Analyzing of warehouse management at avery dennison company (warehouse 4)

- Improve the management performance of raw materials in the stock at Warehouse 4 of Avery Dennison RBIS Company Detail purpose:... Figure 1.2: Label and Packaging Materials products Sou

Ho Chi Minh City, December, 2021

MINISTRY OF EDUCATION AND TRAINING

HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY AND EDUCATION

CAPSTONE PROJECT INDUSTRIAL MANAGEMENT

LECTURER: Ms HỒ THỊ HỒNG XUYÊN STUDENT: TRẦN ĐÌNH DUY

ANALYZING OF WAREHOUSE MANAGEMENT AT AVERY DENNISON COMPANY (WAREHOUSE 4)

SKL 0 0 8 3 2 0

MINISTRY OF EDUCATION AND TRAINING

HO CHI MINH CITY UNIVERSITY OF EDUCATION AND TECHNOLOGY

Ho Chi Minh City, December 2021

ANALYZING OF WAREHOUSE MANAGEMENT AT AVERY DENNISON COMPANY (WAREHOUSE 4)

THANK YOU

The Avery Dennison Company internship experience was a great opportunity to learn and develop my profession I consider myself also very grateful that I have been given the chance to be a part of it I am so lucky to meet so many great people and experts who have taken me through this point

I would like to thank Mr Van Nguyen, Warehouse 4 Manager, for his excellent work,

he took the time to hear me and to direct me on the correct course, and encouraged me

to carry on our project at their highly respected organization I am so thankful to you for the work you have done during the training

I appreciate Mr Don Ho for his valuable decision and advice and encouragement

He was my Team Leader at the time He helped me push up my strong suit to the next level I am thankful to remember his contribution at this moment

I would also like to thank the Faculty of Economics, University of Technology and Education for developing such an incredibly useful course, so we can learn theoretically

as well as in practice

In pleasure, I really appreciate all the wonderful things Ms Ho Thi Hong Xuyen, my mentor, my teacher, has done for me during this time I actually couldn’t write this thesis well without her assistance

This chance I consider as a huge achievement in my car I should aspire to the best use of learned skills, expertise and seek to develop them in order to achieve desired

career goals I hope that in the future we will continue to work together

Ho Chi Minh City, December 2021

Author’s Sign

DOS Days Of Supply

EHS Environment, Health and Safety

FIFO First In – First Out

GPD Global Project Development

GRC Gate Realistic Confirm

IHM Industrial and Healthcare Materials

RBIS Retail Branding and Information Solutions

RFID Radio-Frequency Identification

RM Raw Materials

TQ Total Quality

VMI Vendor Management Inventory

VSIP Viet Nam – Singapore Industrial Park

WIFI Wireless Fidelity

WMS Warehouse Management System

LIST OF TABLE

Table 3.1: Input – Work instruction at Warehouse 4 24Table 3.2: Output – Work instruction at Warehouse 4 28Table 3.3: Data record comparison 33

