The ineffective operating procedure at MORE UK in ho chi minh city

From problem finding mess, the author presents the symptoms of the company that is MORE UK looking for supplementary factories with better production capacity and clearer production plan

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

NGUYEN THI ANH THU

THE INEFFECTIVE OPERATING PROCEDURE

AT MORE UK IN HO CHI MINH CITY

MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – Year 2018

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

NGUYEN THI ANH THU

THE INEFFECTIVE OPERATING PROCEDURE

AT MORE UK IN HO CHI MINH CITY

MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: Dr Phan Thi Minh Thu

Ho Chi Minh City – Year 2018

SUPERVISOR’S REPORT ON THE FINAL THESIS SUBMITTED

FOR THE DEGREE OF MASTER of BUSINESS ADMINISTRATION

Final thesis title: The Ineffective Operating Procedure at More UK in Ho Chi Minh City

Student name: Nguyễn Thị Anh Thư

Supervisor name: Dr Phan Thị Minh Thư

1 General comments:

∙ Remarks on the student’s attitude:

∙ Remarks on the assignment’s academic quality:

2 Overall assessment:

□ Meet requirement for submitting;

□ Not meet requirement for submitting

Table of Contents

Executive Summary 1

Introduction 3

CHAPTER I: INDUSTRIAL OVERVIEW AND COMPANY BACKGROUND 4

1.1 Industrial Overview 4

1.2 Company Background 6

CHAPTER II: PROBLEM JUSTIFICATION 6

2.1 Problem finding process 6

2.2 Company’s Symptoms 7

2.3 Problem Identification 9

2.3.1 Problem mess 9

2.3.2 Potential Problem 14

2.3.2.1 Ineffective partnership management 14

2.3.2.2 Ineffective operating procedure 15

2.3.2.3 Unclear organizational structure 16

2.3.3 Identify the central potential problem 19

2.3.3.1 Central problem definition 19

2.3.3.3 Justify the importance of central problem 21

2.3.3.3.1 Potential Consequences 21

2.3.3.3.2 The problem importance in MORE UK 22

CHAPTER III: ALTERNATIVE SOLUTIONS 23

3.1 Cause validation 23

3.1.1 Affiliative leadership style 23

3.1.2 Lacking of job description 24

3.1.3 Lacking of training 25

3.1.4 Poor planning and scheduling 26

3.1.5 Language and Culture Barriers 26

3.2 Proposed solutions 27

3.2.1 Solution 1: Writing job descriptions 29

3.2.2 Solution 2: Creating an official integrated process planning and scheduling 29

3.2.3 Solution 3: On-the-Job Training 33

3.2.4 Solution 4: Diversity training 34

3.3 Alternative sets of solutions 34

3.4 Action plan 37

3.4.1 Objective 37

3.4.2 Timeline and Cost 37

Conclusion 44

Reference 45

Appendix 47

Appendix 1: The survey questions were contributed for choosing sets of solution 47

Appendix 2: Interview 48

Appendix 3: Related template which using in MORE UK operating procedure 56

LIST OF FIGURE

Figure 1: Value chain of Vietnam’s textile and apparel industry………5

Figure 2: Initial Cause – Effect Map……… 13

Figure 3: Updated Cause – Effect Map……….18

Figure 4: Solution Map……… 28

Figure 5: Sets of solution ……….35

Figure 6: The process of fabric development and importing process ……….40

Figure 7: The process of developing neck ring trims and importing trim ……… 40

Figure 8: The actual hangover date and the docket hangover date……….41

LIST OF TABLE Table 1: The amount of orders which transferred to supplementary factory………7

Table 2: The CMT Price in VC factory and supplementary factory……… 8

Table 3: The transferring expense to supplementary factories……… 9

Table 4: Proposed solution assigns the tasks for employee in Solution 2.1……… 31

Table 5: Proposed solution assigns the tasks for employee in Solution 2.2……… 32

Table 6: Survey result ………36

Table 7: Timeline and estimated cost for Solution 1 ……… 38

Table 8: Timeline for a bulk fabric ………39

Table 9: Timeline for a bulk trim ………40

Table 10: Timeline and estimated cost for Solution 3……… 42

DEFINITION OF TERMS

1 Merchandiser is a person who is the bridge between the industry and the buyer

Merchandiser have to look after every job like buying the raw material which is required to finish the product, making the garment, finishing the garment,

documentation, finally shipping

2 Pattern maker is a person who take responsible for taking fashion designers

ideas and creating a workable pattern that will ultimately become an article of clothing

3 Trims: The raw materials used in sewing room other than fabric, which materials

are directly attached to the fabric to make a garment are called trims For example: Threads, buttons, lining, Interlining, zippers, labels, etc

4 Docket is the production orders to the factory The docket is the order to your

factory that tells them exactly: What style to make, how many garments and the size breakdown What the hangover date is

5 PP sample (Pre-production sample) is essentially an example of what will be

produced during the manufacturing process The PP samples are garments that are produced in the facility that is planning to manufacture the bulk order

