NATIONAL ECONOMICS UNIVERSITY

BUSINESS SCHOOL E-BBA – E-BDB PROGRAM

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OPERATION MANAGEMENT
Lecturer: Prof. Soren. R. Kirche

DAI UY COMPANY
GROUP 02
Cao Vu Thuc Anh 11220104
Phan Thi Mai Anh 11220578
Tran Thanh Lam 11223210
Bui Ngoc Linh 11223333
Nguyen Khanh Linh 11223567
Vuong Thao Linh 11223848

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HANOI – 12/2023
Executive Summary

Dai Uy is a company that produces animal feed in Ha Nam Province, Viet Nam. As the need for
animal feed is always rising in Viet Nam, Dai Uy has achieved few successes during the early years.
However, in the past 3 years, Dai Uy’s business activities seem to have slowed down. In 2021, Dai
Uy’s revenue has risen to 92% compared with 2020 - which has witnessed a dramatic decrease
because of Covid-19. Despite the increasing revenue in 2021, the company saw a 21% drop in revenue
in 2022. Revenue is forecasted to fall in the next few years if the company does not make any changes
or innovations. This report proposes a specialized operational plan for Dai Uy Ltd., co, in order to
reduce costs, improve quality and productivity.

The purpose of this study is to find out the current circumstances of Dai Uy, the problems that cause a
loss in profit, the pros and cons of the operating system. Therefore, solutions will be pointed out to
enhance the company’s sales, revenues, profits and maintain a sustainable business. According to our
Ishikawa, there are many causes in methods, preservation, labor, and machines that lead to the loss of
$100000 profit. The methods are ineffective, lack of innovations while the preservation is
disorganized. Lack of labor and the poor working conditions also lead to profit loss. Many machines
are being abandoned and outdated which results in low productivity. All things considered, some
solutions will be introduced to bring out a few changes to the production system. The solutions are
expected to save $140,000 for the company. In particular, we would like to apply new methods into
the preservation process, replacing all the machines which will help to increase the profit of the
company to 8.5% a year. Furthermore, the price of producing one product will be lessened while the
number of products sold will increase, leading to a growth of 13.5% in revenue. The return on
investment will increase from 9.6% to 48.9%.

It is expected that this proposal can help the company improve its current situation, and make the most
of its resources to earn maximum profit. This will be assured by cutting down the production cost
while still supplying high-quality products.
Decision-making matrix

We considered two places to visit: Dai Uy company and Mavin company. Therefore, we used a
Decision matrix to make a good decision. A decision matrix is a variation of the L-shaped matrix,
which can evaluate and prioritize criteria to help us make a good decision. (“Decision Matrix”, n.d.)

Criteria Weight Dai Uy Weighted Mavin Weighted

Score #1 Score #2
Location 9 9 81 8 72
Interest 10 9 90 8 80
Popularity 8 7 56 9 72
Size 8 8 64 8 64
Product 9 8 72 7 63
Diversity
Accessibility 10 9 90 7 70
Total 453 421

Introduction

Production and marketing of animal feed, as well as the sale of raw materials for the manufacture of
industrial glue and animal feed, are the primary business activities of Dai Uy Production and
Marketing Company Limited. Located in Bach Thuong Ward, Duy Tien Town, Ha Nam Province, the
firm was founded on June 7, 2005. (“Dai Uy Company”, n.d.)

The company has been developing for eighteen years, and after that time, it has solidified its place in
the animal feed industry. Farmers nationwide, particularly in the Northern and Central provinces of
VietNam trust it to provide supplies for their vast livestock project farms. Dai Uy is delighted to have
received several rewards and is regarded as the 26th company of top enterprises in the Duy Tien
district of Ha Nam province.

In June 2011, the firm formally expanded into the manufacturing of industrial glue, which was a
totally separated production sector from the technology used in the production of animal feed. As a
result, it became one of the first businesses in this field in Vietnam. Dai Uy progressively increased its
market share and strengthened the base of its business.

The business was among the top FAST 500 in 2011. The growth of the corporation has aided in the
advancement of Vietnam's overall development, especially that of Ha Nam province. In addition to
paying a substantial amount of taxes to the state budget each year, the corporation employs hundreds
of people in the community. This is a remarkable contribution of Dai Uy company, not only affirming
its position in the animal feed market but also solving the country's problems.