LIST OF FIGURE

Figure 1.1: Avery Dennison Logo 4

Figure 1.2: Label and Packaging Materials products 5

Figure 1.3: Graphics products 6

Figure 1.4: Reflective products 6

Figure 1.5: Retail Branding and Information products 6

Figure 1.6: RFID products 7

Figure 1.7: Printer products 7

Figure 1.8: Performance Tapes products 8

Figure 1.9: Fastener products 8

Figure 1.10: Medical products 8

Figure 1.11: Avery Dennison RBIS chart operation 9

Figure 1.12: Avery Dennison Annual Financial Report 2016 - 2020 10

Figure 1.13: Avery Dennison Year Stock Chart 10

Figure 1.14: Supply Chain Department and Warehouse work chart 12

Figure 1.15: Map in Warehouse 13

Figure 2.1: Structure of a supply chain 15

Figure 2.2: Example of a Double ABC Analysis 18

Figure 2.3: ABC Analysis: product value and frequency of sales 19

Figure 2.4: VMI chart work 20

Figure 2.5: Bullwhip effect illustrated 21

Figure 3.1: General link operation process 22

Figure 3.2: Import process chart 23

Figure 3.3: Goods Received Note 24

Figure 3.4: Raw materials arrive at Warehouse 4 24

Figure 3.5: TQ team are checking new RM 25

Figure 3.6: The temporary location 25

Figure 3.7: Stock cards 25

Figure 3.8: RM Tracking computer 26

Figure 3.9: Export process chart 27

Figure 3.10: RM Request form 28

Figure 3.11: Clerk team are checking on computer 28

Figure 3.12: The vacant location at Warehouse 4 29

Figure 3.13: The Operator takes the goods 29

Figure 3.14: Storage documents 30

Figure 3.15: Air conditioner at Warehouse 31

Figure 3.16: Safe working loads instruction 31

Figure 3.17: The racks of Warehouse 4 32

Figure 3.18: The month label of Warehouse 4 33

Figure 3.19: Counterbalance forklift 35

Figure 3.20: Pallet Jack 36

Figure 3.21: Walkie Stacker 36

Figure 3.22: The reach fork truck 37

Figure 3.23: Plastic Pallet 37

Figure 3.24: Wood Pallet 37

Figure 3.25: Fire prevention tools 38

Figure 3.26: Chemical Indentification Tag 39

Figure 3.27: The volume data comparison 2021 – item 10H000141 43

Figure 4.1: VMI category using space inventory 46

Figure 4.2: VMI total inventory and max stock 46

Figure 4.3: VMI inventory situation 47

Figure 4.4: The old data information flow 49

Figure 4.5: The new data information flow 50

Figure 4.6: QR Barcode current and early project step 51

Figure 4.7: Working desk of Shipping mark team 52

Figure 4.8: Shipping mark label 53

Figure 4.9: Locator label 53

Figure 4.10: Shipping mark workflow chart 54

Figure 4.11: The new combine stamp (the new shipping mark) 57

LIST OF CONTENT

THANK YOU i

LIST OF TABLE iv

LIST OF FIGURE v

LIST OF CONTENT vii

INTRODUCTION 1

1 Background of the thesis 1

2 Purpose of the thesis 1

3 Scope and Object of the thesis 2

4 Research method 2

5 Paragraphs 2

CHAPTER 1: OVERVIEW ABOUT AVERY DENNISON AND WAREHOUSE 4 3

1.1 Introduction to Avery Dennison 3

1.1.1 Origin and Development 4

1.1.2 Field and Products 5

1.1.3 Business strategy (RBIS) 9

1.1.4 Organizational structure (RBIS) 9

1.1.5 Business report 9

1.2 Supply Chain department 11

1.2.1 Introduction to Supply Chain department 11

1.2.2 Supply Chain work chart 12

1.3 Warehouse 4 12

1.3.1 Introduction to warehouse 4 12

1.3.2 Warehouse 4 map 13

1.3.3 Warehouse 4 team 13

CHAPTER 2: LITERATURE REVIEW 15

2.1 Definition of supply chain 15

2.2 Warehouse in Supply Chain 16

2.2.1 What is Warehouse 16

2.2.2 The role of the warehouse 16

2.2.3 The function of the warehouse 16

2.3 Warehouse management 17

2.4 ABC Classify 17

2.4.1 ABC Method 17

2.4.2 Double ABC Method 18

2.4.3 ABC Analysis 19

2.5 Vendor Management Inventory (VMI) 19

2.6 Bullwhip phenomenon 21

CHAPTER 3: THE REALITY OF WAREHOUSE 4’S WORKING PERFORMANCE 22

3.1 General link operation process 22

3.2 Specific business process in Warehouse 4 23

3.2.1 Import process 23

3.2.2 Export process 27

2.2.2 Inventory activities 30

3.3 Reality of warehouse management 33

3.3.1 Inventory status 33

3.3.2 Employee status 34

3.3.3 Warehouse layout status 35

3.3.4 Inventory forklift and pallets 35

3.3.5 Safety Status 38

3.3.6 Data information framework flow 39

3.4 Evaluation of the management of raw materials at Warehouse 4 39

3.4.1 Advantages 39

3.4.2 Disadvantages 41

CHAPTER 4: SOLUTION FOR A BETTER WAREHOUSE MANAGEMENT 44

4.1 Urgency and purpose 44

4.1.1 Urgency 44

4.1.2 Purpose and limitation 44

4.2 Solution for warehouse 4 management 44

4.3 Shipping Mark Advanced Solution (QR Barcode) 50

4.3.1 Introduction 50

4.3.2 Current and Early Project Step 51

4.3.3 Project Description 52

4.3.4 Evaluation and solutions for QR Barcode project 54

4.3.5 The solutions for the project 55

4.3.6 The novelty of the solution 556

CONCLUSION 58

REFERENCES 59

APPANDIES 61

INTRODUCTION

1 Background of the thesis

Production is always an important industry in our lives Manufacturing Companies always have a special mission for economic development and serve market requirements For good production management, it is necessary to have great warehouse management

as a companion Effective inventory management, sources of raw materials are available and sufficient to meet, meaning that the production room will be assured of input to perform their duties

