Reducing damaged products in sato vietnam solutions co , ltd

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Dang Thi Binh REDUCING DAMAGED PRODUCTS IN SATO VIETNAM SOLUTIONS CO., LTD MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2017 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Dang Thi Binh REDUCING DAMAGED PRODUCTS IN SATO VIETNAM SOLUTIONS CO., LTD MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Dr PHAN THI MINH THU Ho Chi Minh City – Aug, 2017 TABLE OF CONTENT ACKNOWLEDGEMENT EXECUTIVE SUMMARY CHAPTER 1: COMPANY INTRODUCTION 1.1 General Information about Sato Vietnam Solutions CO., LTD 1.2 Company background 1.3 Organization chart 1.4 Product definition CHAPTER 2: PROBLEM IDENTIFICATION 2.1 Problem context 2.2 Symptoms 2.3 Identify problems 10 2.3.1 The first problem: Production’s capacity issue 10 2.3.2 The second problem: Mistake on delivery 12 2.3.3 The third problem: Damaged goods 14 2.3.4 The third problem: Lack of forecast 15 2.3.5 The forth problem: Forecasting from customer 16 2.3.6 The fifth problem: Mistake on sample approval 17 2.4 Initial Cause – effect map 18 CHAPTER 3: SOLUTIONS AND ACTION PLAN 20 CHAPTER 4: REFERENCES 37 CHAPTER 5: SUPPORTING INFORMATION 38 5.1 MEETING MINUTE 38 5.2 Transcript 39 5.3 Transcript 41 5.4 Transcript 44 5.5 The performance appraisal 49 5.6 The exception of adding working effectiveness and internal – external communication into KPI form 53 5.7 Flow chart for factory 53 LIST OF TABLES Table 1: The number of late shipment from Jan, 2016 to Jun, 2017 Table 2: The factors impact to the late delivery Table 3: Calculation of Product (SAM) Table 4: The average number of orders from Hirich customers Table 5: Overload order number from SVS from May to July 2017 Table 6: Number of damaged goods from May to July 2017 Table 7: Forecasting Table 8: Order listing Table 9: Stock agreement for retail customers Table 10: Plan to make stock agreement for retail customers Table 11: Lead time table Table 12: Plan to rebuilt the flow charge for factory Table 13: Training schedule for salesman and label development member Table 14: Plan to build a good training program for staffs Table 15: The survey results of adding more condition into KPI format Table 16: Plan for employee performance review ACKNOWLEDGEMENT I am grateful to my supervisors, Dr Phan Thi Minh Thu, whose expertise, understanding, generous guidance and support made it possible for me to work on a topic that was of great interest to me It was my pleasure working with them I am hugely indebted to Managers of Sato Vietnam Solutions CO., LTD, Mr Nobuhiro Matsumura, Mr Mitsuhiro Inaba, Ms Quyen and Board of Managers at Hirich factory for finding out time to response to my questions for being ever so kind to show interest in my research and for giving their precious and kind advice regarding to my topic I would like to express my gratitude to co-workers at Sato Vietnam Solutions CO., LTD for being so generous to reply to my questionnaires Words can never be enough to thank your all kindness EXECUTIVE SUMMARY This project is conducted at Sato Vietnam Solutions CO., LTD The purpose of this project is figuring out the reasons for increasing late delivery from 25.0% for first haft of 2016 to over 41.5% for second haft of 2016 and 39.5% for first haft 2017, the increasing in customers complains according to the report from Operations department The late delivery is the serious problem because it leads to customer satisfaction and company development between literatures informed reviews and the collected data from Sato Vietnam Solutions CO., LTD during deep interviews with managers, mini-survey on staffs and reports from Label development division of Operations department, and sales admin In a further investigation, the root causes of late delivery are figured out and corresponding solutions are given to improve the situation There are four steps of alternative solutions proposed as following: (1) Production plan (2) Make the flow chart and public on each division in factory (3) Providing training program to production workers , label development member (4) Developing a proper performance plan CHAPTER 1: COMPANY INTRODUCTION 1.1 General Information about Sato Vietnam Solutions CO., LTD Sato Vietnam Solutions CO., LTD (SVS) is a 100% foreign invested by Sato Corporation which has offices in 26 countries and a business presence of over 90 countries It was established in 2012 With the mission that is to create new value for our customers through products and services of superior quality, and to contribute towards a better and more sustainable world And the vision of SVS is to aim to be the leader and most trusted company in the Auto-ID solutions industry worldwide, exceeding customer expectations in an ever-changing world As digital advances and automation affect the world around Sato, we continually seek new ways to stay ahead of the game Integrating Auto-ID technology with revolutionary materials, we bridge the last inch of the last mile