REPORT INTERNSHIP 2 CAT NGHI TEA MANUFACTURING AND TRADING CO , LTD

Background Figure 1: Logo and slogan of Cat Nghi Tea Source: official website Cat Nghi Tea Manufacturing and Trading Limited Liability Company Cat Nghi Tea wasestablished in 2004, with

HOCHIMINH INTERNATIONAL UNIVERSITY

SCHOOL OF INDUSTRIAL ENGINEERING & MANAGEMENT DEPARTMENT OF

LOGISTICS AND SUPPLY CHAIN MANAGEMENT



REPORT INTERNSHIP 2

CAT NGHI TEA MANUFACTURING AND TRADING CO., LTD

Student’s name: LƯƠNG THANH BẢO NGỌC

ID: IELSIU18096

Advisor: M.Sc DƯƠNG VÕ NHỊ ANH

Ho Chi Minh City, Vietnam

August, 2021

TABLE OF CONTENTS

1. ACKNOWLEGDEMENT 1

2. INTRODUCTION 2 2.1 Background 2 2.2 Supply chain network of Cat Nghi Tea Co,.Ltd _ 3

3. PURPOSE 15

4. BUSINESS DESCRIPTION _16 4.1 Warehouse department 16

4.1.1 Business process and its function 16

6.6.1 Labor cost 296.6.2 Pick and move product time 30

6.6.3 Excess inventory 316.6.4 Productivity of machine _ 33

6.7 Timeline 34 6.8 Operational requirements 37

6.8.1 The anticipated mission of the new model of warehouse 37

6.8.2 Performance and physical parameters 386.8.3 Environment factors 38

6.9 Environmental sustainment factors 39

7. CONCLUSIONS _40

8. REFERENCES 41

LIST OF FIGURES

Figure 1: Logo and slogan of Cat Nghi Tea (Source: official website) _ 2

Figure 2: Cat Nghi Tea Manufacturing process (Source: official website) 3 Figure 3: Flow chart of the Supply Chain of Cat Nghi Tea 3 Figure 4: Harvesting tea leaves activity on Bao Lam farm 5

Figure 5: Operation flow chart _ 5 Figure 6: Machine system in Bao Lam factory _ 6

Figure 7: How defective product being utilised _ 7 Figure 8: Finished products 9 Figure 9: A small corner of Binh Duong warehouse 10 Figure 10: Inside the official store 11

Figure 11: Daily activities in the official store 12

Figure 12: Cat Nghi Tea in a trade fair in Dubai (2019) before Covid-19 _ 12 Figure 13: Distribution network for domestical sales _ 13 Figure 14: House of quality (HOQ) _ 28

Figure 15: Redundant part of tea trees 33 Figure 16: Activity-On-Arrow (AOA) network 37

LIST OF TABLES

Table 1: My main tasks for each working week 24 Table 2: Warehouse’ statements, and it requirements _ 26

Table 3: Technical Performance Measures (TPMs) 29

Table 4: Methods to reduce labor cost _ 30

Table 5: The positive trend after implementing technology to reduce labor cost 30

Table 6: Methods to reduce moving and picking time _ 31 Table 7: Methods to remove excess inventory _ 32

Table 8: Method to increase productivity of machine _ 34

Table 9: Estimated timeline for each activity to improving warehouse 36

Table 10: Calendar production in Viet Nam 38

1. ACKNOWLEGDEMENT

Thank Cat Nghi Tea Manufacturing and Trading Limited Liability Company for helping me

to have a really rewarding opportunity to experience the work environment as a trainee Theknowledge gained will help a lot for my future study and work Currently Cat Nghi Tea’sproducts are presented in most of the Asia, Middle East and Eastern Europe countries Ihope products will be promoted more throughout all the continents so that everyone can useand enjoy the fresh and qualified tea

This internship would not have been successful without the guidance and help from mysupervisor – Ms Nguyen Hoang Minh Tuyet – a director of Cat Nghi Tea Therefore, Iwould like to express my special thanks to her who has supported me during the 3-monthinternship Moreover, it is my colleges and seniors, who gave me encouragement, greatguidances to further understanding of my major, constructive comments, and supportivesuggestions whenever I needed, so I really appreciate and respected them

