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Building Information System and Applying E-commerce in King Do Joint Stock Company I/ Introduction about the company 1/ Introduction Kinh Do Joint Stock Company was formerly known as Kinh Do limited construction and food processing company and was founded in 1993 At first, the company is only a small factory with an area of about 100m2 with 70 workers and invested 1.4 billion, specializing in the production and sale of snack - a new product to consumers in the country at that time In 1994, the company increased the capital to 14 billion VND and imported production line of snack which worth 750,000 USD from Japan The success of King Do cheap snacks with characteristic flavors which is suitable with the tastes of domestic consumers has become an important step for the continued development of the company In 1999, the company increased the capital to 40 billion VND, established commercial centers Savico Capital in District I, Ho Chi Minh City, marking a new development of Kinh Do business into other areas The company first opened Bakery system, starting a chain of candy stores from the north to the south in the future In 2002, the company increased the capital to 51 billion VND and expanded the plant area to 40,000 m2 In 09/2002, Kinh Do Joint Stock Company was established with a capital of 150 billion VND, in which King Do food processing company contributes 50 billion VND On 12/12/2005, 25 million shares of Kinh Do are officially put into transaction for the first time in Ho Chi Minh City Securities Trading Center On 07/2006, Kinh Do and food conglomerate Cadbury Schweppes officially signed a business agreement This is a preparation step of Kinh Do when Vietnam joined AFTA and WTO After 16 years of operation and development, the capital and production scale have continuously been growing Up to now, King Do has become the leading confectionery manufacturer in Vietnam 2/ Business situation At the end of 2011, the net revenue of King Do was 4247 billion VND, an increase of 32.6% compared to the same period of 2010, due to the increases of sales volume and of prices of some products Gross profit by the end of 2011 reached 1673 billion, an increase of 33.8% Rate of return on equity is 0.51 and the ratio of debt on capital reached 0.26 In general, the business situation of the ompany is quite favorable 3/ Analysis of ERP in King Do At the end of 2003, the company officially applied the ERP system The functions of the software are: Purchasing Management • Preparation and approval of requisitions • Support supplier selection and orders • Record, monitor and control the entire implementation process to purchase goods, pay for suppliers • Track the progress of orders • Subscribe to the time and place of delivery • Analysis of changes in the purchase price over time • Statistics group sales purchase details, products, suppliers Sales Management • Record, monitor and control the entire sales process implementation, delivery of distributors • Establish policies for the purchase price, discount and promotion • Control the debt limit to allow the sale • Have detailed sales reports by item, group of customers, each distributor and each business area employees Warehouse Management • Record, monitor and control the entire in-and-out process of warehousing • Control Inventory control quantity • Manage inventory by items and groups • Analysis of inventory age •Determine the value of inventory in several different calculation methods (weighted average, FIFO, LIFO, landing real name) • Make reports of inventory and detail materials Management of tools, instruments and fixed assets • Record, monitor and control the entire management process of fixed asset and tools • Follow-up and implement depreciation calculations of fixed asset • Establish criteria and cost objects for allocation • Give out statistics and monitor the transferring and management of tools and fixed assets between divisions • Implement and control the allocation of the cost of tools and instruments Production Management • Record and control the production planning • Support the planning of materials for production • Manage the production receipts and processes • Monitor the implementation of the production planning and control of production schedule • Control the quality of raw materials and finished products in stock, for sale • Monitor and analyze production costs Management of debts, payables and receivables • Record, track, and control the implementation of the debt management process • Keep track with state liability for each subject and for each invoice • Monitor the implementation of the debt limit • Analyse the age of debt, monitor debt collection and debt payment • Planning for debt collection, debt payment • Report on the balance sheet as liabilities incurred liabilities, detailed books of accounts Capital Management Make plans of revenue and expenditure Make reports, keep track and control the whole process of revenue and expenditure Books and reports system: cash book, deposit book, detailed book for cash General Accounting Keep track with accounting issues Support the implementation of adjustment, allocation…in the form of accounts Keep records of financial statements, business statement and money flows 4, Analysis of ERP situation a/ Strengths - Have a strong information technology infrastructure - Have highly qualified IT staff - The staff and employees in