6 Lead time is the latency between the initiation and execution of a process For

example, the lead time between the placement of an order and delivery of bulk of button from a manufacturer may be from 10 days to 15 days

7 Hangover date is the delivery date of garment

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Executive Summary

The purpose of this paper is to point out the problem that exists in the operation of

MORE UK in Ho Chi Minh City and the author have proposed alternative solutions to solve problems that help to manage the company become more effective

In Chapter I, the author introduces MORE UK as well as the general situation of the garment industry in Vietnam According to the company size, MORE UK is a rep office which specializing in processing women's clothing and export to countries such as

England, Australia, America, Korea, as well as describe company products and

company structure

In Chapter II, the author analyzes the problem that MORE UK is facing From problem finding mess, the author presents the symptoms of the company that is MORE UK

looking for supplementary factories with better production capacity and clearer

production plans to take over orders because the main factory can not continue to handle orders because of many problems between related parties such as: Customers changing order detail information, low capacity of factory for production, Insufficient dealing FOB price between MORE UK and factory, Lacking of person who charge in controlling sample room and Lacking of merchandiser's role clarity internally MORE UK

Therefore, MORE UK noticed that with the VC production capacity will not complete the progress to export garments in time, hence, the Chief Rep make decision to find supplementary factories which leads to pay higher CMT price and other costs as

transferring cost and importing cost

By the interview method, the authors proposed some potential problems leads to the company symptom are Ineffective partnership management, Ineffective operating

procedure and unclear organizational structure, the central problem is ineffective

operating procedure However, to justify the existence of problem, the author analyzed the main problem in ineffective operation management, which led to issues related to Ineffective partnership management, Ineffective operating procedure and unclear

organizational structure These problems are linked together, however, the central

problem leading to the symptom is ineffective operating procedure officially

The authors also show the importance of central problems by pointing out the potential consequences which are increasing cost management, affecting firm performance and

customer satisfaction, which is unavoidable if the situation is not resolved At the same time, the author had pointed the level of important of these potential consequences when this problem occurs at MORE UK to justify the importance of this central problem

In Chapter III, the author is continuing to analysis the cause validation to find out what causes of core problem of MORE UK is the presence of unexpected supplementary

factories By interview and related theories, the author identified the potential causes of the problem are Affiliative leadership style, Lacking of job description, Lacking of

training, Poor planning and scheduling and Language and Culture Barriers Because the cause “Affiliative leadership style” is an objective cause, the author did not build a

solution for this cause but focused on solving the remaining causes By doing survey and analysis, the author choose the set of solution is the combination of Writing job

description, Each employee in the merchandiser team will take responsible to follow up one or two customer in whole process, from receiving purchasing orders to exporting the goods and On- the- job training to develop action plan to solve problem of MORE UK is ineffective operating procedure

The above is a executive summary of the thesis to give the reader a preliminary view of the content of the paper There is the full thesis "The ineffective operating procedure at MORE UK in HO CHI MINH CITY" from the author

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Introduction

In recent years, in the tendency of world integration, Vietnam has succeeded and developed the products in the country and has exported many kinds of goods such as petrolium, textiles and garments, agricultural products, footwear, software, etc to the world and brings great value for this country One of the main exporting goods is garments

MORE UK is a garment manufacturing company headquartered in Leeds, UK with the main line of clothing for women, which is the intermediary company between the

factory, supplier and customer The main purpose of this thesis is to explore the causes of appearance of unexpected supplementary factories at MORE UK since the beginning of

2017 It leads to the increasing of related expenses, for instance, CMT price, transferring expenses or garment quality The methodology is the combination between validated data and theories which collected through in-depth interview and company survey to explore the causes of problem The finding of the study revealed that ineffective operating

procedure is the main problem why it occuring the unexpected supplementary factories and leads to the thing is that MORE UK have to pay higher CMT price for factory From the analysis, the author point out the central problem is the ineffective operating

procedure in MORE UK from receiving purchasing order from customer to ship the garment back to customer is not effective The causes led to it happens are from are Affiliative leadership style, Lacking of job description, Lacking of training, Poor

planning and scheduling, Language and Culture Barriers To solve the problems, the author proposed the set of solution Writing job description, Each employee in the

merchandiser team will take responsible to follow up one or two customer in whole process, from receiving purchasing orders to exporting the goods and On- the- job

training to help MORE UK can decrease the expenses which happens if the situation continues

CHAPTER I: INDUSTRIAL OVERVIEW AND COMPANY BACKGROUND 1.1 Industrial Overview

The garment industry is a craft industry in Vietnam and it has a long history The

garment industry has experienced with rapid growth over the past years This industry is supplying clothes for the society, creating jobs for a large resource, and bringing a large source of foreign currency from exporting and contributing a source of revenue to the state budget

Following the report of Textile and Garment industry, this industry is one of Vietnam's key exporting sectors over the years The total export of garment industry has always been the leading exporters of Vietnam, behind petrolium In 2013, Vietnamese garment textile products are exported to more than 180 countries and territories with exporting turnover of USD 17.9 billion, taking 10.5% of GDP in the whole country