challenges for our customers with solutions that ensure accuracy and sustainability, save labor and resources, offer reassurance and build emotional connections 1.2 Company background Company name: SATO VIETNAM SOLUTIONS CO., LTD Established: 10 September 2012 Capital: VND 6,284,400,000 Sales revenue: 61,282,694,189VND (as of 29 March 2017) Head office: 6th Floor, Saigon Finance Center Building, 9th Dinh Tien Hoang St., Ho Chi Minh City Tel.: (+84) (28) 3910 1350/1351 Fax: (+84) (28) 3910 1352 Representative Office: Ha Noi (Established: 24 April 2015) 13th Floor, TTC Tower, 19 Duy Tan Street, Cau Giay District, Hanoi Tel.: (+84) 243 795 7946 Total number of members (as of October 2017): 35 people (HCMC: 25 people; HN: 10 people) Departments: Sales, Operations, Accounting, Technical, HR-GA, Software Development Main products: Consumable, barcode printer, barcode solutions, RFID solutions Website: http://www.satovietnam.com Sato partner: Hirich Corporations (is a Vietnamese company) – producing consumable and providing to Sato Vietnam Solutions CO., LTD It is main supplier of consumable products 1.3 Organization chart General Director General Manager Ha Noi Representative Office Ho Chi Minh Head Office Sales Manager Sales Leader Sales admin Sales staff CS Manager SD Leader SD staff CS Leader Ops Manager HR Manager Chief Accountant Admin Ops Leader HR leader General Acountant Sales CS admin Label division CS staff Shipping division HR staff Accountant CS SD WH division 1.4 Product definition Because of the name and group of products at Sato Vietnam Solutions are quite general Therefore, the writer gives the some definition as below to make the readers understand correctly about the type of product Label: is a piece of paper or other material that gives you informative matters about the object such as a brand, mark, tag, origin of products, quantity or description of product It is attached to products, carton boxes or anywhere that you want to describe any information of your products Based on the using purpose, the label will be in different sizes, designs, types or colors Consumable: Goods which not returned after issuance from stores or factories, become incorporated into other goods and lose their identity, or cannot be used for their intended purpose without extinguishing or transforming their substance1 transfer and deliver goods to customers After that we will request them to report the action plan for new improvement Obviously, a clear and deeper understanding the issues which were reported during the June meeting is essential for SVS to success in its business Based on the importance of issue, the author decided to conduct a research within the company to collect more information and clarify the real problem 2.2 Symptoms At the first steps, the writer approach the person in charge of shipping division to collected the data from operations base on real situation and calculated the rate of late delivery for each period The detail is following Table 1: The number of late shipment from Jan, 2016 to Jun, 2017 Criteria No of shipments Jan to Jun 2016 Jul to Dec 2016 Jan to Jun 2017 2,776 3,122 3,896 No of shipments delayed 694 1,296 1,537 Rate of shipment delayed 25.0% 41.5% 39.5% From the above table, SVS business is going well by years The number of shipment is increasing quickly from Jan 2016 to Jun 2017 The number of shipments of the second half of 2016 increased 11% compared with the first half and this number kept increasing up to 20% in first half of 2017 In the parallel, the delayed shipments also increase significantly and the highest rate is in the second half of 2016 – 41.5% from the total of shipments in this period Ans 1: Depend on each shipment, it matching with the amount we have to pay There are no different if we re-arrange the shipment due to wrong delivery However, if the mistake comes from forwarder, we no need to pay anything, they have to cover it About urgent orders, it’s about 30% - 40% of urgent orders come from customers and we need to push factory Q6: Does your company have any solutions to improve this? Ans 1: My leader had a meeting with supplier some days ago to discuss about lead time and how to improve damaged goods They are processing some new things now I may receive the meeting note soon About forwarder, because we purchase service of warehouse and transportation from forwarder so we also set up the meeting with them to analysis the problem and give out solutions for those mistakes They understand well about the serious of problem now I saw them improve day by day Q6: How long does it take to for you all to recover that kind of issue? Ans 1: Ummm… it depends Case by case we will negotiate with each party Q7: Do you think that late delivery is a common issue at trading companies? I mean that the rate is always high compared with other companies? Ans 1: [laugh] not sure at all Q: Ok That’s all for my questions Thank you very much for your support Wish you healthy and success! Nice day! 5.3 Transcript Interviewee: Sales