Reducing damaged products in sato vietnam solutions co , ltd

LIST OF TABLES Table 1: The number of late shipment from Jan, 2016 to Jun, 2017 Table 2: The factors impact to the late delivery Table 3: Calculation of Product SAM Table 4: The avera

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Dang Thi Binh

REDUCING DAMAGED PRODUCTS

IN SATO VIETNAM SOLUTIONS CO., LTD

MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – Year 2017

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Dang Thi Binh

REDUCING DAMAGED PRODUCTS

IN SATO VIETNAM SOLUTIONS CO., LTD

MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: Dr PHAN THI MINH THU

Ho Chi Minh City – Aug, 2017

TABLE OF CONTENT

ACKNOWLEDGEMENT 1

EXECUTIVE SUMMARY 2

CHAPTER 1: COMPANY INTRODUCTION 3

1.1 General Information about Sato Vietnam Solutions CO., LTD 3

1.2 Company background 3

1.3 Organization chart 4

1.4 Product definition 5

CHAPTER 2: PROBLEM IDENTIFICATION 6

2.1 Problem context 6

2.2 Symptoms 7

2.3 Identify problems 10

2.3.1 The first problem: Production’s capacity issue 10

2.3.2 The second problem: Mistake on delivery 12

2.3.3 The third problem: Damaged goods 14

2.3.4 The third problem: Lack of forecast 15

2.3.5 The forth problem: Forecasting from customer 16

2.3.6 The fifth problem: Mistake on sample approval 17

2.4 Initial Cause – effect map 18

CHAPTER 3: SOLUTIONS AND ACTION PLAN 20

CHAPTER 4: REFERENCES 37

CHAPTER 5: SUPPORTING INFORMATION 38

5.1 MEETING MINUTE 38

5.2 Transcript 1 39

5.3 Transcript 2 41

5.4 Transcript 3 44

5.5 The performance appraisal 49

5.6 The exception of adding working effectiveness and internal – external communication into KPI form 53

5.7 Flow chart for factory 53

LIST OF TABLES

Table 1: The number of late shipment from Jan, 2016 to Jun, 2017

Table 2: The factors impact to the late delivery

Table 3: Calculation of Product (SAM)

Table 4: The average number of orders from Hirich customers

Table 5: Overload order number from SVS from May to July 2017

Table 6: Number of damaged goods from May to July 2017

Table 7: Forecasting

Table 8: Order listing

Table 9: Stock agreement for retail customers

Table 10: Plan to make stock agreement for retail customers

Table 11: Lead time table

Table 12: Plan to rebuilt the flow charge for factory

Table 13: Training schedule for salesman and label development member

Table 14: Plan to build a good training program for staffs

Table 15: The survey results of adding more condition into KPI format

Table 16: Plan for employee performance review

ACKNOWLEDGEMENT

I am grateful to my supervisors, Dr Phan Thi Minh Thu, whose expertise, understanding,

generous guidance and support made it possible for me to work on a topic that was of great interest to me It was my pleasure working with them

I am hugely indebted to Managers of Sato Vietnam Solutions CO., LTD, Mr Nobuhiro

Matsumura, Mr Mitsuhiro Inaba, Ms Quyen and Board of Managers at Hirich factory for

finding out time to response to my questions for being ever so kind to show interest in my

research and for giving their precious and kind advice regarding to my topic

I would like to express my gratitude to co-workers at Sato Vietnam Solutions CO., LTD for being so generous to reply to my questionnaires Words can never be enough to thank your all kindness

EXECUTIVE SUMMARY

This project is conducted at Sato Vietnam Solutions CO., LTD The purpose of this project is figuring out the reasons for increasing late delivery from 25.0% for first haft of 2016 to over 41.5% for second haft of 2016 and 39.5% for first haft 2017, the increasing in customers

complains according to the report from Operations department

The late delivery is the serious problem because it leads to customer satisfaction and company development between literatures informed reviews and the collected data from Sato Vietnam Solutions CO., LTD during deep interviews with managers, mini-survey on staffs and reports from Label development division of Operations department, and sales admin In a further

investigation, the root causes of late delivery are figured out and corresponding solutions are given to improve the situation

There are four steps of alternative solutions proposed as following:

(1) Production plan

(2) Make the flow chart and public on each division in factory

(3) Providing training program to production workers , label development member (4) Developing a proper performance plan

CHAPTER 1: COMPANY INTRODUCTION

1.1 General Information about Sato Vietnam Solutions CO., LTD

Sato Vietnam Solutions CO., LTD (SVS) is a 100% foreign invested by Sato Corporation which has offices in 26 countries and a business presence of over 90 countries It was established in

2012 With the mission that is to create new value for our customers through products and

services of superior quality, and to contribute towards a better and more sustainable world And the vision of SVS is to aim to be the leader and most trusted company in the Auto-ID

solutions industry worldwide, exceeding customer expectations in an ever-changing world As digital advances and automation affect the world around Sato, we continually seek new ways to stay ahead of the game Integrating Auto-ID technology with revolutionary materials, we bridge the last inch of the last mile challenges for our customers with solutions that ensure accuracy and sustainability, save labor and resources, offer reassurance and build emotional connections

1.2 Company background

Company name: SATO VIETNAM SOLUTIONS CO., LTD

Established: 10 September 2012

Capital: VND 6,284,400,000

Sales revenue: 61,282,694,189VND (as of 29 March 2017)

Head office: 6th Floor, Saigon Finance Center Building, 9th Dinh Tien Hoang St., Ho Chi Minh City

Tel.: (+84) (28) 3910 1350/1351

Fax: (+84) (28) 3910 1352

Representative Office: Ha Noi (Established: 24 April 2015)

13th Floor, TTC Tower, 19 Duy Tan Street, Cau Giay District, Hanoi

Tel.: (+84) 243 795 7946

Total number of members (as of October 2017): 35 people (HCMC: 25 people; HN: 10 people) Departments: Sales, Operations, Accounting, Technical, HR-GA, Software Development

Main products: Consumable, barcode printer, barcode solutions, RFID solutions

General Manager

Ho Chi Minh Head Office

Ops Leader

Label division Shipping division

WH division

HR Manager

HR leader

HR staff

Chief Accountant

General Acountant

Accountant

Ha Noi Representative Office

Admin

Sales

CS

SD

1.4 Product definition

Because of the name and group of products at Sato Vietnam Solutions are quite general

Therefore, the writer gives the some definition as below to make the readers understand correctly about the type of product

Label: is a piece of paper or other material that gives you informative matters about the object

such as a brand, mark, tag, origin of products, quantity or description of product It is attached to products, carton boxes or anywhere that you want to describe any information of your products Based on the using purpose, the label will be in different sizes, designs, types or colors

Consumable: Goods which not returned after issuance from stores or factories, become

incorporated into other goods and lose their identity, or cannot be used for their intended purpose without extinguishing or transforming their substance1

transfer and deliver goods to customers After that we will request them to report the action plan for new improvement

Obviously, a clear and deeper understanding the issues which were reported during the June meeting is essential for SVS to success in its business Based on the importance of issue, the author decided to conduct a research within the company to collect more information and clarify the real problem

2.2 Symptoms

At the first steps, the writer approach the person in charge of shipping division to collected the data from operations base on real situation and calculated the rate of late delivery for each

period The detail is following

Table 1: The number of late shipment from Jan, 2016 to Jun, 2017

Criteria Jan to Jun 2016 Jul to Dec 2016 Jan to Jun

2017

No of shipments 2,776 3,122 3,896

No of shipments delayed 694 1,296 1,537

Rate of shipment delayed 25.0% 41.5% 39.5%

From the above table, SVS business is going well by years The number of shipment is

increasing quickly from Jan 2016 to Jun 2017 The number of shipments of the second half of

2016 increased 11% compared with the first half and this number kept increasing up to 20% in first half of 2017 In the parallel, the delayed shipments also increase significantly and the highest rate is in the second half of 2016 – 41.5% from the total of shipments in this period

CHAPTER 2: PROBLEM IDENTIFICATION

2.1 Problem context

From the meeting at the end of June 2017 between General Director, General Manager,

Managers and all heads of department, there were some issues about operations and management which were raised Firstly, the person in charge of label development division of operations department report that they received a lot of complain from sales team about delivery issues and this keep increasing for years To be specific, the number of late shipment was increasing

dramactically for the first six months of 2017 in comparision to the number at the same period in

