Operation Management Report Finish

2008

Ho Chi Minh International University

Operations Management Report

Group

East Asia Co., Ltd Song Than Industrial Zone

Lê Minh Hải

BA060089

Tôn Thất Huệ Trí

BA060113

Vũ Thành Công

BA060052

Hồ Tấn Hùng

BA060059

Trần Thị Hồng Sáng

BA060102

Đỗ Phạm Ngọc Tú

BA060110

Table of Contents A. PART ONE: INTRODUCTION ......................................................................... 1 I.

Background ................................................................................................. 1

II.

Achievement ................................................................................................ 1

B.

PART II: DESIGN OPERATIONS ...................................................................... 2

III. Management quality .................................................................................... 2 IV. Process strategy........................................................................................... 4 1.

General ...................................................................................................... 4

2.

Detail......................................................................................................... 4

V. Location..................................................................................................... 11 Position ......................................................................................................... 11 Factors That Affect Location Decisions ........................................................... 12 VI. Layout strategy .......................................................................................... 13 VII. Human resource and job design................................................................. 14 C. PART III: MANAGEMENT OPERATIONS ......................................................... 16 VIII. Inventory management and Supply Chain Management .............................. 16 IX. Material requirement planning and ERP ...................................................... 17 X.

Short-term scheduling ............................................................................... 17

XI. Forecasting ................................................................................................ 17 D. CONCLUSION ............................................................................................ 17 E.

REFERENCES ............................................................................................. 18

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Operations Management Report

Operations Management Report EAST ASIA CO., LTD TRIP

A. I.

PART ONE: INTRODUCTION BACKGROUND

East Asia Co., Ltd was established in late of 1998 and officially went into operation in the beginning of 1999. The company specializes in manufacturing and trading galvanized iron, pre-painted galvanized iron, and Zinc/Aluminum coated iron used in the industry and civil construction. The main factory is located at Street 5, Song Than Industrial Park – Binh Duong province with an area of over 30,000m2. East Asia Co., Ltd has developed a distribution system throughout the country and to some other East Asian Countries… With the professional, energetic employees including over 40 graduated and post-graduated qualified engineers and technicians; the number of official mechanic who have been trained in middle-ranking technical school, is over 150 people.

II.

ACHIEVEMENT

Possessing the human resources, modern technique and a trusted service, East Asia Co., Ltd is, day by day, developing and becoming one of the top leading steel companies in Vietnam. East Asia was acknowledged by many customers both in domestic and oversea. East Asia co., Ltd is one of 500 largest private companies in Viet Nam. The presence of the Color Coating line marked a step of the new improvement of East Asia that meet the need going higher and higher, and more and more various of the current market.

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Operations Management Report Beside the strategies of investing for technology, developing manufacturing and trading, asserting the competitive position by the quality and the cost price, East Asia has been building an action plan to improve the brand name of East Asia through broadcasting, marketing, participating in yearly industrial fairs and projects related to our major. Thus, East Asia can research the market, and catch the predilection of consumers. With the modern technologies, East Asia guarantees to supply quality products in wide range, suitable for many applications both in civil and industrial construction. East Asia has provided 2 advanced continuous galvanizing lines and 1 color coating line. The capacity of the 3 lines gains over 100,000 tons of product/year and is ISO 9001: 2000 qualified.

B.

PART II: DESIGN OPERATIONS

III.

MANAGEMENT QUALITY

There are many tasks to perform managing quality such as process strategy, location strategies, layout strategies, human resources, supply- chain management, scheduling, and maintenance. Each strategy as we mention above will be more detail in other specific part in this report. In this part of the case we mention about quality in East Asia company; we just focus on International Quality Standard. As we know, there are tow ISO 9000 and 14000, in East Asia company, they just apply ISO 9000. Now how we can understand what ISO 9000 is and how East Asia can apply it. What is ISO 9000? A set of quality standards developed by the international standards Organization (ISO) such as Quality management system, Management responsibility, Resource management, Product realization, Measurement, analysis and improvement. In East Asia how they can apply ISO 9000 It is very hard to go detail in this part, we just mention some main idea about ISO in Ton Dong A.

