX Co’s SUPPLLY CHAIN 40 CHAPTER 3: IMPROVEMENT AREAS 40 3.1 ANALYSIS, EVALUTE AND SECLECT PROBLEM 40 3.1.1 Rice insect : 41 3.1.1.1 Fumigation: 41 3.1.1.2 Storage: 42 3.1.2 Inconsistency 42 3.1.2.1 Material: 42 3.1.2.2 Production: 43 3.2 IMPLEMENTION TO IMPROVE 45 3.2.1 Time control of fumigation 45 3.2.2 The environment of storage 45 3.2.3 The control of storage 46 3.2.4 Control material input 47 3.2.5 Material areas 47 CHAPTER 4: THE RESULTS 50 4.1 MEASURMENT AND THE IMPROVEMENT 50 4.1.1 The quality performance 50 4.1.2 The production flexibility 51 4.2 EVALUATE THE IMPROVEMENT 51 CONCLUSION 52 REFERENCES 53 APPENDICIES 57 List of Figures Fig 0-1 The reseach scope Fig 1-1: A Generic Supply Chain (Wisner 2005, p6) 11 Fig 1-2: An Illustration of SCM in a Firm’s Supply Chain 12 Fig 1-3: The Bullwhip Effect (Fawcett 2007) 13 Fig 1-4: Supply Chain Integration 16 Fig 1-5: Agri-Food Supply Chain Performance Categories and Indicators 23 Fig 2-1 Organization structure 27 Fig 2-2 The revenue of rice 28 Fig 2-3 The rice volume in export and domestic market 29 Fig 2-4 The Revenue Proportion in 2013 30 Fig 2-5 THE STRUCTURE OF ANGIMEX SUPPLY CHAIN 32 Fig 2-4 The main production process 34 Fig 2-5: Scope of Angimex’s supply chain 36 Fig 2-6: Agri-Food Supply-Chain Performance Indicators 36 Fig 2-4 Quality performance 38 Fig 2-7 The orders volume in months in 2014 39 Fig 3-1: The customer’s complaints 40 Fig 3-2 Analysis causes of insects 41 Fig 3-3 Analysis cause of inconsistency 42 Fig 3-4: The under compsumtion areas 43 Fig 3-5 The manufacturing process 43 Fig 3-5 The purchasing rate of under consumption areas 48 Fig 4-1 The quality performance improved 51 Fig 4-2 No insects metric 51 List of Tables Table 1-1: Definitions of Supply Chains and Supply Chain Management 10 Table 1-2: World Class Performance Measures (Wisner 2005, p441) 19 Table 1-3: SCOR’s Level Metrics (Supply Chain Council 2002, p6) 19 Table 1-4: Advantages and Disadvantages of Methods to Assess Supply Chain Performance (Aramyan et al 2006, p53) 20 Table 1-5: Example of Logistic KPIs for Food-Chain Networks on Three Hierarchical Levels 22 Table 2-1: The export and domestic volume 29 Table 2-2: The revenue proportion 30 Table 2-3 Customer complaint in 2013 37 Table 2-4: The orders volume in months in 2014 39 Table 3-1: The customers complaint in 2013 40 Table 3-2 The under consumptions areas and purchasing volume 43 Table 3-3: The improving areas for quality peformance 45 Table 3-4: The fumigation exposure time 45 Table 3-5 The criteria of rice material 47 Table 3-6 The under comsumption 48 Table 3-6 The summary of improving in quality performance 49 Table 4-1: The customer complaint in months in 2014 50 Table 4-2 The comparation of performance 50 INTRODUCTION 0.1 PROBLEM STATEMENT AND INTEREST In 2012, Vietnam became the world's second largest exporter of rice But the 2013, the market has shown of significant change, Thailand has returned, rather Vietnam position, and India still is the country's largest rice exporter in the world Especially recently years, Myanmar have launched the product that directly compete with the rice products that are the as strongest in Vietnam The globalization has caused great pressure on the world economy makes competition fierce The companies were linked together to strengthen, to reduce costs and increase competitive advantage That links formed the big supply chain, grow increasingly In Vietnam, companies also linked together as an inevitable trend for survival and development This trend has changed the face of traditional activities In fact, how managers can control and improve performance in order to strengthen the competitiveness of supply chain? Located in Long Xuyen, An Giang province, Angimex is one of the top ten biggest rice export in Vietnam, the Angimex’s production ability are 2,200 tons/ day with processing factories system located in the key of material areas, convient transportation, the storge capacity over 100,000 tons, and paddy drying, milling, polishing modern plants The Angimex export from 230,000 to 300,000 tons of rice to market as : Singapore, Malaysia, the Philippines, Indonesia, Africa, Iran, Iraq, Cuba, Hong Kong The rice supply chains of ANGIMEX Company meet some problems:  The quality material of input without consistently  Customers complaint for product quality Objective of study  Research the theory of supply chain, analysis, evaluation typical supply chain model, contacts the practice situation in Agri-food  Evaluate supply chain ANGIMEX Company  Improved supply chain performance ANGIMEX Company by applying some theory models in supply chain  Provide measures and recommendations  Finding and correct some problem to improve performance of ANGIMEX supply chain 0.2 RESEARCH QUESTION AND HYPOTHESES Genaral research question:  How to improve the rice supply chain of ANGIMEX Company ? The main research question can be divided into three specific questions:  What are key factors having effect on the performance of Angimex’s supply chain?   