TAM THE – Key Factor in the Made in Vietnam Lean Decision Making Method45294

TAM THE – Key Factor in the Made in Vietnam Lean Decision Making Method Minh Nguyen Dang 1* 1 Vietnam National University, University of Economics and Business; * Correspondence: dangm

TAM THE – Key Factor in the Made in Vietnam Lean Decision Making Method

Minh Nguyen Dang (1)(*)

(1) Vietnam National University, University of Economics and Business;

* Correspondence: dangminhck@gmail.com

Abstract: Vietnamese enterprises lack a good-quality support model for their management decisions

It is necessary to carry out research to build an appropriate decision-making model for Vietnamese enterprises The first aim of this paper is to examine the effectiveness of Made in Vietnam lean decision-making model in eliminating and reducing existing wastes in decision- making process of Vietnamese enterprises The second aim is to determine the priority of variables involved in the model and the most important factor to ensure the application effectiveness The model was applied

to 60 Vietnamese enterprises To achieve the purpose of the study, a multi-method design is used, which includes observation, semi- structure survey and in-depth interview The result of the research indicates that the model has succeeded in eliminating and reducing five existing types of wastes in decision- making process in Vietnamese enterprises In detail, there are wastes in human resources, waste in times, waste in information, waste in methods, waste in high failure rate Last but not lease,

“Tam The” is the most important variable that needs to be considered firstly in Made in Vietnam lean decision- making model The Made in Vietnam lean decision-making model have been proved as a new and advanced decision-making model by Vietnamese enterprises This model can be used for enterprises in both developing and developed country

Keywords: Made in Vietnam lean management philosophy; Decision-making model; Tam The

1 Introduction

Decision-making is a fundamental skill that each enterprise needs to maintain and expand for their business Incorrect decisions may lead to loss or even to the collapse of an organization There are a lot of decision-making research that has introduced theories, models, techniques and practical tools to maximize the effectiveness of decision-making in companies Božičković et al used some lean tools as well as statistical analysis, simulation and graphical tools to make decisions with higher efficiency and performance in production systems As introduced by Sack et al in the field of civil engineering, a new production model is combined between lean management and simulation model to make the decision Sacks et al proposed a simulation model of information for making construction decisions based on the views and principles of lean management Mao & Zhang integrated the principles of lean management into computer simulation techniques in the construction sector context The results of this simulation show that applying lean principles enhanced the performance of the construction process; reducing the project lead-time and increasing the process efficiency However, there are only a few authors in the extant literature who

build the overall model based on simulation and lean philosophy Therefore, the purpose of this study is to fill this research gap

There has not been any decision-making studies conducted in Vietnam There is no published official book (or documents) related to decision- making models, especially the ones combining both lean philosophy and simulation Furthermore, Vietnamese enterprises would not apply effectively and directly the decision- making models which have been studied and applied successfully in the world due to differences in organizational cultures, human resource characteristics, finances, and the development of science and technologies Thus, it is necessary to conduct research to build a appropriate decision- making model for Vietnamese enterprises

In prior study, the author developed a Made in Vietnam lean decision making model for Vietnamese enterprises from the Made in Vietnam lean management In this reseach, the author applied the model to 60 Vietnamese enterprises to confirm the effectiveness of Made

in Vietnam lean decision- making model in practice and finalize the model to ensure the highest effectiveness when applied in practice To fulfil the aim of this research, the following objectives were formulated: (1) investigate wastes that Vietnamese enterprises are facing in the decision-making process; (2) evalute the effectiveness of Made in Vietnam lean decision-making model in cutting existing wastes in decision- making process; (3) determine the priority of all variables involved in the model and find out the most important factor ensuring the application effectiveness

The Made in Vietnam Lean Decision- Making Model:

The Made in Vietnam lean decision-making model was built from the Made in Vietnam lean management thinking The model also involves the current situation of decision-making process in Vietnamese enterprises The model is explained as follows:

Figure 1: The Made in Vietnam Lean Decision- Making Model (Minh, 2018)

The proposed decision- making model includes three main parts:

• AS-IS model: Imitation decision context, input in decision-making process

build the management decision- making alternatives

• TO-BE model: Evaluation alternative, output in decision-making process

AS-IS MODEL

Variables:

{X1, X2, X3…,Xn}

Criteria:

(SQCDE)AS-IS

The Made in Vietnam lean management philosophy

Identify wastes in AS-IS model

Establish Lean alternatives

TO-BE MODEL

Variables:

{Y1, Y2, Y3,…, Yn} Criteria:

(SQCDE)TO-BE

AS-IS model

Being considered as an input in the decision-making process, AS-IS model describes

an imitation of the current decision context AS-IS model helps decision-makers to deeply understand the decision context (e.g the current operation management or the project situation…)

AS-IS model includes: {X 1 , X 2 , X 3 …,X n }

Where: X represents the project essential variables

n: number of variables

The AS-IS model is established by a set of essential variables corresponding to the significant entities in the decision context Each project has differential essential variables which depend on decision’s objectives and are selected by decision-makers All variables are divided into 5 groups namely:

Group 1: “Tam The”: Including all variables that describes “Tam The” of all related

people

Group 2: Man: Including all variables that describes people who are related to the

decisions (worker, supplier, competitor…)

Group 3: Method: Including all variables that describes the methods used in

decision- making context

Group 4: Machine: Including all variables that describes the machines used in

decision- making context

Group 5: Material: Including all variables that describes the materials used in

decision- making context

To evaluate the decision fully and directly, the comprehensive criteria for the selection of alternatives needs to be established For each project, we have:

S = {S1, S2, S3… Sn} is the set of all criteria measuring Safety

Q= {Q1, Q2, Q3… Qn} is the set of all criteria measuring Quality

C= {C1, C2, C3… Cn} is the set of all criteria measuring Cost

D= {D1, D2, D3… Dn} is the set of all criteria measuring Delivery

E= {E1, E2, E3… En} is the set of all criteria measuring Environment

For different projects, the decision- making criteria will be different Decision- makers and managers will directly select the criteria for decision- making on the basis of the actual situation and condition of each project

The Made in Vietnam lean management- fundamental thinking in building the management decision- making alternatives

In the context of decision- making process in Vietnamese enterprises, The Made in Vietnam lean management thinking is interpreted as follows: the Made in Vietnam lean management is the thinking of creating the optimal management decisions for an enterprise/organization by utilizing employees’ intellectual abilities to build alternatives which minimize existing waste (intangible and tangible wastes) in the decision-making context, and at the same time prevent potential wastes that can arise when decisions are deployed in practice

After AS-IS model in each project has been built, based on the lean management philosophy, decision-makers will identify existing tangible and intangible wastes in AS-IS model The wastes can potentially cause the failure of achieving the initial target Then, the involved parties will build alternatives to minimize these wastes

Alternatives are established based on the Made in Vietnam lean management which must meet two requirements:

(i) Solve the existing wastes at the maximum level (tangible waste and intangible waste)

(ii) Prevent potential problems at the maximum level

Lean alternative includes: {A 1 , A 2 , A 3 …A n }

Where: A: represent solutions to reduce waste

n: number of solutions

All solutions also are divided into 5 groups corresponding to 5 variables, namely: (i)

“Tam The”; (ii) Man; (iii) Method; (iv) Material; (v) Machine

TO-BE model

Figure 2: TO-BE model

The TO-BE model is used to describe a future desired situation to implement a specific alternative to reality According to the characteristics of decision, a specific method

is used to evaluate the alternative’s effectiveness is different Based on the result of the evaluation criteria set from the beginning, the before-after comparison will be conducted by the involved managers Then, managers will discuss to choose the best alternative

The Made In Vietnam Lean Management Philosophy

The Made in Vietnam lean management philosophy has been built to close the gap between international lean philosophies to Vietnamese culture This philosophy has been applied successfully in over 200 enterprises in Vietnam

The Made in Vietnam lean management philosophy is a philosophy to gain profit and create added value for company/organization by empowering employees to use human intelligence to continuously improve the business process to minimize waste costs The concept of the Made in Vietnam lean management is explained by the following equations:

Profit = Revenue – Cost (1)

Costs = Actual costs + Waste (2)

Waste = Tangible waste + Intangible waste (3)