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Operations Management Report Quality management system East Asia established and maintained a quality manual that includes the control of document and control of record. Management responsibility includes management commitment, customer focus, quality policy,

quality

objectives,

quality

management

system

planning,

management

representative, internal communication. For example, in management commitment, the top management of East Asia company provide evidence of its commitment to the development and implementation of the quality management system, or in internal communication, the top management of this company ensured that that appropriate communication processes are established within the organization and that communication takes place regarding the effectiveness of the quality management system. Resource management includes provision of resources, human resources infrastructure, work environment. For example, in work environment part, East Asia determined and managed the work environment needed to be achieve conformity to product requirements Product realization includes planning of product realization, determination of requirements related to the product, Design and development planning Purchasing Production and service provision For example, in purchasing part, the company ensured that purchased product conforms to specified purchase requirements. East Asia can supply all of requirement about product from specific customer, that’s why they become to be stronger over time. Measurement, analysis and improvement include monitoring and measurement Control of nonconforming product, analysis of data and improvement. For example, in analysis of data part, East Asia determined, collected and analyzed appropriate data to demonstrate the suitability and effectiveness of the quality management system and to evaluate where continual improvement of the effectiveness of the quality management system can be made. Here all contents to answer the question how East Asia company can apply ISO 9000, but there another way to us to understand easily by and answer some question when we look at their operation as follow: Effective operation The rule set to make company better Following the fixed rules in this company What is their innovation?

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Operations Management Report At the end, the manger of East Asia said that their innovation is ISO14000 in the near future.

IV.

PROCESS STRATEGY 1.

GENERAL

The production line is WETLUX technology. The factory has prepared to build a new production line with NOF technology. Productivity: 5000-6000 ton/month (the ratio is 80% Zinc plated Steel plate, 50% Color plated steel plate. Recently, the ratio is changed to 50% plated Steel plate and 50% Color plated steel plate. And last month, the ratio of production is that the percentage of color plated steel plate is more that one of zinc plated steel plate. ) Effective output is 30% or 40% of design capacity. Instruction includes 4 independent production lines. Maybe the product of this production line becomes raw material for another one (internal traffic)

2.

DETAIL A) GALVANIZED IRON There are 8 sections in Zinc plated Steel plate production line

Step 1: Checking input Materials: From production schedule, checking the specification of materials and define quantity. Weighing the Black Sheet bundle, writing and recording the data such as: standard weight, actual weight, suttle, specification and mode into the quality logbook of Black Sheet. Checking the quality: Round check: specification, place of origin Unpacking the bag, checking inside materials. To some bundles which are not enough equality such as : distorted, exothermic, iron-mould ….they will be carried out without producing. In the production process, workers often monitor the quality of Black Sheet (level of fertile, exothermic, rupture…) then record in the quality logbook of Black Sheet.

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Operations Management Report Step 2: Direct feed material continuously: If the materials are enough quality to produce, they are inflow exhaust system and hood up with the first bundle to provide continuously for production line Step 3: Deoiling and Pickling:

Checking input Materials

Before Steel plates was entering to plate, they had had to through the deoling and pickling section, this section has 4 parts : Using chemicals to deoil : First, the Sheet band must go through the cistern concentration from 23 to 40, the temperature is 600C – 800C here with steam, then next to two flushing chambers. Those flushing chambers is including : pump high –

Direct feed material continuously

Remove lubricant or rust

Deoiling and Pickling

pressure team system and small detergent from the cistern. It atomizes two faces of black sheet bundle; use the crane to cleanse deoiling parts. It continues going through the hot water flushing chamber (600C – 800C)

Heating the sheet

Plating ZINC

to reclean some dirty elements on Sheet. After that, sheets are gone into HCl bath with 10% - 20% strength. This is

Cooling

checked twice per turn ad record in the quality logbook The last part is a water bath to make HCl out, and Sheets go through the

Passivation surface

hot water flushing chamber again. Then they are dried by a couple of rubber crane before come to next section.

