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2008

Ho Chi Minh International University


Operations Management Report

Group

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

East Asia Co., Ltd


Song Than Industrial Zone
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. PART ONE: INTRODUCTION

I. 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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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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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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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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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

Checking input
Step 3: Deoiling and Pickling: Materials

Before Steel plates was entering to plate, they had had to through the
Direct feed material
deoling and pickling section, this section has 4 parts : continuously

Using chemicals to deoil :


Remove lubricant or
rust
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
Deoiling and
Pickling
flushing chambers. Those flushing chambers is including : pump high –

pressure team system and small detergent from the cistern. It atomizes
Heating the sheet
two faces of black sheet bundle; use the crane to cleanse deoiling parts.

It continues going through the hot water flushing chamber (600C – 800C)
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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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


Packing and inventory
department. After making steel plates become bundles, they are

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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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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Cleaning oil, dust on sheets to make higher adhesive strength of


Input materials
coat on tin interface.

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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c. After baking oven is air-blast system with high capacity to


Coating, baking, cooling
cool tin surface before feed into other lacquering

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 air-

blast 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, and Duracoat…. Using three - axial

lacquering in order to produce a glossy 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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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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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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• 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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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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Advantages and disadvantages of this layout

Product-oriented Layout
Advantages Disadvantages
•Low variable cost per unit Higher capital investment
•Low material handling costs •Special equipment
•Reduced work-in-process inventories •Any work stoppage stops whole
•Easier training and supervision process
•Rapid throughput •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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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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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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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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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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