2016 This situation caused a lot of problem for company including the increasing of

transportation fee, labor cost, production cost and the decreasing of customer trust The head of Operations depart also presented her opinion about the lack of forecast, the increasing number of damaged goods and delivery issue with unclear procedure from related departments She

believes that this is the main reasons of high rate of late delivery Besides that, the mistake come from sample approval process also effected to the delivery process of Sato Vietnam Solutions to customers

Secondly, the manager of sales department expressed his worry about changing of suppliers from customers in consumable business in the near future as this sensitive business requested stress lead time, especially retailers and garment companies He said that his team almost received complaint from customer every day; they needed to take more time to visit customers to solve the problem In addition, the complaints which received from customers increase definitely They suggest that company should have some actions to improve operations and production as well as forwarder to make sure that goods are delivered to customers in time as their request Thirdly, the head of Operations department proposed that the company should improve the internal procedure firstly by building the forecast monthly and all information related to product

as well as shipment must be provided exactly to operations department right after receiving the confirmed purchase orders from customers Besides that, we also need to set up the meeting with our partner – Hirich corporations to find out the cause of problem, and then cooperate with them

to find the way to improve this In the other hand, one of roots of late delivery is forwarder issue

We also need to review the paper procedure at warehouse person in charge and check how they

According to the general manager, the late delivery issue is very popular in trading companies which are in barcode – auto ID industry However, the percentage is about 10% as maximum With the given numbers, the rate of late delivery at SVS is too high compare with industry’s rate Next, from the first symptoms, the writer discuss with operations team to figure out the number based on the internal record of operations department to make clear the root of problem as below table:

Table 2: The factors impact to the late delivery

1 INTERNAL

1.1 Production issues

(Production's capacity issues) 24.0%

1.2 Mistake on delivery: wrong goods,

wrong receiver's information

(Forwarders, operations, sales)

Jan to Jun 2016 Jul to Dec 2016 Jan to Jun 2017

The number of late shipment from Jan, 2016 to Jun, 2017

No of shipments

No of shipmentsdelayed

decide forecast number)

2 EXTERNAL

2.1 Customer (forecasting) 5.0%

2.2 Mistake on sample approval 10.0%

(Source: From Operations Department)

Lack of production’s capacity is the biggest factors which impacted to the late delivery in SVS now It accounts for 24% from all factors besides of mistake on delivery, damaged goods and lack of forecast Then, damaged goods – 22.7%, mistake on delivery – 22% and lack of forecast – 16.3% are the next factors which strongly impact to late delivery issue Those factors are come from internal of the company In the other hand, the external factors such as forecasting from customers and mistakes on sample approval also lead to late delivery but the percentage of those are not much Both of them count only 15% from total

Here is the chart of the factors impacted to the late delivery in Sato Vietnam Solutions

2.3 Identify problems

2.3.1 The first problem: Production’s capacity issue

According to Scott Shpak, the definition in production capacity, production capacity deals with output and how a manufacturer balances raw materials, machinery, labor and storage to match demand for its products Decisions about production capacity can be strategic and operational, long- and short term Factors affecting production capacity interrelate to such a level that a change to one potentially affects all2

Production capacity is the maximum quantity of products that factory can produce with available resources such as raw materials, labor, assets, etc… The production capacity normally will be calculated by day or month, and then compared back with the production history to know

whether it increase or decrease This is one of the most important tasks that the firm needs to understand and consider for future development

Once the production capacity running stable, it means that they manage raw materials, labor, time, storage space as well as forecast well

In the addition, Hirich’s business is going very fast in the year of 2015, then the factory is

overload while the orders keep increasing from customer including SVS In 2016, they decided

to build a new factory in district 9 which is four times bigger compared with old factory

Nevertheless, running new factory, there are a lot of workers quit the job due to long distance from their home to new factory and Hirich need to recruit new workers That’s the reason why they have to face with labor issues Moreover, there are a lot of damaged product occurred in their production such as: wrong direction of label rolls, color issues, material issues, wrong printing position, damaged packing, oversize and glue quality issue as table 5 of article 2.2.3 of this chapter

