DSpace at VNU: Application of 5S in Vietnamese Small and Medium Manufacturing Enterprise-Current Situation and Soluions

DSpace at VNU: Application of 5S in Vietnamese Small and Medium Manufacturing Enterprise-Current Situation and Soluions...

APPLICATION OF 5S IN VIETNAMESE SMALL AND MEDIUM MANUFACTURING ENTERPRISES - CURRENT

SITUATION AND SOLUTIONS

Nguyen D ang Mitth - Do Till Cue -

Ta Thi Huong Giang - Hoang Till Thu Ha

I INTRO DUCTIO N

The economy is changing more competitively, modern corporations nowadays growth through improving efficiency o f manufacturing as well as delivering higher quality goods and services to attain higher customer satisfaction In Vietnam, on the path to build up a market - oriented socialist economics, the contribution o f corporations, especially Small and Medium Enterprises (SMEs) are playing key roles More than 280,000 SMEs accounting for about 98 percent o f total number o f firms around Vietnam in 2011, this segment contributes about 30 percent o f GDP annually These enterprises not only employ for millions labor each years but also donate the national wealth so that supporting SMEs development always is top priority among government policies However, small scale and lack o f capital as well as human problems are the reasons that make many SMEs still are in struggling to survive To solve this problem, entrepreneurs take chances o f globalization and integration to learn oversea successful key for business Certainly, the exactly imitation is not allowed due to difference in culture and business circumstance as well as level o f manager Thus, learning from oversea knowledge and implementing for Vietnamese case are still at first stage and always need support from both government and society

Come from Japan, a traditional Asian country and home o f powerful corporations, 5S is a tool that applied successful and commonly for a long times It

is methods o f maintaining good housekeeping so that firms can enhance the production efficiency as well as quality o f goods and services This method was applied firstly by Osada in 1980s, Then, many firms throughout Japan also start to implement 5S to reduce waste and improve productivity (Osada, 1991) 5S is

* University o f Economic and Business, VNU

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APPLICATION OF 5S IN VIETNAMESE

abbreviation o f five Japanese words which starting with S: Seiri, Seiton, Seiso, Seiketsu, and Shitsuke (Ho, 1997) Nowadays, 5S also is implemented in many countries and five Japanese words with s starting also is adapted in local language Particularly, in English, they are Sorting, Straightening, Shining, S t a n d a r d i z i n g and Sustaining (Lonnie Wilson, 2010) 5s is good way to maintaining housekeeping and environment performance as well as safety and systematic workplace (O ’Eocha, 2000) Most organizations started practicing 5S in manufacturing areas before applied it in office based environment (Stephen J and Graeme, 2004) Through time, 5S is developed and integrated with other method for better improvement and higher efficiency with other method such as Kaizen ideas (Imai, 1997 and Kodama, 1959) and visual control (Nikkan Kyogyo Shinbun, 1995) Also, 5S is used as foundation o f other managing activities such as Total Quality Management (TQM) (Ho et al, 1995) and Total Productivity Management (TPM) (Ho and Fung, 1995)

In lean manufacturing system, 5S is applied as a basic tool to maintain housekeeping (Becker, 2001) and implement lean (Hines et.al, 2004) In Vietnam, the concept o f 5S have been developing and applying in firms under the guidance o f Vietnam Productivity Centre (VPC) It is an effective and suitable method for Vietnamese firms in starting to enhance productivity and improve product quality (Phan Chi Anh, 2008)

However, the num ber o f Vietnamese documentary about 5S implementing and how to integrating effectively 5S with others methods is still limited Besides, how well it works and what is the current situation o f implementing 5S in Vietnamese SMEs are still questioned so that restrict supporting and developing it in Vietnam Aimed to provide a picture about the fact o f 5S applying in SMEs for superior support, this paper would like to provide closer look at firstly the overview about 5S theoretically and provide reality about how SMEs are exploit this useful method through survey from Northern manufacturing SMEs Furthermore, final part o f this paper would analyze difficulties that they are facing and suggest practical countermeasure that firms should apply to implement 5S more effective

II M ET H O D O LO G Y

There are three phases in process o f conducting this research The first stage is collecting data This information source was create by combination o f secondary data and primary data which built from survey fifty-two Northern Manufacturing SMEs as well as semi-constructed interview for deeper analyze The second stage is figuring out problems that hide inside the whole picture drawn from previous phrase: How SMEs are exploiting result o f 5S? What factors cause this problems? Based on the problem in current situation and using 5whys method, research point

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out the roots o f the problem: lean did not develop in Vietnamese SMEs After that, some suggestions are given in third stage in order to enhance effectiveness o f 5S implementation in these enterprises

Figure 1: M ethodology

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A P P L I C A T I O N O F 5 S IN V I E T N A M E S E

III O V E R V IE W OF 5S

5S is a method in total quality management system that originated from Japan during the period time from 1960s to 1970s This is difficult period in history of Japan economics after World War II Japanese firms startina apply 5S with the idea about good housekeeping is the basic o f maintaining and improving productivity and quality

Five components o f 5S are abbreviation o f five Japanese words which starting

with S: Seiri, Seiton, Seiso, Seiketsu, and Shitsuke In different countries, 5S could

be translated into dialects for better adaptation but still keep the same meaning For

example, in English 5S contain Sorting, Straightening, Shining, Standardizing and

Sustaining and in Vietnamese, these five s represent Sàng lọc, sắp xếp, Sạch sẽ, Săn sóc và Săn sàng.

