UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business NGUYEN THI THUY LATE PO DELIVERY CONFIRMATION IN GROUP INTELLECT POWER TECHNOLOGY LIMITED MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – 2018 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business NGUYEN THI THUY LATE PO DELIVERY CONFIRMATION IN GROUP INTELLECT POWER TECHNOLOGY LIMITED MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: TRAN HA MINH QUAN Ho Chi Minh City – 2018 Executive summary Recognizing that communication is more important than ever, organizations have invested in new information technologies and raised the profile of their communication professionals Despite these efforts, however, an array of factors continues to hinder effective communication in many companies Although this topic has received considerable attention in the literature, most of the articles are restricted by their limited approach concerned primarily with the effect of various methods Manufacturing is an integrated system covering everything from order receipt through to the product shipment (Hitomi 1991) It covers a wide range of activities in many functional areas including planning and design, purchasing, production, inventory, distribution, marketing and sales Realising the importance of such an approach, this study proposes a model to improve on-time response to customer through business process model integrating two common processes involved in manufacturing planning, control and execution cycle for MTO situations and a database for supporting various functional applications through basic and transaction data The proposed model was implemented through Group Intellect Power Technology Ltd The rest of the paper is organised as follows First, a review of the company background as well as current problems that company is facing Next, the proposed improvement solutions are presented, followed by a section on a systematic investigation of the on time response problems and implementation of the solutions to overcome the problems in Group Intellect Power Technology Ltd Finally, research findings and conclusions are drawn Acknowledgements I would especially like to show my gratefulness and special thanks to my supervisor – Dr Tran Ha Minh Quan for all his continuous supports, advices and instructions through the process of researching and writing this thesis Without his enthusiastic help, this thesis could not have been accomplished I also would like to show my gratitude to ISB lecturers, my colleagues at work, my classmates at ISB for their valuable knowledge and continuous support I also send my sincere thankfulness to my family for their support and encouragement throughout my years of study TABLE OF CONTENTS Executive summary Acknowledgements Company Background 3.1 Organization Structures of GIPT and FRIWO Problem Identification 4.1 Situation Analysis 4.2 Symptoms Materials related 10 Engineering related 13 Production control related 14 Others 15 4.3 Central Problem 16 PO handling flow 16 4.4 Initial cause effect map 19 4.5 Potential Root Cause 20 Communication within GIPT 20 Communication between GIP and FRIWO 21 4.6 Cause-effect map 22 Problem Solving 23 5.1 Improve communication within GIPT 23 Weekly report from GIPT purchasing and engineering team 23 Weekly production schedule meeting 23 Added KPI for percentage for POs without delivery dates 24 5.2 Improve communication between GIPT and FRIWO 24 To define standard leadtime 24 Weekly critical materials list 25 Improvement on POT 25 Action plan 28 Conclusion 29 Appendix I : In-Depth Interview Information 30 Reference 49 Company Background My company name is called GIPT, Group Intellect Power Technology Ltd With over two decades of experience in electronic product design and manufacturing, GIPT has become a professional provider of a wide range of power conversion products GIPT is also expertise in providing OEM and ODM electronics contract manufacturing services to global customers With headquarters located in Hong Kong, we have three manufacturing facilities located in Shenzhen and Dongguan, China as well as Ho Chi Minh City, Vietnam GIPT today has over 3,000 employees and over 43,000 square meters of production space in Asia Our fully competent manufacturing and R&D teams help us face the challenge of rapid market changes As a specialist in power conversion products, our R&D team is capable of developing a wide range of products including adaptors and switching power supplies with power ranging from to 3000 Watts, and transformers from low power to industrial grade Furthermore, our team has developed a patented transformer, which features small size but high energy We also produce a wide range of consumer products, including radio frequency, consumer electronic products, and electromechanical products Our missions are - Quality is the essence of our organization with the goal of Zero defect, and - Continuously pursuing the highest quality goals with the most cost effective and flexible solutions Our major customers come from all around the world, with about 50% coming from Europe, 30% coming from America and 20% from Asia FRIWO is our major customer located in Germany, who contributes to about 40% of the sales revenue in 2017 3.1 Organization Structures of GIPT and FRIWO Table 1: GIPT’s Organization Structure GIPT Marketing Department (MD) Factory Purchasing Department (PUR) Production Control (PC) Materials Control (MC) Production Engineer (PE) Table 2: Friwo’s Organization Structure FRIWO Order Planning Procurement Manager Project Manager Before March 2017, FRIWO’s has a local China procurement team to communicate with China suppliers, including GIPT After March 2017, the organization was changed to global commodity management, where one procurement manager will handle the same type(s) of components Some procurement managers are located in China, and some in Germany Problem Identification 4.1 Situation Analysis The business between GIPT and FRIWO started from year 2007 GIPT acts as a contract manufacturing company for FRIWO FRIWO owns the design of the products and provides Approved Vendor List (AVL) with specific prices, minimum order quantity, delivery leadtime and shipment terms GIPT needs to order components based on FRIWO’s AVLs, put the components together, perform testing, packing and ship the finished product according to FRIWO’s shipping instruction During the initial period, majority business came from a few products with stable demand FRIWO also provides 16 weeks rolling forecast to GIPT and updates weekly GIPT used to be able to provide the target shipment dates for the POs quickly before In the last few years, FRIWO starts to consolidate orders they placed to their Poland factory and another China’s contract manufacturing suppliers, then place to GIPT As a result, FRIWO starts to put more products with smaller order quantity and irregular demand at GIPT for production As of 2017, there are more than 100 active products produced in GIPT For every new products to be run in GIPT production, FRIWO will arrange engineer pilot run (EPR) to confirm the design has no problem before starting mass production From time to time, FRIWO engineer team will modify the design of the products also, and an engineering change notice (ECN) will be issued to GIPT After receiving the ECNs, GIPT also needs to perform EPR to confirm the design changes has no problem, then to update the bill of materials (BOM) and / or the production process FRIWO’s order planning team places POs to GIPT in any date of the week, and the order status are communicated between GIPT and FRIWO through a Sabrina: Customer I will say customer Unless the product is not qualified yet, we will be able to provide PO shipment date within 48 hours as committed Nguyen Thi Thuy: What actions you suggest to reduce the time required to confirm PO shipment date? Sabrina: Customer should check the PO terms and conditions, including price, payment and delivery terms etc before placing PO to us 37 In-Depth Interview #3 –CODE C  Date : 13-Nov-2017  Time : 11:00 am  Interviewer : Nguyen Thi Thuy  Interviewee : Katy Chen  Position : Production Control Leader  Age : 40  Working experience : 18 Nguyen Thi Thuy: Could you please introduce yourself ? Katy: My name is Katy, 40 years old I worked in GIPT 10 years ago I am the production control leader in GIPT Nguyen Thi Thuy: Could you describe your daily job? Do you communicate with both company’s internal departments and external customer? Katy: My team provides the planning for all the production lines in Hossack My team get the order delivery date information from our K3 system, then check the materials status from the material control team to see when materials will arrive factory After production, we will inform to our Marketing Team and our ImportExport Team to arrange the shipment Nguyen Thi Thuy: How often you send out status updates / report to your counter parts? Katy: We will work with other teams and provide delivery schedule information to fill up the weekly PO Tracker Internally, we have daily meeting to review the production plan for the day and report problems to other departments Nguyen Thi Thuy: Do you have clear target dates to complete your job? Katy: Yes, we have clear targets from the K3 system 38 Nguyen Thi Thuy: If you cannot finish your job on time, you aware if it will impact on the PO shipment date or not? Katy: Our target is to have materials arrive factory just before production start, such that we can minimize the inventory carrying cost Therefore materials are usually the bottle neck to enable production starts If we cannot meet the production schedule, then the PO shipment date will be impact directly Nguyen Thi Thuy: If you can complete your job ahead of schedule, you or your company receive any reward? On the other hand, if you missed your schedule, what will be the consequence? Katy: We will have no reward for completing our job ahead of schedule In order to have a more stable capacity demand, we will pull-in some production orders during low season Nguyen Thi Thuy: If some targets are unrealistic, will you discuss with other teams to get an updated agreement on setting the targets? Katy: Yes, we will discuss with marketing department and feedback the situation to customer We notice many orders from customer does not meet the standard component leadtime Therefore we need to wait for component delivery schedule from materials control team to plan for production If we not have this material availability information, we will not be able to fill in the delivery schedule in PO Tracker Nguyen Thi Thuy: Could you suggest the main people or department who created situation that PO shipment date cannot be answer quickly? Katy: Leadtime is the main reason making us unable to answer the PO shipment date There are also other problems like PO is placed, but the product has not been approved for production Nguyen Thi Thuy: What actions you suggest to reduce the time required to confirm PO shipment date? 39 Katy: Customer should place POs with enough leadtime to make sure materials can be available and match with their demand and our Purchasing department should update material shipment schedule and place order to supplier as soon as possible 40 In-Depth Interview #4 –CODE D  Date : 13-Nov-2017  Time : 1:00 Pm  Interviewer : Nguyen Thi Thuy  Interviewee : Kevin Vo  Position : Engineering Manager  Age : 35  Working experience : 15 Nguyen Thi Thuy: Hi, Could you please introduce yourself ? Kevin: My name is Kevin, I’m GIPT Engineering Manager and I have been working here for 10 years Nguyen Thi Thuy: quite a long time to understand all techincal issues in GIPT, right? Kevin: I still need to learn more as many new models will be run in short period of time Nguyen Thi Thuy: Could you describe your daily job? Do you communicate with both company’s internal departments and external customer? Kevin: yes, I am in charge of Engineering and Technical matters My team needs to support production side in order to production smooth We work with other teams internally and with customer engineering team in case any modification request released by customer Nguyen Thi Thuy: How often you send out status updates / report to your counter parts? 