According to VITAS statistics in 2014, the percentage of exporting garment by CMT is still around 85%, FOB is only 13% and only 2% is exported by ODM

- CMT (Cut- Make - Trim) This is the simplest method of textile export and

bringing the lowest added value By cooperating in this method, the buyer

provides the whole of the input to the production company including trims,

transportation, design and specific requirements; Manufacturers only make

cutting, sewing and finishing products The company have exported by CMT only need to be able to produce and have a basic understanding of the design to

implement product samples Finished products will be collected and distributed by buyers

- OEM/FOB (Original Equipment Manufacturing/ Free on Board) This is “buying raw materials, selling products” For FOB orders, companies are responsible for importing raw materials and producing orders When producing this method, company will actively add input materials to produce products Accordingly, there are two forms of FOB: FOB level 1 - purchasing of materials from the supplier specified by the customer and FOB level 2 - the company takes responsible for finding materials

- ODM (Original Design Manufacturing) This method is including the designing stage and the production process from purchasing fabric, trims, cutting, sewing,

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finishing, packing and transportation Design capabilities represented a higher level of knowledge of the vendor, thus, it brings a much higher added value to the product ODM businesses create designs, complete products and sell them to buyers/customers who often the owners of major brands around the world

Due to its strong potential production with abundant labor resources, low labor cost and

it is prioritized to develope by government, Vietnam garment industry has attracted a large amount of foreign investment and facilitating production, contributing to improving product value According to statistics by the General Department of Customs, in the first

11 months of 2017, Vietnam garment industry exports reached $28.84 billion, an increase of 11% over the same period of 2016 This is a relatively high growth rate compared to 5.2% growth in the same period of 2016 In 2017, foreign investment in garment increased by 10% mainly from US, EU, Japan, Korea China, Russia, Hong Kong, Thailand, This contributes significantly to balance the trade balance of the economy In fact, in recent years, the tendency of shifting production orders from China

to Vietnam because low labor price is more competitive than China

According to Vietnam Textile and Apparel Association (VITAS), the main components

of its value chain include tight connection among raw material suppliers, domestic manufacturers, intermediaries and international customers, as shown in Figure below

Figure 1: Value chain of Vietnam’s textile and apparel industry

representative office is only to carry out trade promotion activities and market research

In the range of this paper, we only analysis the situation in Representative Office in Ho Chi Minh City, Viet Nam

CHAPTER II: PROBLEM JUSTIFICATION

2.1 Problem finding process

Being a representative office, the main activity of the office is to carry out market research and promote trading activities in the textile and garment industry in Vietnam With a source of customers which are cooperated directly by parent company in the UK, MORE UK Rep Office will search for factories, suppliers to carry out garment processing operations in Vietnam then export garment under the outsourcing factory’s name

At present, VC is one of the main outsourcing factory which product MORE UK orders

of blouse and trousers With a close and cooperative relationship for many years, VC usually offer reasonable CMT price and quality of products are accepted by customers

By observing all aspects of the company, the author finds that the appearance of another factory (HUY HUNG, CONG PHAT, PHU KHANG) to replace the main factory (VC)

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orders to catch up the hangover date which takes proportion is 35% -55% The author checked the order numbers from quarter I/2017 to quarter II/2018 and interviewed related staffs who are merchandiser, planning employee and the pattern makerworks with the factory to find out the cause of the problem The first symptom is the increasing costs including CMT prices, the cost of transporting the materials to the supplementary factory

2.2 Company’s Symptoms

According to finding unexpected supplementary factories, it leads to increase some

expenses, especially CMT price The VC factory's failure meets the hangover date lead to find an unexpected supplementary factory The consequence when occurs the replace

factories are the increasing of CMT prices and other costs that have affected the

profitability of orders since the beginning of 2017.These tables below show the detail

symptom

Q1/2017 Q2/2017 Q3/2017 Q4/2017 Q1/2018 Q2/2018

The amount of order in

Table 1: The amount of orders which transferred to supplementary factory

In table 1, it shows the amount of orders which transferred to supplementary factory

(PHU KHANG, HUY HUNG, CONG PHAT) Because VC factory can not produce the good of garments meet the hangover date, MORE (UK) have to transfer all raw materials

to replaced factory Based on the data in Table 1, the percentage of orders to be shipped

to other processing supplementary is significant, especially in the IV/2017 and I/2018 As this is the peak season of the apparel industry, the volume of garment exported to

countries in the UK and Australia is big, therefore the orders are full capacity in VC Due

to many objective and subjective causes that will be explain in Situation analysis, many orders can not put inline for production in VC factory that leads to MORE UK looking for supplementary factories with better production capacity and clearer production plans

to take over orders

Finding supplementary factory increases costs such as the CMT price at the new factory will be higher than the CMT price at the VC Generating operating expenses such as the cost of transporting the fabric from the VC factory to the new factory, the cost of

importing and export goods at the new factory At the same time, the cost of PP production samples increases as each factory needs to sew PP samples to know how to produce samples in bulk

pre-In the limit of this article, the author only mention to the average CMT Price for each blouse and trouser with MILLERS customer for instance

