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Solutions for poor demanding forecast in e chem vietnam

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UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

NGUYEN THI HONG THU

SOLUTIONS FOR POOR DEMANDING
FORECAST IN E-CHEM VIETNAM

MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – Year 2021


UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

NGUYEN THI HONG THU

SOLUTIONS FOR POOR DEMANDING
FORECAST IN E-CHEM VIETNAM

MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: Dr. Nguyen Phong Nguyen
Ho Chi Minh – Year 2021


Table of contents
1.



2.

Company introduction .......................................................................................................................... 5
1.1

Mission.......................................................................................................................................... 8

1.2

Vision ............................................................................................................................................ 8

1.3

Ethnic ............................................................................................................................................ 8

1.4

Company organization .................................................................................................................. 8

1.5

Products....................................................................................................................................... 10

1.6

Main customers: .......................................................................................................................... 11

Problem Identification......................................................................................................................... 12
2.1


Problem Context ......................................................................................................................... 12

2.2

Symptoms ................................................................................................................................... 13

2.3

Possible Problem ......................................................................................................................... 17

2.3.1

Long Lead Time .................................................................................................................. 19

2.3.2

Late response for customer request ..................................................................................... 21

2.3.3

High competitive price ........................................................................................................ 21

2.3.4

Product Shortage ................................................................................................................. 22

2.4

2.4.1


Poor Demanding forecast .................................................................................................... 24

2.4.2

Inflexible system ................................................................................................................. 25

2.5

3.

4.

Problem Validation ..................................................................................................................... 28

2.5.1

Eliminating Inflexible system as the main problem ............................................................ 28

2.5.2

Identify Poor Demanding Forecast as the main problem .................................................... 29

Problem Justification .......................................................................................................................... 30
3.1

Problem definition ...................................................................................................................... 30

3.2


Problem existence ....................................................................................................................... 31

3.3

Problem importance .................................................................................................................... 31

Cause validation .................................................................................................................................. 32
4.1

Potential causes ........................................................................................................................... 32

4.1.1

Improper forecast method ................................................................................................... 33

4.1.2

Inaccurate input information ............................................................................................... 34

4.1.3

Ineffective internal collaboration ........................................................................................ 35

4.2
5.

Identify the central potential problems ....................................................................................... 24

Cause validation .......................................................................................................................... 37


Suggested Solutions ............................................................................................................................ 40
5.1

Alternative solutions ................................................................................................................... 40

3


6.

5.1.1

Rent market research agency about purchasing status ........................................................ 40

5.1.2

Define incentive offer to explore demand information from customers ............................. 41

5.2

Solution Justification .................................................................................................................. 45

5.3

Action Plan.................................................................................................................................. 46

REFERENCE ...................................................................................................................................... 66

4



LIST OF TABLES
Table 1.1 Products range of E-chem in many industries ........................................................................... 10
Table 2.1 The number of customer complaints from 8/2020 till 3/2021 .................................................... 14
Table 2.2 The total order from main customers by Quarter. ....................................................................... 15
Table 2.3 Number of customer complaint by each departments ................................................................. 16
Table 2.4 Lead time of popular products in E-chem Vietnam .................................................................... 20
Table 2.5 Price comparison 3140 RTV products between E-chem quotation and the current buying price
of SPG – potential customers. ..................................................................................................................... 22
Table 2.6 Top 10 South Korean forwarder is Freight & Logistics service ranking by revenue for May
2021 ............................................................................................................................................................ 28
Table 3.1 Cost arising from over stock holding .......................................................................................... 31
Table 4.1 Target and actual sales from 3rd Quarter 2020 to 1st Quarter 2021. .......................................... 34
Table 4.2 Summary ..................................................................................................................................... 39
Table 5.1 Cost and Benefit of renting market research agency .................................................................. 41
Table 5.2 Sale status from January 2021 till March 2021........................................................................... 42
Table 5.3 Sale Revenue by customers from January 2021 till March 2021................................................ 43
Table 5.4 Cost and Benefit calculation for incentive offer solution. .......................................................... 44
Table 5.5 Action Plan for selected solution. ............................................................................................... 48

5


LIST OF FIGURES
Figure 1.1 The company organization chart in December 2020 ................................................................... 9
Figure 1.2 Products range of E-chem in many industries ........................................................................... 11
Figure 1.3 Current manufacturing customers in E-chem Vietnam, their product usage and revenue in
March, 2021. ............................................................................................................................................... 12
Figure 2.1 Customer’s complaint by month................................................................................................ 14
Figure 2.2 The comparison of customer complaints of each department. .................................................. 16