Besides, my appreciation also goes to the school of Industrial and Engineering Managementwho gives me a chance to participate in an internship when being a junior student.Especially, with the support from the advisor – M.Sc Duong Vo Nhi Anh I gained moreconfidence to step out of my comfort zone and conquer new challenges

2 INTRODUCTION

2.1 Background

Figure 1: Logo and slogan of Cat Nghi Tea (Source: official website)

Cat Nghi Tea Manufacturing and Trading Limited Liability Company (Cat Nghi Tea) wasestablished in 2004, with the main factory located in Bao Lam - Lam Dong Province, CatNghi Tea Co,.Ltd is one of the few Vietnamese enterprises pioneering in traceability andquality control of finished tea according to a closed process Choosing the name which actslike a message that customers should maintain the majesty styles when enjoying tea,

together with simple tones yellow as the dominant color together with the slogan “The taste

of pure happiness”, Cat Nghi Tea Co,.Ltd commits that fresh and clean products completely

come from the pure nature, which makes customers feel secure and happy about the quality

of product

Being a tea manufacturer, Cat Nghi Tea did and continues to apply the model “From tea

leaves to finished product”, providing safe and quality tea products for both domestic and

international consumers to enjoy

With more than 15 years' experience in tea production and export, Cat Nghi Tea meets thestandards to export to countries such as: Pakistan, Myanmar, Malaysia, India, The UK,Russia, Dubai, etc

2.2 Supply chain network of Cat Nghi Tea Co,.Ltd

Figure 2: Cat Nghi Tea Manufacturing process (Source: official website)

 Cat Nghi tea farm:

Cat Nghi Tea choose Lam Dong province to locate their farms There are two main farms:

 The first one is called “Trial & Error” farm: The area is about 3 hectare served as thepurpose to test and investigate before commercial planting as well as breed the tea seedling.There are 2 well-qualified experts, together with trained farmers, they try their best to createnew varieties to adapt the changeable weather and meet the customers’ satisfaction day byday

 The other is “Harvestable” farms: The area is up to hundred hectares, which isdivided into many parts and being rent by local farmers After the head office as well as thefood inspection organizations confirmed the tested tea trees are safe and agree this type oftea tree having a economic potential, these trees are cultivated and taken care of by farmers.The soil source as well as the quality of plants and leaves are strictly controlled to ensurethe best quality of tea

 Cat Nghi Tea choose the tactic very wisely, they give the tree seedings to trained farmers tocultivate, and ensure all the harvested tea leaves being consume 1 By doing this, as far as thecompany’s benefits are concerned, a number of labors are minimized, and they do not have toallocate the manager to manage the farm on a daily basis In addition, it is local farmer whoknow best about geography and weather in the area, thus maximising the planting productivity.Moreover, as far as the farmers’ benefits are concerned, their harvest is ensured to beconsumed all the time; therefore, they are not worried about inventory or stock items.Additionally, the plantation area is also provided, which is ideal for farmers who cannot afford

to purchase and own a huge amount of area

With the motto “Prevention is better than cure”, disease prevention is not only important

but also essential in the tea growing process so as to ensure the same quality over differentharvesting seasons In order to ensure bringing quality products to consumers, Cat Nghi TeaCompany built an agricultural technical team with tea farmers to control the fertilizationprocess, spraying pesticides and harvesting procedures so that they are scientifical andeffective enough to confirm the quality of clean tea as well as ensuring food safety andhygiene

Turning to harvesting part, after gathering in of the crops for at most three hours, tea must

be processed to ensure that the natural quality of the tea tree remains at the highest level

1 Chế độ bao tiêu

4

Figure 4: Harvesting tea leaves activity on Bao Lam farm

 Factory : The operation flow chart of Cat Nghi Tea is as the figure below

Figure 5: Operation flow chart

Currently, Cat Nghi Tea owns two factories:

 Factory 1: located in Bao Lam – Lam Dong Province, next to the main farm, this

factory operation mainly focuses on agricultural process, quality checking and sorting leave

tea-Figure 6: Machine system in Bao Lam factory

The raw materials used in tea production are 1 shrimp (tea buds) two or three young leaves.Leaves are pale green, dark green or of different ages The leaves are about 4-15cm longand 2-5cm wide Fresh leaves contain about 4% caffeine Usually only the bud leaves and 2

to 3 new leaves that grow near that time are harvested for processing Manual harvestingoccurs steadily after about 1 to 2 weeks

 Coming first to quality checking steps, any raw tea leaves that does not meet thestandards are disposed out of the process immediately This process aims to separate a smallportion of tea that has enough strength, cells from the tea cubes, facilitates ventilation toreduce temperature and creates new physical properties to through the next crumplingprocess is smooth

In reality, there is a high percentage of disposed leaves, around 25-30% However, at CatNghi Tea company, defective products are utilised as fertilisers or being sold at salvagevalue for funeral service companies as preserving the body remains purpose

Figure 7: How defective product being utilised

 After that, it is the stage of crumpling tea The purpose here is to break down some cells

to oxidize tannin, which reduces the burning of green tea and causes the tea buds to

curl according to market requirements Required cell stamping is approximately 45% innecessary conditions such as air humidity 90%, temperature 22-24 degree Celsius, torture 2times for 30-45 minutes each

 Tea, after bearing crumpling process, will be spread into a layer 4 - 5 cm thick and transferred to the period of killing yeast

Killing yeast is the use of high heat to destroy the fermentation in the first place, thuspreserving the green color of chlorophyll In order for the chemical changes to not takeplace under the action of yeast, but the transformation of substances still has to be done atthis time using the elements of heat and moisture Therefore, to achieve high quality greentea products, the manufacturer must destroy yeast thoroughly and increase heat productionfor tea to keep the color of green tea fresh, the taste is sweet and has a characteristic aroma.Methods of killing yeast: depends on which type of tea leaves In total, there are four waysthat Cat Nghi Tea currently uses to kill yeast

 Tea steaming method : The agent is saturated steam, there are 2 steaming methods: interrupt steaming and steaming continuously

+ Steaming intermittently: using an autoclave, the water in the pot is boiled with gas, with oil to steam the tea Tea is spread on a net covering the pot

+ Steaming continuously: pectin is hydrated, so tea leaves are easy to stick together.This method has the advantage of killing yeast quite quickly and thoroughly, the tea is quitegreen, reducing a part of the fresh pungent smell of tea

leaves and completely mechanized The downside is that it needs a lot of equipment,

so it is cumbersome and expensive

 Blanch method : Dry the tea from a moisture content of about 65% to 3-4%, allowing

a chemical transformation to occur to transform the substances and form the characteristicaroma and flavor of the tea

 Star or stir-fry method - contact method :

+ Interruption method: Using cast iron pan with a fairly large thickness, the pan isheated with coal, firewood, FO oil or gas and is mixed with the island wing at 23-28 rpm+ Continuous method: Using a cylindrical barrel made of corrugated iron, the barrel

is tilted at a certain maximum angle and has an island to push the tea out, the barrel isheated with coal, firewood, gas Time about 6-8 minutes with 2-3 minutes to kill yeast and4-5 minutes to dry

 Dry steaming method :

Using the agent is hot air with a temperature of 160-180oC, using humid air forreflux should improve the heat transfer coefficient, the time to kill yeast is about 6-8minutes, the moisture of tea after steaming about 65%

 After that, tea go to the drying stage At this period, operators dry the tea twice from

a moisture content of about 65% to 3-4%, allowing a chemical transformation to occur totransform the substances and form the characteristic aroma and flavor of the tea

+ Drying the first time has a temperature of 90-95 degree Celsius, drying time 12-15

minutes, remaining tea moisture 18-20%

+ Second drying temperature 80-85 degree Celsius, drying time 12-15 minutes, remaining moisture 3-5%

Between 2 drying times, the tea is spread thinly, cooled and let the tea redistribute moisture evenly, avoiding local drying, in wet and dry

