Improving late delivery performance a study of rochdale spears ltd, company

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business PHAM THI AI VAN IMPROVING LATE DELIVERY PERFORMANCE: A STUDY OF ROCHDALE SPEARS LTD, COMPANY MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – 2018 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business PHAM THI AI VAN IMPROVING LATE DELIVERY PERFORMANCE: A STUDY OF ROCHDALE SPEARS LTD, COMPANY MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: TRAN HA MINH QUAN Ho Chi Minh City - 2018 Executive summary In today‘s scenario, delivering product to the customers at the shortest possible time is a challenge for all the manufacturing industries In typical manufacturing organizations, functional units have their own goals As there is no single functional unit responsible for on-time delivery, in traditional organizations on-time delivery has received minimal attention An important feature of the conventional wisdom of make to order (MTO) manufacturing has been that if a plant‘s management wishes to achieve good delivery performance they need to quote a long lead time The long lead times give them the ability to plan production effectively and achieve high levels of delivery performance However, it has been reported that the reverse situation occurs, namely manufacturing plants quoting short customer lead times were, in fact, achieving much better delivery performance than those plants that quoted long lead times (Szwejczewski et al 1997) Although this topic has received considerable attention in the literature, most of the articles are restricted by their limited approach concerned primarily with the effect of various delivery date assignment methods Manufacturing is an integrated system covering everything from order receipt through to the product shipment (Hitomi 1991) It covers a wide range of activities in many functional areas including planning and design, purchasing, production, inventory, distribution, marketing and sales Ontime delivery or lead time cannot be dealt with in isolation In order to make any realistic and sustained improvement in (on time delivery) OTD performance, the whole manufacturing planning, control and execution cycle and associated systems have to be taken into consideration Realising the importance of such an approach, this study proposes a model to improve on-time delivery performance through business process model integrating two common processes involved in manufacturing planning, control and execution cycle for MTO situations and a database for supporting various functional applications through basic and transaction data The proposed model was implemented through Rochdale Spears Ltd, company The rest of the paper is organised as follows First, a review of the company background as well as current problems that company is facing Next, the proposed improvement solutions are presented, followed by a section on a systematic investigation of the on time delivery problems and implementation of the solutions to overcome the problems in Rochdale Spears company Finally, research findings and conclusions are drawn Acknowledgements I would especially like to show my gratefulness and special thanks to my supervisor – Dr Tran Ha Minh Quan for all his continuous supports, advices and instructions through the process of researching and writing this thesis Without his enthusiastic help, this thesis could not have been accomplished I also would like to show my gratitude to ISB lecturers, my colleagues at work, my classmates at ISB for their valuable knowledge and continuous support I also send my sincere thankfulness to my family for their support and encouragement throughout my years of study TABLE OF CONTENTS Executive summary Acknowledgements I PROBLEM IDENTIFICATION 1.1 Company background Company mission 1.2 Problem symptoms 1.3 Problem identification 11 Central problems validations 14 1.4 Potential cause of problem and the justification 24 1.4.1 Lack of cross-functional knowledge 24 1.4.2 Company’s service innovation strategy 25 1.4.3 Personality difference 25 II ALTERNERTIVE SOLUTIONS AND ACTION PLANS 28 2.1 Solutions 28 2.2 Solution details 28 2.2.1 Estimate an accurate and unified delivery date using a systematic procedure 28 2.2.2 Facilitate communication as the primary condition 29 2.2.3 Focus on processes rather than on functional units 29 2.2.4 Closer coordination with suppliers 30 2.2.5 Employee involvement 30 2.3 Implementation of the proposed improvement solutions 30 2.4 Difficulties faced: 32 2.5 Results of implementation of the above solutions 33 III CONCLUSIONS 35 Appendix A: In depth interview information 36 Reference 53 LIST OF TABLE Table Company sale report 2016-2018 ……………………………………….08 Table 2: Shipping performance 2017………………………………………… 09 Table 3: RH team lead time report ……………………………………………….10 Table 4: Key accounts team lead time report……………………………………10 Table 5: Key accounts - sale report………………………………………………11 Table 6: Weekly performance report -2018………………………………… 33 Table 7: Weekly average lead time report 2018 …………………………… 34 LIST OF TABLE Figure 1: Process of an order 16 Figure 2: Problem validation 21 Figure 3: Initial cause effect map -23 Figure 4: Final cause and effect map -27 I PROBLEM IDENTIFICATION 