Warehouse management must not allow a lot of mistakes, which can affect the entire line behind and worse can affect the entire productivity of the company The warehouse

is not only responsible for the storage function, but also is responsible for ensuring the input of raw materials for production as well as for semi-finished products There are always problems that affect that sustainability

Through more than 6 months of internship at Warehouse 4 at Avery Dennison, I have experienced many problems at this material warehouse Also participating in the project

to improve the company's warehouse management I want to build an essay with the most objective and subjective views about the problem in reality and apply knowledge

in practice With a strong motivation about the great value brought after improving the warehouse management system, I choose the topic "Analyzing warehouse management

at Avery Dennison Company (Warehouse 4)" for my graduation thesis to bring those things convey to everyone

2 Purpose of the thesis

General purpose:

- Analyze warehouse 4 management at Avery Dennison RBIS Company

- Improve the management performance of raw materials in the stock at Warehouse 4 of Avery Dennison RBIS Company

Detail purpose:

- Learning and grasping about the process, professional operations, and management of Warehouse 4 of Avery Dennison Company

- Evaluating warehouse performance and limitations

- Proposing solutions to improve Warehouse 4 management of the company

- Suggesting solutions to make employees work more efficiently and inventory management better

3 Scope and Object of the thesis

Scope of the study: The warehouse management at Warehouse 4 of Avery Dennison RBIS Vietnam is located at No 4 Street, Long Hau Industrial Park, Long An Province Data collection time period: Data collected from July 1, 2021 to November 20, 2021

4 Research method

Information collection methods: collect information from profile, document and results through internal audits as well as feedback of involving people

- Data analysis methods: using the analyzed historical data

- Qualitative data analysis: implemented in the form of either interpretation explanation and understanding of the situations from investigating

- Delphi method: Useful information when exchanging with experts in the field

5 Paragraphs

Chapter 1: Overview about Avery Dennison and Warehouse 4

Chapter 2: Literature review

Chapter 3: The reality of Warehouse 4’s working performance

Chapter 4: Solutions for a better Warehouse 4 management

CHAPTER 1: OVERVIEW ABOUT AVERY DENNISON AND WAREHOUSE 4 1.1 Introduction to Avery Dennison

Avery Dennison (NYSE: AVY) is a global materials science company specializing

in the design and manufacture of a wide variety of labeling and functional materials The company is a member of the Fortune 500 and is headquartered in Glendale, California

Avery Dennison RBIS, the $1.6 billion business of Avery Dennison Corporation, specializes in solutions for apparel and footwear brands Avery Dennison RBIS provides smart, innovative, and sustainable solutions to help brands optimize product value and enhance performance in global trade supply chains We elevate the brand through solutions for graphic paper labels, printed fabric labels, labels, decorative accessories, and packaging to attract consumers

Full name: Avery Dennison RBIS Vietnam Co., Ltd

Legal represent: Nguyễn Cửu Thanh Châu

Number of employees: Over 1,000 people

Authorized capital: 30 billion dollars

Corporation slogan: Inspired Brands, Intelligent World

Area: 27.000 square meters

Logo:

Figure 1.1: Avery Dennison Logo

(Source: Company public website)

1.1.1 Origin and Development

In 1935, Avery Dennison Corporation was founded in Los Angeles, California as Kum Kleen The name was changed to Avery Adhesives in 1937 The company was originally founded by Ray Stanton (“Stan”) Avery, the first inventor of the first self-adhesive sticker

The first Avery labels were simple, round price stickers Stan Avery chose Kum Kleen Products as his original company name to advertise the ability of a self-adhesive label to be removed without leaving a mark In 5 years of operation, the number of employees is only 19