The standard to finish the drying phase is that the tea has a strong aroma with no high

aroma, is burned and the remaining moisture in the tea is about 4-6%

8

Figure 8: Finished products

 Then, the operator classify the finished product Depending on the quality of green tea produced but classified into the following categories: OP, P, PS, BP, BPS, D and F

In which 2 tea items D and F are often not valuable for using purpose, so usually thecompany takes advantage of them to convert them into black tea items or to produce teabags

These are all the operation process in factory 1

 Factory 2: located in Bien Hoa – Dong Nai Province, which concentrates on

packaging and planning to distributed finished product to final customer Tactically, CatNghi Tea utilises the area of factory in Dong Nai Province for storage purpose so as tominimize the cost for renting, transporting and salaries

The main activity in this factory is packing and storing In order to preserve the finished teawell, much attention should be paid to the selection of packaging materials, packagingmethods, appropriate storage facilities, etc

 With tea for a short period of time, it can be wrapped in 2 layers of paper (one layer

of inner liner and one layer of label paper outside) and sealed, then put in wooden crateswith lining paper inside and close the lid tightly

 For tea that needs to be stored for a long time, it should be stored in a tea containerlined with 3 layers of paper (two layers of plain paper and a layer of metal paper in themiddle), with a lid, with a tin splint and nail fastening Tea must be filled, tightly packed intea containers

Figure 9: A small corner of Binh Duong warehouse

 Retailer / Showroom / Officially store:

Located in 18 Mac Thi Buoi Street, Ben Nghe Ward, District 1, Ho Chi Minh City, this is

an official store for domestic customers to visit and purchase stunning tea packages

Figure 10: Inside the official store

In this area, it occurs buying-selling activities on a daily basis In addition, it is also a placefor people, especially youngsters and young adults to discover and trial products beforepurchasing tea, a traditional cuisine of Vietnam

Figure 11: Daily activities in the official store

locally at retail stores Customers walk into the retail store or place an order online or by phone and pick it up at the retail store.

Figure 13: Distribution network for domestically sales

 International sales

Tea is one of the highly appreciated agricultural products across the continent Itsconsumption is always high, especially quantities for export to Eastern Europe, MiddleEast, and some Asian countries

 Middle East area

All of exported products is delivered by sea In these countries, our company choose thesemi-finished products to be delivered, we sells in the form of large package of tea, whichweighs from 35 kilograms to 75 kilograms in order to minimise transportation cost Clearly,with the same total weights, the smaller the area of each package, which means the tea iscontained in less-than-a-kilogram package instead of 35 kilograms or more one, the morethe total products account for container’s area, therefore increasing the transportation cost

In addition, the labour cost in these countries is not remarkable, thus the importers utilisethis advantage to convert the huge package into smaller ones to suitable for their customerdemand

 Eastern Europe

All of exported products are delivered by sea In these countries, different from the Middle East area, our company choose the finished products to be delivered, we sell them in the

form of small package of tea, which weighs no more than two kilograms The reasons isthat the labour cost in these countries is somehow remarkable, which outweighs thediscrepancy in transportation cost if we use the same strategy as Middle East countries.

 Asian countries

Most exported products is delivered by truck on traffic flow However, Vietnam productsare not welcomed much This may be caused by the influence of Taiwan, Japan which havealready had reputation in tea business In the near future, Cat Nghi Tea will concentrate onexpanding the brand recognition to Asian

3 PURPOSE

After taking part in internship 1, I gained the basic foundation of how a business isoperated, and participating in internship 2 is a golden opportunity for me to gain hang-onexperience These work experience interns receive is invaluable and cannot be obtained in aclassroom setting, which makes this one of the most important benefits of internships

In this interns, first of all, I want to test my specific techniques learned in the classroombefore entering the working world It’s an opportunity to apply what I have learned in a safeenvironment where mistakes are expected In addition, I want to learn the specialized skills

of a particular field as well as transferable skills such as communication, teamwork, andcomputer proficiency are also obtained in an internship, fully preparing interns to enter theworkforce after graduation