How to factors affect supply chain practice on upstreams side, on downstreams side and internal process in Angimex? How to improve the performance in Angimex’s supply chain? The basic on research questions, the hypothesis are:  Factors including collectors, the quality and quantities of rice, season, delivery, storage, production, transportation effect on performance of Angimex’s supply chain Famers Collector ANGIMEX Companies, wholesale Distributor, End user Fig 0-1 The reseach scope 0.3 DATA COLLECTION AND METHODOLOGY Source of data:  Primary data from Angimex company the department: Through interviews and experiment activities Marketing, Accounting, Technical, Manufacturing, QC, Purchasing  Secondary data: The annually reports of Angimex, internet, newspaper Methods of collection: Methods of field research:  Collect qualitative information to determine preliminary problem  Application of theories, models and tools into practice  Conduct a realistic measure for primary data Methods desk research:  Research the theory of supply chain  Research and identify the theoretical model, the tool will be applied to the actual Angimex Co  Analysis of secondary data from the The Annually Reports of ANGIMEX Co and departments to measure performance of the supply chain  Analysis and assessment of the primary data into the information needed to make decisions or conclusions Methodology The research process used to answer the research question and to fill the gaps of knowledge is a deductive approach based on a positivistic approach to research The research, which employs a hypothetical-deductive method based on relative emphasis upon whether theory comes first (Pathirage, Amaratunga & Haigh 2008), follows a seven-step process (Sekaran 2003):  Observation Supply chain area of research interest identified  Problem identification from the primary gathering of information  Theory formation from a conceptual framework that clearly identifies and labels variables  Hypothesizing A possible explanation to some phenomenon is proposed  Further scientific data collection  Data analysis  Deduction Conclusions are reached by interpreting the results of the data analysis Hypotheses are substantiated and research questions are answered 0.4 STRUCTURE OF THE PAPER INTRODUCTION PART 01 ANALYSIS OF SUPPLY CHAIN IN ANGIMEX Problem Statements, Hypotheses, Data collection, Methodology CHAPTER 01 SUPPLY CHAIN ANALYSIS CHAPTER 02 THE PERFORMANCE OF SUPPLY CHAIN IN ANGIMEX Co PART 02 CHAPTER 03 IMPROVING AREAS IMPROVEMENT OF ANGIMEX Co’s CHAPTER 04 SUPPLLY CHAIN RESULTS CONCLUSION Results, constraints, recommendations 10 PART 1: ANALYSIS OF SUPPLY CHAIN IN ANGIMEX CHAPTER 1: SUPPLY CHAIN ANALYSIS 1.1 LITERATURE REVIEW ON SUPPLY CHAIN 1.1.1 Difinations and terms and on Supply Chain Many researchers provide a definition of supply chain For example, Lee and Billington (1993, p835) define it as “a network of facilities that perform functions of procurement of material, transportation of material to intermediate and finished products, and distribution of finished products to customers.” Additional definitions of supply chains and supply chain management have been reviewed by Ananda (2004, p24) as provided in Table 1-1 Figure 1-1 shows a generic supply chain from suppliers to end customers Table 1-1: Definitions of Supply Chains and Supply Chain Management Author Definition Ronald, Stephen The supply chain refers to all those activities associated with the transformation and flow of goods and services, including their et al (2000) attendant information flows, from the sources of raw materials to end users Management refers to the integration of all these activities, both internal and external to the firm Benita (1999) A supply chain is an integrated process where raw materials are manufactured into final products, then delivered to customers via distribution, retail or both Bhaskaran (1998) A supply chain is a series of manufacturing plants that transform raw materials into finished products Frazelle (2002) A supply chain is a network of enterprises, individuals, facilities and information/ material-handling systems that connect the supplier’s supplier to the customer’s customer Cooper, Lambert Supply chain management is the integration of business processes from end user through original suppliers to provide products, services et al.(1997) and information that add value for customers Tan, Kannan et Supply chain management is the simultaneous integration of customer requirements, internal processes, and upstream supplier al.(1999) performance Simchi-Levi (2003) Supply chain management is a set of approaches used to effectively integrate suppliers, manufacturers, warehouses and stores, so that merchandise is produced in the right quantities and distributed to the right locations at the right time, to minimize system-wide costs while 51 Quality performance 98 97 Quality performance 96 95 Poly (Quality performance) 94 93 2012 2013 month of 2014 Fig 4-1 The quality performance improved 99 98.8 98.6 98.4 98.2 98 97.8 97.6 97.4 97.2 No insects metric 2013 2014 Fig 4-2 No insects metric 4.1.2 The production flexibility The rice purchasing capabicity in peak haverst is 30,000 tons, but the peak orders volume only 20,000 tons Production flexibility = 66% The production flexibility is no change 4.2 EVALUATE THE IMPROVEMENT The improving the product quality, storage condition, storage time, material under consumption makes increasing the quality performance significantly, increasing supply chain performance, the customer complaint decreasing 52 CONCLUSION The