In 1946, the company was incorporated into Avery Adhesive Label Corp and the name was later changed to Avery Adhesive Products, Inc in 1958, and Avery Products Corporation in 1964 The name was again changed to Avery International Corporation

in 1976, and it became Avery Dennison after the company strategic merged with Dennison Manufacturing Company in 1990 Today the corporation operating in more than 50 countries, with more than 32,000 employees and over $7 billion in revenue (2020)

In Vietnam, the factory was established on May 3/2003 first in VSIP, Thuan An town, Binh Duong Province and quickly get the trust of customers and occupy a strong market often

After more than 12 years of operation in the Vietnamese market, to serves the huge market demand, the corporation decided to build and inaugurate a new factory in Long Hau industrial park, Can Giuoc town, Long An province Total investment capital up to

30 million dollars Nowadays, the company operates with more than 3000 employees, dealing in many fields related to labels, packaging, decorative accessories and RFID labels (In 2020 Avery Dennison completes acquisition of Smartrac’s RFID transponder business)

1.1.2 Field and Products

Avery Dennison Corporation is a multinational manufacturer and distributor of pressure-sensitive adhesive materials (such as self-adhesive labels), apparel branding labels and tags, RFID inlays, and specialty medical products

The company’s products, which are used in nearly every major industry, include pressure-sensitive materials for labels and graphic applications; tapes and other bonding solutions for industrial, medical and retail applications; tags, labels and embellishments for apparel; and radio-frequency identification (RFID) solutions serving retail apparel and other markets

Business Summary:

- Label and Graphic Materials (LGM)

Label and Packaging Materials: Design and produce packaging and label products

to collect customer needs from many fields (Food and Drink, Pharmaceuticals,…)

Figure 1.2: Label and Packaging Materials products

(Source: Company internal information)

Graphics Solutions: Design vinyl graphics and automotive wrap graphics worldwide

Figure 1.3: Graphics products

(Source: Company internal information)

Reflective Solutions: Build reflective panels to illuminate construction areas, traffic signs, ambulances,

Figure 1.4: Reflective products

(Source: Company internal information)

- Retail Branding and Information Solutions (RBIS)

Apparel Solutions: Delivery tickets, tags, and labels to external embellishments, and packaging for brands around the world

Figure 1.5: Retail Branding and Information products

(Source: Company internal information)

RFID (Radio Frequency Identification): Provide RFID solutions for brands and system integrators

Figure 1.6: RFID products

(Source: Company internal information)

Printer Solutions: Providing customers with innovative and sustainable printer and labeler products and supplies that accelerate supply chain performance, increase productivity, and elevate the consumer experience

Figure 1.7: Printer products

(Source: Company internal information)

- Industrial and Healthcare Materials (IHM)

Performance Tapes: Providing high-performance bonding and functional materials for baby care, incontinence care, feminine hygiene and consumer packaging Our solutions include a wide range of adhesive closures, mechanical closures and closure components

Figure 1.8: Performance Tapes products

(Source: Company internal information)

Fastener Solutions: A global provider of fasteners for a wide range of industries and applications, along with the applicators and equipment needed to apply them

Figure 1.9: Fastener products

(Source: Company internal information)

Medical: As a partner for medical device manufacturers, Avery Dennison Medical offers customized solutions, expertise, and the facilities to take your ideas from concept

to completion

Figure 1.10: Medical products

(Source: Company internal information)

1.1.3 Business strategy (RBIS)

These are the 4 key strategies of AD RBIS Southeast Asian companies Avery Dennison RBIS Vietnam is an important link in the chain of companies in Southeast Asia

Deliver outsized growth in high-value categories: Continue to lead the smart label in apparel Accelerate vertical growth in key industries Focus on the growth of the external market in the customers in the sports and art market segment Those market segments are strategic customers

Unlock growth and value in the food industry and logistics segment: Address market needs for visibility display, efficiency and sustainability with integrated identity solutions and smart labels That vision for sustainability and long-term

Leverage business model transformation Continue to grow profitable shares at the base, develop flexibility, productivity, automation, and fixed-cost innovation to enhance profitability and competitiveness That makes the business will maintain its position in the world and have the trust of loyal customers

Strengthen your organization's digital capabilities and solutions: Boost up digital and data capabilities to lead solutions and raise the customer experience The digital transformation in the market is happening very quickly The acceleration to keep up with the times will support the future path ahead