(Source: Minh, 2016)

LEAN ALTERNATIVE A

Variables:{A1, A2, A3…,An} Criteria:(SQCDE)A

LEAN ALTERNATIVE B

Variables:{B1, B2, B3…,Bn} Criteria:(SQCDE)B

…

LEAN ALTERNATIVE N

Variables:{N1, N2, N3…,Nn} Criteria:(SQCDE)N

The Made in Vietnam lean management thinking

The Made in Vietnam lean management thinking

The Made in Vietnam lean management thinking

The Made in Vietnam lean management thinking

AS-IS MODEL

Variables:

{X1, X2, X3…,Xn}

Criteria:

(SQCDE) AS-IS

TO BE MODEL Simulation study base on Made

in Vietnam lean management

According to equation one, the better scenario to increase profits should be wastes cost reduction The Made in Vietnam lean management provides methods and tools to help enterprises to identify existing wastes in the business process and to gradually eliminate these wastes There are two types of wastes: tangible and intangible It is easy to identify tangible wastes in the business process, e.g., inventory, overproduction, waiting time, unnecessary transportation and motion, and defects It is harder to identify intangible wastes Intangible wastes include waste in mindset (such as the lack of true thinking power and skill, the reluctance to work, the conservative and traditional thinking), waste in working approach (such as lack of continuous improvement in terms of methods and processes to operate the business), and waste in missing opportunities (such as missing growth chances and business opportunities) Indeed, intangible wastes are generally considered more than tangible waste

The Made in Vietnam lean management philosophy has been implemented in Vietnam since 2014 Today, the Made in Vietnam lean management philosophy has been applied by more than 200 Vietnamese’s private enterprises from manufacturing to service area This philosophy has not been only used by small and medium enterprises but also big ones Those enterprises have recognized the performance improvement in terms of productivity, products and service quality, and customers’ satisfaction after nearly 6 months

of applying the Made in Vietnam lean management philosophy Meanwhile, the production cost has decreased because of eliminating wastes in operation processes The enhanced cohesion between employees and the enterprises has been confirmed by the decline in employee turnover rate thanks to the application of the Made in Vietnam lean management

Table 1: Summary of the improvements from implementing the Made in Vietnam in enterprises

1 year applying 2-3 years applying 4 years applying

Increased productivity

Improved quality

Reduced cost

Enhanced the cohesion

between employees and

enterprises

Source: Summary from the annual report of efficiency after applying the Made in Vietnam lean management)

The Made in Vietnam management philosophy have been recognized by Vietnamese enterprises as a new and advanced management method that is suitable for all type of businesses in Vietnam

2 Methodology

2.1 Research Framework and Research Methods

The research used the qualitative method that is suitable for the research objectives listed above The research framework is presented as in Figure 3:

Figure 3: Research framework

2.2 Data collection method

During one year, from June 2017 to June 2018, the model was applied to 60 Vietnamese private enterprises from manufacturing to service The reesearch data were colected by a multi-method such as observation, survey, and in depth interview (see Figure 4)

Figure 4: Data collection methods

Secondary data collection methods

Finalize the Made in Vietnam lean decision making model by determining

the priority orders of all variable involved in the model

Find out existing waste in decision making process in Vietnamese

enterprises

Assess the effectiveness of the model in cutting existing wastes

Made in Vietnam lean decision making model for Vietnamese enterprises

Literature review Observation, survey and in-depth interviews

data

Primary data

Observation

Survey

In-depth interview

Interview enterprise’s managers Interview consultant experts Company documents

The collected secondary documents and information included historical data of actual business performance when enterprises applied the the Made in Vietnam lean decision making model in reality These data were to support the assessment of the effectiveness of the model in Vietnamese enterprises

Primary data collection methods

Primary data in the study was collected through 3 methods:

Observation method:

Observations were conducted on the sample of 20 typical enterprises operating in mechanical manufacturing, retailing and logistic services in the scope of the research The author focused on the process of applying the Made in Vietnam lean decision- making model in those companies to assess the application effectiveness

Survey method:

The method was implemented by conducting investigation and survey via questionnaires on 60 enterprises which applied the Made in Vietnam lean decision-making model