results Through the implemented contents, the thesis was done analysis and evaluated the theory of supply chain and applied it to improve the performance of supply chain of Angimex Company According to the research objectives, the thesis has made the following contents:       Studies of the structure and functioning of the supply chain Analysis of supply chain performance, measurement and improvement Analysis of the quality, the production flexibility Introduction to Supply Chain of Angimex Company, the problems encountered, and on that basis, making measures operational performance improvements Focus on quality issues Search the gap in the supply chain (product quality) and improve it The constraints Due to current positions, and the limit time so the scope of the survey in the series is narrow, there are many issues that the thesis can be not study and analysis due to insufficient data So there is lack of performance assessment of the whole supply chain The limiting of the subject is not given the improvements through cost of quality So measures convince about technical but not enough convince about economic, because the cost information and profit is often the confidential communication of company Recommendations The paddy rice under consumptions to make sure the quality consistency, but the company should evaluate risks for the investments In case the price paddy rice was low, the famer did not have profit making the recovery debt difficult 53 REFERENCES English Aissaoui, N, Haouari, M & Hassini, E 2007, 'Supplier Selection and Order Lot Sizing Modeling: A Review', Computers & Operations Research, vol 34, no 12, pp 3516-3540 Ananda, SJ 2004, 'Procurement Dimensions in the Australian Manufacturing Sector: Flexibility Issues in a Supply Chain Perspective', School of Management, Curtin University of Technology Andries, B & Gelders, L 1995, 'Time-Based Manufacturing Logistics', Logistics Information Management, vol 8, no 6, pp 25-31 Aramyan, L, Ondersteijn, CJM, van Kooten, O & Lansink, AD 2006, 'Chapter Performance Indicators in Agri-Food Production Chains', in CJM Ondersteijn, JHM Wijnands, RBM Huirne & O van Kooten (Eds.) Quantifying the AgriFood Supply Chain, Springer, Dordrecht, pp 49-66 Bhaskaran, S 1998, 'Simulation Analysis of a Manufacturing Supply Chain', Decision Sciences, vol 29, pp 633-657 Chen, IJ & Paulraj, A 2004, 'Towards a Theory of Supply Chain Management: The Constructs and Measurements', Journal of Operations Management, vol 22, no 2, pp 119-150 Chopra, S 2004, Supply Chain Management: Strategy, Planning, and Operation, Pearson Education International, Upper Saddle River, NJ Choy, KL, Harry, KHC, Lee, WB & Felix, TSC 2007, 'Development of Performance Measurement System in Managing Supplier Relationship for Maintenance Logistics Providers', Benchmarking, vol 14, no 3, pp 352-368 Christopher, M 2005, Logistics and Supply Chain Management: Creating Value Adding Networks, Prentice Hall/Financial Times, Harlow, UK Cohen, S & Roussel, J 2005, Strategic Supply Chain Management: The Five Disciplines for Top Performance, McGraw-Hill, New York Cooper, MC, Lambert, DM & Pagh, JD 1997, 'Supply Chain Management: More Than a New Name for Logistics', The International Journal of Logistics Management, vol 8, pp 1-14 Crum, C & Palmatier, GE 2003, Demand Management Best Practices: Process, Principles, and Collaboration, J Ross Publishing, Fort Lauderdale, FL 54 Fawcett, SE 2007, Supply Chain Management: From Vision to Implementation, Prentice Hall, Harlow, UK Fearne, A, Hughes, D & Duffy, R 2001, 'Chapter 4: Concepts of Collaboration: Supply Chain Management in a Global Food Industry', in JF Eastham, L Sharples & SD Ball (Eds.) Food Supply Chain Management: Issues for the Hospitality and Retail Sectors, Butterworth-Heinemann, Bodmin, UK Ferrer, J 2003, 'Supply Chains in Europe', in JL Gattorna (Ed.) Gower Handbook of Supply Chain Management, Gower, Burlington, VT Frazelle, EH 2002, Supply Chain Strategy: The Logistics of Supply Chain Management, McGraw Hill, New York Gattorna, JL (Ed.) 2003, Gower Handbook of Supply Chain Management, Gower, Burlington, VT Heath, GJ & Danks, A 2003, 'Chapter 2.8: Inventory Management', in JL Gattorna (Ed.) Gower Handbook of Supply Chain Management, Gower, Burlington, VT Hsiao, HI, van der Vorst, JGAJ & Omta, SWF 2006, 'Logistics Outsourcing in Food Supply Chain Networks: Theory and Practices', in J Bijman, SWF Omta, JH Trienekens, JHM Wijnands & EFM Wubben (Eds.) International Agri-Food Chains and Networks: Management and Organization, Wageningen Academic Publishers, Netherlands, pp 135-150 Jespersen, BD & Skjott-Larsen, T 2005, Supply Chain Management: In Theory and Practice, Copenhagen Business School Press Oxfordshire Joel, DW 2003, 'A Structural Equation Model of Supply Chain Management Strategies and Firm Performance', Journal of Business Logistics, vol 24, no 1, pp 1-25 Kapoor, SK & Kansal, P 2004, Basics of Distribution Management: A Logistical Approach PHI Learning, New Delhi Lambert, DM, Cooper, MC & Pagh, J 1998, 'Supply Chain Management: Implementation Issues and Research Opportunities', International Journal of Logistics Management, vol 9, no 2, pp 1-9 Lee, E-K, Ha, S & Kim, S-K 2001, 'Supplier Selection and Management System Considering Relationships in Supply Chain Management', IEEE