CMT Price in supplementary factory $1.7 $2.5

Table 2: The CMT Price in VC factory and supplementary factory

The cost of transporting goods by truck to the replacement plant depends on the distance between the plants and the number of fabrics and materials, if the bulk order, the

maneuvering 2-3 trucks for transportation high cost According to data from the

accounting department, the average costs incurred are listed in the table below

Table 3: The transferring expense to supplementary factories

In addition, the cost of making PP samples is doubling, depending on the requirements of customers, such as customer MILLERS, PP samples will be 3 pieces, a size 10 and 2 size

14 When VC factory receives orders from MORE UK, after receiving the bulk fabric for the production, the factory will sew 3 PP samples to know how to process the garment

and apply for production Depending on the type of blouse or trouser, the cost of these

styles will increase with its complexity

2.3 Problem Identification

2.3.1 Problem mess

After the symptom analysis, the increasing of CMT price and management expenses are the result of “unexpected supplementary factories” company symptom To have a deep understanding and find the potential problems, the author have conducted the interview with Ms Kim Dung - Merchandiser who working directly with the VC factory and have new findings To sum up, there are many causes for the symptom “unexpected supplementary factory” in MORE UK situation

- Time consuming for sample approval: According to Ms Dung, "It is very

time-consuming to wait for approval from customers for fabric and trims which making

by suppliers, which leads to MORE UK merchandisers sometimes fail to order controlling and late delivery to the factory " In this industry, every single details which are main fabric, buttons, zippers, eyelets, lining, labels, which are

approved by customers After receiving the purchasing order and the technical packs from customers, MORE UK has to find suitable suppliers in terms of price

and product quality that require the suppliers to provide trim samples The

supplier will take of few days to send sample to MORE UK then will send to customers to get approval Because almost of MORE UK customers are

Australian and UK branches, hence the delivery time by DHL, FEDEX or UPS will take a few days In addition, because of difference time zone and MILLERS customer is only give response in every Tuesday and Thursday, it takes long time, sometimes we lost a whole week to get approval for a button Then, if the

customer approves, the bulk will be imported to the factory in Vietnam

- Changing order detail information: This problem rarely happens but MILLERS

customer sometimes make some changes to the product, for example, changing information in the price ticket label while MORE UK had placed the all label orders and put it in finished garment So when customers change information it will take time and money to MORE (UK) order and produce the price tag from the beginning This is also one of the factors that affect to the time of production orders and leads to main factory can not have enough ability to finish it and need the support from supplementary factory

- Low capacity of factory for production: After the contract is executed with CMT

price for each order or multiple orders at the same time, MORE UK will cooperate

to main suppliers and import fabrics, trims from China or in local and transfer to

VC factory to start production Under the contract, VC have committed to ship garments to the customer on the hangover date However, in reality, "VC did not conduct cutting, sewing activities at the factory until the hangover date, the fabric was not spread out to make the fabric cutting, which led to the factory have not had garments to ship out They received so many orders at the same time but limited capacity, therefore they can not control all orders that have the same

hangover date”

- Insufficient dealing FOB price: Because MORE UK customers are in the

medium and low cost segment, the company always co-operate to factories who offer the lowest CMT price with the right quality, including VC factory From beginning 2017 to now, almost orders of MORE UK have been signed processing contract with VC factory, especially the blouse and trouser orders According to

- Insuffcient ordering fabric and trims process: Because the lead time of fabric

and trims are not the same, it’s hard for merchandisers control when it should import materials For example, the lead time of fabric is 60-70 days, trims such as buttons, zipper, lining, takes about 10-15 days for production which then sent to customers for inspection and approval for production” The period of time for all trims and fabric to be delivered to the factory takes a months, this is also one of the causes that the factory can not produce the hangover date In addition,

sometimes, the quality of the trims are not guaranteed or the supplier produces and sends the defective product to affect the progress of the factory because of cutting time, making and sewing is not synchronized with the time of the fabric and

materials imported, which caused the factory to be delayed in the production Merchandiser have to know the lead time of materials carefully, but they do not really effective to control and make sure all materials have to be in factory at the same time, which make sure the factory have all materials to start production

- Lacking of person who in charge of controlling sample room: At present,

MORE UK has only technical controls on the samples.The requirement for

specific samples has not been controlled, which only under the control of

merchandiser leads to the sample room does not know which sample is the

priority At the same time, the quality of samples was not checked closely, so many samples were sewn several times to meet the customer’s standard This time consumes in the production process, the factory can not catch up the hangover date in time

- Lacking of merchandiser’s role clarity: Merchandisers and planning staff have

similar job There are many internal issues to be considered Management system and work assignment are not clear, merchandiser department has not really

worked effectively The order receiving department and the planning department

do not have a clear working assignment that leads to across function and working

duplication Sometimes, merchandisers and planning staff have a similar work, for example, a merchandiser and a planning staff are working with one supplier for the same order, same styles Besides it, because of high workload with many customers, merchandiser team always in high pressure of working In addition, the pressure to work with the VC factory also makes the merchandiser department work really not effective