admin – Ms Huynh Ngoc Thanh Vy Interview method: via Gmail hangout (chatting) [Start…] 41 Hi Vy! I am doing a project for my final thesis of ISB program about “Late delivery at Sato Vietnam Solutions” I would like to have your answers for following questions Welcomes your feedback and answers will be kept confidential Thanks for your participation Questions: Q1: Could you please to share me the purchase order process at Sato? How many consumable orders you receive every day? Ans 1: Sales PIC will work with customers for quotation and receive orders from them After that, they pass all to me for checking and recording then sending to Operations team for goods preparation Every day, I receive about to 10 orders of consumable includes about 10 to 15 items as average Besides, twice a month, our biggest customer will place order with about 30 – 35 items It’s the hard time for us to meet customer requirement Q2: I think that the numbers of orders are quite big How you manage it? Ans 1: Anytime receiving orders from sales PICs, I will record to my data system immediately with tracking number Any changing of goods status, I will update and share the information to sales PIC for shipment plan Moreover, Operations PIC also record it in details so all of us easy to follow up Q3: Do you often receive urgent order? Ans 1: Yes Many urgent orders coming Especially come from customer who is retailers and garment companies Q4: Do you know why they always request goods urgently? Ans 1: Because of type of business, they always need stock of consumable such as they need label to print the price or promotion label or product information etc… and it depends on the orders from their consumers each time That’s why it is very hard to predict the exactly order quantity of consumable to us Q5: Do they submit the forecast for future order? Ans 1: Some of customers submit forecast but some not 42 Q6: Why don’t you request them to submit it in advance so we can prepare the material better? Ans 1: We did request but somehow, it not works well Q6: What is the opinion from your manager? Do they have any idea to improve this kind of problem? Ans 1: He always request sales PIC to visit customers to discuss about forecast but still not so effectively My manager is visiting each customer who has short lead time to negotiate again Hope that it can be better Q7: Is there any other factors effect to late delivery? Ans 1: Yes There are some reasons such as: mistake from forwarder during delivery or NG products caused late delivery Q8: What you mean about mistake from forwarder during delivery? Ans 1: Well… sometimes they deliver goods to wrong address and we need more time to get back the right place Q9: Did you talk with them to improve it? Ans 1: Nope Operations team will work with them Q10: Do you see any improvement? Ans 1: [laugh] it’s improved for this mistake and happened other issues, look like the common mistake of forwarding companies Sometimes I heard from our customers that they facing same issue Q11: How about NG products? Ans 1: May come from sales PIC or production But it’s improving recently Q11: Do you have any involve improving this mistake? Ans 1: Yes, of course I always try to check document and layout of new items carefully before providing to Operations for order processing Q: Ok That’s all for my questions Thank you very much for your support Wish you healthy and success! Nice day! 43 5.4 Transcript Interviewee: Board of Manager Mr Nobuhiro Matsumura – General Manager Mr Masashi Kozai – Sales Manager Mr Mitsuhiro Inaba – Head of Representative Office in Hanoi Mr Shunji Horiguchi – Customer Service Manager Interview method: Direct interview [Start…] Hi everyone! I am doing a project for my final thesis of ISB program about “Late delivery at Sato Vietnam Solutions” I would like to have your opinions related to the following matters Thanks for your participation Questions: Q1: From the report of Operations department, I saw that there are a lot of late shipments to customers and the number of complaints from customers keep increasing Do you have any idea about this? Matsumura: Yes, recently we have been facing with a lot of problems on delivery issues My staffs also reported me that there are many complaints from customers about this We are thing about this and I hope that we would have some direction to minimize the late delivery Kozai: Yes This becomes more seriously now as we – sales team need to get a lot of complaint from customer Inaba: Any delay from delivery, it strongly affects to customer’s production plan as our products is a part of production lines Especially retail customers such as Aeon, Family Mart,… they even stop their business if they are lack of label to print the price and product information In any delay, we have to minimize the risks for customers by arrange urgent shipments to them with 44 special service Then, we have to pay more for transportation fee and take more time to solve the problems Q2: Do you know why it happened for a long time but