other departments are capable of using ICT proficiently - Data of customers is always updated, customers are taken care well b/ Weaknesses - Products are popular so the customers not have to find out through the media much - Infrastructure of equipments is still backward compared with foreign enterprises c/ Opportunities - The Internet and information technology industry have been developing significantly, especially social networking sites Promotional opportunities, looking for customers all over the world market with attractive payments are opened to the Kinh Do d/ Challenges - Rapid development of information technology requires constant upgrades - Basing on the powerful development of IT, rivals also try to promote e-commerce Thus, it is necessary for the company to build the new EPR system to replace the old one in order to meet the demand for development II/ Make new strategies for developing E-commerce in King Do 1/ Analysis of business environment Many confectionery companies were established in the period from 2010 to 2012 At the same time, companies which operated for a long time and had a foothold on market continuously developed different products to attract consumers like Goody's Bibica, BBQ snack of Hai Ha, Fruit Mix Dry of Vinamit… In addition, foreign firms continuously export products to Vietnam and steady take market shares like Danisa, Ricola from Switzerland, Haribo, Bonne Maman from France However, the market share of many Kinh Do’s products have continuously been growing while other products are not reduced or even increase slightly due to the efficiency of market expansion policy Through the above analysis, it can be seen that the confectionery market in Vietnam is directing to the diversification Thus, Kinh Do needs to change the way of management and apply technological innovations and modern ERP into production Products Growth of net profit (%) Market share (%) Cookie 52.3 33 Cake 12.2 17 Moon-cake 31.4 76 Fresh bread 33.8 64 Ice cream 27.8 29 Yogourt 44.6 Total 32.6 2/Business strategy in 2012-2016 and vision to 2020 Forming Strategic Business Units (SBUs) for each product The SBUs will help the company become more flexible for different products For different product and region, the company can cope with the pressure varying at different times The purpose of dividing business into SBUs is to create the concentration and efficiency in growth, to createt profits and competitiveness Forming functional departments in group level We recognize the similarities in different types of products Thus, we need to make sure the independent management of sectors to achieve the concentration does not create duplicates This leads to the formation of functional departments in the areas of Finance, Human Resources, Information Technology, accounting, supply chain, sales and marketing And it is essential to ensure that while SBUs focus on competition, these functional departments can focus on maintaining the competitiveness of SBUs Empower the directors of SBUs so that they can manage the units as business owners In a large company, there is often criticism that bureaucracy is crushing efficiency, causing stagnation of decisions and sluggish decisions make businesses miss opportunities Kinh Do does not face this problem because the structure and process settings are creating effectiveness so that the company is able to make decisions at the right time and maximize opportunities Promote the overall scale of the Group to maximize efficiency in supply chain management Our greatest value is the ability to bring products to market We have to buy raw materials, produce and distribute products All of these activities relate to our joint chain SCM is an important element And we see this as one of our key competitive advantages Normally, when the company grows in large-scale, the supply chain will firstly be difficult King Do does not face this problem at all The combination of the scale, the coordination in ERP system and the concentration of the supply chain help our profit rise up, resulting in profits to our shareholders Attracting talents by becoming the best "Who We Are" is the most important part of Kinh Do, which is the combination of different people, the cultural diversity and the collective experience of our staff With a professional staff and experts in production, King Do is a group of membered companies Kinh Do's philosophy is to attract the best talents by becoming the best companies 3/ Comparison of ERP software produced by domestic and foreign companies To find out the most effective ERP software, we have to compare the ERP software of different companies in a variety of criteria such as cost, scale implementation, convenience (in a scale of 10), and security capabilities of the software interface: Software Prices companies Oracle Medium Perfect ERP High SAP Very high Scale Upgrade ability Large Large Large Yes Có Yes – easy Convenience 10 to Security 8,5 Microsoft Medium Medium upgrade Yes – need cost to Dynamic (1415$/1CC and small upgrade NAV Openbravo U) Low (400- Small No 8,5 xTuple 500$/user) Low (800- Small No 7,5 1000$/user) Basing on above comparison and analysis, we propose the use of Oracle ERP which is consistent with the circumstances of the company - a company that is in the development Therefore, Oracle ERP Human Resource Management is fully justified by the following reasons: Oracle is the second largest software companies in the world