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Ineffective operation of k company production lines in vietnam

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UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business NGUYEN MINH VY INEFFECTIVE OPERATION OF K COMPANY PRODUCTION LINES IN VIETNAM MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2021 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business NGUYEN MINH VY INEFFECTIVE OPERATION OF K COMPANY PRODUCTION LINES IN VIETNAM MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Dr PHAN THI MINH THU Ho Chi Minh City – Year 2021 TABLE OF CONTENTS TABLE OF CONTENTS LIST OF FIGURES LIST OF TABLES ACKNOWLEDGEMENT EXECUTIVE SUMMARY CHAPTER 1: INTRODUCTION 1.1 COMPANY OVERVIEW 1.2 PROBLEM CONTEXT 11 1.2.1 Quality assurance system 11 1.2.2 Procedure of corrective action of complaint notice 12 1.2.3 The background of complaints from customers for the Vietnam representative office of K Company 15 1.3 SYMPTOMS 15 CHAPTER 2: PROBLEM IDENTIFICATION 26 2.1 POSSIBLE PROBLEM 26 2.1.1 Overloading in peak season of production, workers are tired and easily to make mistake in processing 28 2.1.2 Workers are infective/ careless in some stages for a certain period of time 28 2.1.3 New workers are not acquainted with their skills, leading to production error 28 2.1.4 The rule of random sensory testing product is inaccurate 29 2.1.5 The impurities from raw material, equipment, tools, packing 29 2.1.6 The training of workers in processing steps is not effective 30 2.2 PROBLEM VALIDATION 31 2.2.1 The ineffective quality assurance management of partner 32 2.2.2 The ineffective quality control management on partner’s processing lines 32 2.2.3 The ineffective operation of production lines (people, production process) 34 2.3 MAIN PROBLEM DEFINITION 38 2.3.1 Definition/description 38 2.3.2 Importance 38 CHAPTER 3: POTENTIAL CAUSES 39 3.1 Ineffective production process management 39 3.1.1 Poor checking production condition: 39 3.1.2 Poor setting production line: people of each step, working time, steps of processing 41 3.2 Ineffective people management 42 3.2.1 Ineffective training of new workers and current workers: 42 3.2.2 Ineffective checking and correcting worker’s processing steps: 43 3.2.3 The supervisors are ineffective in their duties: 44 CHAPTER 4: ALTERNATIVE SOLUTIONS 47 4.1 Set of Solution 47 4.1.1 Adjust the staff training method 47 4.1.2 Redesign the duties of supervisors 48 4.1.3 Cost and benefit 50 4.2 Set of solution 52 4.2.1 Adjust the staff training method 52 4.2.2 Adjust the quality allowance for supervisors 54 4.2.3 Increase personnel for supervisors 54 4.2.4 Cost and benefit 55 4.3 ACTION PLAN IN ORGANIZATION 57 4.4 SOLUTION SELECTION 64 CHAPTER 5: CONCLUSION 66 CHAPTER 6: SUPPORTING INFORMATION 67 INTERVIEW TRANSCRIPT 67 APPENDIX 84 REFERENCES 91 LIST OF FIGURES Figure 1: The organization structure of K Company in 2020 10 Figure 2: The organization structure of K Company in 2020 11 Figure 3: Procedure of corrective action of complaint notice chart 13 Figure 4: Total complaint notice of S company in 2018-2020 16 Figure 5: Complaint notice all types of fish 2018-2020 18 Figure 6: All types of complaint notice 2018-2020 20 Figure 7: Exporting container quantity and percentage of complaint/ container in period 2018-2020 24 Figure 8: Exporting container quantity and complaint notice in 2018-2020 24 Figure 9: The initial cause and effect map 31 Figure 10: The updated initial cause and effect map 37 Figure 11: Cause and effect diagram of ineffective operation of production lines 46 LIST OF TABLES Table 1: Complaint notice in 2018-2020 16 Table 2: Ratio of complaint notice/ container 17 Table 3: Types of complaint notice in 2018-2020 21 Table 4: Seasonal increasing in complaints from 2018-2020 21 Table 5: Seasonal increasing in complaints and exporting containers from 2018-2020 22 Table 6: Processing product volume of K Company at S partner in 2018-2020 25 Table 7: Sale revenue of K Company for S partner’s product in 2018-2020 26 Table 8: The quality salary structure for workers 50 Table 9: Cost for set of solution 50 Table 10: Actual staff salary for production line/month 51 Table 11: Average processing fee of fish product (except worker salary) 52 Table 12: Benefit for set of solution 52 Table 13: The quality allowance structure for supervisors 54 Table 14: Staff salary when applying set of solution 56 Table 15: Cost for set of solution 57 Table 16: Benefit for set of solution 57 Table 17: Compare benefit set of solution with set of solution 64 Table 18: List of the interviewees 67 ACKNOWLEDGEMENT First and foremost, I would like to convey my great gratitude to my supervisor, Dr Phan Thi Minh Thu, for her unwavering support Her helpful counsel has helped me overcome all of my mistakes and