Figure 2.3 Wholesale trend from September 2020 till March 2021 ........................................................... 17
Figure 2.4 Initial Cause and Effect Map ..................................................................................................... 18
Figure 2.5 E -chem Vietnam’s Sale Process ............................................................................................... 23
Figure 2.6 E-chem Vietnam’s Sale Process ................................................................................................ 24
Figure 2.7 Updated Cause and Effect map ................................................................................................. 27
Figure 4.1 Fish bond diagram of main problem and potential causes ........................................................ 32
Figure 4.2 The input material and information flow in the supply chain.................................................... 34
Figure 4.3 SOP Process in a supply chain .................................................................................................. 36
Figure 5.4 Estimation of incentive for main current customers. ................................................................. 44
Figure 6.1 Summary of Research Method .................................................................................................. 49

6


EXECUTIVE SUMMARY
Demand forecast is a critical step in Sale and all internal operation department, which ensures the supply
chain for customer work smoothly, make a balance between supply and demand partners to avoid any
wasting or shortage in the inventory as well as satisfy the customer experience when buying products from
a company. To respond to the uncertainty of market and customer demand, the process to make demanding
forecast should be careful because it is a key driver in the process to create a high demand forecast accuracy
with appropriate method to recognize the demand signals (order recorded history, shipments, promotion
program, and competitor information)
E-chem Vietnam is an official distributor of Dow ASEAN in the Chemical industry, which is a complicated,
high competitive market with high volatility. The main products of E-chem are silicone products in LED
processes such as display, electronics, lighting. Due to the tight production schedule of the electronics
industry, it requires good demand planning from the supplier side to make sure no delay or shortage in the
production side of customers. E-chem has been established in the Vietnam market for more than one year,
but they quickly merge on the market and gain positive sales growth in one year. However, the unsuitable
stock level in the warehouse is a critical issue that affects the smooth operation and long-term development
of the company.

The research includes some important parts. Firstly, the researcher identify the problem through interview
and theories, it is found that the poor demanding forecast. This main problems impacts on the competitive
advantages of company such as: lead time, competitive price, shortage in product quantity for customers.
Secondly, through some of the in-depth, focus group interview and theoretical framework, the researcher
find some potential causes: Improper forecast method, Inaccurate input information, ineffective
collaboration. Thirdly, there are solutions proposed and confirmed by the top managers of company and
key person in making strategy and decided to choose incentive offer for customers. The cost for this solution
is USD 7,074.37 including the preparation and estimated incentive amount for one month. The duration to
executive this plan is four months including one month for prepration, three months for implementing and
evaluation the result.
The presentation above supports the readers have an overview on how a new chemical company faces to
the obstacle when emerging in the new market. From the work has been contributed, the full name of the
study is “Solutions for Poor Demanding forecast in E-chem Vietnam”.

7


1. Company introduction
E-chem Vietnam is a Korean company. It was established on 5th March 2020 to distribute DOW chemical,
the world-leading chemical brand in silicone adhesive & sealants, and silicon-based technology in Vietnam.
In the North, E-chem recognizes the promising development of industrial parks in Hai Duong, Vinh Phuc,
Quang Ninh, Bac Ninh, Hai Phong, Hung Yen provinces. E-chem decided to open an office in Ha Noi on
5/3/2020. E-chem set up the first warehouse in Bac Ninh with 350m2 (Far from Ha Noi office around 70
km), which supports delivering some product samples to the office checking the quality status on storing
period. After seven months of running the business in northern areas, with fast prospective development,
the General Director – Lee Jae Hoon, decided to open the second office on 3/10/2021 – located in Ho Chi
Minh City, the largest economic center in Vietnam.
The company provides many kinds of Dow Silicone products applied for many industries. Dow
Performance Silicones has been a global leader in silicon-based adhesives for more than seventy years.
Headquartered in Michigan, USA, they maintain manufacturing sites, sales and customer service offices.

Research and development labs in every major geographic market worldwide to ensure customers receive
fast, reliable support for their processing and application development needs.

