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The gap in supply chain management at golden sea company

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UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Le Thi Thu Thao THE GAP IN SUPPLY CHAIN MANAGEMENT AT GOLDEN SEA COMPANY MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2021 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Le Thi Thu Thao THE GAP IN SUPPLY CHAIN MANAGEMENT AT GOLDEN SEA COMPANY MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: DBA Phan Thi Minh Thu Ho Chi Minh City – Year 2021 Table of contents Table of Contents EXECUTIVE SUMMARY CHAPTER 1: PROBLEM CONTEXT 1.1 COMPANY OVERVIEW 1.2 PROBLEM CONTEXT 1.2.1 The gap in supply chain management 1.2.2 Symptom validation and justification CHAPTER 2: PROBLEM IDENTIFICATION 2.1 POSSIBLE PROBLEMS 11 2.2 PROBLEM IDENTIFICATION 13 2.2.1 Ineffective Forecasting 13 2.2.2 Financial problem 14 2.2.3 Ineffective supplier management 16 2.2.4 Poor inventory management 18 2.3 MAIN PROBLEM VALIDATION 19 2.3.1 Problem definition 19 2.3.2 Justify the important of main problem 23 CHAPTER 3: ALTERNATIVE SOLUTIONS 25 3.1 CAUSE VALIDATION 25 3.1.1 No over quotas by level 27 3.1.2 No involvement in formal Win-loss reviews 28 3.1.3 Inappropriate/ Ineffective winning sales process 28 3.2 SOLUTIONS 31 3.2.1 Solution 1: Implement OKRs Model (Objectives and Key results) management in Sales department 31 3.2.2 Solution 2: Implement SMART goals model in Sales department 33 3.3 SOLUTIONS VALIDATION 34 3.4 ACTION PLAN 39 3.4.1 Objectives 39 3.4.2 Timelines and estimated cost 42 CONCLUSION 44 REFERENCES 45 SUPPORTING INFORMATION 48 Figures Figure 1: The company organizational structure Figure 2:: PE material data from June 2020 to November 2020 Figure 3: PP material data from June 2020 to November 2020 Figure 4: The gap between Planning figure and Execution Figure/ Procurement figure in PE material Figure 5: The gap between Planning figure and Execution Figure/ Procurement figure in PP material Figure 6: The Initial cause and effect map 12 Figure 7: The Updated Cause and Effect Map 22 Figure 8: The relationship between Forecasting and Planning 23 Figure 9: Forecasting the demand in JIT manufacturing systems 24 Figure 10: The second updated cause and effect map 26 Figure 11: The final cause and effect map 30 Figure 12: The similarities and differences between OKRs and SMART model 36 Figure 13: The advantages and disadvantages of OKRs and SMART model 37 Tables Table 1: Main material data from June 2020 to November 2020 Table 2: Timelines of solution 42 Table 3: Estimated cost of solution 43 Images Image 1: Key actions being taken by supply chain professionals 16 Image 2: Relationship with key suppliers 17 Image 3: Ability to resolve unexpected events with suppliers 17 Image 4: OKRs Model 32 Image 5: SMART model 33 ACKNOWLEDGEMENT A completed study would not be done without any assistance and support Therefore, the author who conducted this research gratefully gives acknowledgment to the people gave support and motivation during the time of doing this research as a requirement of completing my MBA degree First of all, I would like to express my thanks and gratefulness to my supervisor DBA Phan Thi Minh Thu Her kindly support and valuable advices went through the process of completion of my thesis Her encouragement and comments had a significantly enriched and improve my work The thesis cannot be done without her help and her experience in many fields Secondly, I would like to thank Golden Sea company for giving me time to research and staffs for taking their precious time for interviews Without the support of the company and the employees in the company, this thesis would not have been completed Thirdly, I would like to express my gratitude to my classmates for sharing, helping and encouraging each other during this MBA course And last but not least, I would like to give my specials thank to my family always beside me and give me encouragement so that I can finish my thesis EXECUTIVE SUMMARY Golden Sea Company is a company with 100% investment capital from Thailand and is also currently the top company in the production and distribution of rope and net products in Vietnam today Golden Sea Company is using main types of plastic materials: PP and PE plastic The source of plastic beads produced in the country is currently not enough to meet the demand, plastic enterprises have to import from abroad Especially, the increase in import tax on plastic to 3% from January 1, 2017 also makes the costs incurred by plastic businesses increase significantly The import of plastic materials also makes businesses "worry" about fluctuations in exchange rates in the market Not only is the company interested in the price of raw materials, but