difficulties in the process of doing my thesis She also teaches me many things more than just this thesis From the bottom of my heart, I want to express my gratitude to my adviser for everything he has done for me Secondly, I want to thank all of the lecturers at the International School of Business (ISB) - UEH who supported me during studying at ISB The useful knowledge and skills that I have learned helped me not only in my thesis but also in my career Last but not least, I'd like to express my gratitude to my company and the individuals who spent their valuable time conducting in-depth interviews and offering helpful material for the thesis EXECUTIVE SUMMARY In today's modern life, people gradually tend to use foods that are convenient, easy to prepare, and good for health Besides, product quality and safety are the top priorities of consumers For that reason, the K Company always focuses on producing products that meet the quality, needs, and tastes of fastidious consumers However, company K still receives complaints from the consumers about the quality of frozen seafood products This thesis with the topic: “Ineffective operation of K Company production lines in Vietnam” has figured some points as below: Firstly, the symptom increasing in customer complaints has been clarified through analysis of collected data from K Company’s internal report, the quality assurance department, and the production management department Secondly, through in-depth interviews with members of K Company’s partner (S Company), and K Company member, many problems lead to the increase of customer complaints These problems are the ineffective quality assurance management of partner, the ineffective quality control management on partner’s processing lines, and the ineffective operation of production lines Each problem has a varied level of influence on the problem but the ineffective operation of production lines is the main problem In addition, the potential causes leading to the ineffective operation of production lines are ineffective production process management and ineffective people management Following the validation and evaluation, the cause: “Ineffective people management” is considered as the main cause Finally, two alternative sets of solutions are proposed to improve the effectiveness of people management Based on deep evaluation of cost, benefit of these sets of solution and final confirmation from K Company’s partner, the set of solution one (adjusting the staff training method and redesigning the duties of supervisors) is chosen So that by implementing an action plan for set of solution one, the problem: “Ineffective operation of K Company production lines in Vietnam” can be solved effectively INEFFECTIVE OPERATION OF K COMPANY PRODUCTION LINES IN VIETNAM CHAPTER 1: INTRODUCTION 1.1 COMPANY OVERVIEW K Company started business in 1937 as a fishing company (period 1937-1959) From 1960 to 2004, it grew into a comprehensive food company that focuses on seafood trading and processed foods From 2005, K Company began its transformation to a true food company (1) K Company specializes in fishery products and runs the business from procurement to processing and sales Our mission: Aiming to grow together with society, contributing to a healthy and heartenriched lifestyle and food culture based on management of human respect (2) President: Mr Makoto Inoue Representative senior managing director: Mr Ken Sakai Number of employees: 2037 including group companies Five business field of K: (3) ● Marine products purchasing business: K Company engages steady procurement of high-quality marine products, supplies raw materials to partners in Japan and overseas, and sells sliced fish products and peeled products (crab, shrimp, etc.) ● Frozen foods business: Selling approximately 1000 different varieties of frozen food for industrial and home use Sushi toppings (salmon, shrimp, squid, snow crab) and raw fish products (salmon, shrimp, squid, snow crab) are sold to conveyor belt sushi stores More overs, Selling Dandori Jozu series of processed food and products which are easy to reheat at home or for nursing facilities (grilled fish, boiled fish, and pickled fish) Besides, K also sell products to restaurant and supermarket deli sections, such as fried seafood, Ocean King imitation crab meat, meat products, and frozen vegetables ● Shelf-stable foods business: K started manufacturing canned foods in 1949, focus on canned fish such as skipjack, salmon, crab, and products of the Sea Marché brand ● Tuna business: From fishing and farming to purchasing, K manages all tunarelated operations Fishing: Wakaba Maru - tuna purse seine fishing vessels catch skipjack in the Pacific Ocean to provide high-quality raw materials for sashimi, dried bonito, and canned products Farming: Hon-Maguro no Kiwami TUNAGU