To calculate the production capacity of Sato’s consumable factory, the writer based on the main factors such as number of machines, operators, shift and line output After that, compare back to the actual order that the factory need to prepare for customers including SVS

Calculation of factory capacity (in hours):

Total number of machines = 35

Shift hours per day = 24 hours

So total factory capacity (in hours) = 35*24 hours = 840 hours

Table 3: Calculation of Product (SAM)

Shift

No of Operator

(A)

Working hours

(B)

Line output (production)

(C)

Product (Standard Minutes) (D)

Total minutes attended (E=A*B*60)

Total Minute produced (F=C*D)

Line Efficiency (%) (F/E*100) Shift 1

Calculation of production capacity (in pieces):

Production capacity per day (in met):

= ((Capacity in hours*60/product SAM)* line efficiency)*3 shifts = ((840*60/2)*42%)*3 = 31,500 met

Table 4: The average number of orders from Hirich customers

Orders from other customers 60% 491,400

Table 5: Overload order number from SVS from May to July 2017

(Met)

Actual orders (Met)

2.3.2 The second problem: Mistake on delivery

Delivery is a process of transferring goods from the source place to predefined location

following the conclusion of contract which both sides agreed and ensured the shipment shall be arranged in time with agreed conditions.3

Nowadays, all of firms have to face with massive competition in the market The prices, quality

of goods or services are not only main factor to decide the success but also the delivery service

In many cases, the delivery is the final key to lead customer make buy decision in fastest way.4

According to Mr Matsumura – General Manager, “the mistake on delivery happens most with customers who are far from our company Such as: customers in the North of Vietnam or other provinces which are far from the central Normally, the main routes of forwarders are from city

to city For example: from Ho Chi Minh City to Ha Noi, Can Tho, Hue, Da Nang,… some big city only After arriving to the main station at central of cities, forwarders will re-arrange the each shipment as assigned addresses for delivery During many steps of delivery, it caused the mistakes.”

As lawyer Pham Tuan Anh,5 there are some of important factors related to goods delivery as below:

Time of delivery: this element is the most important in a sales or purchase contract Whole

procedure from order processing to sample approval until goods producing are effected to the time of delivery All those things need to be calculated carefully right after receiving order from customers to make sure that the company can meet customer’s requirement

As Mr Mitsuhiro Inaba – Head of Representative Office in Hanoi mentioned: “Our products are distributed in over country while we have just only one main factory in Ho Chi Minh City It is must to have more than one factory to supply goods to customers which is in the north, for example In fact, being a representative of Hanoi office, I am looking for a good factory for label products in the North to serve customer there” Next, the writer approaches Sales Manager in Ho Chi Minh City – Mr Kozai to ask his ideas about this matter He said: “due to only one main factory so it takes longer for them to produce goods because they need to take care all orders from us besides their own customers It leads to overload in production For our side, the time to get approval on sample and drawing before mass production is quite long because we need to take many steps then but this case is not so many I am asking sales staff to shorten the lead time for sample and drawing preparation and try to work and cooperate with customer closely to get final approval faster”

Place of delivery: is a place to process the delivering and receiving activities This decides how

much money that the company has to pay and the responsibility for each shipment

Regarding to Mr Kozai – Sales Manager, “because of goods transferring to very far distance that’s why it is easy to meet the mistakes or damages Sometimes, because there are many small shipments to many customers per day so the forwarders arrange those shipments to wrong

places For example, the shipment A should be delivered to Hanoi and shipment B should be delivered to Bac Ninh but they arrange shipment B to Hanoi and shipment A to Bac Ninh When this issue happened, it takes much time to re-arrange those to right places and some time it caused the delay for production at customer site due to no consumable” To explain more about this issue, MrHoriguchi - Customer Service Manager gave his ideas: “because of human

mistakes, sales admins provide wrong information to operations team Then, the parcels go to wrong places as well When customers received goods and checked, they found that the received

goods is wrong compared with their orders, then they complaint or report to us And, we need to ask operations team to help us to re-arrange it In general, sometimes we could not control 100% those problems but we are step by step to improve this.”