Transactions on Engineering Management, vol 48, no 3, pp 307-318 Lee, HL & Billington, C 1993, 'Material Management in Decentralized Supply Chains', Operations Research, vol 41, no 5, pp 835-847 55 Luning, PA, Marcelis, WJ & Jongen, WMF 2002, Food Quality Management: A TechnoManagerial Approach, Wageningen Pers, Wageninge Mentzer, JT 2004, Fundamentals of Supply Chain Management: Twelve Drivers of Competitive Advantage, Sage Publication, London, United Kingdom Meuwissen, MPM, Valeeva, NI, Velthuis,AGJ & Huirne, RBM 2006, 'Chapter 11 the Insurability of Product Recall in Food Supply Chains', in CJM Ondersteijn, JHM Wijnands, RBM Huirne & O van Kooten (Eds.) Quantifying the AgriFood Supply Chain, Springer, Dordrecht, pp 147-159 Meyr, H, Rohde, J & Stadtler, H 2002, 'Basics of Modelling', in H Stadtler & C Kilger (Eds.) Supply Chain Management and Advanced Planning, Springer, Heidelberg, Germany Naylor, JB, Naim, MM & Berry, D 1999, 'Leagility: Integrating the Lean and Agile Manufacturing Paradigms in the Total Supply Chain', International Journal of Production Economics, vol 62, no 1-2, pp 107-118 Nuthall, L 2003, 'Chapter 2.11: Supply Chian Performance Measures and Systems', in JL Gattorna (Ed.) Gower Handbook of Supply Chain Management, Gower, Burlington, USA Parker, C 2000, 'Performance Measurement', Work Study, vol 49, pp 63-66 Pathirage, CP, Amaratunga, RDG & Haigh,RP 2008, 'The Role of Philosophical Context in the Development of Theory: Towards Methodological Pluralism', The Built & Human Environment Review, vol 1, pp 1-10 Paul, DC, Richard, CL & Frances, B 2004, 'The Role of Risk in Environment-Related Supplier Initiatives', International Journal of Operations & Production Management, vol 24, no 5/6, p 554 Poluha, RG 2007, Application of the Scor Model in Supply Chain Management, Cambria Press, New York, United States Rodney, M & Daniel, M 2001, 'Integrating Business Processes for Global Alignment and Supply Chain Management', Business Process Management Journal, vol 7, no 2, pp 113-130 Ronald, HB, Stephen, MG & Ashok, M 2000, 'New Managerial Challenges from Supply Chain Opportunities', Industrial Marketing Management, vol 29, no 1, p Rushton, A, Croucher, P & Baker, P 2006, The Handbook of Logistics and Distribution Management Kogan Page Publishers, London, United Kingdom Samson, D (Ed.) 2001, Management for Engineers, Pearson Education Australia, NSW.Sciences, vol 29, pp 633-657 56 Simchi-Levi, D 2003, Designing and Managing the Supply Chain: Concepts, Strategies, and Case Studies, McGraw-Hill/Irwin, Boston Stevens, J 1989, 'Integrating the Supply Chain', International Journal of Physical Distribution and Material Management, vol 19, no 8, pp 3-8 Tan, K-C, Kannan, V, R, Handfield, RB & Ghosh, S 1999, 'Supply Chain Management: An Empirical Study of Its Impact on Performance', International Journal of Operations & Production Management, vol 19, no.10, pp 1034-1052 Taylor, DH & Fearne, A 2006, 'Towards a Framework for Improvement in the Management of Demand in Agri-Food Supply Chains', Supply Chain Management, vol 11, no 5, pp 379-384 Walters, D 2003, 'Chapter 2.10: Supply Chain Financial Performance Measurment', in JL Gattorna (Ed.) Gower Handbook of Supply Chain Management, Gower, Burlington, VT Walther, G & Spengler, T 2005, 'Impact of Weee-Directive on Reverse Logistics in Germany', International Journal of Physical Distribution & Logistics Management, vol 35, pp 337-361 Wijnands, JHM & Ondersteijn, CJM 2006, 'Chapter Quantify the Agr-Food Supply Chain: Overview and New Research Directions', in CJM Ondersteijn, JHM Wijnands, RBM Huirne & O van Kooten (Eds.) Quantifying the Agri-Food Supply Chain, Springer, Dordrecht, pp 3-12 Wisner, JD & Fawcett, SE 1991, 'Linking Firm Strategy to Operating Decisions through Performance Measurement', Production and Inventory Management, vol 32, no 3, pp 5-11 Wisner, JD 2005, Principles of Supply Chain Management: A Balanced Approach, SouthWestern, Mason, OH Vietnamese Angimex (2009 to 2013), the annual reports Cuu long Delta Rice Research Instute, http://www.clrri.org/ Nguyen Van Son, 2013, talking about improving rice supply chain in Vietnam, Sea Freight Logistics Vietnam seminar, HCMC Vietnam Food Association, http://vietfood.org.vn/en/ 57 APPENDICIES TERMS OF SUPPLY CHAIN Activity-Based Cost Accounting (ABC) A cost accounting system that accumulates costs based on activities performed and then uses cost drivers to allocate these costs to products or other bases, such as customers, markets, or projects It is an attempt to allocate overhead costs on a more realistic basis than direct labor or machine hours Source: http://www.apics.org/ (10th ed.) Activity-Based Management (ABM) The use of activity-based costing information about cost pools and drivers, activity analysis, and business processes to identify business strategies; improve product design, manufacturing, and distribution; and remove waste from operations Source: http://www.apics.org/ (10th ed.) Business-to-Business Commerce (B2B) Business being conducted over the Internet between businesses The implication is that this connectivity will cause businesses to transform themselves via supply chain management to become virtual organizations, reducing costs, improving quality, reducing delivery lead time, and improving due-date