1 1 Seiri (S o rtin g )

Seiri is the way tools, equipm ent, materials, documents is organized follow logical order so that the workplace is keeping clean, tiny All the items could be sort in prioritizing per requirement and keeping them in easily-accessible place One comm on approach Seiri is using “red card" to tai’ any unnecessary items These tagged items would be consider whether i t ' s in r i g h t p l a c e o r n o t a n d p e o p l e w h o r e s p o n s i b l e f o r t h i s a r e a w o u l d m a k e decision to keep this items or not Sorting process will classify everything in workplace so that eliminate time o f m oving and searching for tools or docum ent and also create a safer work environment.

2 Seiton (Straightening)

In J a p a n e s e , S e i t o n m eans is a r r a n g e d e v e r y t h i n g n e a t a n d o r d e r ly S o, w h e n i n t r o d u c e d into Vietnam, S2 is called Straighten After removal o f unnecessary items, the next task is to organize them effectively so that they can be easy to find, and easy to repay after using Typically this process starts by looking at the usefulness and frequency o f using these items

to decide its location In this step, the items need to be identified by labeling or numbering to easily locate the best location, on the principle o f visual m anagement: "a place for each item, each item has a unique position." Through Seiton activities, the working environment would become more convenient and tidy that inspire employee for better work result.

3 Seiso (Shining)

Seiso - the third s m eans that shining and keeping the workplace clean Main task in this section is kept clean throughout the organization o f the overall hygiene and daily cleaning machinery, supplies, and w ork areas Seiso aims to improve the working condition, reduce risk, accidents, and improve the accuracy o f machinery and equipment (due to dust) Hygiene regularly also can test machines, devices which detect problems such as dust in

m a c h i n e r y , t h e p l a c e l o o s e s c r e w s , b r o k e n screws s o t h a t w e q u i c k l y f i n d s o l u t i o n s t o problems, improve the productivity o f machinery, equipm ent and safety at work.

Ap pl yi n g these first t hr e e s, firm can achieve a m a z i n g results, thus, contributing for improving productivity and profitability for the business.

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Figure 2: 5S principles

In summary, 5S practices to help businesses build environment clean, tidy and safe

at work, promoted creativity in employees and develop discipline and corporate culture For business enterprises, the benefits can be identified through model PQCDSM:

- Improve productivity (P - Productivity)

- Improved product quality (Q - Quality)

4 Seiketsu (Standardizing)

ỉn Vietnamese, Seiketsu also is translated as “săn sóc”, which mean focusing on the purpose

of maintain standard and operating resuits in the first three Ss Its goal is long-term maintenance 3Ss activities rather than a temporary movement Therefore, ensuring the accuracy is essentia! to maintain the achievements of the previous operation In addition, organizations and businesses may make regulations, rules, plans, etc to be able to control the development and implementation of 5S Other important in Seiketsu contents are operational test and evaluation 5S performance By developing S4, 3S activities will be gradually improved based on the standards set out and proceed to complete the 5S business

5 Shitsuke (Sustaining)

Shitsuke is the final activity of 5S This “S” meant to be trained to make up a daily routines and habits of employees in implementing 5S Ready can be interpreted as training people to follow standard and strict monitoring rules in the workplace However, when the improvement opportunities appear, ready will help firm make changes as appropriate easily Thus, the in S5 content, the training of 5S is the most important point, help the 5S activities are maintained and developed to the highest level, thus contributing to improve productivity and product quality

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APPLICATION OF 5S IN VIETNAMESE.