the quality of raw materials is also a top priority The company always choose the leading suppliers of plastic materials, both domestic and imported in order to ensure the quality of production inputs to help the Golden Sea brand always be highly appreciated by consumers, creating trust for future growth Not only the fluctuation of raw materials in the current market, Golden Sea Company is also facing supply chain problems within the company There is a difference between the forecasting, planning and actuality from the Sales, Planning, Purchasing and Production departments Although the company can still manage during the "Coronavirus" pandemic occurred from the second quarter of 2021 However, the gap between forecasting, planning and actuality is often much different, which will have many impacts on production plans, waste operating costs and importantly, not meet the demand of customer about finished products Through interviews and research from theoretical frameworks, the author has discovered the root cause of the problem being faced at Golden Sea company is that there is no over quotas by level Finally, the author proposes a solution with reasonable estimated cost that is to apply the OKRs model to the Sales department so that each employee can know what their individual goals are, which is committed by staff level and management levels CHAPTER 1: PROBLEM CONTEXT 1.1 COMPANY OVERVIEW Golden Sea Company was formed with 100% capital investment from Thailand and was established on 18/7/1995 to be the top manufacturer of Thailand for rope and net used for fishing, maritime transportation, industrial and agricultural sectors, etc… With 60 years of accumulated experience in production Golden Sea' business reputation and product quality are not only famous domestically but also spread abroad With the main vision of bringing the highest technology and the most affordable products to contribute to the development of the Vietnamese economy, especially in fisheries, agriculture and some manufacturing industries With technical products, Golden Sea has affirmed its strength compared to other manufacturers Modern technology and production machinery system with German, Italian, Japanese, Spanish, Indian and Thai technologies can produce ropes with diameters from 1.5mm - 120mm and capabilities bearing (breaking force) up to 100 tons Golden Sea currently has factories: factory at Ho Chi Minh City and factories at Long An Province with high productivity Products with leading quality currently in the Southeast Asian market and recognized worldwide (of which the brand currently accounts for 89%, the market share of ropes accounts for 40% (surveyed by axis) of the rope market for fishing in Vietnam) and is currently favored by customers around the world such as Matai (Japan), And always at the forefront in the development of technology to produce fishing gears with traditional rope products as well as Fishery - Instrument materials; Antifouling paint and highpressure lamps are used in fisheries, agriculture and some other applications Vision: Making Golden Sea become one of the top suppliers of fishery nets and fishery products in the Asia Mission: Golden Sea always finds the bond between the benefits of our customers, the community and our company important Golden Sea believes in offering the satisfaction for the customers and community by strategic, creative, unique and effective ideas based on advanced technology and local tradition The result that brought in by Golden Sea is the added value for the customers, community, company and its employees Golden Sea believes in changing the view of the world regarding the image of Vietnam in the field of fishery nets and tools Golden Sea believes in creating products with the quality lasting through the time under the slogan “A steady faith lasting through ups and downs” Golden Sea believes that developing people is the most important goals of the humanity civilization Golden Sea always gathers, develops, encourages and maintains talented individuals We provide sufficient work environment, competitive benefit policies and worthy compensation for their contributions to the success of the company and the benefit of customer and community Golden Sea shares the responsibility with the community “The company chooses the same side with the environment” “the loving bridges” “warming home” SHAREHOLDERS AUDIT Figure 1: The company organizational structure Supply chain function includes all logistics management activities including planning and managing all activities related to sourcing and Procurement, including all logistics operations More importantly, it also includes coordination and collaboration with partners in a comprehensive supply chain, which could be suppliers, third-party service providers, and