1.1 Company background Was founded in 2003 by entrepreneur Geoff Hawkes, Rochdale Spears is a very successful group of companies which design, manufacture, and distribute designer home furnishings and decorative accessories through high-end distributors and retailers in USA and our new internet platform for international distribution, Resource Decor The Group continues to grow rapidly with almost 4,000 employees in Vietnam across manufacturing plants, headquarters in Hong Kong and offices in the US The success of the business has led to established, long-term relationships with Century Furniture, Lillian August, and Restoration Hardware, Morden History, Anthropology, and others customer which brings a huge of orders for the company With a reputation for exceptional quality and exquisite craftsmanship, Rochdale Spears Company has become a proud leader in exceptional design, innovative product development and world-class manufacturing in the luxury furniture market Table Company sale report 2016-2018 Total value/account/year 2018 Account/year 2016 2017 RH $ 56,849,682 $ 67,336,479 $ 78,609,705 Major accounts $ 4,629,986 $ 11,213,378 $ 19,216,946 Key accounts $ 21,368,477 $ 17,487,474 $ 16,413,191 Total $ 82,848,144 $ 96,037,330 $ 114,239,842 (forecast) (Source:RSC) Company mission Rochdale Spears Company is an internationally focused, business-to-business enterprise, serving some of the biggest names in the luxury furniture market The company is proud leader in exceptional design, innovative product development and world-class manufacturing RSC is proud to uphold a positive culture and safe working environment for our team, allowing them to perform at their highest ability, and provide outstanding service to our customers As custodians of the planet, the company remain committed to reducing our impact on the environment, supporting local communities, sourcing the highest quality natural materials and adopting sustainable principles where possible 1.2 Problem symptoms To find out what are the current problems that our company is facing, the writer had carried out in-depth interview with some of managers as well as staffs in the company Most of people realized that although the business of the company is increased in total amount as we are widening the new factory at the other Plan, however, we have lost much of orders from some of initial important customers due to our service was not really good, especially that the shipping performance showing high rate of late shipment while the percentage for on-time shipment is occupied a small number, it‘s a poor performance Table 2: Shipping performance 2017 Shipping performance (2017) 60.0% 40.0% 20.0% 0.0% 45.7% 29.6% 50.7% 24.7% 16.7% 32.6% 42.0% 16.0% 42.0% Resto Major Accounts Key accounts Late 45.7% 50.7% 42.0% Ontime 29.6% 16.7% 16.0% Early 24.7% 32.6% 42.0% Late Ontime Early (Source: sale team-RSC) According to the Shipping performance report from Sale department in 2017, generally, it is showing clearly that the company have a poor delivery performance Major account occupied the highest rate of late shipment with approximately 51%, following is RH with around 46% and the last one is Key accounts with 42% However, Key account had the lowest rate of shipment shipped on-time with only 16% for the on-time POs and 42% was for the early shipment Major accounts and RH were following with 16.7% and 29.6% of on-time shipment, 32.6% and 24.7% of early shipment respectively This result significantly impacted to the company performance to customers as well as causing a huge of increasing cost for the company RH, the biggest customer of the company has intended to move their business to the other factory as our performance is going down recently Most of the shipments are not met what customer requested as well as what we confirmed Production lead time is 118 days in average for mass production while our committed lead time is 90 days for the repeated orders and 120 days for the newness ones The below table is taken from our weekly report by RH sale team: Table 3: RH team lead time report Lead time Days Running average 118 Average 12 weeks 116 Average weeks 114 (Source:RSC) In the same situation with RH, LA, MH which are our key accounts but their orders are falling down recently as we did not serve they well, general production lead time is more than 120 days, it is much more than our committed lead time The customer is not willing to wait for nearly a haft of year (147 days) for a product Table 4: Key accounts team lead time report Lead time Days Running average 147 Average 12 weeks 145 Average weeks 143 (Source:RSC) 10 Pham Thi Ai Van: Uhm huhm, I see However, as your explain, you should be taken the order of customer to be completed on time, but recently, according to production report as well as the evaluation from client, the delivery performance of our company is not good, late delivery occupied a high rate with over 50% in average How you think about this? Tran Le Quynh Tram: Yes, correctly I know it well as I‘m the person doing this report weekly But this situation has been happened for a long time Pham Thi Ai Van: If so, you know what is the reason for that lately shipments? Could you share the reason causing for high rates of late delivery in our