performance Capacity Management The function of establishing, measuring, monitoring, and adjusting limits or levels of capacity in order to execute all manufacturing schedules; i.e., the production plan, master production schedule, material requirements plan, and dispatch list Capacity management is executed at four levels: resource requirements planning, rough-cut capacity planning, capacity requirements planning, and input/output control Capacity Planning The process of determining the amount of capacity required to produce in the future This process may be performed at an aggregate or product-line level (resource requirements planning), at the master-scheduling level (rough-cut capacity planning), and at the material requirements planning level (capacity requirements planning) Capacity – Information Flows Capacity is the capability of a worker, machine, work center, plant, or organization to produce output per time period Information aids us in addressing capacity availability, unused capacity and performance issues that impact a business’s revenue and productivity as well as its image and reputation Source: http://www.apics.org/ (10th ed.) Capacity – Physical Flows 1) The capability of a system to perform its expected function 2) The capability of a worker, machine, work center, plant, or organization to produce output per time period Capacity required represents the system capability needed to make a given product mix (assuming technology, product specification, etc.) As a planning 58 function, both capacity available and capacity required can be measured in the short term (capacity requirements plan), intermediate term (rough-cut capacity plan), and long term (resource requirements plan) Channel management The management of firms or individuals that participate in the flow of goods and services from the raw material supplier and producer to the final user or customer Source: http://www.apics.org/ (10th ed.) Collaboration Collaboration is defined as the process by which partners adopt a high level of purposeful cooperation to maintain a trading relationship over time The relationship is bilateral; both parties have the power to shape its nature and future direction over time Mutual commitment to the future and a balanced power relationship are essential to the process While collaborative relationships are not devoid of conflict, they include mechanisms for managing conflict built into the relationship Sources: Monczka, R., Trent, R., & Handfield, R (1998) Purchasing and Supply Chain Management Cincinnati, OH: South Western College Publishing Continuous Improvement A never-ending effort to expose and eliminate root causes of problems; small step improvement as opposed to big step improvement Source: http://www.apics.org/ Contract An agreement between two or more competent persons or companies to perform or not to perform specific acts or services or to deliver merchandise A contract may be oral or written A purchase agreement when accepted by a supplier, becomes a contract Acceptance may be in writing or by performance, unless the purchase order requires acceptance in writing Source: http://www.apics.org/ Contract Management Contract management is a strategic management discipline employed by both buyers and sellers whose objectives are to manage customer and supplier expectations and relationships, control risk and cost, and contribute to organizational profitability/success For successful service contract administration, the buyer needs to have a realistic degree of control over the supplier’s performance Crucial to success in this area is the timely availability of accurate data including the contractor’s plan of performance and the contractor’s actual progress Sources: http://www.ncmahq.org/cmi/research.html Cost See: Activity-based Cost Accounting, Activity-based Management, Cost System Design, Target Costing, Total Costs, Total Cost of Ownership Cost Management In terms of activity-based cost accounting, cost management involves control of activities to eliminate waste, improve cost drivers, and plan operations This process should influence the organization’s strategy setting process Factors such as product pricing, 59 introduction of new products, and distribution of existing products are examples of strategic decisions that are affected by cost management Customer Relationship Management (CRM) A marketing philosophy based on putting the customer first It involves the collection and analysis of information designed for sales and marketing decision support to understand and support existing and potential customer needs It includes account management, catalog and order entry, payment processing, credits and adjustments, and other functions Customer/Order Fulfillment Process A series of customers’ interactions with an organization through the order was filling process, including product/service design, production and delivery, and order status reporting Source: http://www.apics.org/ Demand Management The function of recognizing all demands for goods and services to support the market place It involves prioritizing demand when supply is lacking Proper demand management facilitates the planning and use of resources for profitable business results Source: http://www.apics.org/ (10th ed.) Distribution Channel The distribution