1.1

Mission

E-chem Co., Ltd is able to reach a wide range of products to provide specific solutions that will improve
efficiencies, speed processing, help reduce the wasting in production sides, save cost for customers.
Everything involved technologies that make life prospective better. It is their mission and duty to be a
contributing partner.

1.2

Vision:

E-chem Vietnam is supplying outstanding chemical material to the various customer of the technology
industries with global makers. Their vision is to be a leading chemical supplier in the Vietnam market and
serve customers with the fastest time and high-quality chemicals.

1.3

Ethnic

Respect legal and social norms, and never engage in unethical or unlawful conduct. Strive for the happiness
of our customers and make customers believe in the company first. Respect the diversity of employees,
promote mutual trust and cooperation, and prevent discrimination. Respect fair trade principles and value
for win-win relationships. As a member of society, take the social roles and responsibilities of our company.

1.4


Company organization

8


GENERAL DIRECTOR

SALES

CUSTOMER SERVICE

Manager

Manager

Assistant
Manager

Assistant
Manager

Sale Staffs

HR/FINANCE

LOGISTICS

OVERSEA
(Korea)


Manager

Manager

Corporation
Branch
Manager

Logistics
Staffs

Strategic
Executive

CS Staffs

Source: Company organization chart in 2020
Figure 1.1 The company organization chart in December 2020

9


1.5

Products

E-CHEM Co., Ltd are supplying outstanding chemical materials to the various customers of the technology
industries with Global Makers
Industry categories

Smart devices (Smartphones and tablets)

Wearable devices

Home appliance device
Telecommunications

E-chem product ranges
Adhesives and sealants
Optical bonding materials
Conformal coatings
Sealants, encapsulants
Thermally conductive materials
EMI shielding materials
Optical bonding materials
Thermally conductive materials.
EMI shielding materials.
Conformal coatings
Sealants, encapsulants
Adhesives and sealants for bonding and gasketing
Thermal management materials
Gels and pottants
Adhesives and sealants, electrically conductive
materials for grounding and EMI shielding
Source: E-chem Catalogues used to introduce for the customers.

Table 1.1 Products range of E-chem in many industries
The main products are Silicone serving electronics and advanced assembly manufacturers. The extensive
portfolio of Silicone is applied for many industries across the value chain and end markets. Many products
are made from silicones for Electronics such as Adhesives and Sealants, Conformal coatings, Encapsulants,

Dielectric Gels, Electrically and Thermally conductive materials and Foams. The industries in which
Silicone can serve its demands are Power and energy, Lamp and Luminaire, Industrial and Aero,
Transportation assembly, Consumer and communications, Appliance, Sensors and actuators.

10


Source: E-chem Catalogues used to introduce for the customers.
Figure 1.2 Products range of E-chem in many industries
Silicone main purposes for Electronics are delivering reliable, long-lasting protection for electronics
application, improving thermal stability and controlling better stress-relief on delicate board components
during thermal cycling. Although its characteristics can cover wide usage with outstanding quality, its
components are considerably simple. Most Silicone is non-solvent, which supports the process of electrical
production simply and time-saving a lot.

1.6

Main customers

11


Customer Name

Location

Product Name

Pioneer Plastics
Industry

ESD Korea
O Sung RF
Jinyang MTS
PolyTech

Hung Yen
Bac Ninh
Bac Ninh
Bac Giang
Hung Yen

Anyone Vina

Bac Ninh

SN Hitech
Innorex Vina
ITM Semiconductor
Dongyang E&P HCM
Vina
Novas EZ Vietnam
Chemtro Vina
Daikin Vietnam

Bac Ninh
Hai Phong
Bac Ninh
Dong Nai

SB7458, SB7468,

LTC761, LTC 750A
7657
SL 200
7458
SL 200, LTY 310, 4000
Catalyst, 7028 Cross,
7200
7657, 7646, 9250,
7028, 4000 Catalyst,
297, 7689, 7645
4000 Catalyst
3-1953
1-2577, 3-6635
PAS-7900S

Vung Tau
Dong Nai
HCM

Estimated monthly
Revenue
$63,364.20
$63,000.00
$2,000.00
$3,500.00
$8,624.00

$1,300.00

$22,731.00

$6,200.00
$223.92
$2,400.00

PAS-7900S
$3,500.00
PAS-7900
$4,832.53
9187L, 9186L, 9187H
$120.00
Source: March 2021 report – Sale department

Figure 1.3 Current manufacturing customers in E-chem Vietnam, their product usage and revenue in
March, 2021.