customers In essence, supply chain management integrates supply and demand management within and between different companies A function that integrates with the responsibility of linking key business functions and business processes within companies into a cohesive and high-performance business model It includes all logistics management activities noted above, as well as manufacturing activities and promotes the coordination of processes and activities of the marketing, sales, and design departments products, finance, information technology 1.2 PROBLEM CONTEXT 1.2.1 The gap in supply chain management During the period of 2020, especially the 6-month period from June 2020 to November 2020, Golden Sea Company has many fluctuations in the supply chain management situation Typically, planning figure, procurement figure and execution figure have differences with each other Based on the data of some internal reports, it can be seen that there did not have a synchronization of main materials using plan at Golden Sea company Data used for analysis are data for all major material codes related to Polyethylene and Polypropylene NPE is an item code for Polyethylene and NPP is an item code for Polypropylene, main type materials using for production Unit: Kg Source: Internal report Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 NPE 376,844 291,276 397,816 382,696 502,269 372,526 NPP 342,206 275,774 345,938 380,204 443,717 339,974 Procurement NPE 372,750 717,750 330,750 108,000 375,000 341250 Figure NPP 580,000 456,000 241,500 387,750 569250 NPE 329,069 392,341 310,814 307,602 417,710 425,716 NPP 296,871 362,017 272,419 274,316 382,452 383,036 Planning Figure Execution Figure actions in the organization when every election, every move of employees and even leaders is always public OKRs must always be agreed upon between managers and employees Employees and managers must work together to come up with the most reasonable OKRs for the organization and the individual Thanks to this autonomy in work, employees leave less and are more loyal to develop the organization and personal experience With OKRs, it is easier for employees and managers to set ambitious goals when only 70% of those goals are completed and the work process is considered successful With this mentality of just getting to 70%, employees are under less pressure instead of always having to get it 100% right Furthermore, achieving 70% of the extraordinary, hard-to-find goals is better than achieving 100% of the ordinary goals 3.4 ACTION PLAN For this solution, Golden Sea Company only applies to the Sales Department to review and evaluate individual goals between sales staff and management levels And these goals have been reviewed and agreed upon between employees and management so that common goals for the department can be achieved 3.4.1 Objectives The author propose this solution should be implemented through main steps 39 Critical path Step 1: Searching for OKRs consultants People involve  Human Resources Department Content  The program is in line with the reality of  Commercial Deputy Director the company and have the experienced  Board of Director of Golden Sea consultants Company Step 2: Consultation session  Human Resources Department  The OKRs consultant will introduce the  Commercial Deputy Director contents and program with the Human  Assistant to Commercial Deputy Resources Department and Commercial Director Deputy Director (the highest position for  Consultants the Sales Department) Step 3: Meeting for OKRs  Human Resources Department introduction  Commercial Deputy Director meeting with the Sales Department staff  Manager/ Supervisor/ Team leader to introduce OKRs model  Sales executive  Commercial Deputy Director organize a  Get an idea of the goals/objectives of the  Consultants Sales department Step 4: Meeting for selecting and  Commercial Deputy Director  Select and announce the goal choosing the goal  Assistant to Commercial Deputy  Individuals build their own OKRs  Manager/ Supervisor/ Team leader  Sales executive 40  Team leaders/supervisors create individual OKRs and cross-link check Step 5: Draft OKRs publishing  Commercial Deputy Director  Assistant to Commercial Deputy  Manager/ Supervisor/ Team leader  Sales executive  Commercial Deputy Director creates and publishes OKRs  Team leaders/supervisors adjust their OKRs  Consultant Step 6: Check the quality of OKRs  Commercial Deputy Director  Assistant to Commercial Deputy  Check for cross-linking throughout the organization  Manager/ Supervisor/ Team leader  Consultants Step 7: Final OKRs publishing  Commercial Deputy Director  Assistant to Commercial Deputy 41  Publish final OKRs to all employees 3.4.2 Timelines and estimated cost Step Task Searching for OKRs consultants Consultation session