route, from raw materials through consumption, along which products travel Distribution Channel Design The planned channels of inventory disbursement from one or more sources to field warehouses and ultimately to the customer There are several levels in the distribution network structure Source: APICS (8th edition) Forecast Error The difference between actual demand and forecast demand, stated as an absolute value or as a percentage E.g., average forecast error, forecast accuracy, mean absolute deviation, tracking signal There are three ways to accommodate forecasting errors: One is to try to reduce the error through better forecasting The second is to build more visibility and flexibility into the supply chain And the third is to reduce the lead time over which forecasts are required Source: http://www.apics.org/ (10th ed.) Forecasting The business function that attempts to predict sales and use of products so they can be purchased or manufactured in appropriate quantities in advance Source: http://www.apics.org/ (10th ed.) Inbound Logistics Following the receipt of materials, parts or resale products from external suppliers, the subsequent storage, handling, and transportation requirements to facilitate either manufacturing or market distribution constitute inbound logistics Source: Bowersox, D.J., 60 Closs, D.J., & Cooper, B.M (2002) Supply Chain Logistics Management Burr Ridge, Boston: McGraw Hill See: Interplant Transfer, Outbound Logistics Industry Standards An industrial standard is a uniform identification that is agreed on Industrial standardization can be defined as the process of establishing agreement on uniform identifications for definite characteristics of quality, design, performance, quantity, service, etc Source: Dobler, D.W., & Burt, D.N (1996) Purchasing and Supply Management (6th ed.) New York: McGraw Hill Information Sharing A strategic partnering relationship between suppliers and buyers is characterized by a willingness to be open, and to share forecasted demand and cost data as well as the benefits resulting from the information sharing Both parties in the relationship generally follow a continuous improvement philosophy towards total cost of material acquisition and ownership along with quality and service Cost, quality and schedule information that is confidential is shared both ways between firms during the early and ongoing stages of design and during the production life-cycle of the supplying relationship This openness exists because of the high degree of trust earned through multiple successful interactions between the two organizations Sources: http://www.capsresearch.org/ Information Technology The technology of computers, telecommunications, and other devices that integrate data, equipment, personnel, and problem-solving methods in planning and controlling business activities Information technology provides the means for collecting, storing, encoding, processing, analyzing, transmitting, receiving, and printing text, audio, or video information Hardware: In the context of information technology, the computer and its peripherals constitute the hardware Software: The programs and documentation necessary to make use of a computer constitute the software Source: http://www.apics.org/ (10th ed.) Insource vs Outsource The act of deciding whether to produce an item internally or buy it from an outside supplier Factors to consider in the decision include costs, capacity availability, proprietary and/or specialized knowledge, quality considerations, skill requirements, volume, and timing Source: http://www.apics.org/ (10th ed.) Inventory 1) Those stocks or items used to support production (raw materials and work-in-process items), supporting activities (maintenance, repair, and operating supplies), and customer service (finished goods and spare parts) Demand for inventory may be dependent or independent Inventory functions are anticipation, hedge, cycle (lot size), fluctuation (safety, buffer, or reserve), and transportation (pipeline), and service parts 2) In the theory of constraints, inventory is defined as those items purchased for resale and includes finished goods, work in process, and raw materials Inventory is always valued at 61 purchase price and includes no value-added costs, as opposed to the traditional cost accounting practice of adding direct labor and allocating overhead as work in process progresses through the production process Inventory Management Systems Software applications that permit monitoring events across a supply chain These systems track and trace inventory globally on a line-item level and notify the user of significant deviations from plans Companies are provided with realistic estimates of when materials will arrive With Inventory visibility, organizations are able to make decisions that optimize supply chain performance Information is available to reduce costs by removing inventory from the supply chain, reducing obsolescence, decreasing operational assets, lowering network operations cost, and decreasing transportation costs Visibility also increases competitiveness by improving customer satisfaction and market responsiveness Source: http://www.apics.org/ (10th ed.) Inventory Positioning Inventory positioning refers to the selective location of various items in the product