Dai Uy Company was able to resolutely weather the storms of the epidemic and survive, even with
notable advances in production and output, throughout the years when the COVID-19 pandemic raged,
causing numerous problems and badly affecting enterprises.
Low manufacturing productivity leads to $100000 loss

a. Method (Average loss of nearly $21000 a year)

The first and foremost problem is the management methods and strategies of the company. Ineffective
management can lead to a decrease in productivity, employee morale, and ultimately, the company’s
bottom line (Kenton, n.d.). The lack of extension and innovation during work lead to the distraction of
employees which cause the company to decrease $19000. They do not focus on their task but doing
other business that is not involved in the production process.

Besides, there are no supervisors in the factory while supervisors play a critical role in managing
employees and ensuring that they are performing effectively and satisfied in their role. Most of the
employees come from rural areas and they are used to working with no discipline. Without the guard
of supervisors, employees can do what they want and delay their actual job which has resulted in the
issue of workers departing midstream and sluggish construction progress. The lack of supervision also
results in the disintegration of machines. No one was there to check if the machines were working or
not and this caused the machines to break down easily.

The inventory management is also ineffective. The raw materials are loaded up like hills without any
protection and the doors of the material’s rooms are always opened so mice can come in and ruin the
material. The company had to remove the poor quality material and wasted $12000 last year. Even
though the materials are different, there is not any storage to categorize them.

b. Machines (Average loss nearly $36000 a year)

The second issue is spending too much time and money on outdated machines. Most machines in the
factory are rusted and outdated. According to the factory manager, they have invested nearly $18000
in repairing the machines each year which is a total waste of money. Especially during Covid-19,
there was barely any affordable fixing labor so they had to pay twice to fix the machines. However,
the company still chooses to use the outdated machines instead of buying new ones. Outdated,
unmaintained machinery results in costly repairs and repetitive maintenance. This puts a screeching
halt on the production process, increases unplanned costs, and negatively impacts overall efficiencies
(Work 2019).

Unused machines are also a problem that costs money and space. Many machines are being covered in
dust because they were broken for a long time and the company did not fix them. Abandoned
machines take up valuable space, resources or energy that can be used by other machines. In addition,
machines that are not maintained properly can cause accidents, injuries to workers and give rise to a
cluttered and unsafe work environment.

c. Labor (Average loss of nearly $27000 a year)

Low labor productivity is a deliberate problem. The productivity of employees is being limited
because of the poor working conditions. The dusty working environment is also a safety risk to
workers’ health. Most health problems are related to the respiratory system because of the dust. Sore
throat, runny nose, flu are very common but working in such a polluted environment for a long time
can cause asthma or even worse such as respiratory infection and lung cancer. Investing in
occupational health and safety (OHS) practices is indispensable for businesses striving to uphold
employee well-being and ensure high productivity (Maryam, n.d.). Employees have to work in the
factory for a very long time but they are not wearing any protective gear. Furthermore, the employees
themselves do not recognize the importance of wearing protective clothes for safety. Failure to instruct
employees on safety measures and provide protective gear can cause serious accidents. The factory
only has little natural light, few bulbs and most of the time there is a lack of light. Some employees
even felt sleepy during working hours because of the darkness which obviously lowers productivity.
During and after COVID-19, many workers decided to quit their jobs which led to a lack of employees
and made the company lose $15000 and continue to increase. There are only a few employees with
10 to 15 years of seniority during each section of the production process. The job is not attractive to
younger people so the number of employees keeps reducing during the recent years. Lack of
employees has forced other workers to work overtime and handle extra jobs.

d. Preservation (Average loss of nearly $16000 a year)

There aren’t any qualified warehouses in the factory. As a result, the employees store the product in a
disqualified environment. A disorganized warehouse can cause overstocking inventory which is hard
to control. This problem has happened a few times when the temporary storage ran out of space, the
workers had to place the product on the ground or any other places. Market competition requires
continuous improvement in the design and operation of production-distribution networks, which in
turn requires higher performance from warehouses (Jinxiang, Marc, and Leon 2007).

The company does not set any rules on storing products. The surrounding condition is also not
appropriate for stocking products since the machines are nearby and there is a lot of dust. There is no
system to protect the products from insects or mice. Consequently, the products can easily get spoiled.
This problem has caused the company almost $10000 last year.
How does the Dai Uy company run the operating system?