Secondly, exploring is an essential part of the university experience, and internships are agreat way for me to acquaint myself with the field I am interested in Taking on thisinternship, I have to work in my major, helping me decide if the field is right for me or not.Thirdly, experience is also my main objective One of the most important internshipbenefits is that students like me who already have some work experience in the form of aninternship before employers Internship experience makes a college grad more marketable

as they usually require less training and can handle more responsibilities I may also receive

a higher starting salary than those who do not have internship experience and are enteringthe workforce or starting a new career

Fourthly, I want to develop and refine skills I also want to realise my strengths andweaknesses during an internship Thanks to feedback from supervisors, I am offered aunique learning opportunity that I may not have again as a working adult

Above all else, financial earning is also my objective In this internship, I was paid, whichmeans I can gain valuable work experience and make money at the same time

Finally, I want to transit this internship into a job It is true that many companies useinternships as a way to enhance recruitment efforts In some cases, a company may decide

to hire an intern at the end of the assignment Even if a job offer doesn’t happen right away,

an intern who makes a favorable impression could receive an offer down the line when anopening occurs I consider it as a purpose, so I entirely devote myself for this 2-monthinternship

• The warehouse should be able to verify that it has received the right product, in the right quantity and standard condition, and at the right time as noticed.

• Receiving also involves the transfer of responsibility for the commodities to the warehouse This places accountability on the warehouse for maintaining the condition of the goods until they are shipped.

• Put-away is the second warehouse process and is the movement of goods from the receiving dock to the most optimal warehouse storage location In Cat Nghi Tea

warehouse, because the products have expiry date, First comes first serves (FIFO)

stragegy is applied.

• When goods are put away properly, there are several benefits: Cargo is stored faster and more efficiently; Travel time is minimized; Safety of goods and employees is ensured; Warehouse space utilization is maximized; Cargo is easier and faster to find, track, and retrieve.

• Storage is the warehouse process in which goods are placed into their most

appropriate storage space When done properly, the storage process fully maximizes the available space in your warehouse and increases labor efficiency.

• Tea leaves should be stored in the cool place which haves high-ceiling and roof

to prevent direct natural sunlight with the temperature variates between 23-27 degree Celcious.

• They utilise the advantages of wood pallets with the dimension 1016 x 1219 mm

to put the tea packages on.

• Picking is the warehouse process that collects products in the warehouse to fulfill customer orders This is the costliest process in the warehouse operation,

and the type of SKUs that need to be picked

and prepares them for shipment to the customer.

the goods and minimal enough to control packaging costs.

the warehouse to the customer.

delivered safely and on time.

sales or sea port to export.

4.1.2 Role

 Improving order processing and increasing productivity of warehouse

When customers place their orders, the only thing they’re concerned with is the delivery oftheir products It is clearly that customers want their products to be delivered on time infull Warehousing offers a “safety stock” Ideally, this means that products are available forshipping whenever customers place their orders If the warehouse department can forecastand estimate enough stock for the next few months, and this reduces delays in delivery

 Offering additional storage for peak time

The stock volume can outgrow it during busy months such as holiday (Full-moon festival,Lunar New Year holiday, etc.) In this case, getting a warehouse space will make the mostsense Basically, a warehouse is great for storing surplus goods, which customers andclients don’t need immediately

Cat Nghi Tea usually produces goods in anticipation of demand This means the companyneed adequate storage for their surplus goods until their customers and clients start putting

in orders A warehouse makes an ideal option to meet your needs

 Improving the quality of product

With better storage management, it’s possible to monitor the production quality Cat NghiTea can use it to track raw materials and finished goods These data can help to determinethe number of materials that go through your production process

Inventory quality control systems help to monitor the shelf life and expiration dates of yourmaterials Workers can easily identify and remove stocks before they expire

 Improving harvesting decisions

A warehouse with an effective inventory management system can help in all purchasingdecisions It can offer the accurate data, which can be used to determine when to purchaseraw materials and stock Based on that, the firm can easily identify fast-moving and slow-moving products depending on order history It’s also easier to identify seasonal products.The data helps Cat Nghi Tea to avoid producing an excessive or inadequate amount ofcertain materials

In this warehouse, we have inventory systems with signals that alert purchasers whichproducts need replenishing This allows the manager to keep stocks always in check