line in plant, regional, or field warehouses Inventory positioning has a bearing on facility location decision, and therefore, must be considered in the logistics strategy Source: Ballou, R.H (1999) Business Logistics Management (4th ed.) Upper Saddle River, New Jersey: Prentice Hall Joint Venture An agreement between two or more firms to risk equity capital to attempt a specific business objective Source: http://www.apics.org/ Lean Manufacturing A philosophy of production that emphasizes the minimization of the amount of all the resources (including time) used in the various activities of the enterprise It involves identifying and eliminating non-value-adding activities in design, production, supply chain management, and dealing with the customers Lean producers employ teams of multiskilled workers at all levels of the organization and use highly flexible, increasingly automated machines to produce volumes of products in potentially enormous variety It contains a set of principles and practices to reduce cost through the relentless removal of waste and through the simplification of all manufacturing and support processes Manufacturing Layout Strategy An element of manufacturing strategy It is the analysis of physical capacity, geography, functional needs, corporate philosophy, and product-market/process focus to systematically respond to required facility changes driven by organizational, strategic, and environmental considerations Source: http://www.apics.org/ (10th ed.) Market Analysis See: Business-to-Business, Channel Management, Customer Relationship Management (CRM), Customer Value, Promotions Negotiation 62 Negotiation is a process of formal communication where two or more people come together to seek mutual agreement over an issue or issues Negotiation is particularly appropriate when issues besides price are important for the buyer or when competitive bidding will not satisfy the buyer’s requirements on those issues Source: Monczka, R., Trent, R., & Handfield, R (1998) Purchasing and Supply Chain Management Cincinnati, OH: South Western College Publishing Operating Policies and Procedures Definitive statements of what should be done in the business, and a formal organization and indexing of a firm’s procedures They are usually outlined in manuals which are printed and distributed to the appropriate functional areas Source: APICS (8th ed.) Order management Order management involves the seamless integration of orders from multiple channels with inventory databases, data collection, order processing including credit card verification, fulfillment systems and returns across the entire fulfillment network For proper execution the process involves real-time visibility into the entire order lifecycle starting from the placement of order and ensuring that orders (SKUs) are not lost, delayed, or corrupted during the fulfillment process The system may also comply with and support parcel carriers and provide sophisticated, centralized freight management and tracking/tracing capabilities Clients, Customer service representatives account managers and suppliers will thus have the ability to track real-time inventory levels for each SKU and inquire about order and shipment status via the web – anytime, anywhere Source: http://www.apics.org/ (10th ed.) Outbound Logistics The process related to the storage and movement of the final product and related information flows from the end of the production line to the end user Sources: Christopher, M (1998) Logistics and Supply Chain Management: Strategies for reducing cost and improving service, (2nd Ed.) New York: Prentice Hall http://www.esri.com/industries/logistics/glossary.html#f-l Performance Measurement Supplier performance measurement and evaluation includes the methods and techniques used to collect information that can be used to measure, rate or rank supplier performance on a continuous basis The measurement system is a crucial part of supplier management and development Source: Monczka, R., Trent, R., & Handfield, R (1998) Purchasing and Supply Chain Management Cincinnati, OH: South Western College Publishing Preventative Maintenance The activities, including adjustments, replacements, and basic cleanliness, that forestall machine breakdowns The purpose is to ensure that production quality is maintained and that delivery schedules are met In addition, a machine that is well cared for will last longer and cause fewer problems Source: http://www.apics.org/ (10th ed.) Program Management 63 The coordinated management of a portfolio of projects to achieve a set of business objectives is called program management Or, a program might refer to an ongoing set of activities internal to the organization, for example, a Total Quality Management program, workplace safety program, supplier development program, etc Source: http://www.mapnp.org/library/prog_mng/prog_mng.htm Quality Conformance to requirements or fitness for use Quality can be defined through five principal approaches: (1) Transcendent quality is an ideal, a condition of excellence (2) Product-based quality is based on a product attribute (3) User-based quality is fitness for use (4) Manufacturing-based quality is conformance to requirements (5) Value-based quality is the degree of excellence at an acceptable price Also, quality