with annual revenue of over 10 billion USD Interface of software is suitable with users since Oracle has operated in Vietnam for more than 10 years The software adjustment to be suitable with Vietnamese is quite good The price is reasonable – only about ten of thousands USD III/ Plan 1/ Human resources To operate the ERP system, main groups of managers are needed: Main group is the management staff, doing daily operations, belonging to functional departments such as accounting and finance, planning, supply of materials, sales and production department: 16 people Technical group includes managers and employees taking responsibilities of technical works: people The implementation of enterprise resource management is done through two phases: the preparation and the formal operation phase Preparation phase for the operation of ERP system include tasks such as: standardization of business processes, making a list of managed objects (goods, supplies, distributors, suppliers, etc.), preparation of computer network systems and staff training Operation stage is the main stage to implement ERP For each stage, the human resources are very important a/ Phase of preparation: Professional groups must give out requirements, management objectives, and building business processes with deployment units The groups are also in charge of testing the correctness of the system model simulator Technical team will prepare the system servers, workstations, network infrastructure, transmission, system settings, perform the professional work of system administrator (backup, permission ) preparing for the operation During this period, the pressure on the personnel is great because they have to make the day-to-day operations to maintain production and business activities of the company and spend time participating in the project of ERP operation at the same time Sometimes, the company has to hire more staff b/ Phase of system operation: Professional groups directly involve in the system operation Employees who take part directly into operations continue to find errors and the inconvenience of the system Management departments continue to monitor and supervise the operation, find out the unreasonable points and propose solutions Besides, management department must continue to develop the system Technical groups are in charge of ensuring that the computer system is running smoothly and perform the system management (backup, permissions, etc.) Thus, it is essential to provide sufficient human resources to implement enterprise resource management in ERP, especially human resources to ensure the level and capacity for implementation 2/ Schedule Task Schedule Make plans and submit to Board of directors 2/2013 Buy software from Oracle 3/2013 – 5/2013 Buy server system and hire server 4/2013 - 9/2013 Instal software system at plants and headquarter 9-12/2013 Test run 1/2013 – 7/2014 Official run 8/2014 Maintain and upgrade for the 1st time 2/2017 Maintain and upgrade for the 2nd time 8/2019 The company will begin installing new ERP project in 02/ 2013 and complete the project 18 months later Then the software will go into formal operation from 08/ 2014, and continue to go through times of maintenance after 30 months (first time in 2/2017 and nd in 8/2019) 3/ Cost factor The cost of implementing ERP system in King Do is divided into items: buying software from Oracle and establishing infrastructure system a/ Buy software from Oracle: the company needs to buy ERP software with the costs followed: Software Sales management Purchasing management Warehouse management Production management Debts, receivables and payables General accounting Capital in cash management Equipments and fixed assets Total Cost (Unit: USD) 45950 68950 34950 52500 65450 63300 45950 11200 388250 Total cost of buying software from Oracle is 388250 USD and the plan starts in 03/2013 b/ Establish infrastructure system: The cost of hardwares and network: Cost of hardwares: application server, database server and backup database server Cost of network infrastructure: LAN, Server ADSL Total cost of infrastructure for plants are estimated from 1-1,2 million USD, depending on the prices of servers and network infrastructure Thus, total cost of the project is from 1,4-1,6 million USD (28-32 billion VND) CONCLUSION In the context of current fierce competition, applying information technology and ecommerce into business and production is a factor which can determine the success of enterprises Therefore, King Do’s improving and upgrading ERP system needs to get proper concern from the Board of Directors since the system helps the company reduce the time and cost of production, thereby improve competitiveness of the products and brand on domestic confectionery market and international market in the future ... group level We recognize the similarities in different types of products Thus, we need to make sure the independent management of sectors to achieve the concentration does not create duplicates This... problem because the structure and process settings are creating effectiveness so that the company is able to make decisions at the right time and maximize opportunities Promote the overall scale... system operation Employees who take part directly into operations continue to find errors and the inconvenience of the system Management departments continue to monitor and supervise the operation,
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