1.1.4 Organizational structure (RBIS)

Figure 1.11: Avery Dennison RBIS chart operation

(Source: Author composed)

1.1.5 Business report

Operation Director

Human

Manager

Operation Manager

Senior GPD Manager

Total Quality Manager EHS Manager

Supply Chain ManagerWarehouse 4

Figure 1.12: Avery Dennison Annual Financial Report 2016 – 2020

(Source: Company internal information)

Inferred the company's financial statements for the past 5 years, shows that the company's business activities are on a continuous development track from 2016-2019 Though the impact of the COVID-19 pandemic caused the company's revenue to be significantly affected in 2019 and 2020, net profit still increased

Figure 1.13: Avery Dennison Year Stock Chart

(Source: Company public website)

1.2 Supply Chain department

1.2.1 Introduction to Supply Chain department

The Supply Chain department controls, manages and operates the entire Avery corporate supply chain Supply chain activities are closely related to and are the inflow and outflow of the enterprise's production processes

The entire Supply Chain department is under the management of MSEA Supply Chain Manager MSEA Supply Chain Manager will be directly responsible for the 4 departments below New decisions and information will flow from the top down

There are 4 job parts under MSEA Supply Chain Manager They will perform different functions

Purchasing: Researching potential vendors; Comparing and evaluating offers from suppliers; Negotiating contract terms of agreement and pricing…

Logistics: Monitor and track quality, quantity, inventory levels, delivery time, transportation costs and efficiency; Control and use the potential of the warehouse; Work in relation to the production department, quality assurance…

Materials Planning: Determining the required materials and generating purchase orders; Ensuring the consistent and adequate supply of materials necessary for production…

Supply Chain Analyst: Monitor and collect data on current operations, including scheduling, sourcing, warehousing, production, and delivery; Analyze data to determine areas for performance improvement…

These departments have separate functions and tasks that support each other in the supply chain The main task of warehouse 4 is to ensure that the goods in the warehouse are safe and to manage the correct inventory according to the quantity and quality All the small tasks in Warehouse 4 are managing huge numbers and materials

Improvements in warehouse 4 will apply within the framework of warehouse 4 and under the supervision of Supply Chain Manager, and do not directly affect the activities

of related departments

The warehouse is an important part of logistics There are 2 main warehouses in Avery Dennison RBIS Long Hau: Warehouse 1 are finished good warehouses, Warehouse 4 is a material warehouse

Warehouse 4 has 3 departments including WH Clerk, WH TQ, WH Keeper/ Operator Each of them we can call a team Also for the warehouse 1

1.2.2 Supply Chain work chart

Figure 1.14: Supply Chain Department and Warehouse work chart

(Source: Company internal information)

1.3 Warehouse 4

1.3.1 Introduction to warehouse 4

Warehouse 4 is the raw material warehouse of AD RBIS Viet Nam, under the Supply Chain department division Play an important role for the production of the entire RBIS Viet Nam

The main location in this study is Avery Dennison Warehouse 4, which is located on Road 4 Road, LHIP, Can Giuoc, Long An, Vietnam The Warehouse scale is 7000 square meters The number of employees is around 150 members with different roles

MSEA Supply Chain Manager

Supply Chain Analyst

1.3.2 Warehouse 4 map

It has 2 main areas which are Zone A (paper, PFL…) is 2200 square meters and Zone

B (woven, thermal ) is 2200 square meters In addition, the staging area used to store goods temporarily is 1200 square meters (Zone C) and the WIP of Production Department The last area is private storage which has a special temperature to keep special goods such as (ink, chemical goods…) 400 square meters (Zone D)

In this warehouse, we have around 2630 pallets in total In 2 main areas Zone A and Zone B, they have 24 racks which are named from A-Z respectively Per rack has 5 floors and has 24 pallet racks named from 1 to 24 In the reserve area, it has 10 racks, which are named TAM1-TAM10, and per rack does the same as the main area

Figure 1.15: Map in Warehouse 4

(Source: Internal Company)

In the operator group, there will be subgroups for each small warehouse, warehouse Team 4A, warehouse Team 4B and warehouse Team 4C

In the Clerk team will be responsible for receiving information, documents and exchanging for 1 or a few certain types of raw materials