41 Kevin: We have daily meeting with Planning team and Production team, during meeting we will announce and update status if any problem happens Nguyen Thi Thuy: means you team will not send out any report to customer? Kevin: if we have any new projects, we will send out report to customer’s engineering team only to update the status of the projects and let them know if any difficulties Nguyen Thi Thuy: Do you have clear target dates to complete your job? Kevin: Yes, we have clear targets on our internal system Nguyen Thi Thuy: If you cannot finish your job on time, you aware if it will impact on the PO shipment date or not? Kevin: My team purposes are to keep machines,tooling and features are in good condition to use, and if any problem during production, we need to have quick actions to solve the problem However, for new models which we need to run samples and let customer approve for mass production, it will be sometimes a problem as material availabilty Customers asked for short lead time and in short period of time we need to prepare all toolings to support production and the test after finishing production This will impact on shipment date of purchasing order Nguyen Thi Thuy: If you can complete your job ahead of schedule, you or your company receive any reward? On the other hand, if you missed your schedule, what will be the consequence? Kevin: We will have no reward for completing our job Nguyen Thi Thuy: If some targets are unrealistic, will you discuss with other teams to get an updated agreement on setting the targets? 42 Kevin: Yes, we will discuss with marketing department and feedback the situation to customer On the other hand, we will also inform customer’s engineering team and let them to decide the problem related to Engineering issue Nguyen Thi Thuy: Could you suggest the main people or department who created situation that PO shipment date cannot be answer quickly? Kevin: Leadtime is the main reason and missing doccument from customer If any update on Engineering or any modification of the products, customers need to send out ECN together with releated doccument such as Modification Request Form, Engineering part, product design,etc And I think there are also other problems like the product has not been approved for production Nguyen Thi Thuy: What actions you suggest to reduce the time required to confirm PO shipment date? Kevin: Customer should shorten the time for testing the samples which we send them for qualification, sometimes it takes nearly months to close the project 43 Data collected after the initial interview Findings Question A Could you please introduce about yourself (your name, Ms Mareike Schapmann B C D Ms Sabrina Hung Ms Katy Chen Mr Kevin Vo age, working experience and Friwo Order Sales assistant of GIPT Production position that you are Planning Officer UT Planning Leader Received PO from Making plan for share a little bit about Received PO from customer and production in your daily job as well Sales Dept and place interface for both accordance with as your duty? What PO to GIPT internal and material you think about weekly update about external for PO availability and your current job? Are PO requirement shipment customer wanted confirmation date working in)? Could you please you interested in this GIPT Engineering Manager Support for the production by keeping machine/tooling stable and run for new projects 44 job? How often you send updates on internal out status updates / system once having report to your counter information from parts? GIPT pass information about the PO to production team and if no problem then no update daily meeting and weekly updates on PO Tracker all requirement Do you have clear target dates to complete your job? send out PO Tracker daily meeting all requirement feedback within 48 shown on shown on hours since internal system, internal system, so based on so based on system to carry system to carry out out on every Wednesday customer placed PO If you cannot finish probably not, for to make sure all your job on time, urgent POs will be information was you aware if it will pulled-in materials passed to both yes, especially materials are the yes, especially materials and tooling/feature 45 impact on the PO by using airfreight shipment date or not? purnishment but schedule, you or any reward? On the other hand, if you need to explain to no reward or customers the no reward or no reward or purnishment reason why the purnishment purnishment feedback to feedback to Marketing team Marketing team to discuss with to discuss with customer customer feedback cannot be missed your schedule, revealed within 48 what will be the hours consequence? are bottle neck no reward or your job ahead of bottle neck external parties If you can complete your company receive internal and If some targets are no, we will update unrealistic, will you exact the wanted discuss with other date which our ask customer to teams to get an customer asked for place order with updated agreement on on PO Tracker and if agreed leadtime setting the targets? unrealistic to achieve we can find another 46 way such as airfreight or hotbuy Could you suggest the main people or department who created situation that PO shipment date cannot be answer GIPT is able to confirm shipment date after week PO Material Customer Material leadtime and Leadtime missing docs placed from Friwo quickly? What actions you suggest to reduce the time required to confirm PO shipment date? 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ECONOMICS HO CHI MINH CITY International School of Business NGUYEN THI THUY LATE PO DELIVERY CONFIRMATION IN GROUP INTELLECT POWER TECHNOLOGY LIMITED MASTER OF BUSINESS ADMINISTRATION... developing a wide range of products including adaptors and switching power supplies with power ranging from to 3000 Watts, and transformers from low power to industrial grade Furthermore, our team... report including following attributes:  Finished good product part number  Problem description (engineering or materials issues)  Target completion date The problem including missing AVL information,