Steps explanation

Deal with Suppliers

The first step in the initiation phase involves a comprehensive analysis of the current supplier
landscape. Organization need to proactively identify signals that indicate a requirement for a new
supplier or modifications to existing relationships. Market dynamics are ever-evolving, and staying
attuned to these changes is crucial. Regular market analyses allow organizations to identify emerging
suppliers or modifications in the offerings of existing suppliers.

Reputation serves as a cornerstone for evaluating potential suppliers. A supplier's reputation is often
reflective of their past performance, reliability, and the satisfaction of other research entities they have
collaborated with. (Ganesan, 1994). Evaluating the quality of products or services a supplier offers
involves a comprehensive analysis of their manufacturing processes, product specifications, and
adherence to industry standards. References such as industry reports, quality certifications, and case
studies provide valuable insights into a supplier's commitment to delivering high-quality goods or
services. (ISO 9001:2015). Analyzing the total cost of ownership, including not just the purchase price
but also factors like maintenance, transportation, and potential risks, is essential for organizations to
optimize their budget. Dai Uy company must ensure that potential suppliers align with industry-
specific regulations and ethical guidelines. References such as legal frameworks, regulatory
compliance reports, and industry publications on supplier compliance offer insights into a supplier's
commitment to meeting these standards.

Finally, negotiating a better deal with suppliers using interpersonal skills, tactics, market
understanding, and data-driven insights. Negotiation is a key activity for procurement. Successful
negotiation helps mitigate further performance, schedule, scope, and service issues. (Sievo, 2023)

Looking for reliable suppliers will incur approximately $600 per year for search-related costs.
Contract with Supplier

The company will prepare a comprehensive contract document outlining all agreed-upon terms and
obtain internal approvals from relevant stakeholders, including legal, and finance from the Contract
Department. Establish Key Performance Indicators (KPIs) and regularly monitor supplier performance
against agreed-upon metrics. This process costs $197,000 to contract with suppliers and import raw
materials annually.

Demand

Demand is the desire, willingness, and capability of a consumer to purchase a specific product for a
particular price over a given period of time. (Tyrah Diaz, 2023). Dai Uy company will receive
customer inquiries through various channels (phone, email, website, social media,...) from all over the
country and then organize and manage these orders efficiently.

Deal with Customers

To deal with customers, Dai Uy has to present suitable product/service options to meet customer
requirements and a detailed quotation or proposal including pricing, terms, and conditions.
(International Chamber of Commerce). Next, the company engages in negotiations with the customer
to finalize terms and conditions.

Contract with Customers

A consumer contract is a legally binding agreement between you and the consumer concerning the sale
of goods or digital content, or the supply of services (with or without goods). (Business Companion).
Besides, the company needs to maintain detailed records of the contract, including terms, consent, and
any communications with the consumer.

Assign to Factory

The first step is to identify tasks or orders that need to be assigned to the factory based on production
schedules, orders, or specific operational requirements. Evaluate the priority and urgency of each task
to determine the order. Production Manager implement systems for monitoring task progress in real-
time, utilizing Manufacturing Execution Systems (MES). They spend a total of $65 per year. Stock
in Ingredients

In the first phase of Workshop, the company receives ingredients from suppliers, verifies the quantity,
conducts a quality inspection of incoming ingredients, checks for freshness, damage, and adherence to
quality standards against the purchase order. Then, store ingredients in designated areas based on their
characteristics and storage requirements. Additionally, they use the FIFO method to ensure older stock
is used before newer stock to maintain freshness (Kenton, n.d.). To store raw materials, they spend
$3000 per year.
Put Ingredients in Machine

Conduct a pre-operational inspection of the machine to ensure it is clean, calibrated, and in proper
working condition. After that, load the prepared ingredients into the machine according to the
machine's specifications and operating manual. Start the machine following standard operating
procedures outlined by the equipment manufacturer and make necessary adjustments to machine
settings based on real-time monitoring and quality requirements.

Classify

Categorize each ingredient based on type such as pig feed, chicken feed,... Regularly check and
monitor the expiration dates of ingredients to prevent the use of expired items. Operating a material
sorting conveyor incurs an annual cost of approximately $200.