still haven’t improved yet? Matsumura: I think that the problems come from internal and external From internal, our factory does not have a perfect process for each step of production Moreover, the connection between sales team and customers and operations team are not so closely That’s why sometimes we face with some issues because of missing information or incorrect information transferring From external, we need to have a better ways to take care them We need to visit them more often as well as make good relationship with customer purchase PIC to understand deeply about customers’ status From that, we can know how their production process running and when they need more material Then, we will advise next ordered quantity or remind them to place new orders It will help SVS to prepare goods better Inaba: Besides the above ideas, I think that we also need to manage order circle for each customers for each item with quantity Sales admin will follow it If she sees that the time coming but SVS still not receive repeat orders, she will ask Sales PIC to remind or visit customers to get new PO Q3: How about forecast from SVS to factory? Do you make it? Matsumura: I and Binh make it monthly based on sales plan from each sales manager In fact, sales managers will get that information from customers’ forecast and some pending projects Besides that, we also based on sales history to set standard quantity for each items Then, we make our own forecast However, due to the number come from customer is untrusted so we also faced with shortage materials for factory Q3: Did you have any discuss with customers and sales team about this to get the trusted number on forecast? Matsumura: Yes, I did some discussion with my sales team sometimes and requested them to work with their customers I also accompanied with sales PIC to visit some customers to talk with them Maybe, the situation becomes better 45 Inaba: It is not easy to get the forecast from customers in the North They don’t want to make forecast However, they manage their material quite well in internally I asked my sales staff to follow their order status and remind them when the time coming and ask them if their orders are lack of any items I saw just few case of late delivery to customers here due to lack of forecast Most of the delays are come from forwarder or production We are also facing with damaged goods issues Horiguchi: there are less than 30% of customers in the South submitted forecast with trusted numbers, 20% having forecast but the number is not so close with actual order, the others are not Q4: How about the forecast from SVS to factory? How you make it? Matsumura: Firstly, we based on order history which recorded daily by operations team It shows all information of an order from customer information to product information From this report, we can know the average ordered quantity per month Secondly, we are managers who involve directly to sales activities so we can know which customers or which project need to be supported by factory such as urgent orders, huge quantity in limited time or even how long for a customer to place a repeat order for a specific item From those two of things, we can predict the number we may got from customers in next few months However, we also cannot control 100% as our customers are expanding now and a manager cannot remember or control everything without support from their staff Besides that, when I make forecast, I just be confident to apply this method for our VIP or loyal customers only I cannot forecast for all customers as I am not sure if they change their supplier in some days or not because our products are easy to replace by other suppliers Q5: How about damaged goods issues? Where does the problem come from? Matsumura: As you know, our factory is facing with high turnover issue because the factory moved to new place which is bigger and farer than the old one Even factory have some support to workers but they still could not stay due to distance issue It means that we need to recruit new workers Of course, they need more time to be trained the working process This is main reason that we face with a lot of damaged products 46 Kozai: Sales team also one of reason for damaged goods If they are careless such as they forgot to check the size of print contents or don’t compare the color of sample with pantone book, problem immediately come In another hand, in some cases, we send sample and layout of new item to customer for approval before mass production However, somehow it still exist some mistakes Sometimes, we need to destruct a big number of labels due to quality issues In this case, we cannot ask customers to pay 100% the value of goods as we need to protect our relationship with customer in long term Normally, depend on each case; we will negotiate with factory and customer to share the cost of destruction items Q6: Do they happy with when you ask factory to share cost as the problem is not came from them? Matsumura: Before going to final decision, we