From the real case of SVS, the root of late delivery issue are mostly came from the wrong

delivery place and this matter is mainly related to sales and operations departments whom

directly involved to the delivery process of all shipment at SVS Besides that, one of the reasons

is because of not good products so production team need to take more time so re-produce and it leads to late delivery In fact, this problem cannot be solved a hundred percent However, from the view of sales team, Mr Kozai – sales manager is going to have a meeting with his team to discuss how to avoid or minimize these kinds of issues from future orders, especially sales admins – they need to make the action plan for this matter and this is just improved internally and this will be not remind from next chapter About the view of operations team, the writer will give some action plan for the improvement and it will be keep going on chapter solutions and action plan at chapter 3

2.3.3 The third problem: Damaged goods

As Dunham Dean mentioned, in any sales order, we expect to buy something that meet our requirement as the most important right And, if the seller provided goods which are not exactly

as described, the goods will be considered as damaged goods or faulty goods6.Shedden Juliet also gave some explanation related to the above term that the goods that we buy must be in good condition with good quality Means that the quality of goods is met the requirement of buyer It

is not allowed to be damaged Unless the faulty caused by the buyer7

Based on actual situation, the writer collected the data which defined when operations

department receive claim from customers and sales team about quality issue of consumable products After that, the writer analyses the cause of each problem and make a list of damaged goods as below:

Table 5: Number of damaged goods from May to July 2017

Wrong direction (the printed direction of paper

is wrong It may be back - up.)

Color issue (printed color is blur or choose

wrong color pantone)

Material issue (wrong material, using old

material)

Wrong printing position (the printed areas are

deflected compared with the drawing)

Packing issue (not meet standard) 1 2 1 4

Over size (compare with drawing) 2 0 0 2

Glue is not good quality (standard thickness of

glue is 15µm – 20µm)

(Source: From Operations Department)

The above table shown that most of issues are not so hard to control from the production side However, it is easy for the workers to make the mistake as those are sensitive mistakes

Therefore, to reduce and improve it, we build up a clear plan So the writer decided to focus on solving this issue in following parts of report

2.3.4 The third problem: Lack of forecast

Forecasting is a decision-making tool used by many businesses to help in budgeting, planning, and estimating future growth In the simplest terms, forecasting is the attempt to predict future outcomes based on past events and management insight There are two kind of forecast:

Judgments forecast and quantitative forecast8 To have a perfect forecast, we need to combine both types of forecast above to support the straight and mitigate the weakness

When the writer approach some researches of other author, the writer understand that most of senior managers avoid making formal scenario planning However, they have to spend a lot of

time to make various forecasting activities as the most important managerial roles and adopt with wide range of approaches9

Regarding to the interview with Mr Matsumura – General Manager about how he makes a forecast to the factory for material preparation: “Firstly, we based on order history which recorded daily by operations team It shows all information of an order from customer information to product information From this report, we can know the average ordered quantity per month Secondly, we are managers who involve directly to sales activities so we can know which customers or which project need to be supported by factory such as urgent orders, huge quantity in limited time or even how long for a customer to place a repeat order for a specific item From those two of things, we can predict the number we may got from customers in next few months However, we also cannot control 100% as our customers are expanding now and a manager cannot remember or control everything without support from their staff Besides that, when I make forecast, I just be confident to apply this method for our VIP or loyal customers only I cannot forecast for all customers as I am not sure if they change their supplier in some days or not because our products are easy to replace by other suppliers.”

From the interview with other related members, they said that even they have a method to make

a forecast However, the forecast is many cases just made by guesting; they don’t have any number or evidence to refer or predict the future orders In the other hand, they requested customers to submit it in advance for material preparation because as a view of customer factories, their demand may be increased or decreased suddenly based on their production status However, the number from customer’s forecast is untrusted so it leads to the increasing of dead stock due to stock over demand

To make complete the process and help the manager give more trusted number when forecasting, the writer would like to take it as a part of solutions and action plan next chapter

2.3.5 The forth problem: Forecasting from customer

According to the theory of forecasting from the part 2.4.4 as above which explain how important forecast is In SVS case, it is not easy to have a forecast from customers According to Ms Vy – sales admin: “there are some customers submit the forecast to SVS and some do not” and Sales

PIC are requested to get the forecast from customers but it seems work not so well It maybe because of type of business or the forecast is not a habit of the firm Even though SVS expects to have forecast for every type of business but it not work in the real As Mr Horiguchi – CS Manger said: “there are less than 30% of customers in the South submitted forecast with trusted numbers, 20% having forecast but the number is not so close with actual order, the others are not.”