Crush into powder

Place the pre-prepared ingredients into the crushing machine following the machine specifications and
guidelines outlined in the operating manual, continuously monitor the machine during operation to
ensure effective and uniform crushing and perform regular quality checks on the crushed material to
ensure it meets specified particle size and quality standards. The cost for each crusher is $6000, and
with three machines in the factory, the combined annual operating expenses amount to $210

Mix according to recipe

Verify the recipe against the formulation, ensuring correct proportions and ingredients. Then, initiate
the mixing process based on the prescribed settings and duration specified in the recipe. Ensure the
mixed powder is aligned with the specified formula. For the mixing machine, the cost of each machine
is $6500, and with a total of 3 mixing machines in the company, the combined annual operating
expenses are $250

Compress

Perform the mixed powder into the compressing equipment. Powder compression refers to the
reduction in volume of a powder through the application of a force. This force via compression
activity, then increases the proximity of particle surfaces, resulting in the formation of bonds between
particles, thus providing powder coherence: a compact is formed. (Escopharma). The price for each
crusher is $3000, and with a total of 3 large crushers in the company, the cumulative annual
operational expenses come to $230 per year.

Quality check

Document relevant information, including batch numbers, production dates, and sample details. Then,
identify the specific testing parameters and methods based on product specifications and industry
standards. The Quality Check Department needs to record test results accurately, including
measurements, observations, and any deviations. As a result, compare the test results with established
quality standards and specifications.
Fertilizer

In the event that a product does not meet the required quality standards during the quality check, the
subsequent course of action involves recycling the product by converting it into fertilizer. This process
is managed by the Recycle Department aims to repurpose the materials, ensuring an environmentally
sustainable approach to handling non-conforming products while contributing to the creation of
fertilizers for agricultural use.

Weigh

If the product is accepted we proceed to the weighing phase. Weighing is an essential part of the food
production process. A product must be weighed to fulfill the recipe of animal feed specifications and
quality requirements. Measuring products with extreme accuracy ensures they are distributed equally,
and the product tastes the same in every batch. Food scales help processors adhere to production
requirements and reduce the risk of creating out-of-spec products. (Carlisle Technology). The cost of
each electronic scale is $100, and the factory possesses a combined total of 8 scales.
Package

Product packaging is the process of designing and creating packaging for a product. This includes the
materials used, the design, the printing, and the assembly. Packaging is an integral part of the product
because it protects it, makes it easy to transport, and can be used to promote it. (Mailchimp).
Following the weighing of the food, the company will proceed to package it, utilizing various
packaging materials selected according to specific categories, with designated quantities and labels.
These labels encompass product information, warnings, regulatory labels, and the company's logo. The
packaging process will be carried out manually by the workers using their hands.

Storage

In the final step, the Package Department receives the product from the packaging area and inspect it
for any damage, discrepancies, or deviations to assign specific storage locations based on product
characteristics, sensitivity, and storage requirements. Ensure that the storage area maintains the
required temperature and humidity levels suitable for the product.

Dai Uy company needs to conduct regular inventory checks to reconcile physical inventory with
recorded quantities and perform periodic quality control checks on stored products to ensure they meet
quality standards. Therefore, establish protocols for the appropriate disposal or management of
products that have expired or sustained damage. Storing goods in a warehouse incurs an annual cost of
around $2000.
Delivery

Load the packaged items into delivery vehicles, ensuring proper organization and secure placement.
Dai Uy company will use a system for real-time tracking of delivery vehicles to closely monitor their
progress, ensuring accurate delivery estimates for customers. Last but not least, verify successful
deliveries through methods such as customer signatures, delivery confirmations, or regular tracking
updates, enhancing transparency and reliability in the delivery process. The cost for each truck is
$200,000, and the company has a total of 5 trucks. The yearly transportation expenses amount to
$1500 per truck.

In light of the significant magnitude of the operating costs intricately linked with the operations of
the factory, it is of paramount importance for us to take a proactive stance in embracing and
executing a diverse array of strategic approaches and methodologies. The primary objective of these
initiatives is to effectively alleviate and curtail the financial burdens incurred, thereby contributing
to the substantial reduction of overall expenditures.Hidden risks and hazards in the
manufacturing process for Dai Uy employees

Risks and hazards

In the process of producing animal feed, there are potential risks and hazards in the steps of putting in
machine, mix material according to recipe and packaging stage particularly related to machinery and
occupational safety risks.