From the above, MORE UK noticed that with the VC production capacity will not

complete the progress to export garments in time, hence, the Chief Rep make decision to find supplementary factory such as Phu Khang, Huy Hung, Cong Phat to replace VC The happened things are the price of CMT will be higher than VC, and other expenses such as the cost of fabric and trims transporting from VC to the supplementary factory, the cost of importing and exporting, the custom expenses, etc This increases the

management cost MORE UK office in Vietnam in particular and affects to the profit of MORE UK in general

In average, an order takes a total of 3 – 3.5 months since MORE UK get the purchasing order from the customer to the hangover date Ideally, if there is no factory change,

MORE UK will guarantee delivery time and quality of goods with customer If the VC can’t complete the production planning, the things happen is transferring all fabric and trims to another factory and the requirement for completion in a shorter time than the average time, it will partly affect the quality of the product and increase the risk for MORE UK if the supplementary factory can not keep up with the process, in case if the order is difficult to take more long time to produce that orders

The whole picture will be demonstrated as Initial Cause - Effect Map below:

Low capacity of factory for

production

Insufficient dealing FOB price

Insufficient ordering fabric and

trims process

Lacking of person who in charge of controlling sample room

Ineffective merchandisers

Merchandiser and planning staff

have a similar job

Taking longer production time

Materials have not been at the factory at the same time

Unexpected supplementary factories

Higher CMT Price

ORGANIZATION SYMPTOM

Figure 2: Initial Cause – Effect Map

From the problem finding process and the initial cause effect map, MORE UK have many orders from MILLERS customer and focusing on finding the new supplementary factories when VC can not response the MORE UK demand because of many objective and subjective reasons Therefore, the consequence is the increasing of CMT and some expenses from the symptom at beginning is “unexpected supplementary factories In next session, the author will do related literature reviews that are as the theory framework linking with the “unexpected supplementary factories” symptom of the company Then the author will find out the core problem using data collected from depth interviews with the planning staff

2.3.2 Potential Problem

By doing the depth interview with a planning staff, a merchandiser and a pattern maker

to discover what are the potential problems lead to the existing symptom of MORE UK The author has collected related information and had done some researchs to support the interviewee’s points

2.3.2.1 Ineffective partnership management

Making an interview by exploring questions with Ms Georgina - planning staff who works directly with MILLERS customers, she said, "The problem is that it is very

difficult to synchronize the way partner works: the factory - the supplier - the customer, this is a closed circle process Waiting for the approval of customers and the lead time of goods of different fabric and trims are different totally, the synchronization and sending the request to the factory is difficult to control The question is how to manage all

partners and make it effectively In addition, MORE UK have to integrate all activities from sourcing raw materials (fabric and trims), sourcing factories for manufacturing and making, sewing in factory, sourcing courier to import samples from oversea and other management

The pressure on the chief of the representative office and the merchandiser is looking for cheap factories, cheap suppliers but still have to ensure the quality of stable goods to get profit from the orders The appendix 2 is the costing sheet of the WSTP13245M and the FOB price quoted by the customer This is the style which transferred from the VC

factory to the CONG PHAT factory with the CMT price is $ l.7, the main fabric price

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and trims are only $ 1.46, the FOB price is $ 5.4, which not including other management costs such as labor cost, miscellaneous expense, MORE UK does not seem to be getting profit from these orders To decrease the material expenses and the CMT price, MORE

UK has to find and negotiate to supplier and factory Hence the problem is that looking for the suitable partners that having average price and increase profits for the company

In addition, the selection of a production factory with production capacity to ensure compliance with the law and delivery on time with the CMT price must be reasonable Because MORE UK is small company and lack of the resources, it is facing the problems

of distance from Vietnam to customers in UK or Australia, long production lead time and quality control that force MORE UK have to control the partnership effectively

From all above, MORE UK have an unsuitable partner selection with company to

achieve the business target According Zhou D, Peng Y, Chen YS1 “the contractor often put too much focus on price, ignoring other important factors, leading to lost

opportunities of cooperating with better partners” In MORE UK, it likely to occur that the partner’s strategy and MORE UK’s strategy does not match about the price, quality and production ability, so it happens the appearance of supplementary factory and it is increase the overall costs, reduce the profits of company

Regarding of deadling FOB price with customer, because of low FOB, MORE UK have

to deal low CMT price with factory This is the conflict of interest, because during the cooperation, both sides just want to gain the best price, resulting in some conflicts of goals and needs In the long-term cooperation, the problem of asymmetric information exists in the agency relationship, which will increase the total cost of both sides, affecting its stability and competitiveness

2.3.2.2 Ineffective operating procedure

Following Gough J2, operating procedures are binding for a company, and that a

procedure in place means the company must follow it.Operating procedures are written, step-by-step instructions that describe how to perform a routine activity Employees should complete them in the exact same way every time so that the business can remain consistent, in addition, with the effective operating procedure, it helps company save time and money, holds the employees accountable because Without standard operating

procedures, employee evaluations become a matter of personal opinion, which is hardly fair to your employees and reducing the risk of employee risk