full-life-cycle aquaculture of blue-fin tuna product, which does not rely on natural juvenile fish ● Logistics Business: provide a logistics service focused on the cold storage business Organizational structure in 2020 Figure 1: The organization structure of K Company in 2020 10 - Remaining bone complaint: the color of crab bone is as same as the color of crab meat (white color); removing shell step is not correct (remaining so much shell and bone) so that checking bone step in dark room is overloading and worker are dazzled after a long working time, easily making mistakes in checking bone step; not ensure enough light intensity at checking bone step in dark room; X-ray machine is old, sometimes it can’t detect correctly - Remaining foreign fragment complaint: impurities come from raw materials like size tags in paper or plastic materials, hook; containers such as plastic tanks, plastic baskets which have many fragments that easily peel off; raw material is dirty and have sea rice, coral stick on this Difficulty:  QC only checks a few representative products/semi-product (frequency hour/ time), can’t check all products, so that the self-consciousness of workers is the most important Error frequency occurs more at lunch time, at the end of shift and overtime  The workers at the bone test have to recruit young people with good health condition, especially female worker At present, it is difficult to recruit bone test workers  Having to de-salt some batches of raw materials that makes them are difficult to check bones B3 PRODUCTION LINE’S GROUP LEADER In-depth interview 9: Interview date: Feb 23rd 2021 Interviewer: Nguyen Minh Vy Interviewee: Mrs Ha Thi Quynh Title: H-line’s group leader - Person in charge of H-line (process horse mackerel, mackerel, yellow tail, saithe, hokke fish, etc.)- (Production management department) Which season does your company have too many complaints from K Company? 78 We have complaints from your company every month, but too many complaints occur during the period at the end of year and after Tet holiday, May also have too much complaint Why did you have many complaints in these seasons? - At the end of year, customers want to export more product, so that our company have to work overtime As a result, workers can be tired and not focus on quality, easily making mistakes in processing - After Tet holiday, old workers have not comeback enough but still have to produce products to meet customer’s orders, leading to overload/making mistakes in some stages Many old workers quit jobs, new workers are not acquainted with their skills, leading to production errors What is the main complaint notice in the last three years (2018-2020)? These are complaint of remaining bone, remaining foreign fragments Why did you have many types of these complaints? - Remaining bone complaint: mistake at removing scale step, filleting step, removing bone step, checking bone step Because of increasing productivity, sometimes the supervisors neglect and not strictly control the semi product quality on processing line - Remaining foreign fragment complaint: impurities come from raw materials like size tags in paper or plastic materials, hook; containers such as plastic tanks, plastic baskets which have many fragments that easily peel off Difficulty:  QC only checks a few representative products/semi-product (frequency hour/ time), can’t check all products, so that the self-consciousness of workers is the most important Error frequency occurs more at lunch time, at the end of shift and overtime C WORKER In-depth interview 10: Interview date: Feb 23rd 2021 Interviewer: Nguyen Minh Vy 79 Interviewee: Ms Kim Thi My Lien 23 years old, working in SGF for years Title: Worker of crab line – person in charge of checking bone step Which season does your company have too many complaints from K Company? At the end of year, before and after Tet holiday Why did you have many complaints in these seasons? - Before Tet holiday, end of year: company have to work overtime As a result, workers are tired and not focus on quality, easily making mistake in processing - After Tet holiday, the new workers are not acquainted with their skills, leading to production errors New workers are trained processing steps in one months (including training and practicing) and they can’t be able to work as well as old workers, and having many mistakes What is the main complaint notice in the last three years (2018-2020)? These are complaint of remaining bone, remaining foreign fragment Why did you have many types of these complaints? - Remaining bone complaint: mistake at removing shell step, removing bone step, checking bone step Workers are dazzled after a long working time in dark room Due to the long working hours in a cold environment or overtime, the feeling of hand to check bones at some point