First the production of animal feed, putting raw material in machines can have serious consequences
for workers. Vehicles carrying raw materials to pour into the machine system moving too fast in the
factory can easily crash into other people in the same area. Operating a forklift improperly via actions
such as speeding, racing or sharp cornering is a serious hazard to operators, loads and the forklift
itself. Operating in the manner above greatly increases the chances of accidents such as collisions or
unit tip overs occurring that can result in injuries, fatalities, product and equipment damage. And the
crane carrying raw materials can be damaged, lack lubricating oil or have a dry engine, leading to
easily fall when lifting goods in such large quantities to dump into the factory. Every forklift is rated
by the manufacturer to be able to safely lift a maximum load limit. Overloading the forklift above its
maximum safe load limit is a serious hazard; overweight load will decrease its stability when the load
is lifted by the tynes, heightening the likelihood that the load will fall and the forklift may tip over
endangering the operator and potentially damaging the load and forklift. Further increasing the
potential for accidents to occur from unit overloading are unsecured loads, without proper restraint
were the load to fall off the tynes or the forklift to tip over the load and can cause serious injury or
damage (Hinz 2021). Moreover, the forklift has a weight limit and individual attachments, and there
will be clasps and backrests; nothing on the load should feel loose or wobbly, so anything unsecured
could fall and hurt someone badly. Besides, with products that are quite smelly, it can affect the
respiratory tract such as coughing, etc. of workers when they do not wear masks when working.

Second, since the company uses automated machinery in most stages of the animal feed production
process, the machinery can present risks to workers if not operated or maintained properly. Hazards
may include entanglement, crushing, and electrical risks. Accidents and injuries can occur if
machinery is not used correctly or if proper safety measures are not in place. In addition to the
automatic production process of the machine, workers are still needed to support the machine in the
step of mixing ingredients according to the formula before compressing them into pellets because it
is very likely that if not careful, workers will fall into the machine or roll their hands or foot on the
machine working.
Finally, with manual packaging, the packaging stage can also cause accidents for workers. Workers
will have to do it directly by holding the packaging bag close to the mouth of the machine when the
finished product is compressed. It is easy to get your hand stuck in the machine. Human error is an
unintentional mistake made by an individual in the performance of a task. These mistakes can be
caused by a wide range of factors, including lack of training, stress, fatigue, distraction, and
complacency. The consequences of human error can be dire and can lead to costly mistakes that can
impact an organization's reputation, financial stability, and legal compliance.

Solutions
There are a few solutions for each of the above possible dangers to maximize product output capacity
and not cost too much money for Dai Uy company.

First, with the step of putting raw materials into the machine, the forklift moving these materials
needs to go at the speed set out in the company's policy and will limit the speed of movement in the
factory to reduce the risk of crashing others. Ensuring all forklift operators hold a valid forklift
license and have completed up-to-date training is likely to decrease the likelihood of rogue operators
utilizing the forklift inappropriately, as they possess the required driving skills and are aware of their
obligations when operating the unit. Overcome instances of forklift overloading it is imperative that
all operators are aware of the unit maximum safe load limit via its rating plate, and all load weights
should be known before lifting commences and loads shouldn’t be lifted until it is confirmed that the
load is within the units load limit. All loads should be secured before they’re lifted to ensure they
can’t move unexpectedly. In addition, they should install danger signs near the area where the
forklift is moving things into the machine, which costs $45, and the machine must be regularly
maintained and maintained periodically. The cost of maintaining machines will be about $300/per
year. Workers who operate or work near forklifts may be struck or crushed by the machine or the
load being handled. This alert instructs workers in the steps they can take to protect themselves near
forklifts (NIOSH 2023). Not only that, the company needs to install cameras to monitor each area
instead of hiring a monitoring worker for each area, which will be costly. Security camera systems
play a significant role in supporting public safety. As a security solution, camera systems provide
valuable evidence for post-crime investigations and help displace criminal activity to unmonitored
areas (Security Magazine. (n.d.)). The company should install a camera system to supervise workers
more effectively, which costs a total of $2000. In addition, the company needs to have rules that
workers must follow, such as wearing masks in the factory to ensure the health of workers and
ensure product quality. Providing basic information to employers and workers, who may find
themselves using respiratory protection for the first time and information on what respirators are,
how they work, and what is needed for a respirator to provide protection (“General Respiratory
Protection Guidance for Employers and Workers”, n.d.).