company? Tran Le Quynh Tram: I think it caused by material, subcontractors and the controlling of production teams Pham Thi Ai Van: According to the other departments, most of late delivery has been causing by your (sale control)…how you think about this? Tran Le Quynh Tram: Customer service also the department have responsible for this delaying, as we are the person who‘s controlling it and manage it from beginning until completed shipment Pham Thi Ai Van: In your point of view, what is the main causes that leads to high rate of late delivery? Tran Le Quynh Tram: I think that Central planning team should have responsible in following up production closely, so that they can also control material with purchasing team for the better management and limit the percentage of late shipments Pham Thi Ai Van: What are solutions that the company has taken to decrease the high rate of late delivery? Tran Le Quynh Tram: The company should be taken care on shipping service Firstly, for the better solving, the system should be improve so that all the related team will be using the same date, there is no confusing and difference of data, it will be unified and following up correctly Customer service team should be training knowledge about manage their order, knowledge about production procedure as well 41 as production team should have the awareness about the importance of on time shipments Pham Thi Ai Van: What are your opinions about the effectiveness of above solutions? Could you share any actions you think should be taken to solve this problem? Tran Le Quynh Tram: I think it will take a long time for the improvement but it should be taken asap The sooner we solve it is better Pham Thi Ai Van: From the above solutions, what is the best solution? Why? Tran Le Quynh Tram: I think the best solution is training people about the importance of on time shipment, then people will work more careful and having all the support from all teams In-depth interview 3-CODE 2A:  Interviewer: Pham Thi Ai Van  Interviewee: Nguyen Thi Tuyet Minh  Title: Material planner supervisor  Age: 35  Working experience period: years Pham Thi Ai Van: Hello Could you introduce something about yourself and the position you are working in? Nguyen Thi Tuyet Minh: My name is Minh, I have been working here for about years I‘m managing the material planner team Pham Thi Ai Van: Can you please share with me a little bit about your daily job as well as your duty? What you think about your current job? Are you interested in this job? Nguyen Thi Tuyet Minh: Actually my duty is that checking material lead time from suppliers after receiving sale order from customer service Then, I will confirm back to CP for their production planning It‘s such a stressful job as we have to deal with suppliers for the best schedule 42 Pham Thi Ai Van: Uhm huhm, I see Currently, I heard the information from sale team, production report as well as the evaluation from client, the delivery performance of our company is not good, late delivery occupied a high rate with over 50% in average How you think about this? Nguyen Thi Tuyet Minh: Yes, I now about this Whenever having any late shipment, production team always chase us for material They will not following up it at the beginning, whenever CS chase them, they coming back to us for pushing Pham Thi Ai Van: If so, you know what is the reason for that lately shipments? Could you share the reason causing for high rates of late delivery in our company? Nguyen Thi Tuyet Minh: I think it caused poor production planning and controlling in production team They should quote with customer the schedule which is workable, sometimes because of customer need to ship urgently, they try to meet their request and agree with the tightly schedule, and pushing us to make material being arrived sooner But as you know, suppliers have their own difficulties, sometimes they can make but sometimes is impossible Pham Thi Ai Van: According to the other departments, most of late delivery has been causing by your team How you think about this? Nguyen Thi Tuyet Minh: Of course every department should have responsibility for late shipment So, I think what the teams need to pay attention on confirming schedule and following up your orders The planning team need to know whether the schedule is workable or not, we need to make clear with client at beginning, don‘t let until the last second them coming back to them to say sorry Pham Thi Ai Van: In your point of view, what is the main causes that leads to high rate of late delivery? Nguyen Thi Tuyet Minh: I think that Central planning team should have responsible in following up production closely Also sale teams have to cooperate with all related team for the better management Pham Thi Ai Van: What are solutions that the company has taken to decrease the high rate of late delivery? 