Package and storage

Step 4: Heating the sheet before coming Pan: This process makes the temperature of black sheet bundles go to 2000C.

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Operations Management Report Step 5: The process of plating ZINC:

Input materials

With the temperature of 1800C – 2000C, sheets is entered soldering flux chamber (Ammonium Chloride, antimony, aluminum) to flush, increase the brightness and mechanical behavior of materials… Then, sheets are gone through zinc chamber, second to radiator grouping to finish this process. Step 6: The process of Cooling:

Deoiling and Pickling

The air duct system and booster perform this process. But after cooling sheets with air duct system, the temperature of sheets still are high. So they is bathed with a water chamber, here the temperature is slow down 600C-800C. And the water chamber makes sheets clear more. Step 7: Surface Passivation:

Plating Zinc

Here, sheets are dipped in chromium chamber with the 3 – 7 strength and the temperature is 550C-600C. Sheets are overlapped by a protective coating chromium against to pickling. Then they are dried by a couple of rubber crane before come to next section. Step 8: Packaging and Inventory: Steel plates are categorized with the level of A, B, C of management department. After making steel plates become bundles, they are

Packing and inventory

weighed, labeled and move to inventory. Some bundles which are not quality enough, are taken out and recorded in the document.

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Operations Management Report B)

PRE-PAINTED GALVANIZED IRON Step 1: Input area

Testing raw meterial

Input meterial

Link tole

Step 2: Cleanse area Remove lubriant or passivation surface

Chemical storage leater

Step 3: Coating ,baking, cooling Chemical coater dry

Grainy coater machine

Finish coater machine

Cool

Step 4: Output area Physical testing

Package & storage

Color plated steel plate product process divided into 4 areas by its function Step 1: Input area Raw sheets feed consecutive into manufacturing process, choose good material to manufacture the best quality product Black sheet bundle or zinc plated sheet plate which was be warm up and checked carefully, will be choose to be material for Color plated steel plate product. Material feed into input area by a couple of rubber crane and carry on carriage To prepare for feeding raw sheets tin into manufacturing , material bring in drum to decompress raw sheets by carriage After bringing in drum to decompress raw sheets, hydraulic system decompress tang , brace the core of raw sheets and move them into the center of route. Some devices is such as junctors, sheets reserves place by Korea technology to ensure route will be consecutive from input to output Step 2: Cleanse area

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Operations Management Report Cleaning oil, dust on sheets to make higher adhesive strength of coat on tin interface.

Input materials

Cleanse area includes one clear oil bath with an injection blow molding system; inject hot Alkali solution into both 2 surface of tin. Then sheets were reamed by crane system ( imported from Korea) to clean oil and dust which adhere on tin interface ( Notes: if tin material still have oil or dust on its surface, so coat will be

Cleanse area

appear easy….) oil in the clear oil bath will be recycle and check carefully before exhaust outside. After clear oil bath are 2 hot and cold flushing water bath, injection system, squeeze crane. To clear chemical drains from clear oil bath and squeeze tin conveyor careful when it exit from clear baths Step 3: Coating ,baking, cooling

Coating, baking, cooling

Coating, baking and cooling area or center area are some main parts of tin plate route in order to output products Center area include 3 lacquering machine (imported from Korea) after lacquering machines are drying ovens which laboratory heat could be more than 600oC a. Lacquering machine: 2 coat axis technology, coating 2 surfaces in parallel. The axes are driven by AC vector motor which purpose is to cover coat interface by a chromate solution cover. This solution is a

good protection from

corrosion and it is also play a role like a bonding layer to adhesive other coats b. After lacquering machines are baking ovens; baking oven with the firing system import from German, using LGP to bake the chemical surface and help it adhere on base metal

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Operations Management Report c. After baking oven is air-blast system with high capacity to cool tin

surface before feed into other lacquering

Coating, baking, cooling

machines d. Rough lacquering machine: 2 coat axis technology, coating 2 surfaces in parallel. The axes are driven by AC vector to adjust the thickness of lacquer film by driving engine, infinitely variable control and modern load cell