Second, mixing raw material following the formula requires workers to supervise the machine sort
according to the formula before crushing and compacting the product high above the machine, which
leads to serious accidents. So the company needs to have protective equipment such as safety cables
to directly hold workers when working at such heights, which cost about $350. Maintaining a safe
work environment requires a lot of things. For starters, it requires commitment and organization on
the part of company managers and supervisors. However, commitment and organization can only go
so far if company leaders don’t provide employees with the proper safety tools and equipment.
 Ultimately, those are the tangible items that will keep employees safe while on the job (EHS Insight
Resources 2021). And there needs to be a danger alarm system that sounds when an accident starts to
happen. The company provides fully protective gear when working which can prevent accidents that
cost a lot of money if happen unexpectedly because falling at such a height is really dangerous to the
worker's life. Therefore, Dai Uy can save hospital bills expense if an accident occurs to the
company’s workers

Finally, manual packaging steps can cause accidents such as getting a worker's hand stuck, so the
company needs to propose an automatic packaging machine to reduce accidents when packing
manually will both be more accurate and more efficient and in the long run will be less costly than
paying workers. The company should invest in replacing automatic machines to weighing and
packaging by machine, which cost $4000, operating expense nearly $180 annually. With the
automatic system, there will be no need to hire additional workers for this position and this will save
the money to pay for employees' salaries. One of the primary benefits of automation is its ability to
significantly reduce human error in data entry. Automated systems operate with a high degree of
accuracy and consistency, minimizing the risks of human error. This is particularly important when
dealing with large data sets or complex data, where the risk of human error can be high (tradesafe
2023).

Dai Uy’s dashboard

Revenue
●Total revenue was lowest in 2020 with more than 300,000 dollars because of the Covid-19 pandemic
raged, which caused many problems such as decreasing demand, scarce materials, layoffs etc..
●The economy recovered during the Covid-19 pandemic, especially during the last few months of the
year 2021, which means the demand for bran increased and workers came back to the factory. As a
result, the revenue of the three categories went up to approximately 600,000 dollars.

Revenue declined in 2022 because ingredients such as corn and soybean had low quantities, which led
to higher product’s prices. This led to lower demand and a decreased number of products sold.

Demand forecasting

●In the year 2020, although the Corona virus had appeared, total demand throughout the year was still
pretty high which was 8000.
●The breakout of the Covid pandemic had caused many effects on the company, it can be easily seen
that the demand dropped considerably to 6000. This had led to many consequences for the company
●But in the end of 2021 and the beginning of 2022, the pandemic had been controlled and all crises
had remarkable improvement. The number collected was about 11,000 which increased by 6,000.
Number of consumer contracts

● In 2020, the number of consumer contract reached the lowest point with about 5,000 contracts
because of the beginning of the COVID-19
●In 2021, even though there were so many impacts of the pandemic on the industry, the company still
had a recovery and its number of contracts increased significanly by 4,000.
●However, the number of consumer contracts decreased from 8,000 to 6,000 due to the low quality
and several factors.

Average of Material damage rate

●Because in 2020 the factory produced as much as in previous years and there were no appropriate
storage measures, the damage rate was quite high at 12%.
●In 2021, the products decreased considerably due to the impacts of COVID-19,the demand reduced,
so that there was a decrease in damage rate.
●There was a slight increase in the year 2022. Despite of 9% damage rate, the company still has to
find a suitable and effective solution to this problem so far

Defect rate

Quality defect rate is used to measure the quantity of defective products or services in relation to the
total output. It provides insights into the effectiveness of quality control processes (“Key Performance
Indicators (KPIs) for Operational Management: Driving Performance and Enhancing Efficiency”
2023)
●2022: Because of recession in 2022, the company produced fewer products, which led to lower
defect rate.
●The company did not focus on upgrading machines. Therefore, the defect rate was pretty high with
more than 2%.
●Because of Covid-19 pandemic and layoff in 2022, the company lacked employees to control the
materials, produce process, and product quality leading to higher defect rate.

Unsold inventory

●Total revenue was highest in 2021, which meant the company sold many products. As a result, the
amount of unsold inventory was low from approximately 100 to fewer than 300 products for each type
of feed.
●Because of the Covid-19 pandemic in 2020 and recession in 2022, the number of products sold
declined. This led to more products stored in warehouses.