2. Problem Identification
2.1

Problem Context

Globally, the annual amount of silicone-based manufacturers is ca. 2,122,000 metric tons with an estimated
revenue is more the n €10.6 billion [56]. It is a profitable and potential industry. Silicone in the world is
extremely expensive and non-eco-friendly. With the growth of the world population, the demand for
modern electronics devices with high quality is increasing accordingly. Silicone-based chemical brings a
high endurance for electronics part with eco-friendly renewable products. It gradually represents an
important driving force for continued electronics market growth.
In Vietnam, Chemical companies for Electronics industries are not popular. The popular name for this kind
of business is Threebond, Creative Engineering, Ellsworth, Henkel. Recognizing the potential markets in
Vietnam, Win9 Group (mother company) decided to choose Vietnam as the priority to set up their first
branch outside Korea. Vietnam market is promising because:

-

Many big electronics brands such as Samsung, Apple, LG are moving their factory to Vietnam,
Mexico, elsewhere as the big trend of businesses shifting supply chains away from China. Samsung
Electronics intends to close all its sole Chinese TV factories in 2020 and shift its production

12


operation into Vietnam; especially, Samsung re-categorizes its manufacturing place in Ho Chi
Minh as an export processing enterprise. [24]
-

Ms. Nguyen Hoang Dung, who is former R&D director of the Ho Chi Minh City Institute of
Economy and Management, stated that outside of South Korea, Vietnam could become Samsung’s
largest production plant.

-

Currently, Vietnam set special policies to encourage EPEs (Export Processing Enterprises) to
expand business inside Vietnam; EPEs receive 0% import and export duties and other tax
incentives. This action supports supporting enterprises to join deeper into the global value chains
and push up the Vietnamese economy and enhance our reputation worldwide, drawing a new wave
of foreign investment to the country.

There are many advantages big companies setting their factories in Vietnam; it is also considerable potential
for E-chem to supply the raw material in Vietnam. Currently, 80% of raw materials are imported from
mother companies or overseas. Recognize huge demand in Chemical industry but not been explored yet.
The first direct target of E-chem Vietnam is all manufacturing vendors of Samsung, which produces
electronics components such as Printed Circuit Board (PCB), Semiconductor, Gasket, PET Silicone Tape,

etc.
In the venture to explore and conquer the electronics industry in Vietnam, E-chem is facing many obstacles
and challenges. Many reasons come from complicated chemical industry characteristics, human, supply
chain, policies to import, working flow with Dow ASEAN company, customer demand, etc. All of the
problem mess should be put into the analysis, research to find the main problem, main cause and most
suitable solution. Every action plan and analysis must be suitable with current scenarios, budget ability,
human resources of E-chem.

2.2

Symptoms

There are plenty of Key Performance Indicators (KPIs) identified and grouped into five categories:
Perceived workload, Work-related disease, Knowledge, Workplace, Financial Performance [27-28]. In a
trading company, taking care of customers is being more attentive because the manufacturing customers
account for 83%, the dealers account for 17%. Moreover, the manufacturing brings 87% revenue in 2020,
13% revenue received from the dealers. Therefore, customer satisfaction affects considerably on their
regular orders and the financial status of the company. Recently, it often happens customer complaints and
orders drop that; the reason why, in this research, the author decides the starting symptom is a high level of
customer complaints.
Since E-chem Vietnam was established in March 2020, the operation system and employees’ performance
are in the process of improving. From March 2020 to July 2020, E-chem focuses on office, warehouse,
13


suppliers setting up and finding promising customers. The first customers are SN Hitech, Pioneer Plastics
Industry, in July 2020; therefore, the author has collected since the first customer complaints (from 8/2020
till 3/2021). The customer service department received the customer complaints via email, calls, hotline,
direct feedback when sales visit and send samples.
Time


8/2020 9/2020 10/2020

Quantity
Percentage

11/2020

12/2020 01/2021 02/2021 03/2021

Total

1

4

3

6

11

16

12

18

71


3.5%

7.1%

6.0%

9.5%

15.5%

21.4%

16.7%

26.2%

100%

Source: Monthly report - Customer Service Department
Table 2.1 The number of customer complaints from 8/2020 till 3/2021