Besides the main teams above, there is still one more team that is the supply chain analyst (Data Analyst)

The members of this team are quite small and the main duty is to control the supply chain operations of the warehouse and the flow of materials along the main supply chain

In addition, they control the data information and reports of the overall warehouse

CHAPTER 2: LITERATURE REVIEW 2.1 Definition of supply chain

A supply chain may contain all activities that transform raw materials to final products and deliver them to the customers A number of stages are involved in a supply chain, typically including suppliers, manufacturers, warehouses, distribution centers, retailers, and customers

Figure 2.1: Structure of a supply chain

(Source: Vitasek, 2010) (1) (p.9)

From Figure 2.1, the material flows go through the supply chain from suppliers to customers, while the information flows of orders and demands are in an opposite direction In today’s highly competitive and complex marketplace, a company with a more effective and efficient supply chain can have more advantage than its competitors The official definition given by the Council of Supply Chain Management Professionals (Vitasek, 2010) (1) is as follows:

“Supply chain management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and all logistics management activities Importantly, it also includes the coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers In essence, supply chain management integrates supply and demand management within and across companies Supply chain management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model It includes all the logistics management noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance and information technology.”

2.2 Warehouse in Supply Chain

2.2.1 What is Warehouse

“A warehouse should be viewed as a temporary place to store inventory and as a buffer in supply chains It serves, as a static unit – in the main – matching product availability to consumer demand and as such has a primary aim which is to facilitate the movement of goods from suppliers to customers, meeting demand in a timely and cost-effective manner.” (Van Den Berg, 2013) (2)

Primarily a warehouse should be a trans-shipment point where all goods received are sent as quickly, effectively and efficiently as possible The basic processes

of warehouse management remain the same over time We receive goods into the warehouse, we process orders, we replenish, we include some value-adding services and then we send the product

2.2.2 The role of the warehouse

Warehouse activities are directly linked to the organization and preservation of goods, so the role of the warehouse are:

- Ensure the continuity of the production and distribution of goods Helping businesses store all products and manage production quantities on the entire system

- Contributing to reducing production, transportation and distribution costs Thanks

to that, the warehouse can actively create shipments with economic scale in the production and distribution process, thereby reducing the average cost per unit Warehouses contribute to saving circulation costs through good management of goods loss, economical and efficient use of warehouse facilities

Support the process of providing customer service of businesses by ensuring that goods are delivered in terms of quantity, quality, delivery status, contributing to delivery

at the same time and place

2.2.3 The function of the warehouse

The function main of the warehouse are:

- Consolidation: When goods/materials are received from many different sources, the warehouse acting as a gathering point for such large shipments will have the advantage of scale when transported to the factory, market by means of transportation

- Coordination of goods: (Organization of business items) In order to well meet the order of many diverse items of the requester The warehouse is responsible for separating large shipments, coordinating and combining many types of goods into a complete order Make sure the goods are ready for the sale or production of the product

- Security and storage of goods: Ensure goods are intact in quantity and quality throughout the operation process, make the most of the warehouse area and capacity, take care of and preserve goods in the warehouse

2.3 Warehouse management

Warehouse management generally means the control and optimization of complex warehouse and distribution systems In addition to the elementary functionality of an inventory management like the management of quantities and storage locations, the control and planning of transport means according to this principle warehouse management also comprises methods and means to control the system status and to choose an operating and optimization strategy For this reason the system preferably has

to be called internal system for the control and optimization of material flows or system for the control and optimization of the (internal) material flow (Michael ten Hompel and Thorsten Schmidt, 2007) (3)

Warehouse management is the process of handling inventory and related tasks within

a warehouse Inventory management deals with managing stock for the whole business and forecasting business trends Inventory management and warehouse management are two facets of managing stock Inventory management provides a high-level view, while warehouse management focuses on the details of the movement of stock (Abby Jenkins, 2020) (4)

2.4 ABC Classify

2.4.1 ABC Method

An ABC analysis can assist in more effective inventory management of the different items (Luenendonk, 2016) (5) The whole aim is to enhance the ability to

manage massive and complicated data sets with ABC analysis This is broken down into three simple categories