Meeting for OKRs introduction Meeting for selecting and choosing the goal Draft OKRs publishing Check the quality of OKRs Final OKRs publishing W1 - June 2021 W2 - June 2021 Table 2:: Timelines of solution 42 W3 - June 2021 W4 - June 2021 No Description Estimating cost (VND) Consultation fee for OKRs Model (2 sessions/ hours each session) Coffee, tea and fruit for the consultant session with 60,000,000 vnd 300,000 vnd consultants Coffee, tea and fruit for the meeting with sales 300,000 vnd department (included consultants) Coffee, tea and fruit for the meeting with sales 200,000 vnd department Coffee, tea and fruit for the meeting with sales department 600,000 vnd (back-up meeting – meetings) Total Table 3: Estimated cost of solution 43 61,400,000 vnd CONCLUSION With the open market and fierce competition in Vietnam today, it is a problem that a manufacturing company can both meet the needs of the market and ensure the synchronization with the supply chain is difficult In order to always maintain the image and quality of the products of Golden Sea Company, the author found that the company was facing problems that could be called difficult to resolve the issues between the Sales Department and the other functional departments/ provisions First, through internal reports and interviews from employees at Golden Sea company, the author can see that the problems are happening at this business Next, some potential problems are listed after it has been researched and searched from the literature review The most important thing is to find out the main cause of such job dissatisfaction problem in the company The final step in the problem-solving concept is to find the best solution to the problem that exists at this stage The article gives two suitable solutions that Golden Sea Company can apply, which are two performance appraisal models: OKRs and SMART Finally, the first solution is chosen after considering its strengths and benefits for the business It can have a profound effect on changing the current situation And an action plan is prepared and needs to be implemented immediately to organize this model for Sales department at Golden Sea Company 44 REFERENCES Amit Surana , Soundar Kumara , Mark Greaves & Usha Nandini Raghavan (2005) Supply-chain networks: a complex adaptive systems perspective, International Journal of Production Research, 43:20, 4235-4265, DOI: 10.1080/00207540500142274 Brandel W The persistent gap between supply and demand [Internet] Supplychainquarterly.com 2007 [cited 19 March 2021] Available from: https://www.supplychainquarterly.com/articles/117-the-persistent-gap-betweensupply-and-demand Brix S Mind the gap between demand and supply [Internet] ERIM Ph.D Series Research in Management Erasmus University Rotterdam; 2016 Available from: http://hdl.handle.net/1765/79355 Forecasting - Overview, Methods and Features, Steps [Internet] Corporate Finance Institute 2021 [cited 23 March 2021] Available from: https://corporatefinanceinstitute.com/resources/knowledge/finance/forecasting/ Forecasting [Internet] Dictionary.cambridge.org 2021 [cited 23 March 2021] Available from: https://dictionary.cambridge.org/dictionary/english/forecasting Miles T Closing the gaps in supply chain management [Internet] Kinaxis Blog 2010 [cited 22 March 2021] Available from: https://www.kinaxis.com/en/blog/closingthe-gaps-in-supply-chain-management Peerless Research Group The Supplier Collaboration Shortage: Uncovering the Gaps in Supply Chain Readiness [Internet] Supply Chain Management Review and Logistics Management for E2open; 2013 Available from: https://www.logisticsmgmt.com/wp_content/e2open_wp_supplier_103113.pdf 45 9/ Makridakis S Chatfield, C Hibon, M Laurence, M Mills, T Ord, K and Simmons, L.F.,"The M2 Competition: A real time judgmentally based forecasting study", Volume 9,1993, p: 5-22 10/ Hogarth, R.M and Makridakis, S., "Forecasting and Planning", An evaluation, Journal of Management Science, Volume 27, Number 10,1981, p: 1237-1246 11/ Moriarty, M M and A J, Adams., "Management judgement forecast, composite forecasting models and conditional efficiency", Journal of Marketing Research, 21 August, 1984, p: 239-250 12/ Schnaars,S.P., "Situationalfactors affectingforecastaccuracy",Journalof Marketing Research,21 August 1984,p: 290-297 13/ Lines, A.H., "Forecasting key to customer service at low cost", Logistics Information Management, Volume 9, Number 4,1996, P: 24-27 14/ Morse E Top 10 reasons you probably have poor sales forecast accuracy!! [Internet] Salesresult.com 2021 [cited 10 April 2021] Available from: https://www.salesresult.com/blog/general/top-10-reasons-you-probably-havepoor-sales-forecast-accuracy 15/ Team M Sales Quota Definition, Importance & Example | Marketing Dictionary | MBA Skool-Study.Learn.Share [Internet] MBA