Number of Customer complaints by month
20

18

18

16


25.00%

16
14

12

11

12

20.00%
15.00%

10
8

6

4

6
4

2

30.00%

10.00%


3

5.00%

1
0.00%

0
Aug-20

Sep-20

Oct-20

Nov-20

Dec-20

Quantity

Jan-21

Feb-21

Mar-21

Percentage

Source: Monthly report - Customer Service Department
Figure 2.1 Customer’s complaint by month

The trend chart illustrates customer complaints received by the customer service department from August
2020 till March 2021. It can be seen that the trend line increases from August 2020 to September 2020,
then slightly decrease one complaint in next month (from September 2020 to October 2020). However, it
dramatically increases in the next three months and decreases in Feb 2021, but then it goes up again in
March 2021. The trend line is increasing significantly in the reporting period between August 2020 to
March 2021.

14


The monthly Sale report showed the numbers of purchase orders in the period from third quarter 2020 till
the first quarter of 2021; it shows that most of the customers decrease numbers of orders by quarterly,
except for PPI, the numbers are fluctuating. Mr. Dat - Senior Sale Executive, pointed out in the interview:
The customer dissatisfaction will impact the promising orders of the company monthly; we feel
uncomfortable while the Sale team keeps finding potential customers and get new orders from them, while
company policies and back-office departments like customer service and logistics do not improve the
quality to make good relationship and build trust from previous customers.
Customers

Q3/2020

Q4/2020

Q1/2021

PPI

20

8


16

Innorex

8

6

4

ESD

18

10

3

ITM

9

7

5

SN Hitech

11


9

5

Source: Monthly report – Sale Department
Table 2.2 The total order from main customers by Quarter.
The customer service is responsible for gathering all requirements, feedback, complaints, expectation from
customers. Customer complaints are related to many departments at E-chem, including products consultants
from Sale team, technical consultants by a technician, delivery time handled by Logistics team, customer’s
response by the customer service department and payment proceed by Accounting department, and other
reasons come from the characteristics of Dow products. The number of complaints regarding each
department is presented in below table:
Department

8/2020

Technician

0

0

0

0

0

1


0

2

4%

Sale

0

0

2

1

4

4

3

4

25%

0

1


0

1

2

2

2

2

14%

Logistics

1

3

1

3

4

7

6


8

46%

Accounting

0

0

0

1

1

0

0

0

3%

Overseas

0

0


0

0

0

2

1

2

8%

Total

1

4

3

6

11

16

12


18

71

Customer
Service

9/2020 10/2020 11/2020 12/2020 01/2021 02/2021 03/2021

Pct

Source: Monthly report – Customer Service

15


Table 2.3 Number of customer complaint by each departments
From Table 2.3, it can be seen that the highest complaints amount is belonging responsibility of Logistics
team. It accounts for around 46% comparing to the total amount; the second department received complaints
from customers are Sales with 25%. It happens very common complaints related Accounting and
Technician department. Furthermore, the overseas department is mainly controlled by Korean Headquarter,
it related to Strategic planning; E-chem Vietnam does not take responsibility for complaints regarding this
department.
According to Ms. My – Assistant Manager of Customer service team:
The most common complaint about the Logistics team is Delivery time; it usually happens the delayed
delivery and cannot meet the production line schedule of customers.
Ms. Dung – Customer Service staffs also shared:
It also happens the long lead time for each product, that customer cannot wait and send purchasing order
(PO) to another official distributor of Dow chemicals. That the reasons why monthly PO decrease month

by month

Complaints of Each departments
14
12
10
8

6
4
2
0

Aug-20

Sep-20

Technician

Oct-20
Sale

Nov-20

Dec-20

Customer Service

Logistics


Jan-21

Feb-21
Accounting

Mar-21
Others

Source: Monthly report – Customer Service department
Figure 2.2 The comparison of customer complaints of each department.
The consequence of customer complaints also demonstrates on Unstable Sale Revenue of company
monthly. The below chart shows the Sales Revenue from September 2020 till February 2021 (period with
six months). It evident that the Sales revenue fluctuates. It dramatically decreased in December 2020.

16


Although the total profit margin rate is 33.39% ($188,673.57) in 8 months which is a high rate considering
a new chemical merging on the new market, in general, the wholesale revenues are fluctuating month by
month. It partially shows uncertain financial statements of E-chem Vietnam.