Output area

system. Lacquer using here is lacquer base chromate, import from well know trade mark like Becker, KCC, Duracoat - help to protect from corrosion it is also play a role like a bonding layer to adhere between tin surface and lacquer coat e. After coating a rough lacquer, tin bring in baking process by using baking ovens in order to the lacquer cell stick together and produce a strong adhesive lacquer. High temperature baking oven system use LPG fuel with the burner from German , Italia, help to avoid produce carbon black which will affect the quality of product. f.

After baking, sheets will be cooled by high capacity airblast system and water spray system.

g. Fine lacquering machine: lacquer used here is lacquer base Polyester - import from well know trade mart like Becker,

KCC,

lacquering

in

and

Duracoat….

order

to

Using

produce

a

three glossy

-

axial

surface,

uniformity on whole surface (using to high quality domestic

product

such

as

washing

machine'

shell,

refrigerator’s shell….), coat 2 surface in parallel which The axis are driven by AC vector motor which purpose to adjust lacquer film density until 25mm easily by driving

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Operations Management Report engine, infinitely variable control and modern load cell system. Lacquer film

cover

uniformly on whole surface, help tin increase color fastness from severe weather condition in our country and protect from Corrosion, commit to coastal area and industry zone… h. After coating the last lacquer film, sheets will bring in the baking process by using baking ovens in order to the lacquer cell stick together and produce a strong adhesive lacquer. High temperature baking oven system use LPG fuel with the burner from German, Italia, help to avoid produce exhaust fume into natural. Heating system from German, Italia burned almost fuel in order to avoid produce carbon black. i.

After baking, sheets will be cooled by high capacity air-blast system and water spray system.

j.

After exit from the last water spray system, sheets cooled by high-pressure fan system and became final product.

Step 4: Output area a) Main function test product quality, divide raw sheets into parts like customer's order form. b) After sheets type exit from center area, it is driven by AC vector motor into looper in order to the central part run stably and consecutively in scroll product process. c) After testing by eye on both 2 surface, sheets is printed meter number and logo like customer requirement and scroll by ripe. d)

After testing enough meter quantity sheets is cut, carry on carriage, packaged and moved to finished products store.

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Operations Management Report

V.

LOCATION

POSITION

East Asia Co., Ltd was established in late of 1998 and officially went into operation in the beginning of 1999. The main factory is located at Street 5, Song Than Industrial Park – Binh Duong province with an area of over 30,000m2 that is one of the biggest industrial Zone in Vietnam. Song Than Industrial Zone Lying in the heart of the Southern key economic zone (i.e, Ho Chi Minh City, Binh Duong, Dong Nai, Ba Ria – Vung Tau, Tay Ninh, Long An, and Binh Phuoc) Situated near the main route of the National Highway No. 13 with a system of the complete infrastructure connected to the significantly principal routes of the national highway and the nationwide commercial and economic centers. The very advantageous geographical location: • The centre of Thu Dau Mot Town : 4 km

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Operations Management Report • Ho Chi Minh City : 30 km • Bien Hoa City : 18 km • The New Port : 20 km • Tan Son Nhat Airport : 22 km • Song Than Railway Station : 16 km

FACTORS THAT AFFECT LOCATION DECISIONS -

Labor Productivity o

-

Song Than Industry Zone attracted huge human resource 

Cheaper



Training



Quantity

Costs o

Utilities, labor, materials, taxes is less than other industry zone

o

Less

easy

to

quantify

and

include

education,

public

transportation,

community, quality-of-life -

Political Risk, Values, and Culture Political of Song Than Industrial Zone: Three supports free of cost to the investors o

Investment licence

o

Making stamp

o

Registration of Tax code

o

Permit for the 1st import

o

Other matters relating to taxation, construction of houses and factories and other legal documents

-

Proximity to Markets and Suppliers o

-

Exchange is very convenient for import or export material and products 

Train (Song than Station)



Car (National highway: 1A, Xuyen A, 13 …)



River (Tan Cang Saigon - IDC Song Than Co.)