At MORE UK, when the author made the interview with Ms Ngoc Lan who is a member

of merchandiser team, she said “Almost merchandisers are overloaded because of too many orders from different customers but they have not really worked effectively

actually, it leads to high workload which causes employees to always be stressed and tired The process of placing fabrics and materials from receiving purchasing orders from customers until the transfer of all fabrics and trims to the factory is still limited because the lead time of fabrics and trims are different The relevant positions such as

merchandiser, pattern maker, QA/QC actually do not work effectively, who have not created an official process at the factory and ensure the quality of goods when shipped garment to customers At MORE UK, the process from receiving your order until the shipment is really shortcoming, there is no official procedure for the employee to follow There is the lacking of planning and scheduling when merchandiser and planning staff work to related parties The procedure of placing fabrics and trims not synchronized, sometimes, it can not be imported to factory at the same time that led to increasing

importing expenses and the factory can not put all materials in line in production because

of ineffective operating procedure

2.3.2.3 Unclear organizational structure

Nahm et al3 defined “Organizational structure is normally described as the way

responsibility and power are allocated, and work procedures are carried out among

organizational member” According to Rajan D4

“unclear and non-transparent organization structure and policy, unfair work shift and unhealthy interpersonal

relationship such as conflict, dispute at workplace will cause stress which will further affect their job performance.”

One of the main difficulties which MORE UK is facing is that the company's server system is slow and always has problems accessing, which makes the work process of the staff sometimes interrupted According to Ms Lan "Because the server system is located

in the UK, sometimes when the office of Vietnam has a problem, we have to spend a whole day that waiting for IT in the UK to solve the problem because of time zone’s difference It’s necessary when merchandiser gets important information on the CMT

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price on the system to do Costing sheet and send to factory, however, because the system

is faulty which causing the work to be delayed Another problem here is that the

organizational structure is not clearly actually, there is not a clear job description in every position Merchandiser and the planning staff sometimes have similar functions because

of lacking of role clarity In addition, MORE UK sample room sometimes makes the wrong pattern with customer requests and takes time to revise and fix it In addition, there is no one who is in charge of following samples in sample room for ensuring the quality of the sample as well

There is the updated cause-effect map below:

Lack of merchandiser’s role

clarity

Ineffective partnership management

POTENTIAL

samples

Changing order detail

Low capacity of factory for

production

Insufficient dealing FOB price

Insufficient placing fabric and

Unexpected supplementary factories

Poor server system

ORGANIZATION SYMPTOM

Ineffective operating procedure

Unclear organizational structure

Figure 3: Updated Cause – Effect Map

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2.3.3 Identify the central potential problem

Following the analysis above, there is considered three potential problems: ineffective partnership management, ineffective operating procedure and unclear organizational structure

Based on the literature and by using the quantitative method, the researcher conducts a survey to merchandiser team to get the result which is the central potential problem for the unexpected supplementary factory is ineffective operating procedure Almost

merchandisers agree that the way to manage all partnership is not effective but the core problem is MORE UK don’t have an effective and clear operating procedure because of ineffective operation management This is the central problem in this case, the

ineffectiveness of operation management makes the way to manage partnership is not efficient Or, we can say, the ineffective partner management is the consequence of the ineffective operation management

2.3.3.1 Central problem definition

Following the article from UK essay5 quoted “Operation management is concerned with the managing the resources that directly produce the organization’s service or products The resources usually consist of people, material, technology, and information but may

go wider than this These resources are brought together by a series of process so that they are utilised to deliver the primary service or product of the organization Thus, operation management is concerned with managing inputs through transformation

processes to deliver outputs” Operation management involves managing people,

technology, information and all other resources needed in the production of goods and services

“Effective operation management can therefore be defined as the effective planning, organizing and controlling of an organization’s resources and activities necessary to

provide the market with tangible goods and services” Johnston et al 6 argued It thus

applies to manufacturing industries, nonprofit organizations and service industries

According Onyett and Ford, the effectiveness is essential for the development of clear aims and for monitoring adherence by disciplines to operational Because the operation management is application of concepts, procedures and technologies to improve the

process of transformation, therefore the effectiveness of an organization depends on how effectively and efficiently operations are managed

2.3.3.2 Justify the existence of problem

To justify the existence of problem, the author analyses the existence of the ineffective partner management in MORE UK because ineffective operation management leads to the way to manage partnership There is the relationship between MORE UK, supplier, factory and customer specifically However, to prove the core problem is ineffective operation management from initial symptom is “unexpected supplementary factories”, in the deep interview to Ms Kim Dung, when the author ask how to outsource the factory

to make the processing orders She stated “The final decision to choose the factory which

is made by Chief Representative and almost trousers and blouse processing contracts are signed to VC factory Priority of MILLERS 'orders have put at VCs based on the close relationship between the two directors is not based on the factory's production capacity leading to the unexpected supplementary factory to keep following these orders that VC can not be completed and delivered on the hangover date” She also continue “In