Skool-Study.Learn.Share 2021 [cited 14 April 2021] Available from: https://www.mbaskool.com/businessconcepts/marketing-and-strategy-terms/1919-sales-quota.html 16/ Marcet R Win/loss reviews Hoboken, N.J.: Wiley; 2011 17/ How to Create a Winning Sales Process with Sales Process Rigor Workbook [Internet] TopOPPS 2021 [cited 20 April 2021] Available from: https://topopps.com/howto-create-winning-sales-process/ 18/ Niven PR, Lamorte B Objectives and key results: Driving focus, alignment, and engagement with OKRs John Wiley & Sons; 2016 Sep 46 20 Head K OKRs and SMART goals: What's the difference? [Internet] What Matters 2021 [cited 25 May 2021] Available from: https://www.whatmatters.com/resources/okrs-smart-goals-difference-between/ 47 SUPPORTING INFORMATION INTERVIEW 1: Question Mrs Duyen Assistant to Deputy Commercial Director Mrs.Tuong Lan Assistant to Supply planning Manager Answer In terms of sales volume forcasting, how will Sales Department execute over time? Sales volume are forecasted by the Sales Department quarterly For Forecast of sales volume, what time will the Sales Department send and send it to? Regarding the monthly output plan, the Sales Department will bring the plan at the beginning of the month to the Planning Department so that the Planning Department will plan and notify the relevant departments Can you tell me about the reasons for the change in sales volume? Usually the change in sales volume will depend on the market demand forecast (sales volume and raw material inputs) In addition, it depends on the customer's orders (usually exports) - especially urgent orders from customers For the Productivity Plan, how will the Planning Division work over time? Each month the Planning Department will receive a forecast of sales volume from the Sales Department The Planning Department will then calculate the quantity of materials for production and send an email at the beginning of the week detailing the quantity of these materials to relevant departments to capture, eg Sales Department, Purchasing Department, Department Warehouse, Factory If the Sales Department has a need to change production productivity, how will the Planning Department it? When there is a change in Production / Production output from the Sales Department, the Planning Department recalculates the quantity of raw materials to promptly notify the relevant departments / departments However, there are some instances where productivity changes from management direction (as market volatility will increase or decrease) 48 What you think about the company's current financial situation? (newly established companies under corporations) Mrs Phuong Trang – financial executive And Mr Quoc Danh – Purchasing staff in charge of main materials For a newly established company, what are the difficulties in terms of lending limits for banks and other payment procedures? Because a newly established company is an affiliated company, the new company's finances are facing some difficulties As a new company, the loan limit as well as the loan procedures and the ability to manage cash flow are limited Many L / C payment procedures for foreign payments are also difficult - the allowable limit is low and the payment value of the contract is high Is the payment time and schedule for the purchase of raw materials guaranteed under the stated terms? There are some periods when trading activities are dense and lead to the company's cash flow exhausting The Finance Department is required to borrow money from the bank The time to wait until the bank disburses also takes a lot of time, so there are times when the Finance Department cannot guarantee the payment term of many purchase orders for input materials What you think about your plan to purchase key raw materials to meet your production needs in the 2020 period? In 2020, the plastic industry market fluctuates a lot in price, but the number of purchases is still enough according to the production plan What you usually rely on to arrange the purchase of raw materials for your production? Purchasing is usually based on the Max-Min Inventory table approved by the Board of Directors to arrange and schedule the purchase of Materials for production Besides the issue of financial ability, you have any other problems when importing materials? There are many cases where materials have been negotiated for production plans, but because the storage capacity is limited and the loading and unloading workers are small, it is not possible to unload and store many materials 49 The inspection of input materials is also quite rigid, leading to many times when the materials are already in stock but have not been used yet because the QA department has not yet released the test results Mrs.Hong Thanh Warehouse Leader Is there a problem with