Evaluatinh the performance of supply chain management and solution, a case study of thái binh shoes , luận văn thạc sĩ

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY NGUY N PH NG HI U EVALUATING THE PERFORMANCE OF SUPPLY CHAIN MANAGEMENT AND SOLUTIONS: A CASE STUDY OF THAI BINH SHOES MASTER OF BUSINESS ADMINISTRATION THESIS , MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY NGUY N PH NG HI U EVALUATING THE PERFORMANCE OF SUPPLY CHAIN MANAGEMENT AND A CASE STUDY OF THAI BINH SHOES Major: Major code: MASTER OF BUSINESS ADMINISTRATION THESIS Supervisor: Dr Tr n Hà Minh Quân Aknowledgement I would like to express my heartfelt gratitude and deepest appreciation to my research Supervisor, Dr Tran Ha Minh Quan for his precious guidance, share of experience, ceaseless encouragement and highly valuable suggestions throughout the course of my research Besides, I would like to extend my sincere thanks to Prof Ms Ta Thi Bich Thuy, for her valuable comments and constructive suggestions on the theory foundation and the APA format from early draft of my thesis My special gratitude is extended to all instructors and staff at Faculty of Business Administration and Postgraduate Faculty, University of Economics HoChiMinh City (UEH) for their support and the valuable knowledge during my study in UEH I would also like to avail this opportunity to express my appreciation to Professor Nguyen Dong Phong and UEH Board of Directors for creating MBA program in English Specially, my thanks also go to to many of my collegues from Shoes Secteur in Decathlon company, who have helped me during the collection of data as well as support me during doing research: Ms Nguyen Thi Hoai Trinh (Supply chain production leader), Mr Nguyen Du Thuan (Development Industrialization Production Leader), as well as Mr Nguyen Thanh Son from Board of Director, Ms Phan Thi Thu Thao, Ms Ngo Ngoc Thy, Mr Phan Van Phuong and other staffs of Production& Planning, Costing, Purchasing… Departments in TBS Group Many thanks to Ms Nguyen Thi Kim Anh, Mr Nguyen Thanh Trung, as well as the other classmates in MBA class, Batch 16 for their valuable and enthusiastic support for this research study Last but not least, the deepest and most sincere gratitude go to my beloved mother, my husband Mr Nguyen Le Thanh Vinh for their boundless support, abundant love and encouragement throughout my period of study I, therefore, dedicate this work as a gift to them all i Abstract Nowadays, the wide application of supply chain in most of business has been observed Based on this, there are many improvements in customer’s reliability and speed of order fulfillment The impacts of supply chain on business’s activities were examined in reality This experimental study will seek to discuss more detail in the Chapter 2,3,4 The function of supply chain management is to design and manage the processes, assets, and flows of material and information required to satisfy customers’ demands The evaluation Supply chain management‘s performance is more important in most of companies Author chose TBS Group – one of bigge st footwear enterprises with their supply chain management (SCM) for her research study Through key indicators to measure SCM’s performance at TBS, author will generalize the statement problem which still exist in TBS’s SCM and have deeply understanding about TBS’s production planning and their organization of shoes process Recommendations with concrete solutions for related entities concerning pending problem of TBS such as the delivery on time, quality, cost and lead time are suggested to improve the supply chain management of TBS Group Keywords: supply chain, supply chain management, key indicator to measure, performance; delivery on time, quality, cost and lead time, production planning ii Contents Acknowledgement i Abstract ii Contents iii List of Tables iv List of Figures v Abbreviations vi CHAPTER 1: INTRODUCTION 1.1 Problem Statement 1.2 Research Objectives 1.3 Research question 1.4 Scope and limitations 1.5 Methodology 1.6 Research rationale 1.7 Structure of thesis CHAPTER 2: LITERATURE REVIEW 2.1 SUPPLY CHAIN AND SUPPLY CHAIN MANAGEMENT DEFINITIONS .5 2.2 FRAMEWORK OF SCM FROM PRODUCTION SIDE 2.3 KEY INDICATORS OF EFFECTIVE MEASUREMENT IN SCM 10 CHAPTER 3: THAI BINH FOOTWEAR JOINT STOCK AND THEIR SUPPLY CHAIN MANAGEMENT 19 3.1 GENERAL VIEW OF LEATHER AND FOOTWEAR INDUSTRY IN VIET NAM 19 3.2 THAI BINH FOOTWEAR JOINT STOCK TBS