need to set up the meetings with each party with the result of investigation We need to analysis and explain to them the situation We need each party sympathy to overcome the difficulties with us even we also need to pay while we did nothing wrong Customer is still a customer I always try all my best to support our customer and also corporate with our factory We develop together Q7: How about the mistake on delivery? What you think about this? Matsumura: It happens most with customers who are far from our company Such as: customer in the North of Vietnam or other provinces which are far from the central Normally, the main routes of forwarders are from city to city For example: from Ho Chi Minh City to Ha Noi, Can Tho, Hue, Da Nang,… some big city only Then, forwarders will re-arrange the shipment as assigned addresses for delivery During many steps of delivery, it caused the mistakes Inaba: Our products are distributed in over country while we have just only one main factory in HCMC It is must to have more than one factory to supply goods to customers which is in the north, for example In fact, being a representative of Hanoi office, I am looking for a good factory for label products in the North to serve customer there Kozai: due to only one main factory so it takes longer for them to produce goods because they need to take care all orders from us besides their own customers It leads to overload in production For our side, the time to get approval on sample and drawing before mass production is quite long because we need to take many steps then but this case is not so many I am asking 47 sales staff to shorten the lead time for sample and drawing preparation and try to work and cooperate with customer closely to get final approval faster Q8: How about mistake on delivery place? Kozai: As Inaba san just said, because we have to transfer goods to very far distance so it is easy to meet the mistakes or damages Sometimes, due to many small shipments to many customers per day so the forwarder arrange it to wrong places For example, the shipment A should be delivered to Hanoi and shipment B should be delivered to Bac Ninh but they arrange shipment B to Hanoi and shipment A to Bac Ninh When this issue happened, it takes much time to rearrange those to right places and some time it caused delay for production at customer site due to no material Horiguchi: sometimes, because of human mistake, sales admins provide wrong information to operations team Then, goods goes to wrong places as well When customers receive goods and check, they found that the received goods is wrong compared with their order, then they complaint or report to us And, we need to ask operations team to help us to re-arrange it In general, sometimes we could not control 100% those problems but we are step by step to improve this Q: Great! I also can study a lot from you for those cases That’s all for my question Thanks for your time sharing with a lot of useful information Wish you healthy and success! Nice day! 48 5.5 The performance appraisal 5.5.1 KPI program Staff Name Code Dept KPI PROGRAM FY2017 1st half target Description I 2nd half target 10 11 12 Total FY2017 target Organization KPI SVS target/SVS + Sale amount + Gross Profit Dept target Individual KPI II (Name + Value + comment) Individual target 49 Proposal (training, knowledge update, …) 5.5.2 KPI Program Evaluation Sheet CONFIDENTIAL Staff name: Staff code: Position: Dept.: Starting day: Evaluation period: Evaluation Score Contents I Weight Self Team leader GM/CRO Organization KPI SVS target/SVS Sale amount 30% Gross Profit Dept target 20% 50 II Individual KPI Individual target 30% Behaviour Competency Working effectiveness 20% Inter-communication, teamwork skill Exter-communication skill 10% Full attendance Implementation of company regulations Total - - - Signature & Name Note: (*) We have levels: Score FY17 [D]: Unacceptable ~ 7.49 [C]: Need Improvement 7.50 ~ 8.99 [B]: Meet Requirement 9.00 ~ 12.79 [A]: Exceed Requirement [S]: Outstanding 12.80 ~ 13.99 14.00 ~ 51 5.5.3 Evaluation Instruction 52 5.6 The exception of adding working effectiveness and internal – external communication into KPI form Very Very Disagree Neutral Agree 5 disagree agree I expect to add the term of damaged goods as working effectiveness into my KPI form I expect to add the term of internal communication and external communication into my KPI form 5.7 Flow chart for factory 53 54 55 ... Operations, Accounting, Technical, HR-GA, Software Development Main products: Consumable, barcode printer, barcode solutions, RFID solutions Website: http://www.satovietnam.com Sato partner: Hirich Corporations... 1: COMPANY INTRODUCTION 1.1 General Information about Sato Vietnam Solutions CO. , LTD Sato Vietnam Solutions CO. , LTD (SVS) is a 100% foreign invested by Sato Corporation which has offices in. ..UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Dang Thi Binh REDUCING DAMAGED PRODUCTS IN SATO VIETNAM SOLUTIONS CO. , LTD MASTER OF BUSINESS ADMINISTRATION