is no longer accurate Because of increasing productivity, not focus on quality, just focus on quantity Not ensure enough light intensity at checking bone step (use dark room and dark line) - Remaining foreign fragment complaint: impurities come from raw materials like size tags in paper or plastic materials, hook, sea-rice, coral; containers such as plastic tanks, plastic baskets which have many fragments that easily peel off In-depth interview 11: Interview date: Feb 23rd 2021 Interviewer: Nguyen Minh Vy 80 Interviewee: Ms Cao Thi Tuyet 29 years old, working in SGF for years Title: Worker of Saba line – person in charge of checking bone – foreign fragment step Which season does your company have too many complaints from K Company? At the end of year, before and after Tet holiday, August Why did you have many complaints in these seasons? - Before Tet holiday, end of year: company have to work overtime As a result, workers are just focus on productivity not focus on quality, easily to make mistake in processing - After Tet holiday, the new workers are not acquainted with their skills, leading to production mistake; many worker quite jobs, lack of workers in checking bone step, overloading New workers are trained processing steps in short time and they can’t catch up with the processing speed, the right manipulation as good as old workers What is the main complaint notice in the last three years (2018-2020)? These are complaint of remaining bone, remaining foreign fragment Why did you have many types of these complaints? - Remaining bone complaint: mistake at filleting, removing bone step, checking bone – impurities step Workers have eye strain after a long working time Due to the long working hours in cold environment or overtime, the feeling of hand to check bones at some point is no longer accurate, semi product is to cold so that is difficult to check remaining bone - Remaining foreign fragment complaint: impurities come from parasite of raw materials, containers such as plastic tanks, plastic baskets which have many fragments that easily peel off; worker are dazzled after a long working time In-depth interview 12: Interview date: Feb 23rd 2021 Interviewer: Nguyen Minh Vy Interviewee: Ms Xeo Thi Hong 21 years old, working in SGF for years 81 Title: Worker of H- line – person in charge of checking bone – foreign fragment step Which season does your company have too many complaints from K Company? At the end of year, before and after Tet holiday Why did you have many complaints in these seasons? - Before Tet holiday, end of year: company have to work overtime As a result, workers are tired and not focus on quality, easily making mistake in processing - After Tet holiday, the new workers are not acquainted with their skills, current worker not pay attention in processing New workers are pressure in short time of training and are easy to make mistake in processing after training time What is the main complaint notice in the last three years (2018-2020)? These are complaint of remaining bone, remaining foreign fragment Why did you have many types of these complaints? - Remaining bone complaint: mistake at filleting, removing bone step, checking bone – impurities step Workers are dazzled after a long working time Due to the long working hours in a cold environment or overtime, the feeling of hand to check bones at some point is no longer accurate - Remaining foreign fragment complaint: impurities come from parasite of raw materials, containers such as plastic tanks, plastic baskets which have many fragments that easily peel off; the fish are so thick difficult to check parasite; not ensure enough light intensity at parasite controlling step CONFIRMATION OF SOLUTIONS In-depth interview 13: Interview date: May 26th 2021 Interviewer: Nguyen Minh Vy Interviewee: Mr Vu Title: Deputy General Director of S Company Ms Vy: Would you mind giving some comments about two set of solutions? 82 Mr Vu: Set of solution is suitable for the company, because it does not cause a big change to the current salary fund and staff of the production lines The cost and benefit of set of solution are also acceptable It will not change the total processing fee to the partners This solution can help to minimize the customer complaints of K Company in particular and of S partner in general Ms Vy: Thank you for your confirmation How about the set of solution 2? Mr Vu: Let me see Actually the set of solution is quite good But it is not suitable with this company When applying set of solution 2, it will harm to the salary budget of the company and may increase the total cost of processing That leads to the increase of the production cost and the total processing fee of customers and reduce price competition compared to competitors Ms Vy: Thank you for your useful comments 83 APPENDIX Appendix 1: Processing – sales volume in detail (year 2018-2019-2020) Processing volume (product), sales amount year 2018 (Tet holiday 8/2-22/2/2018) Year Month Total sales amount ($) Container Product (kg) quantity (pcs) Rate total sales (%) Rate total product (%) 2018 Jan 2,672,745.64 334,799.95 23 9.4% 10.9% 2018 Feb 1,339,574.84 145,937.60 17 4.7% 4.7% 2018 Mar 2,068,444.73 276,281.20 21 7.3% 9.0% 2018 Apr 1,788,065.80 197,803.40 20 6.3% 6.4% 2018 May 2,828,547.20 313,498.64 25 10.0% 10.2% 2018 Jun 1,469,682.89 166,856.85 19 5.2% 5.4% 2018 Jul 2,025,826.28 203,097.22 19 7.1% 6.6% 2018 Aug 2,833,936.45 265,815.50 24 10.0% 8.6% 2018 Sep 1,867,873.86 196,381.75 25 6.6% 6.4% 2018 Oct 2,673,266.83 286,872.13 23 9.4% 9.3% 2018 Nov 3,665,435.51 356,472.62 27 12.9% 11.6% 2018 Dec 3,130,654.43 341,368.16 26 11.0% 11.1% 28,364,054.46 3,085,185.02 269 100% 100% 60.6% 65.4% 65.9% Total Rate seasonal increasing complaints/year (%) 84 Processing volume (product), sales amount year 2019 (Tet holiday 28/1-11/2/2019) Year Month Total sales amount ($) Container Product (kg) quantity (pcs) Rate total sales (%) Rate total product (%) 2019 Jan 3,345,416.19 364,514.12 28 9.0% 9.9% 2019 Feb 1,909,472.91 219,146.94 20 5.2% 5.9% 2019 Mar 3,262,926.99 319,285.40 31 8.8% 8.6% 2019 Apr 2,825,500.18 284,450.44 32 7.6% 7.7% 2019 May 3,140,398.66 293,621.02 37 8.5% 7.9% 2019 Jun 3,088,619.75 355,748.27 30 8.3% 9.6% 2019 Jul 2,528,433.55 263,641.15 27 6.8% 7.1% 2019 Aug 3,558,858.59 359,879.60 36 9.6% 9.7% 2019 Sep 2,659,253.91 210,239.38 29 7.2% 5.7% 2019 Oct 3,285,809.55 300,587.71 32 8.9% 8.1% 2019 Nov 3,881,970.07 369,324.70 38 10.5% 10.0% 2019 Dec 3,566,349.40 357,599.91 39 9.6% 9.7% 37,053,009.75 3,698,038.64 379 100% 100% 60.4% 61.2% 61.7% Total Rate seasonal increasing complaints/year (%) 85 Processing volume (product), sales amount year 2020 (Tet holiday 17/1-31/1/2020) Year Month Total sales amount ($) Container Product (kg) quantity (pcs) Rate total sales (%) Rate total product (%) 2020 Jan 1,798,711.54 158,964.37 20 5.4% 4.5% 2020 Feb 2,708,915.53 281,888.42 27 8.2% 8.1% 2020 Mar 2,943,131.90 331,144.55 34 8.9% 9.5% 2020 Apr 2,883,012.85 321,407.13 32 8.7% 9.2% 2020 May 3,082,083.36 362,142.26 34 9.3% 10.4% 2020 Jun 2,599,928.13 257,343.85 29 7.9% 7.4% 2020 Jul 2,678,432.31 297,193.45 31 8.1% 8.5% 2020 Aug 3,128,952.33 350,018.44 33 9.5% 10.0% 2020 Sep 2,261,157.44 233,653.90 29 6.8% 6.7% 2020 Oct 2,712,992.81 256,493.62 27 8.2% 7.3% 2020 Nov 3,132,256.43 323,956.41 33 9.5% 9.3% 2020 Dec 3,083,645.89 321,890.95 36 9.3% 9.2% 33,013,220.52 3,496,097.35 365 100% 100% 59.5% 60.2% 60.9% Total Rate seasonal increasing complaints/year (%) 86 Appendix 2: JOB ANALYSIS FOR CHECKING BONE OF FISH PRODUCTS 87 Appendix 3: ANALYSIS FOR FISH BONE STRUCTURE 88 Appendix 4: FORM OF COMPLAINT NOTICE Dear Thanh san We got claim from Horse mackerel kirimi, the content as follows Factory: S Company Item: Yellow tail kirimi 60g*5*10*3 Expiry date: 2021.3.1 Contents of the claim: from end user Customer found bone from Horse mackerel kirimi 60g, length: 2.5cm This bone came out when end user ate these product Needed action: - Feasibility report and counter measure for that probability Deadline: 10th Feb 2020 Best regards 89 Appendix 5: SAMPLE OF COMPLAINT CORRECTIVE ACTION 90 REFERENCES K Company History [Available from: https://www.kyokuyo.co.jp/en/company/point/history/index.html K Company Mission [Available from: https://www.kyokuyo.co.jp/en/company/topmessage/index.html Five Business Fields [Available from: https://www.kyokuyo.co.jp/en/company/point/business/index.html Basis policy for Quality assurance [Available from: https://www.kyokuyo.co.jp/en/company/point/reliability/index.html Vietnam K Company Internal information Huss HH Assurance of seafood quality: Food & Agriculture Org.; 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An investigation in state and other sectors in Vietnam Public Organization Review 2015;15(4):565-79 32 Bruggen A An empirical investigation of the relationship between workload and performance Management Decision 2015;53(10):2377-89 33 O'Connell S Meeting the Workload Challenge Headteacher Update ; volume 2015, issue 1, page 8-10 ; ISSN 1478-5307 2015 92 ...UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business NGUYEN MINH VY INEFFECTIVE OPERATION OF K COMPANY PRODUCTION LINES IN VIETNAM MASTER OF BUSINESS ADMINISTRATION... problem but the ineffective operation of production lines is the main problem In addition, the potential causes leading to the ineffective operation of production lines are ineffective production. .. solved effectively INEFFECTIVE OPERATION OF K COMPANY PRODUCTION LINES IN VIETNAM CHAPTER 1: INTRODUCTION 1.1 COMPANY OVERVIEW K Company started business in 1937 as a fishing company (period 1937-1959)
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