43 Nguyen Thi Tuyet Minh: I think firstly, the system should be improved, then all the important information can be found easily when we need and the information is unified between departments Don‘t have the occasion that the ship date which production team following is on this week but sale team is chasing for other weeks Secondly is that, the production team have to be careful when confirming schedule with client, we should have a spare of time for the unexpected case happened Pham Thi Ai Van: What are your opinions about the effectiveness of above solutions? Could you share any actions you think should be taken to solve this problem? Nguyen Thi Tuyet Minh: I think it will take a long time for the improvement but it should be taken Pham Thi Ai Van: From the above solutions, what is the best solution? Why? Nguyen Thi Tuyet Minh: I think that is improving the skill in management order of production team and sale team In-depth interview 4-CODE 3A:  Interviewer: Pham Thi Ai Van  Interviewee: Do Thi Luong  Title: Factory planner supervisors  Age: 34  Working experience period: years Pham Thi Ai Van: Hello Could you introduce something about yourself and the position you are working in? Do Thi Luong: My name is Luong, I‘m planner in plan I have been working here for around years Pham Thi Ai Van: years, it is such a long time It should be a great job so that it can keep you staying with company for a long time Can you please share with me a little bit about your daily job as well as your duty? What you think about your current job? Are you interested in this job? 44 Do Thi Luong: Yes, it is a great job As a factory planer, I am the person who building production plan for the factory and confirming shipping schedule for customers as well I‘m working directly with all the production team in the factory from white wood team, finishing team, packing team We handle the order and controlling it until shipping It is quite stress job as you have to face with lot of situation and troubles in production, but you have to have immediate action to keep production being running smoothly and especially that keeping the order being shipped on scheduled Pham Thi Ai Van: Uhm huhm, I see However, as your explain, you should be taken the order of customer to be completed on time, but recently, according to production report as well as the evaluation from client, the delivery performance of our company is not good, late delivery occupied a high rate with over 50% in average How you think about this? Do Thi Luong: Yes, correctly I know it well, we always trying to avoid the late shipment being happened Pham Thi Ai Van: If so, you know what is the reason for that lately shipments? Could you share the reason causing for high rates of late delivery in our company? Do Thi Luong: Most of the late shipment has caused by material Because if this is the internal issues, we are able to solve it by our own team and we are able to control it But material is out of control, material team cannot follow it closely, they will not follow and chase for it if we don‘t chase them Pham Thi Ai Van: According to the other departments, most of late delivery has been causing by your team How you think about this? Do Thi Luong: every people always think that late shipment is due to production team, they produced late then we ship late But involving in producing a products it is including many departments from sale team, technical team, purchasing teams Everything should be perfectly to have the smoothly process and on time shipment So, how can we bear all responsibilities? 45 Pham Thi Ai Van: In your point of view, what is the main causes that leads to high rate of late delivery? Do Thi Luong: I think that is material What is out of control should be taken care more carefully Pham Thi Ai Van: What are solutions that the company has taken to decrease the high rate of late delivery? Do Thi Luong: I think that purchasing team have to work more closely with supplier, then we can have better relationship and following up production better Pham Thi Ai Van: What are your opinions about the effectiveness of above solutions? Could you share any actions you think should be taken to solve this problem? Do Thi Luong: I think will be a difficult process but if we can improve it, the company can get more order from customer As I see that lots of our big customers, they don‘t have much orders recently Pham Thi Ai Van: From the above solutions, what is the best solution? Why? Do Thi Luong: I think the best solution is building up the rating for supplier and have better choice in selecting suppliers By having good supplier, material will not be delayed In-depth interview 5-CODE 3B:  Interviewer: Pham Thi Ai Van  Interviewee: Nguyen Thi Thuy An  Title: Packing staff  Age: 34  Working experience period: years Pham Thi Ai Van: Hello Could you introduce something about yourself and the position you are working in? 46 Nguyen Thi Thuy An: My name is An, I‘m the packing planner in P1I have been working here for years Pham Thi Ai Van: It is such a long time that you have been here with company Can you please share with me a little bit about your daily job as well as your duty? What you think about your current job? Are you interested in this job? Nguyen Thi Thuy An: Packing team is the final step in production We arrange for packing the ready item, arranging the load plan for im-ex team arrange booking We have responsibility for loading product onto the container can complete the shipment Pham Thi Ai Van: Uhm huhm, I see Currently, according to production report as well as the evaluation from client, the delivery performance of our company is not good, late delivery occupied a high rate