Table 2: Number of respondents in the survey

The content of the survey covered two main parts:

Part 1: Information about enterprises and participants involved in the survey This section was used to group the survey's enterprises and survey's respondents Section 1 provides the following information: the size and the field of each enterprise and basic information of survey participants (occupation, position in the enterprise and contact information)

Part 2: The effectiveness of the Made in Vietnam decision-making in practice This section was designed with 14 semi-closed questions to confirm the validity of the model in Vietnamese enterprises through 3 main parts: (i) Find out the existing wastes; (ii) Evaluate the effectiveness of application ; (iii) Find out the most important variables in the decision- making model

In-depth interviews method

In-depth interviews were conducted after the survey data is analyzed Twenty enterprise’s top manager and middle managers were selected in the survey respondents by the representative sampling method On average, each interview lasts 30 minutes to reaffirm the results obtained through the survey, explore the most important factors that determine the effectiveness of the model

3 Results

3.1 Wastes in Decision- making Process in Vietnamese Enterprises:

After analyzing the primary data, the author identified five types of wastes in decision- making process in Vietnamese enterprises These wastes are summarized in Table

3 below

Table 3: Five existing types of wastes in decision-making process in Vietnamese enterprises:

Waste in human

resources

Decentralization and empowerment in decision-making are not effectively implemented in Vietnamese enterprises Top level employees

in company are usually overloaded by the number of decisions to make Subordinates try to evade decision- making and push the responsibility higher up 75% of decisions were made by senior executives in the business; only 25% of decisions were made from lower level Waste in time Time is not used effectively in the decision-making process in

Vietnamese enterprises For example, group discussion is often employed by companies to make important and complicated decisions This method is likely to provide more accurate decision- alternatives due

to the diversity of experience and multi-dimensional perspectives of all the involved members However, due to the unique cultural characteristics of Vietnamese working environment, decision-making by group discussion often takes a lot of time before consensus among different members are reached Sometimes these discussions are not

very effective

Waste in information Lack of input information often occurs in the decision-making process in

Vietnamese enterprises Due to the lack of standard criteria to collect input data, too much unnecessary information is collected On the other

hand, the necessary information is often missing

Waste in methods Vietnamese enterprises lack a lot of useful methods to support decision-

making process effectively, such as: making thinking,

decision-making model, alternative evaluations…

Waste in high failure

rate

Vietnamese enterprises experience a high failure rate when making decisions in reality, which has created a big waste for the enterprises The success rate of making decision in enterprises is only 57%, which means that 57% of decisions applied in practice effectively met the original goal The failure decision creates both tangible and intangible

waste to company The tangible wastes are easy to identify such as waste

of money, time and human resources On the other hand, the intangible wastes are the biggest waste of business, but harder to identify An example of this is waste of opportunity for development, reducing the

competitiveness of enterprises in the market

3.2 The Results of Applied the Made in Vietnam Lean Decision-making Model in

Vietnamese Enterprises

After applying in practices, the validity of the model has been confirmed The result (Table 3) shows that existing wastes in decision-making process have been reduced as a result of applying the Made in Vietnam lean decision-making model

Table 4: Results of applying

Source: Authors

3.3 “Tam the”, the most important factor of The Made in Vietnam lean decision-making model

During the application process, “Tam The” has been confirmed as the most important factor of The Made in Vietnam lean decision making model “Tam The” also has been proved to be the factor that had the greatest impact on the effectiveness of the model

“Tam The” has been recognized as a unique Vietnamese management; “Tam the” is defined

by the following management function:

Tâm Thế = Thấu 1 + Thấu 2 + Ý (Vietnamese concept)

Tam The = Deep Understanding 1 + Deep Understanding 2 + Consciousness (Source: Minh, 2016)

“Tam The” includes 2 Understandings and 1 Consciousness) Deep Understanding

1 is to comprehend that a work (job/study) that a person implements benefits himself/herself Deep Understanding 2 is to comprehend that by doing the work seriously (job/study) can he/she improve their thinking capacity (when studying) and working possibilities (when implementing a job), therefore bring benefits for himself/herself Consciousness is to understand that people should have good behavior, attitude and morality with the work to reflect and implement 2 understandings