- Cutting costs (C - Cost)

- Delivery (D - Delivery)

- Ensure safety at work (S - Safety)

- Raise awareness and discipline for employees (M - morale)

As a simple method, ju st changing in mind thinking o f manager and employee and also a methodology that sharing the same perspective “Cleanliness is next to eoodliness” o f Vietnamese, 5S is less costly way for firm to a bring up hieher performance with cleaning and efficient working environment

IV C U R R E N T SIT U A TIO N OF 5S PR A C TIC E IN VIETNAM ESE MANUFACTURING SM A L L AND M EDIUM ENTERPRISES

1 Small and medium enterprises in Vietnam

The above part represent literature reviews and some theories about 5S, this prove that 5S is 2;ood method to improve company performance We analyze continuously the current situation application 5S in Viet Nam through survey at 52 SMEs

According to the V ietnam government regulations, small and medium businesses is a registered business under the law with total capital under 100 billion VND or number o f employees less than 300 In recent years, the number o f SMEs increased continuously and accounts for approximately 97% o f businesses operating across the country C ontributing more than 30% in G D P and creating thousands o f jobs for the society, the development o f SMEs are considered as an important strategy in V ietnam ’s development

Due to small scale in both capital and number o f employees, SMEs often are highly flexible, adaptable to changes in business environment However, because of low technological capabilities as well as the limited capital, a great number of SMEs in Vietnam are falling, stagnating and facing bankruptcy during the downturn Therefore, Vietnam government has been supporting for enterprises to access capital and technology as well as efficient management and production methods And, 5S - a Japanese method, that is very simple but efficiency of production to improve com pany environment and performance is one way to develop SMEs We conducted survey in 52 SMEs in Viet Nam, and went to reality

to research and investigate the current situation o f application 5S in Viet Nam

2 Current situation o f lean practices in Vietnamese small and medium enterprises

Following the Japanese firms, 5S was introduced in Vietnam in the early 21s century After 10 years o f development in Vietnam, 5S has brought many benefits

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to enterprises, especially SMEs during the economic downturn In 2002, a workshop on methods and experience o f Japan in productivity management held by Vietnam Productivity Center and Asian Productivity Organization introduced overall TQ M tools to Vietnamese enterprises In the following years, a series o f programs to support for applying lean in Vietnam was organized and obtained good results In June 2010, program " Enhancing capacity to support industry in Vietnam" held by JICA and SM E TAC help Vietnamese SMEs to apply a number

o f tools o f lean such as 5S, kaizen, visual managem ent, TPM, .However, up to now, these methods has not been widely applied in Vietnamese enterprises However, the num ber o f enterprises that has been supported in this program achieved about 170 enterprises, account for a very small proportion (less than 1%)

o f SMEs in Vietnam In 52 companies, we conduct the survey to exam how 5S apply in Vietnamese SMEs, and which level application o f 5S in SMEs is We exam the relationship between 5S and productivity efficiency, workplace and performance b efo re and after a p p ly this tools The r e s u l t - the table o f this survey show that the application o f 5S in SMEs is medium, follow JIC A - one o f organize

in Japan to develop productivity , that cooperate with SME - TAC, and through the survey and real observation, the level o f apply 5S stood at level 3 in 5 level It means that, the SMEs, which are applying 5S, only achieved 3S (Sort, Straighten, Shine) Most o f these companies is trained or guided by volunteer in Japan, but they still have not yet apply 5S completely and successfully

1 Training 5S awareness for employees 1.00 5.00 4.28 0.93

3 Developing and Establishing 5S standard 1.00 5.00 4.10 0.74

4 M aintaining daily 5S at office and showroom 1.00 5.00 4.00 0.94

5 M aintaining daily 5S at shop-floor 1.00 5.00 3.75 1.05 x6 Maintaining daily 5S at warehouse 1.00 5.00 3.98 0.99

7 Promoting 5S to suppliers network 1.00 5.00 3.54 1.12

Actually, 52 com panies in survey were typical in applying 5S method And most o f com pany located in Hanoi or Ho Chi M inh City In a b is city, where information network is very developing and receive more support from government, those SMEs still cannot apply fulfill 5S method, so in the rural areas may be the number o f application o f 5S is m uch small It is reason why w e can estimated that

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there are only small num ber o f SM E apply 5S in Viet Nam M oreover, the number

of SMEs that has successfully applied is smaller

Besides survey at 52 M SM Es, deep interview w as carried out at 3 enterprises

in Hanoi: Hanel JST Com pany, C N C -V IN A and Shorai Limited Company

2.1 H anel Plastics Joint Stock Company

As one o f the first jo in t stock companies in Hanoi, Hanel Plastics JSC was founded in 1994 Its main products are plastic and foam products for other industries

With the support from the program “Enhancing capacity to support industry in Vietnam”, Hanel has applied the 5S, kaizen into the plant since 2009 In the first phase, company held training program for employees with basic knowledge o f 5S, kaizen, TPM, After training, cleaning cam paign was done in the entire o f company, machines, facilities and products were filtered and rearranged logically and scientifically During implementation process, the enterprise also made improvements to reduce lead-time for arriving and operating As a result, the

effectiveness o f the t o o l s 5S, kaizen is evidence in the work environm ent as well as

business result

Net revenue from operating 12,274,437,332 8,492,201,326 145%

Source: Hanel financial statement, 2011.