- The products in category A are the most common in the warehouse This are the products that provide a large part of the sales profits of a business This good does not take a lot of money and is the smallest part of your stock, but

it brings the greatest income Usually, these products represent 10% of the inventory of the firm and represent about 80% of its income (Luenendonk, 2016) (5)

- The center of your goods are category B objects These goods account for 20% of your inventory and 15% of your sales Management sometimes overlooks these goods, but there is plenty of promise in these category B pieces This B products can be turned into cash making A products with a little investment and care (Luenendonk, 2016) (5)

- Items in category C do not make a lot of money on their own The organization will comfortably make a little profit from these goods This amounts to about 70% of a company's inventory, despite the fact that revenues account for just about 10% of total revenue These activities require the least amount of oversight (Luenendonk, 2016) (5)

2.4.2 Double ABC Method

Once the first ABC Analysis has been done, it is beneficial to do another analysis to get a bigger picture of which goods are the most frequently picked Having already done

an ABC analysis on Sales Revenue, the next step is to do another ABC analysis on picking frequency (Frandsen, 2014) (6) The picking frequency would be categorized in the ways in the list below

• A-products account for 80 % of the picking frequency

• B-products account for 15 % of the picking frequency

• C-products account for 5 % of the picking frequency

A Double ABC Analysis would then contain 9 different product classifications, 3 for the sales revenue criteria and 3 for the picking frequency which would give 9 different areas classification (Frandsen, 2014) (6):

Figure 2.2: Example of a Double ABC Analysis

(Source: Frandsen, 2014) (6) (p.22)

2.4.3 ABC Analysis

Figure 2.3: ABC Analysis: product value and frequency of sales

(Source: Gwynne Richards) (7) (p.83)

2.5 Vendor Management Inventory (VMI)

VMI is a process which facilitates efficient inventory management The aim of VMI

is to ensure availability and freshness at the point of sale with the lowest possible logistics costs and the lowest possible inventory level across the entire purchasing chain This is only possible if all parties speak the same language, share an understanding,

apply the same standards and methods and work together on a constructive basis In any case, commercial pressure in the consumer goods industry will force companies to further streamline their purchasing processes, in order to achieve a sustained increase in efficiency and profits (Wassim Sasso, 2020) (8)

VMI is an alternative to the traditional order-based replenishment practice, being a more efficient supply chain integration strategy and collaboration concept In a VMI relationship, the vendor is empowered to manage a customer’s inventory and replenish the goods at the customer’s site automatically under agreed conditions and rules

VMI gives the vendor both responsibility and authority to manage the entire replenishment process The change is fundamental by making the availability and inventory turnover the new primary measures of the vendor’s performance instead of delivery time and preciseness

Collaboration is core to the success of VMI Buyers and vendors must enter VMI with the objective of multi-disciplinary teams working together to discover the “win-win” solution to VMI The individuals involved should be collaborators and understand the needs and requirements of their trading partners

Figure 2.4: VMI chart work

(Source: Author composed)

Min stock/ max stock levels for VMI:

For products included in the VMI program, the next step is to determine Min/Max stock levels for products The Min/Max method was one of the earliest automated inventory replenishment methods used in enterprise planning The “Min” value

represents a stock level that triggers a reorder The “Max” value represents a new targeted stock level following the reorder

There are no universal formulas for setting the Min/Max levels in VMI systems It depends on sales, production, planning,…

Thus, vendor and buyer first agree on delivery frequency and then on general days

of supply (DOS) targets It is recommended to not set very low targets right away, instead, a 3-phase project with gradually lower stock levels is recommended in order to ensure product availability

Keep your Min/Max levels dynamic It is the responsibility of the VMI warehouse manager to perform ongoing reviews that would identify which products Min/Max levels need to be adjusted

2.6 Bullwhip phenomenon

The “Bullwhip Effect” is a new term (but not a new phenomenon since it has been debated in the literature for over four decades) coined by Lee, Padmanabhan and Whang (1997) (9) It refers to the scenario where the orders to the supplier tend to have larger fluctuations than sales to the buyer This distortion subsequently propagates upstream

in an amplified form Generally speaking, the further upstream the echelon, the more distorted and amplified is the waveform

Figure 2.5: Bullwhip effect illustrated

(Source: Lee, Padmanabhan and Whang) (9) (p.555)