Group)’S BACKGROUND……………… 21 3.3 SUPPLY CHAIN MANAGEMENT IN TBS GROUP 27 3.4 MEASUREMENT SCM IN TBS GROUP 33 3.4.1 Personal Interviews 33 3.4.2 Current indicators of TBS to measure the SCM’s performance .35 CHAPTER 4: CONCLUSIONS AND RECOMMENDATIONS FOR TBS GROUP’S IMPROVEMENT IN SCM 50 4.1 CONCLUDING REMARKS 50 4.2 RECOMMENDATIONS OF THE RESEARCH STUDY: 51 4.2.1 Self-contained process 51 4.2.2 Simplification of major processes 55 4.2.3 Upgrade the system or expand sub-contract supplier 55 4.2.4 Design main style of product with investment 56 4.2.5 Outsourcing the satellites factories 56 4.3 LIMITATIONS AND FURTHER RESEARCH: 56 REFERENCES 58 APPENDIX 1: Guide for Interview & Questionaires 59 List of interviewees 61 APPENDIX 2:Key Figures of TBS Groups 62 iii List of Tables Table 2.1 Framework of production planning 11 Table 3.1 Sharing percent of Vietnam’s export market…………… ……………… 20 Table 3.2 Interviewees and statement concerning to SCM 34 Table 3.3 Shipment report of TBS from week21-week 25, 2010… .38 Table 3.4 Quality control of TBS from the beginning until shipment 41 Table 3.5 Top 10 models in TBS with quality high return rate 42 Table 3.6 Situation of lead time at TBS Groups before for some typical model… ….43 Table 3.7 Lead time flow in production of TBS Groups 44 iv List of Figures Figure 2.1 Basic flow of SCM (sited of Decathlon company) Figure 2.2 Basic Quality Control (From Quad tool of Decathlon Company)………….14 Figure 3.1 % Delivery on time of TBS through years for Europe Customer 36 Figure 3.2 Global lead time 2008 of TBS 44 Figure 3.3 Replenishment lead time 2008 of TBS…………… ……………………… 45 Figure 3.4 Derivation of basic cost elements 47 v Abbreviations SCM: Supply chain management DOT: Delivery on time LT : Lead- time TBS: Thai Binh Shoes EU: Europe FDI: Foreign Direct Investment Lefaso: Vietnam Leather and Footwear Association OEM: Original Equipment Manufacturing R&D: Research and Development QFD: Quality Function Development LOP: Labor cost, Overhead and profit EDI: Electronic Data Interchange TMS: Transportation Management System SQC: Statistical Quality Control vi CHAPTER 1: INTRODUCTION 1.1 PROBLEM STATEMENT: Nowadays, Supply chains are becoming increasingly global and ever more complex In addition, organizations also want try to support strategic management practices such as entering new markets, controlling business activity in a good system, increasing the pace of new product introductions, improving customer satisfaction Thus, for organizations to work closely with their suppliers, logistics providers, distributors and retailers, their supply chains must be streamlined and technology-enabled However, the full understanding about supply chain management (SCM) and its application in the real organizations are different among enterprises Assessing the performance of SCM is necessarily indispensable in the period and Thai Binh Footwear Joint Stock is the case at point, especially when Thai Binh is one of biggest footwear companies of Vietnam On the other hand, Thai Binh also has a full supply chain from the beginning of material purchase until the finished product among footwear enterprises The results from the evaluating supply chain management of Thai Binh can be used to refer for the application of SCM in real enterprises Importantly, this research will outline how supply chain management is an important part in business activities, from production view, especially in footwear industry Through working few years as supply chain leader, the real problems in applying supply chain management in general and in Thai Binh Footwear Joint Stock- one of typical footwear company of Vietnam in particular can show the function and physical structure supply chain management as well as the inner problems in key indicators to measure SCM’s effectiveness I will go to the detail to state clearly my understanding in literature review and analyze bottle neck in this company (Chapter 2&3) Although TBS Group owns one strong supply chain, in their management, it still exist some problems, especially with main key indicators that use to measure the efficiency of their supply chain By analyzing the situation arising at SCM of TBS Groups, the author reveals that the delivery on time (DOT) at TBS still faces some big delay Besides, Thai Binh controls well the orders but lead time of order processing is too long Concerning to the quality, whether TBS can produce the shoes in good