VINA)

C N C -V IN A was established in 2007 and engaged in the field o f machine manufacturing and automatic control With the support o f program “Enhancing capacity to support industry in Vietnam", the com pany has applied CN C-V INA tools 5S, kaizen since its establishment W hen first applied, the training programs o f these tools are held regularly to the board o f directors and managers Then, the training for staffs was implemented At the same time, com pany also organized and

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arrar.ged machinery, equipment, products to eliminate lead-time Continuous

improvement, kaizen was encouraged in the enterprise, so work environment and

productivity o f CNC were improved significantly

2.3 Shorai Vietnam Company Limited

Shorai Vietnam Co., Ltd, a member o f A Long Corporation operates in support

industries Its director is Japanese, so Shorai applied 5S and Kaizen when it was

established in 2011 With support o f program “Enhancing capacity to support

industry in Vietnam”, Shorai hold a number o f training programs for its managers and

employees After that, it began practicing 5S and kaizen under supervision of director Application process at the company almost a year but only gives efficient

large companies The company has made continuous improvements to reduce lead-

time as well as manipulate time in the production process Up to now, Shorai received

a lot o f orders from the ereat enterprises such as Toyota, Dongfeng, Truong Hai,

Thong Nhat

There cases imply the change in performance and efficiency after applying 5S

in specific case and in specific number So, 5S can apply in Viet Nam and bring many good result for SMEs Besides good news, there are som e true stories that we

need to know that even the companies is considered quite success in application 5S,

the level o f application still stood at level 3 It may suggest that, may be many other companies apply 5S is stood at lower than level 3 Even though, many SMEs have

never access concept o f 5S It will lead to the number o f SMEs apply 5S is small

The less, with typical success stories in Vietnam, the authors have drawn three

major lessons that the company has successfully applied to implement lean; good

leadership, m anagem ent capability and suitable training program Those cases show that 5S (and some other methods) is a very useful method that helps enterprises

increase profit and it can be adopted in Vietnamese SMEs However, those are only the initial successes; it would take more time to popularize lean in Vietnam To find out the reason why 5S still have yet develop in Vietnam, and reasons for there are a little o f company apply 5S in SMEs, we can consider the next part

V T H E CAUSES O F P R O B L E M AND SO LU TIO N S F O R

d e v e l o p m e n t o f l e a n p r o d u c t i o n i n V IE T N A M E S E E N T E R P R IS E S

1 T h e causes t h a t lead to u n d e rd e v e lo p m e n t o f 5S in V ietn am ese S m all

a n d M e d iu m E n te r p r is e

Although 5S is an effective method that helps Vietnam ese SMEs eliminate wastes and improve productivity, 5S has not yet been applied widely in Vietnam In order to point out the roots o f the above issue, tree diagram o f causes was built based on 5Whys method and the survey results The tree diagram consists o f 6

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layouts where present the causes lead to the results in the previous layout Therỉ are

9 causes that lead to the problem: 5S are not applied widely in Vietnamese SMEs:

- Lack o f enterprise leader’s commitment in 5S practice

- Ineffective propaganda about 5S in Vietnam

- Limited capability o f leaders

- Lack o f 5S specialists

- Poor quality training 5S program

- Lack o f Vietnamese materials about 5S

- Lack o f supervision in 5S practice

- Lack o f support from government in accessing capital

- Lack o f initiative in learning from other enterprises

Based on the result o f survey at 52 companies, there exist 7 the most critical reasons that make 5S practice unpopular in Vietnam

L I Lack o f enterprise leader’s commitment in 5S practice

In enterprises, leaders or Board o f Directors (BOD) play a vital role in orienting the development strategics as well as 5S practice plan BOD will set up the goals and necessary resources in plan o f applying 5S, so that commitment OÍ

B O D in 5S practice is essential for enterprise to im plem ent 5S plan successfully In addition, strong commitment o f leaders could make employees aware o f importance

o f 5S in company, since then encourage them to do 5S activities effectively In short, leader’s commitment is a key for success o f 5S plan in MSMEs

1.2 Ineffective propaganda about 5S in Vietnam

Although 5S was imported in Vietnam for over 10 years, it is still considered

as a new method in many Vietnamese MSMEs It is a really useful method that helps enterprises improve productivity, but there is no propaganda campaign about 5S in Vietnam Therefore, at the present, there are few SMEs that knew and applied this method in management and production

1.3 Lack o f 5S specialists

5S is still new for many Vietnamese SMEs, so that it is difficult for those to apply 5S in company properly Specialists who have deep understandings about both 5S and Vietnamese business context will support SMEs to develop strategy and to overcome the difficulties in implementation plan, especially in the beginning stage Without support from specialists, enterprises could face to the failure o f 5S plan, so lack o f 5S specialist is a critical reason that leads to problem in applying 5S

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