paying suppliers? Due to limited financial capacity, many contracts are required to change their payment terms However, some suppliers not agree to the change terms, resulting in unsuccessful transactions, and the Purchasing department is forced to look for an alternative supplier What you think about the current stockpiling capacity of the company's warehouse? Currently the company has main warehouses, but the storage capacity of these warehouses is still low Typically, the finished products are still in abundance, sometimes the Warehouse department has to let the finished products overflow in the yard As for the current manpower in the Warehouse Division, you think it is enough to accommodate unloading for many material purchase orders in the same day? The current workforce of the Warehouse Department has been reduced compared to before The number of workers in Warehouse is people and Warehouse is people In addition, the Warehouse department also has to give priority to export conainer shipments, so it is difficult to arrange and receive many containers of raw materials especially those without pallet Also, you think the material preservation problem is being done well? Occasionally, in some cases of transporting goods, the packing of raw materials also occurs However, this number is also negligible 50 INTERVIEW 2: Question Prompt Answer Hi, can you tell me how you According to the time from June to November 2020, the sales forecast is lower than evaluate the sales forecast from the actual number of customers because the inventory is not enough to meet the June to November 2020? domestic market and it seems that the forecast is not enough to meet the needs of the Is there any change in the given domestic market reported that certain specific products are not effective target number and the actual Typically, in the fourth quarter of 2020, orders for product A are many, but due to SO? the lack of raw materials and production capacity, it is impossible to close orders with customers Ms.Lan Sales department now as far The sales process of the company is still properly followed by the Sales Department, Phuong as I know has a sales process but regarding the Winning sales process, the Sales Department does not currently However, you know have a specific process Senior sales data team leader anything about Winning sales process, if so, can you comment on this winning sales process? What are the sales targets Do you set individual Current sales of the Sales Department will have a specific number for the whole year currently in the sales sales targets? And you and a separate figure for each Quarter of the year Targets will be calculated for the department? set sales quotas for groups whole department: For example, the domestic sales team may have to bear more than or individuals? export sales (because the company mainly distributes in the domestic market) Sales quotas for each individual or team have not yet been set a specific number 51 Are there any Win-loss Sales department does not have win-loss assessment assessments for individuals or groups? "1 Hi, can you tell me how you The export market at that time was also quite volatile, with a lot of orders from evaluate the sales forecast from abroad but also urgent orders It can be said that the forecast is not very accurate June to November 2020? Is there any change in the given target number and the actual SO?" Ms Thao Sales department now as far Quyen as I know has a sales process Export sales However, you know admin team anything about Winning sales leader Currently I don't know about winning sales process process, if so, can you comment on this winning sales process? What are the sales targets Do you set individual The company now has overall target numbers for the year and for each quarter currently in the sales sales targets? And you Regarding sales quota, the export business department also has its own target department? set sales quotas for groups number However, there are no specific numbers for each individual or individuals? 52 Are there any Win-loss Sales department does not have win-loss assessment assessments for individuals or groups? 53 ... The gap in supply chain management During the period of 2020, especially the 6-month period from June 2020 to November 2020, Golden Sea Company has many fluctuations in the supply chain management. .. ECONOMICS HO CHI MINH CITY International School of Business Le Thi Thu Thao THE GAP IN SUPPLY CHAIN MANAGEMENT AT GOLDEN SEA COMPANY MASTER OF BUSINESS ADMINISTRATION SUPERVISOR:... consumers, creating trust for future growth Not only the fluctuation of raw materials in the current market, Golden Sea Company is also facing supply chain problems within the company There is a difference
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