Proximity to Competitors

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Operations Management Report

o

Although this location have a lot of competitor such as Hoa Sen Group but market stills attract and potential in long time for them.

VI.

LAYOUT STRATEGY

Today, the East Asia used product-oriented layout for production because characteristics of each products. Factory has six departments in which have two Galvanized Iron worksation and one Pre-painted Galvanized Iron workstation. Next year, Factory will have more one

Galvalume (Zacs) workstation. There are six departments of factory 1. Operation Management Centre 2. Supply material 3. Workstation 1 produces Galvanized Iron 4. Workstation 2 produces Galvanized Iron 5. Workstation 3: Pre-painted Galvanized Iron 6. Inventory Product-oriented layout had been used because factory makes focus only two kinds of product that they need production is stable and high efficiency.

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Operations Management Report Advantages and disadvantages of this layout

Product-oriented Layout Advantages •Low variable cost per unit •Low material handling costs •Reduced work-in-process inventories •Easier training and supervision •Rapid throughput

Disadvantages Higher capital investment •Special equipment •Any work stoppage stops whole process •Lack of flexibility •Volume •Product

The product manager said that factory faced with area problem and they can’t expand area of factory. Supply material area and inventory is often in minimizing stable that mean company expense more money. Area problem is also reason that the distance between departments is still so far and movement components still not convenient. For instance in case, in workstation 1, finished product must bypassed new-come to inventory. Although factory has many difficult but East Asia intend to make innovation of layout so that production is more efficiently and reduce cost.

VII.

HUMAN RESOURCE AND JOB DESIGN

The Human Resource strategy of East Asia based on the Annual Strategy of the company – when the company defines its main strategy for the year – they will define the number they want to have in their human resource based on all of the related sides: Marketing, productivity …. After that, a process is opened up, they will search to the application pool in some public places like job fair, the job centre…, then they will get the application, after screening the application, the second round is the interview round. The interview round will also be the last round of the selection process of East Asia. All of their process about Human Resource, not only selection, but also others like training, incentive program … followed the government process.

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Operations Management Report For training, they have 2 levels, the first one for low-level employees; mainly they will do training on the job, and the former train to their new members, or their successors. This kind of training is suitable for East Asia as the low level because it can save the cost, also reduce the training time. Mainly the low-level employees of East Asia have low educational level, with not high salary, and do simple processes work in the machine. With high level employees, mainly high-level educational level, from business field or technical, East Asia have programs for them to educate them more about knowledge and train more skills needed. Sometimes, they send some of their technical employees to near country like Singapore and Malaysia to learn more about the modern techniques in this country. East Asia follow the Employment-stability process, that keep their employees constant with time, and expand their employees by around 10-20% per year. Their Standard work schedule is 3 periods (8 hours per one period) per day (24 hours per 24 hours), with this working time, they can produce with all of natural providing time and take advantage of the running of machine to keep the work all the time. The working rules of East Asia are clarify and put in the information board of each machine – then the employees can follow their period and do needed things with respect the rules to make the process run well time by time. They have 3 types of machine, produce differently, around 7 to 10 to 20 employees per machine, depended on the complex level of the work. The work in East Asia, as watched, can be clarified to 2 types, high-level and low-level. In Low level, they do the work with very high specialization – the low-level employees work in process together with the machine, their works require very accurately and somehow simple, that why their employees don’t need to have average education level. With high level, they work as administrative works and high level techniques and business, still with specialization but more autonomy than low-level, their education and training are also better. The psychology components of job design for low-level employees are rather clear. Skills variety is not so much because the job is specialization. The job identify is clear, also trained carefully on the job. Job significance is also clear, each employee has his

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Operations Management Report responsible, and stated clearly in the information board, working rules, and process identification. Job autonomy and feedback on the job is not much, due to the job characteristics. Motivation system of East Asia is based on productivity and some gain sharing and profit sharing of the company. The ergonomics and work method in East Asia is also rather good. Their process is semi-autonomic, the employees just special in their works beside the machine. Work environment in East Asia is somehow rather good, with wide and high factory. But the noise in the machine is so high, very head-ache sound. The dust from the machine is not so much due to the good technology of East Asia, it’s a plus signal for work environment.