addition, because this is a family-owned company particularly and relying on long term relationships to do the business, it is one of the reasons for the passivity in getting orders Although MORE UK in Viet Nam was established in 2014 but the mother company had

a long time to look into the Vietnamese apparel market VC is one of the long-term

cooperative factories with the parent company” In addition, MORE UK outsource

suitable material suppliers for ensuring the quality and cheap price and some material suppliers is nominated by MILLERS customer, it’s quite passive for MORE UK if the suppliers can not respond MILLERS’s requirement Ms Kim shared “In some cases, for instant, when we order the labels which approved by customer already, the China

supplier make goods and send labels to factory, but in the end of the day, they send an email to me and said they send wrong label, so we have to wait again, it takes time and the factory do not have labels to attach to garment” In the symptom part, the author has

shown the Table 1: The amount of orders which transferred to supplementary factory,

the proportion of the amount of order which transferred to supplementary factory to the amount of order in VC takes 35% in first quarter of 2017 and 40% in 4th quarter of 2017,

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it leads to increase the higher CMT price and transferring expenses when change the factory This is found that MORE UK do not have an effective partner management way

to reduce the management cost

“Moreover, because we do not have any standards or procedure to choose supplier or factory, only based on relationship, so choosing a partner for business is relatively

subjective At the same time, because there is no clear management process, employees

of MORE company often overlap work, the efficiency of work is not high So when working with partners, employees will depend on the situation and personal experience

to solve the problem, the company does not have a standard for employees to rely on and solve the problem” Lan said Without set standards, management will face a disciplinary challenge when poor work performance eventually does affect productivity

2.3.3.3 Justify the importance of central problem

To justify the importance of central problem is the ineffective operating procedure or the ineffective operation management, furthermore, the author show some potential

consequences based on theory There are some research shows the important of

ineffective operating procedure by evaluating how it affects the operation of the

company There are some potential consequences might be happened if this problem is still presented

2.3.3.3.1 Potential Consequences

+ Cost Management

According to Swamynathan R, Ravindran S 7 “The cost management issues in a firm usually arises in a number of functional areas like: Purchase & supply of raw materials, shop layout & manufacturing processes, design of the products manufactured, mode of transportation, warranty & return services, employee training methods, types of

information technologies used, strategic cost audit of the members and their capabilities and market forecast and research”

+ Firm performance

Murphy et al claimed that firm performance is a multidimensional concept, and three indicators can be production, finance or marketing, or consequences such as growth and profit The ineffective operation management affects to firm performance, which can lead to the decrease in profit When the organization is facing to ineffective operation management, employee particularly, they may be lost and do not know how to solve problems, how to deal with partners In this case, MORE UK have to pay higher CMT price because of changing factory in the end of the day, the gross profits are directly impacted decreasing In addition, the transferring cost is too high and money is otherwise mismanaged, a lower business income will be realized

+ Customer Satisfaction

Successful operations management is the key to ensuring customer satisfaction by

creating more value than the competition

Oliver RL8 defined that “customer satisfaction is defined as pleasurable fulfillment That

is, the consumer senses that consumption fulfills some need, desire, goal, or so forth and that this fulfillment is pleasurable Thus, satisfaction is the consumer's sense that

consumption provides outcomes against a standard of pleasure versus displeasure”

Another researcher Heskett J L, Sasser WE, Schlesinger LA9 claimed “Customer

satisfaction is understood as a consumer's perceived value received from a product or service provider during his/her transactional or on-going relationships

The main objective of in any organization remains to maximize on resources and

improve on customer satisfaction

2.3.3.3.2 The problem importance in MORE UK

The purpose of conducting in depth interview is confirmation the importance of 3

consequences The analysis method which used to collect data and information is depth interview with Ms Kim - merchandiser and Ms Thao - Accountant, it was conducted until no more information come out The finding from qualitative research was

summarized below:

(1) Cost Management: Important

+ Minimize the transferring cost from factory to factory

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+ Choose the right partners (factory and suppliers) to minimize the incurred

expenses

+ Negotiate reasonable CMT with factory and FOB with customer

(2) Firm performance: Important

+ Control the lead time of fabric and trims more effective

+ Work with partner more effective to reduce the appearance of supplementary factory

+ Make sure to deliver garment to customer on time, even MORE UK can deliver earlier than hangover date

(3) Customer Satisfaction: Extremely Important

+ Get more orders from customers if MORE UK guarantee about delivery time and garment quality

+ Easy to get approval for sampling in the process

+ Customer will introduce MORE UK to other fashion branch companies

CHAPTER III: ALTERNATIVE SOLUTIONS

company and knows the cause of the problem mentioned Specific causes shown in the company are as follows:

3.1.1 Affiliative leadership style

Leaders play a core role in leading their employee to fulfill company’s goals effectively, Fiaz M, Su Q, Ikram A, Saqib A11 Leadership has been routinely found to be an

important contributor to organizational success and competitive advantage, Bass BM 12The effective operation management is not always a result of how efficient the processes are, but also is a matter of leading people and involving them in achieving the common goals of the organization As Yukl & Van Fleet13 said, the leadership is viewed as a

process that includes influencing the task objectives and strategies of a group or

organization, influencing people in the organization to implement the strategies and achieve the objectives, influencing group maintenance and identification, and influencing the culture of the organization