CHAPTER 3: THE REALITY OF WAREHOUSE 4’S WORKING

PERFORMANCE 3.1 General link operation process

Figure 3.1: General link operation process

(Source: Internal Company)

The process is a loop, starting with the production department when receiving the order, they will make their own production plan The order and planning information will then be forwarded to the planning and purchasing departments

Material Planner will enter the data of Warehouse 4 to control whether the amount

of materials is enough to meet or not If the raw materials are enough, they will report

to Warehouse 4 and export the materials to the production department

If it is not enough, the materials planning department will create an additional plan for the preparation of materials to match the plan of the production department They will then consult with the purchasing department and pass on the material plan to them The purchasing department will be responsible for contacting and creating a contract with the supplier Everything must go according to plan

The Supplier will deliver materials to Warehouse 4 as planned Raw materials will

be stored at the warehouse and used for production The materials delivered to the warehouse must be compatible with the items listed in the Purchasing plan Errors in inventory and management of the warehouse will not be accepted by the production department and cause serious consequences

After the goods are finished, the production department will stock them in WH1 and WH2 We will take finished goods to our customers from those two warehouses

It is a general process but in reality, each department has to take on a lot of different specific jobs As for Warehouse 4, there will be 3 main processes that I will introduce right below

3.2 Specific business process in Warehouse 4

3.2.1 Import process

Figure 3.2: Import process chart

(Source: Internal Company)

In order to present more specific and vivid information, I will present on the table the process of importing materials at Warehouse 4

Due to weather reasons, the material delivery truck may arrive at the warehouse at irregular hours

Table 2.1: Input – Work instruction at Warehouse 4

Step Job Description Illustrating image

1

The related department (Im –Ex,

Purchasing,…) will inform details

information such as intern code,

quantity, quantity of packages,

waybill, arrival time to Warehouse

Clerk who will inform to WH

Operator

Figure 3.3: Goods Received Note

2

Supplier or transporter contact

with warehouse clerk when they

come to company for delivering

Warehouse Clerk check the

delivery documents and inform to

WH Operator who will check, count,

receive raw materials and sign

WH Operator moves raw

materials to temporary location where

waiting to inspect quantity and hard –

over delivery document to WH Clerk

Figure 3.4: Raw materials arrive at Warehouse 4

3

The TQ department relies on the

mail of the Warehouse Clerk to take

samples of raw materials and

compare with approved sample by

GPD, if:

- Qualified: TQ confirm to receipt

raw materials to warehouse clerk by

email

- Unqualified: TQ inform to hold,

don’t receipt raw materials by email

TQ will control this raw materials;

make the complaint documents to

exchange or return with supplier

These unqualified materials will be

taken to Zone C (Reserve area) and

into temporary locations In order for

the return and complaint procedures

to take place, until the supplier comes

and returns the perfect goods to us

Depending on the type of goods

and the distance of the supplier, the

items have different take-back times

On average, it takes about 1-2 weeks

to complete The warehouse 4 has a

reserve area to store for such cases

When the time is longer than

expected, our side will send an email

to urge the supplier

4

After receiving the information to

receipt raw material, WH Operator

check actual with packing list when

they arrive to warehouse

Each team of Operator, will be

responsible for each item of their own

Zone Zone B for example When the

items of Zone B arrive, the Operator

of Zone B will come and check the

quantity against the Goods receipt

note and packing list

Then there will be a month stamp

on the boxes and a note of the item

and the date of receipt

They will then deliver it to their

respective Zone then place it in the

vacant locators Then it is noted on

the Goods receipt note then note it on

the stock cards Finally give all the

documents back to the Clerks

Figure 3.7: Stock cards

5

WH Operator transfer packing

List to Warehouse Clerk

Warehouse Clerk receipt on

system by PO, item and location

follow actual

Document archives: goods

received note with sign, delivery

note, and packing list Figure 3.8: RM Tracking computer

(Source: Author composed)

3.2.2 Export process

Figure 3.9: Export process chart

(Source: Company internal information)

Just like the import of the warehouse, the export process will also be presented in the table

For more information, the company has a professional transportation team between Warehouse 4 and the production department at the head office

Since it is a raw material warehouse, Warehouse 4 Avery Dennison uses the FIFO method (First In – First Out) in exporting raw materials Raw materials that have been

in the warehouse for a long time must be removed from the warehouse first