Moreover, the scarce materials caused higher cost in 2022 (vietnamnews.vn 2023)

●The market competition was getting higher, but the company focused more on producing industrial
glue (“Dai Uy Company”, n.d.). Therefore, the company paid less attention to upgrading machines and
advertising its feed.
●Moreover, regulatory changes in QCVN 01 - 190: 2020/BNNPTNT affecting the animal feed
industry, such as changes in health and safety standards, restrictions on farming impact demand and
contribute to higher unsold inventory of 3 categories.
Cycle time

Cycle time is the measure of a business cycle from beginning to end. Production cycle time refers to
production activities, such as the total time required to produce a number of products (Guan, n.d.).

●Covid-19 pandemic raged in 2020 so the company lacked employees. This caused longer cycle time
in the production process.
●In 2021, the demand for bran increased and workers came back to the factory, so machines could
produce more products at the same time and reduce cycle time to less than 6 hours per 100 units.
●The cycle time increased to approximately 6.5 hours per 100 units in 2022 because the company had
to lay off workers in the recession.

On-time delivery rate

● It can be successful when the On-time Delivery index at Dai Uy Company increases steadily over
the years.
●2020 the rate stayed at 2% and slightly increase to about 2.5% in 2021
●And in the year 2022, it hit the peak which was 4%.

Machine downtime rate

●The machine in 2020 worked frequently so its stoppage rate stayed at the low point of about 50%
●Because the pandemic became serious in 2021, the factory had been closed and this led to the
degradation of the production system. The machine downtime rate rose up to 90%
●When successfully controlling the disease, we can see that the machine downtime rate had a positive
signal but it is still very high at 80%.

Recommended solutions
Preservation

Material damage rate in 2020: 11%

Material damage rate in 2021: 7.5%

Material damage rate in 2022: 9%

From the data above, the company can lower the material damage rate by designing and planning a
warehouse involving different levels of decision-making, with high levels of interactions and
interdependencies. Warehouses must be modular, adaptable, compact, accessible, flexible, and capable
of responding to changing conditions, to improve space utilization, and to reduce congestion and
movement (Carla 2010). Fixing the warehouse will cost the company a total of $6500. Warehouses
must be separated from producing places and machines. Smart warehouses help improve the capability
of emergency response and daily material management (Zhen and Li 2022). Having a storage system
to protect the warehouses from dust and insects can reduce the damaged material to approximately
1.3% each year. Each raw material and product should be categorized in different sections. The
company can have software to control the expiration date of the products and materials. This software
will cost them about $179/year. All of the suggestions mentioned above will help the company save
$45000 per year

Method

The company should upgrade inventory management. Effective inventory management can help
reduce waste, improve efficiency, and increase profitability. Companies can improve their inventory
management by implementing a system to track inventory levels, categorize materials, and protect raw
materials from damage (“What is inventory management and how does it work?”, n.d.). Implementing
inventory technology to track inventory in real-time. Categorizing inventory into priority groups will
help to understand ordering quantities and frequencies.

Supervisors play a critical role in managing employees and ensuring that they are performing
effectively and satisfied in their roles. Hiring supervisors can help ensure that employees are working
efficiently and that any issues are identified and addressed promptly (Herrity 2023). The company can
hire two people to become supervisors and their salary will cost the company $600 for two every
month. Installing more cameras to monitor both employees and machines is a way to assist
supervisors. The money for cameras will be $2000.

The best way to keep employees focused is to keep the workplace comfortable and motivated. Quality
fresh air, sufficient light, and adequate space for movement will help workers feel productive
throughout the day. A small break from 10 to 15 minutes also prevents employees from feeling tired or
overworked. Reminding employees about the rules while at work to put them into the framework and
do not do other things when they are still in working hours. With the focus of employees, the revenue
can increase by 5%.

Labor

Improving the working environment will help the employees to feel motivated at work. Installing more
lights is a way to increase the attention span of staff. The company must provide protective gear which
costs $50/person for employees while working to prevent them from the dust and toxic chemicals.

With the investment of modern machines, we can now build an automatic producing system which
requires only a few employees. Numbers of factory workers could decrease from 57 people to 30
people. Instead of paying approximately $300 for each employee including basic salary and bonus
rewards every month while they can’t work for a long time or during weekends, the company can save
up a great amount of money to use for other purposes.