has two major components: (1) quality of conformance—quality is defined by the absence of defects, and (2) quality of design—quality is measured by the degree of customer satisfaction with a product’s characteristics and features Quality Programs Some of quality programs that are currently used include: Total Quality Management (TQM): TQM is a management approach to long-term success through customer satisfaction TQM is based on the participation of all members of an organization in improving processes, goods, services, and the culture in which they work Total Quality Engineering (TQE): TQE is the discipline of designing quality into the product and manufacturing processes by understanding the needs of the customer and performance capabilities of the equipment Total Quality Control (TQC): TQC is the process of creating and producing the total composite good and service characteristics by marketing, engineering, manufacturing, purchasing, etc., through which the good and service will meet the expectations of customers Statistical Quality Control (SQC): SQC is the application of statistical techniques to control quality Six-Sigma Quality: Six sigma quality is a term used generally to indicate that a process is well controlled, i.e., tolerance limits are ±6 sigma from the centerline in a control chart Reverse Logistics A supply chain that is dedicated to the reverse flow of products and materials for returns, repair, remanufacture, and/or recycling Source: http://www.apics.org/ (10th ed.) Scheduling Scheduling involves taking decisions regarding the allocation of available capacity or resources (equipment, labor and space) to jobs, activities, tasks or customers over time Scheduling thus results in a time-phased plan, or schedule of activities The schedule indicates what is to be done, when, by whom and with what equipment Scheduling seeks 64 to achieve several conflicting objectives: high efficiency, low inventories and good customer service Scheduling can be classified by the type of process: line, batch and project Source: http://www.apics.org/ (10th ed.) Six Sigma See: Quality Programs Specifications Specifications are the most detailed method of describing requirements Various types of design specifications are the detailed descriptions of the materials, parts, and components to be used in making a product Hence, they are the descriptions that tell the seller exactly what the buyer wants to purchase Source: Dobler, D.W., & Burt, D.N (1996) Purchasing and Supply Management (6th ed.) New York: McGraw Hill Standard/Compatibility 1) An established norm against which measurements are compared (APICS 10th ed.) 2) The Internet has transformed supply chain management into something closer to an exact science However for information to be shared, systems, both hardware and software, must be able to communicate and be compatible so that all supply chain activities can be optimized across company boundaries Standards promote interoperability and compatibility among operating environments Supplier Performance Evaluation The main objective of the supplier evaluation process is to reduce purchase risk and maximize the overall value of the purchaser It typically involves evaluating, at a minimum, supplier quality, cost competitiveness, potential delivery performance and technological capability Some of the other criteria used in the preliminary evaluation of suppliers include financial risk analysis, evaluation of previous performance, and evaluation of supplier provided information Source: Monczka, R., Trent, R., & Handfield, R (1998) Purchasing and Supply Chain Management Cincinnati, OH: South Western College Publishing Supply Chain Design Supply chain design involves the determination of how to structure a supply chain Design decisions include the selection of partners, the location and capacity of warehouse and production facilities, the products, the modes of transportation, and supporting information systems Source: http://www.apics.org/ (10th ed.) Total Productive Maintenance (TPM) Preventive maintenance plus continuing efforts to adapt, modify, and refine equipment to increase flexibility, reduce material handling, and promote continuous flows It is operatororiented maintenance with the involvement of all qualified employees in all maintenance activities Source: http://www.apics.org/ (10th ed.) Warehouse Management Layouts This refers to the configuration of the warehouse site with lines, storage areas, aisles, etc Layout or storage plan of a warehouse should be planned to facilitate product flow Special 65 attention should be given to location, number, and design of receiving and loading docks Source: http://www.apics.org/ (10th ed.) ... Research the theory of supply chain  Research and identify the theoretical model, the tool will be applied to the actual Angimex Co  Analysis of secondary data from the The Annually Reports of ANGIMEX. .. the rice export business 2.3 SUPPLY CHAIN OF ANGIMEX COMPANY 2.3.1 Supply chain structure The structure of Angimex s supply chain have started from rice crops, farmers, collectors, milling, Angimex, ... Agri-Food Supply Chain Performance Categories and Indicators 24 CHAPTER 2: THE PERFORMANCE OF SUPPLY CHAIN IN ANGIMEX 2.1 ANGIMEX COMPANY INTRODUCTION 2.1.1 History of ANGIMEX Company The An Giang