with over 50% in average How you think about this? Nguyen Thi Thuy An: Yes, correctly I know it well as I‘m the person doing shipment every day But when production produced late, we cannot improve it as we are the final step in production The production team should have responsible to produce on time Pham Thi Ai Van: If so, you know what is the reason for that lately shipments? Could you share the reason causing for high rates of late delivery in our company? Nguyen Thi Thuy An: I think it caused by material and production team Sometime I see that production team just following to catch up their output target Pham Thi Ai Van: According to the other departments, most of late delivery has been causing by your team How you think about this? Nguyen Thi Thuy An: We just follow production to arrange shipment, so that if production produced late, we have to ship late Pham Thi Ai Van: In your point of view, what is the main causes that leads to high rate of late delivery? 47 Nguyen Thi Thuy An: I think that Central planning team should have responsible in following up production closely, so that they can also control material with purchasing team for the better management and limit the percentage of late shipments Pham Thi Ai Van: What are solutions that the company has taken to decrease the high rate of late delivery? Nguyen Thi Thuy An: The company should be taken care on shipping service Production team should have clearly planning and control it well Pham Thi Ai Van: What are your opinions about the effectiveness of above solutions? Could you share any actions you think should be taken to solve this problem? Nguyen Thi Thuy An: I thinks it will take a long time for the improvement Pham Thi Ai Van: From the above solutions, what is the best solution? Why? Nguyen Thi Thuy An: I thinks the best solution is training people about the importance of on time shipment, then people will work more careful and having all the support from all teams 48 Data collected after the initial interview Findings Question 1A Could you please introduce Ms Lan Anh 1B 2A 3A 3B Ms Tram Ms Minh Ms Luong Ms An Production Packing staff planning about yourself (your name, age, Customer service Customer service Material planner working experience and account lead years of years of position that you are working years of experience experience in)? experience years years of of experience experience Could you please share a little Received PO-send Received PO-send Making plan for Making plan for Arranging loading bit about your daily job as well to production & to production & material production as your duty? What you material following up team- material think about your current job? arrange shipment team- and plan and shipment arrange shipment Are you interested in this job? Recently, according to Have been known Yes, it has been Have been known Know production report as well as the well evaluation from client, happened the Most of late long time delivery performance of our delivery is causing for well, Know it well, a Used to be chased always try to doing it everyday for pushing avoid it happen material company is not good, late 49 delivery occupied a high rate by material with over 50% in average How you think about this? Could you please share the Material reason causing for high rate of mainly late delivery in our company? is the Caused reasons material, cause by Poor production Most of the late Caused planning and shipment subcontractors and controlling It‘s also caused by production team the controlling in caused by has material and by production team material production According departments, to the most other Yes, we should Yes, we should Of course every Every department If of late have responsible have responsible department should should delivery has been causing by have your team (material, planning, responsibility for the shipment sale control)…how you the shipment production have produced late, responsibility for they arrange late think about this? In your point of view, what is I think the main cause that leads to Central high rate of late delivery? that I think planning Central that Central planning Material planning team should have team should have team should have responsible Central planning team should have responsible 50 responsible in responsible in following up following up production closely, they production so that closely, can also they so can that also control material control material What are solutions that the Improve system Improve system company has taken to decrease Training the high rate of late delivery? lead Improve system about production to team Production team have to work more should know Training management Purchasing closely team supplier improve production and controlling skills awareness the with clearly and have planning control it well importance of on time shipment What are your opinions about It takes long time the effectiveness of above But should solutions? Could you share any concerned It takes long time be But should be It takes long time It will be a It takes long time difficulty process concerned actions you think should be taken to solve this problem? 51 From the above solutions, what Training Improve is the best solution? 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