quality, there are many additional steps and they need to control more to follow the good and the traceability when there is any problem arising at destination For the cost, the author would like to analyze deeply the detail of production cost and investigate why the cost of TBS is still higher than other competitors in footwear field By examining the concrete footwear company Thai Binh Joint Stock, the author will show out the main purpose of this study, that is to find the solutions to improve their production planning in order to ensure the rate of delivery on time (DOT), reduce lead time, control quality figure, optimize the cost in supply chain management 1.2 RESEARCH OBJECTIVES: The primary objective of this study is to present the important role of supply chain in a footwear company, to identify key drivers to measure the performance of supply chain 60 List of interviewees: No 10 11 61 APPENDIX 2: Key figures of TBS Groups Output and export value of footwear and leather industry Vietnam 2005-2007 Items Output(pair s) 1.Shoes all 472,736,000 kinds(prs) Growth rate: In which: Sport Shoes 272,874,000 Canvas 42,017,000 shoes 62 Ladies shoes Sandals Finished Leather of all kinds(sqft) Bags &handbags of all kinds(unit) 63 Footwear export of Vietnam 2006-2008 MARKET FOR EXPORTING EU NORTH AMERICA JAPAN OTHERS TOTAL Source: LEFACO Vietnam (2008) Business performance 2004-2007 Contents Total sales Net sales goods sold margin cost cost cost from business profit Total profit before tax 10 tax 11.Profit after tax Notes:* figures in brackets were negative numbers Total sale Cost Profit after tax Demand, production capacity and export 2005-2009 Year 2005 2006 2007 2008 2009 ( Demand based on the number of orders of customers at the beginning of the year or on forecast of customers given for TBS group 65 Production planning in 2009 Month Planned 10 11 12 Total 27 17 27 26 27 27 29 27 25 28 27 28 66 The cost information for producing sport shoes Index Regular time cost (VND/pair) Over time cost (VND/pair) Subcontract cost Inventory cost ((VND/pair/month) Training cost (VND/pair) Lay off cost (VND/pair) Management System Model of Thai Binh Shoes 2005-2009 SHAREHOLDERS MEETING TBS GROUP BOARD OF MANAGEMENT LEADERSHIPS BLOCK OF HUMAN RESOURCE DEVELOPMENT FINANCIAL BLOCK HR& IT FINANCIAL MGNT 67 Main products of TBS Group Production performance from 2005-2008 Criteria Turn over (million VND) Production volume (million prs) Demand,production capacity and export(prs) 2008 12,407 10,789 2007 2006 9,403 2005 8,078 68 Production Process with cold cement technology for sport shoes Rolling-Laminating (Laminating roller) Batching compound (Rubber cutting machine) Cutting (Hydraulic cutting machine) Dispersion Kneading (Dispersion kneader) Printing-pressing logo (High frequency embossing machine) Embroidering logo (Computer embroidery machine) Stitching pieces (Stitching machine) Attaching (Sole attaching machine) Removing form,cleaning& Pakaging Mixing (Mixing roller) Sheeting (Sheeting machine) Sheeting (Sheeting machine) (Cutting machine) Lasting (Lasting machine) Buffing-Attaching EVA Phylon (Buffing machine) Dispersion Kneading (Dispersion kneader) Mixing (Mixing roller) Cutting pieces Upper moulding (Upper moulding machine) Batching EVA (EVA cutting machine) EVA pressing (EVA pressing machine) 69 Production organization of a sole factory and shoes factories of TBS Shoes Factory Sole factory Lamina ting shop 70 Production flows at TBS Group Step Collecting Information NO Step Step Planning Step Considering alternatives Step Step YES Step Step Step 10 Supervising Implementation Coordinating & handling problems occurred Synthesizing production performance Step 11 Step 12 Reporting Analyzing, evaluating periodical production performance Having preventive measurements Continuous improving 71 ... distributors and retailers, their supply chains must be streamlined and technology-enabled However, the full understanding about supply chain management (SCM) and its application in the real organizations... Initially it produced lady fashion shoes and canvas vulcanized shoes, but then specialized in sport, casual, hiking shoes and sport sandals Since 199 2, the group also known as THAI BINH SHOES has... normally, a pair of shoes consists of parts: upper and bottom For uppers, TBS used many kinds of material: leather, EVA, synthetics, PU Vivid, as well natural material such as silk, textile macrofile,