C.

PART III: MANAGEMENT OPERATIONS

VIII.

INVENTORY MANAGEMENT AND SUPPLY CHAIN MANAGEMENT

Inventory is a very important part of any company and so does East Asia Company. It helps the company flexible to keep pace with customers’ needs and perform production process effectively. In this part, East Asia Company’s inventory is discovered in main terms below. The method used to compute the inventory level that the company apply is base on production volume, sale volume and inventory capacity. After all factors are balanced, the backward calculation is done to find out the amount to keep in inventory. The goals are to minimize the cost and satisfy the demand such as reduce holding cost – the cost of carrying inventory over time. The company tries to get stock safety and avoid stock outs. The company invests a lot in equipment and management tools. The setup cost is high. Once a year, each chain of production equipment is repaired and maintained for one month according to ISO 9001-2000 quality management standard. Record and cycle account: Each roll of material or product is verified carefully and pasted a certification sheet of characteristics and codes to manage. The manager goes around checking and recording them. Management the inventory is done by software. The company has invested in Lac Viet software company 300 million vnđ for operation management software. Reorder: the company order in two sources: domestic suppliers (30% raw material demand) and foreign suppliers (70% raw material demand). Domestic company is Phu My steel company. This company uses Italian technology, so that their products have high quality,

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Operations Management Report short lead time but low quantity outputs. And the price is published daily. The commercial department has authority and responsibility to make decision on order (which companies are suppliers for each period for reorder point and order detail)

IX.

MATERIAL REQUIREMENT PLANNING AND ERP

At the present time, East Asian doesn’t have MRP or ERP computer system. In short term, East Asia will use MRP software of Lac Viet Co., Ltd for management system

X.

SHORT-TERM SCHEDULING

As we know the important role of scheduling in an organization as the competitive advantage of this institution from faster movement of goods through a facility, faster deliveries, and reliable deliveries. In East Asia Company, scheduling also play an important role like that. For the fixed scheduling with auto-machines, scheduling is assigned correspondingly from each worker group to each task with a specific machine in continuous production. Basing on the demand or requirement form the market, the manger can give out the requirement of output for each period, so that, for each period the scheduling should be changed, and worker is ranged in the most suitable position of time and task. It is very effective because it does not make worker bored, they are more willing to work in different tasks and different time.

XI.

FORECASTING

Base on the development of Vietnamese economic (GDP, population), the department of marketing will forecast the future plan on October and November for the next year. As the development of the company, East Asia co., Ltd will invest on new equipment, maintenance-process … with high quality, and update the management program continuously

D.

CONCLUSION

East Asia co., Ltd is one of the 500 largest private companies in Viet Nam, qualified as ISO 9001:2000 about product. The current volume of products has not met the large demand for steel in Viet Nam. So, with the proud of customer satisfaction about its high quality products, East Asia Co., Ltd will enlarge production as well as the size of company more and more in the future.

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Operations Management Report

E.

REFERENCES

Jay Heizer & Barry Render. Operations Management, 8/E East Asia Co., Ltd homepage. Retrieved June 23, 2008 from http://www.tondonga.com/index.php?navi=home Introduction of Industrial Zone homepage. Retrieved June 24, 2008 from http://www.stiz.com.vn/ Vietnamnet e-newspaper. Top the largest 500 company in Vietnam (VNR500). Retrieved June 20, 2008 from http://www.vnr500.com.vn/ ISO 9000 family of standards for quality management systems. Retrieved June 20, 2008 from http://en.wikipedia.org/wiki/ISO_9001 The Japanese Standards Association. Retrieved June 20, 2008 from

http://www.jsa.or.jp/default_english.asp

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