 Leverage seasonal growth

Holiday and cold seasons are famous for the high sales numbers Basically, the warehousedepartment gives the whole company the ability to boost operations as needed without anycost burden

 Risk management

This usually happens when the supply of a particular product exceeds the market demand,especially when it coming to harvesting season This is because the time frame to harvesttea leaves is around June to October, but the demand in this interval is not remarkable Ifthe company decides to sell, we can easily suffer loses Instead, this warehouse can be used

to store products, in the harvesting season, the maximum tea leaves that need storing is up

to 600 tons When the demand becomes more than the immediate supply and productions,

we can then release them to the market

Also, our business can minimize the loss from fire, theft, and damage by using a warehouse

to store goods

4.2 Sales department

4.2.1 Business process and its function

 Market segment:

- Focus on export tea-leaves and tea products (95% total rate)

- Focus on Business-to-Business segmentation (B2B)

- Approach new markets: Australia, Taiwan, America, etc

- Expand the local market in Vietnam

 Key business goal:

- Reduce transportation cost

- Increase number of products to be exported

- Expand new products relative tea leaves in health care area

Search for potential customers by using B2B website, social networks and other channels

Do email and digital marketing to approach potential customers

Prepare and send initial quotation

Do transaction, negotiation with customers Send the final quotation Arrange and prepare for PI and Sales Contract Follow the production and shipment process

Follow and handle the customs clearance; Arrange for shipping documents

to submit and collect money from buyers

Take care of customers and push for new order plans, Work with forwarder to update the freight, consignment status

4.2.2 Role

The sales department is the direct link between the company’s product and its customers It

is sales staff that build relationships with customers, mainly B2B, together with B2C.Further, a quality sales department helps identify a customer’s unique needs and makes surethat those needs are met

Since sales department have direct contact with customers on an ongoing basis, it becomesprivy to personal information that helps make sales interactions smoother and friendlier Ahighly trained sales professional tailors sales pitches to the individual customer and learnsthe ins and outs of their needs

5 TASKS

The table below summaries the activities that I worked each week at Cat Nghi TeaManufacturing and Trading Limited Liability Company

Honestly, I just acted as a supporter and trainee rather than a real staff Therefore, my main work is to support the seniors and gain hang-on experiences from them.

 Learning by heart the business process of the company At thefirst week, all I had to do was try my best to carefully understand the operation process ofthe company It seems so boring for me because I did not have to do any task exceptreading; however, when writing this report, I find that time is very useful By having thislearning week, I gained the very basic foundation as well as deeper knowledge about thecompany

April 11th – April 17th

 Getting acquainted with seniors and leaders: I was introduced

to everyone as well as having short introduction about peoplethat I will work with

 Going around factory and understand how each machineoperates

 Carefully knowing the layout of each type of SKUs, whichbelongs to which class (A,B or C items), which item needsspecial care, etc

 Approaching the data and learn to use company’s advancedorganizational technology to track sales, inventory,backorder items, stock out items that occurs in the warehouseApril 18th – April 24th

load and unload data, then find out the illogical if having.

 Take the tea samples to QA/QC department for testing

 Doing some tasks when needed

 Observing the operation from receiving an order to finishingthe packaging process

 Supporting the senior in record data activity (at the beginningand the finishing of a day-work), making comparison withload and unload data, then find out the illogical if having

 Observing and supporting seniors in managing the packagingMay 4th – May 8th and sorting operation process (batch different products to

fulfill customer’s order)

 Participating in planning to upgrade and improve thewarehouse which would occur in the next quarter to meet anincreasing number of international demand

 Supporting the senior in record data activity (at the beginningand the finishing of a day-work), making comparison withload and unload data, then find out the illogical if having.May 9th – May 15th

 Supporting the senior in managing the packaging and sortingprocess and supporting to track domestically orders

 Participating in planning to upgrade and improve thewarehouse which would occur in the next quarter to meet anincreasing number of international demand

 Supporting the senior in record data activity (at the beginningand the finishing of a day-work), making comparison withMay 16st – May 22nd load and unload data, then find out the illogical if having

 Supporting the senior in managing the packaging and sorting