In another hand, Mr Inaba – Head of Representative Office in Hanoi gave some ideas to improve this: “I asked my sales staff to follow their order status and remind them when the ordering time coming and ask them if their orders are lack of any items.” And “I think that we also need to manage order circle for each customers for each item with quantity Sales admin will follow it If she sees that the time coming but SVS still not receive repeat orders, she will ask Sales PIC to remind or visit customers to get new PO.”

Those ideas from Board of Managers may make some changing in positive ways in short term During action, they may have some new ideas to improve the forecast issue more effectively Although SVS tries to improve this kind of problem but it cannot be change in some days They need time to change the habit of working for sales members as well as the managers and make them to understand deeply about the meaning of forecast so they can corporate with each other well Because this is related much to the external side so the writer just can get some ideas of improvement from board of managers only and this will not be remind at following parts of this paper

2.3.6 The fifth problem: Mistake on sample approval

This issue is related to customer relationship between SVS and external – customers

Customer relationship management or CRM is a concept of managing the interactions between the company and its customers The objectives of customer relationship management are

increasing profitability, income and customer satisfaction To organize the CRM department, many organizations use tools such as technologies and procedures to maintain a good

relationship with its customers and contribute to the increasing sales Therefore, CRM is an issue

of strategic business and process rather than a technical one.A customer complaint is an

expression of dissatisfaction about the provided services or delivered products. 10 It is a report from a customer providing documentation that the product or service of company does not fit to the demand of customers

SVS does not have customer service management department to contact with customers and record feedback on quality of services and products However, sales department and customer service department corperate together to work with customers directly for whole process from the first contact, submitting quotation, working on sample approval before mass production until receiving goods They are also the one to receive and solve the complaint from customers as a window person between internal and customers Although the company determines that,

understanding its clients whether a good comment or a complaint is a crucial way to enhance and develop its business However, somehow, the relationship is not so closed enough so far

The number of damaged products which are caused by mistake from sample approval is

increasing definitely It is an evidence for issue of communication with customers and creating a good relationship the customers Obviously, it will affect negatively to sales and profit of SVS It rises up a demand of improving service quality and customer relationship However, it is

necessary to take longer time to research and built up the relationship with customer Therefore, the writer will not solve this problem at following parts of this paper

2.4 Initial Cause – effect map

After figuring out the real problem, the writer continues to review more studies and researches before in order to make a list of potential causes And, the chosen problems of mistake on

delivery, damaged products and lack of forecast lead to inefficiency production process In the next chapters will summary the literature reviews results Then, the writer matches potential causes with six tentative problems which provided by related members in Sato Vietnam

Solutions and divided them into two groups including internal (production capacity issue,

mistake on delivery, damaged products, lack of forecast) and external (forecasting from

customer, mistake on sample approval), then makes an Initial Causes and Effect chart as

following

CHAPTER 3: SOLUTIONS AND ACTION PLAN

The above symptoms are important problems and strongly affect to the late delivery at SVS To solve these, SVS needs more time and much money for a lot of improvement Therefore, the writer decides to choose the most serious problems which leads to inefficiency production

process problem as a core problem and goes in deep in this chapter of report

The production process is the method that businesses make products and services A productive process is quite a fluid process It will be analyzed and tweaked as needed continually to make improvements in cost, speed and quality. 11

There are three main types of production process are used as below:

Job Production – Batch Production – Flow Production

Job production is a unique process in the fact that the job or project is considered to be a single

operation, which requires the complete attention of the operative before he or she passes on to the next job

Batch production is continually processed through each machine step before moving on to the

next operation This method is sometimes referred to as 'intermittent' or 'staged' production as different job types are held as work-in-progress between the various stages of production

Flow production is a continuous process of parts and sub – assemblies passing on from one stage

to another until completion To make sure that the production line can work smoothly each operation must be of standard lengths and there should be no movements or leakages from the line

Given that, the benefits that a production process brings back are:

- The products are matched with customers’ requirement, often from as early as the design stage

- Each steps of a procedure are simple and clear, straightforward and flexible

- Flexible in using or operating machine and manage materials

- Manage production time efficiently and control every things related to production easily

- Ease of using just-in-time techniques to eliminate waste and minimize costs

- Help staff and worker understanding about process as well as knowledge of products

In SVS case, the above processes are used inefficiency in its production When the writer visits factory and checks the production process but it is not available at production working place However, it is attached on ISO profile for their internal management only That’s why the

workers as well as production staff have no clear guideline in paper for their reference when necessary

In conclusion, by giving a lot of evident on previous parts, the inefficiency production process at SVS leads to mistake on delivery, damaged products and lack of forecast and those problems are come from operations members

Basing on actual needs and the literature reviews as above which argued the benefit from

production process, the writer sum up the ideas and concludes in the following solutions for the real problem of Sato Vietnam Solutions CO., LTD with four steps as below:

(1) Rearrange production plan for production team

(2) Make the flow chart and public on each division in factory

(3) Providing training program to production workers , label development member (4) Developing a proper performance plan

Step 1: Rearrange production plan for production team

To have an efficient production process and maximize productivity, any company needs a perfect production plan However, a perfect production plan is very complex and it can cover variety activities from forecast, inventory, human resources as well as equipment or standardized time

In other words, a production plan will help the firm know where they are going and how long it will take them to get there In this part, the writer will not mention about human resource and equipment because both of them are over control for SVS in short term To involve into both of them, SVS need to build a plan as well as budget in advance Therefore, the writer will

concentrate on forecasting, inventory and standardized time. 12

Lack of forecast

Inefficiency production process

Mistake on delivery

Damaged products Internal

Operations

Operations

Late

Delivery

Four steps of solutions:

1 Production plan: LP PIC

2 Flow chart: Production

3 Training program: Production workers

4 Performance plan: Production workers

Improve quality of products

 Forecast

To plan effectively, SVS needs to estimate potential sales with some reliability In the addition, most of businesses don't have firm numbers on future sales However, SVS can forecast sales based on historical information, market trends, pending projects and/or established orders Then, set up the minimum stock for common items or materials and those stock quantities are ensured that they are available at warehouse and ready to ship out to customers when needed The

forecast will be made monthly by operations member and approved by general manager follow the company process

Reserved q’ty (order received)

Minimum stock q’ty

Available stock

Forecast quantity

customers to submit forecast for preparing materials In case of receiving forecast from

customers, sales manager need to work with label development member to check the reliability

of forecast based on order history and real situation of each customer before sending to

production team

Table 8: Order listing

(Note: the numbers on the table are for example only)

is very risky if SVS keep stock of completed products for any customers However, SVS also find the way to improve this difficulty and minimize the stress of production From the meeting with board of managers of Sato Vietnam Solutions, the managers gave some advices about inventory issues so that factory can make a better preparation Firstly, SVS divides customers into three types of customers including retail customers, distributors and manufacturing

customers For retail customers, this type of customer is always in high risk level as they are easy

to change supplier but they are potential customers Secondly, label development member will make the stock agreement with different level of stock quantity and negotiate with customers to sign that agreement This is a commitment between SVS and customers for long term

cooperation and this method will be apply most to retail customers and manufacturing customers For customer, they can get goods whenever they need For SVS, SVS will serve customer better

in safe condition And, because all retail customers are Japanese companies, they are used to this habit so they are easy to agree with SVS For manufacturing customers and distributors, SVS

keep working and cooperating with them closely to follow up the order status and try to get trusted forecast from them as much as possible

Table 9: Stock agreement for retail customers

(Note: the numbers on the table are for example only)

Type of goods

Order quantity per month (average)

Stock quantity (use for 10 days)

Time to produce + delivery

Time to stock (maximum)

Y20199020225 10,000 sheets 3,500 sheets 7 working days 3 months

Table 10: Plan to make stock agreement for retail customers

1 Review all customer and divide into 3

1 Items are always in urgent needs

2 Items are ordered monthly

3 Items have long lead time materials

LP member Production manager 10 days

3 Negotiate and sign with customers

about stock agreement

Sales PIC Sales manager 30 days