Affiliative leadership style helps to create emotional relationships that bring a sense of belonging and belonging to each member in the company The strength of this leadership style is in keeping with the stressful situations However, using only this leadership style, the only reliance on praise and encouragement can lead to lack of orientation and not increase productivity

At MORE UK, the Chef of the representative office based on experience and

relationships with partners to solve the problem is one of the causes of this central

problem The boss is too soft, easy to change, and does not have a good idea about how

to make decision to choose a good factory or good suppliers, which make it difficult for employees to keep up with partners and to be very dependent on them Ms Kim agreed

“Our Boss is quite easy to deal with factory because the Director of MORE UK in head office and he have the close relationship with VC owner, therefore, if VC owner agree to our CMT price, we will place orders in VC even their capacity can not handle all orders There is a bias because MORE UK can find another factory to place orders with the same CMT price but better production capacity In addition, the way he manage the office is like family- style management, he’s a good boss, however, we do not have clear policy, every thing will be sorted out by experience

3.1.2 Lacking of job description

According to Schneider & Bowen, “job description is a written statement which provides information on all the essential duties and responsibilities assigned to one or more

individuals performing a job”, which required qualifications and reporting relationships

of a particular job

Job descriptions affect your employees' performance in a variety of ways, written

descriptions guide both your managers and their employee in their day-to-day work If the company don’t have currently provide job descriptions for each employee that

discuss with your executive team members how job descriptions can improve two-way communications and boost your organization's productivity.Everyone wants to be

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recognized by their employer for the work they do, especially if it's above and beyond their job description It happens often, whether you're asked to complete a task outside your scope of work

At MORE UK, sometimes because of too much work and no clear job assignment or job description, merchandisers and planning staff have a same job sometimes and they don’t remember is this job that they have done or not and blame responsibility to each other because there are lacking of job description Following Mr Vinh - pattern maker, he said

“We do not have the person who control samples, sometimes when Boss need that style’s sample but it takes time to find it even we lost it, then, we do not know who take

responsibility here, maybe quality controller or merchandisers or even me” In the other hand, because MORE UK don’t have a clear structure, so sometimes, people do not know who needs the information, who do the tasks and who is the person in charge of that tasks

3.1.3 Lacking of training

Following European Journal of Business and Management14, “Training is a systematic process to enhance employee’s skill, knowledge and competency, necessary to perform effectively on job Effective training and development programs aimed at improving the employees’ performance Training programs not only develops employees but also help

an organization to make best use of their humane resources in favour of gaining

competitive advantage”

Training in workplace is very important, if the manager has been ignoring the importance

of workplace training, the company could get risk, for example: creating unsafe working environment, employees feel not happy and unsatisfied, it might be lead to the reduce productivity and even increased turnover rate of employee

At MORE UK, employees are not trained to improve their knowledge to solve problems, everything is based on their own experience and depending on the situation they will discuss to with Chief of the Office Representative to come up with solutions New

employees are only handled from the predecessor in 1-2 days then the rest must be based

on experience to solve the problems The author is in the position of merchandiser but had a background in economics, the knowledge of the apparel industry is absolutely nothing, the author had no chance to take any training courses at the company, instead of

Self-studying from old employees to have knowledge and experience in the garment industry This made employees spend a lot of time when they started working at MORE

UK

3.1.4 Poor planning and scheduling

To maximize productivity, the company needs to set up an effective planning and

scheduling in production The effective planning is a complex process that covers a wide variety of activities to ensure that materials, equipment and human resources are

available when and where they are needed, it helps you know we are going to and how long we will take to get there With a good planning and after that scheduled and

executed accordingly employee productivity will increase significantly and reliability will increase This will result in faster product throughput and lower costs

In the interview with Ms.Nhu - merchandiser, MORE (UK) does not currently have a system for scheduling and planning purchasing orders efficiently Purchasing order is controlled by the merchandiser, but the focus of tracking all the orders of all customers is limited, so do not know which orders really need priority to arrange the factory in a reasonable way Merchandisers do not have weekly meetings to arrange production schedules for all orders, instead of just ordering their own customers In some cases, there is a coincidence of the hangover date of two orders from two different customers, the chief will assign the factory to produce the orders passively and urgently which can affect the quality of the final product

3.1.5 Language and Culture Barriers

According to Peltokorpi, V., & Clausen, L15 language and cultural differences create barriers to intercultural communication in foreign subsidiaries, language has either been overlooked or considered a subordinate part of cultural values in international business The cultural barriers are one of the most challenges for native employees, which have an overall negative and influence on intercultural internal communication The main barriers

to intercultural communication were the lack of a shared language and low motivation for foreign managers and Vietnamese employees to develop their English proficiency It leads to employees are quite shy and cautious to express their opinion/ideas The

consequences of culture and language barriers for Vietnamese employees were feelings