Machines

Machine downtime rate in 2020: 2%

Machine downtime rate in 2021: 2.5%

Machine downtime rate in 2022: 4%

The company should replace outdated machines with modern machines to reduce the machine
downtime rate. Investing in a brand new machine system can be expensive at first but in the long run it
can lead to significant cost savings. Newer machines are often more energy-efficient, require less
maintenance, and can produce higher-quality products (Work 2019).
https://www.escopharma.com/solutions/compressionmixing machine with one new machine.

Therefore, the mixing machine cost is $6700. In the package step, we change the sealing machine and
cut down on employees to buy an automatic weighing and sealing machine. The current price of the
machine is about $4200 so we will add two new machines for this step which will cost $8400. All
these modern machines will create a new automatic production system which will both help to
decrease the machine downtime rate noticeably and boost the revenue to nearly 8.5%.

A regular checkup every month for the machines can expand their life cycle. Having regular machine
servicing significantly reduces the effects of faulty machines as they ensure that parts are still in good
working order and also create a safer working place for staff. The checkup price is $780 each month so
the total price in a year will be $9360.

Unused machines take up valuable space and can be a safety hazard. Selling or disposing of unused
machines can free up space and reduce clutter in the workplace. There are about 3 abandoned
machines in the factory and each can be sold for $1000. Selling unused machines can generate revenue
that can be used to purchase new equipment.

In addition, training employees on how to use the machines correctly also helps scale down the
breakdown time of machines. Proper use and maintenance of machines can help prevent accidents and
prolong the life of the equipment. Training employees on how to use and maintain machines can help
ensure that they are used correctly and that any issues are identified and addressed promptly.

Return on investment (ROI)

According to the solutions presented in the implementation plan above, revenue will increase by
13.5% from $489000 to $555015. The number of employees decreases from 50 to 32 people.

This is the financial report table for 1 year before and after solutions implementation.

Criteria Before After

Revenue $489000 $555015

Cost Material $197000 $152000

Salary $180000 $115200

Fixing Warehouse 0 $6500

Warehouse Management 0 $179

Software

Cameras Expense 0 $2000

Protective Gear Expense 0 $1600

New Machines Expenses 0 $25460

Installing Danger Signs 0 $45

Installing Safety Cables 0 $350

 Other costs $69,300 $69,300

Total $446,300 $372,634

Profit $42,700 $182,381

ROI = Profit / Cost of the investment * 100 = 48.9%

Therefore, with the new policy, Dai Uy will save nearly $140,000 per year compared to $100,000
loss. The return on investment will increase from 9.6% to 48.9%.

Gantt chart for implementation plan

We propose solutions and plan them within a 4-month timeframe. We spend most of the time
implementing solutions in practice and the last 2 days reviewing and making further improvements.

C
onclusion
Productivity is the decisive factor in the economic growth, efficiency, and competitiveness of
products in the market. If the business aspires to keep pace with industrialization and modernization,
manufacturing systems have to change and improve regularly. The analysis of Dai Uy reveals
insights into the company's operational management style and areas, and gives essential
recommendations for improvement.

Based on the foregoing examination and analysis, it can be stated that Dai Uy Ltd., co has a
significant number of issues in methods, preservation, labor, and machines leading to a $100000
drop in profit. Looking further at the company’s Standard Operational Process (SOP), there are a
lot of potential risks hidden in Dai Uy’s manufacturing process that could cause severe injuries to
workers. These are the reasons why Dai Uy should follow all the aforementioned solutions for
problems that the company is experiencing. By implementing effective operational management
strategies, Dai Uy company can enhance efficiency, reduce costs, improve profitability, and
strengthen its competitive position in the market. Through a combination of safety enhancement,
machines and inventory optimization, and financial management, Dai Uy can improve its financial
situation. The revenue and profit of Dai Uy company in 2022 are $489000 and $42,700,
respectively, with a 9.6% Return on Investment (ROI). The company will be able to improve
revenue to $555,015 with ROI to 48.9%, and profit to $182,381 if all the solutions are adopted and
followed.

In conclusion, changing and adaptation are survival skills that bring businesses success. With a focus
on continuous improvement, Dai Uy can achieve sustainable growth and become one of the top
companies in the animal feed industry.

-----------------------------------------------------END--------------------------------------------------------------
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