Wholesale trend
$200,000.00
$150,000.00
$100,000.00

$160,419.49

$110,649.86


34.86% 34.22%

$131,623.88
$129,504.69 46.50% $139,427.58
$94,470.15
36.74%
31.69%

$37,095.35

$50,000.00

$16,765.05

28.91%

50.00%
40.00%

30.24%30.00%
25.60%

$-

20.00%
2020.08

2020.09

2020.10


2020.11

Whole sales amount

2020.12

2021.01

2021.02

2021.03

Margin rate

Source: February 2021 Sale report – Sale department
Figure 2.3 Wholesale trend from September 2020 till March 2021
To sum up, the fact that E-chem is facing customer dissatisfaction issues for many departments, especially
problems from Logistics’ responsibility, significantly affects monthly purchase orders in the company. As
a result, a high level of custom complaints is the starting point for deeper analysis of the current problem
in E-chem.

2.3

Possible Problem

Besides, based on a literature review to determine the problems that cause customer complaint symptoms,
some first in-depth interviews were conducted in different departments from 10th February 2021 till 25th
February 2021. The face-to-face interview has proceeded, including the Manager level (Department
Manager, Assistant Manager) and staff. The purpose of the in-depth interview is to understand the opinion

of stakeholders regarding the customer complaint at E-chem from August 2020 up to the moment of
interviews.
There are five possible outstanding problems causing customer complaints: Long lead time of products,
inflexible systems to respond to customers' inquiries and quotation requests, high price, product shortage,
and the short expiration day. Those are possible problems that the author initially gets from in-depth
interviews and bases on theory review.

17


POSSIBLE PROBLEMS

SYMPTOMS

EFFECTS

Delay Lead Time

Drop Purchase Orders
Late response to customer
request

Customer Complaints

High competitive price
Unstable Sale Revenue

Product Shortage

Figure 2.4 Initial Cause and Effect Map


18


2.3.1 Long Lead Time
Typically, the Sales team in E-chem will discuss with suppliers (Dow ASEAN Chemical Corporation) to
check available stock status, production lead time, and price for each product after receiving new purchasing
orders from customers. Then, Sale team will calculate and inform the final lead time by adding the
production lead time and delivery lead time to confirm the shipping date for customers. That is how the
sales team bases on confirming with clients and setting up the committed shipping date. As a process, due
to production issues from plants of suppliers or unexpected shipping delays from forwarders. These cases
result in delayed lead time for customers of E-chem Vietnam.
Furthermore, due to the limited material resource to produce specific chemicals, the production plant of
each product is different. The main shipping plants are from Korea, the EU, Japan, China, US. The lead
time of Silicone products in E-chem normally around 3-4 months; some unique products last even 5-6
months, these products are typically delivered by vessel (boat). If there is no prior preparation for stock, the
customer's tight line production cannot be appropriate with this lead time. Furthermore, the safety stock is
necessary as a buffer to cover the unusual or unexpected customer demand [14]. To be more specific, lead
time (including production and delivery lead time) of common products sold in E-chem Vietnam are shown
as below chart:
Estimated
Production Lead Delivery Lead Arrival in
Productio
Time
Time
Echem
n Plants
(Months)

GMID


Dow ASEAN Material Description

6017267

3140 RTV SLNT CLR,TUB,100ML-40CTN

30 working days 15 calendar days 3 months

KOREA

4015093

3-4241 DIELECTRIC TOUGH GEL KIT

29 working days 75 calendar days 5 months

USA

2429594

LDC 2577D BTL,CAN,1KG-10CTN

27 working days 30 calendar days 3 months

KOREA

42 working days 15 calendar days 3 months

JAPANES

E

6017389 SE 9189 L GRAY RTV,CRT,330ML-10CTN

2225999 182 SIL ELASTOMER PT,KG,19.9KG-PAIL 33 working days 75 calendar days 5 months

USA

1673998 182 SIL ELASTOMER KIT,KG,1.1KG-1CTN 29 working days 70 calendar days 5 months

EU

2085925

184 SIL ELAST PLST,19.9KG-1KIT/CTNDOW

28 working days 75 calendar days 5 months

USA

4007531

3-1953 CONFORMAL COATING,3.6KGPAIL

34 working days 75 calendar days 5 months

USA

4007474


3-1965 CONFORMAL COATING,3.6KGPAIL

28 working days 75 calendar days 5 months

USA

19


4006079

3-1953 BLADDER PAK,KG,18.1KG-PAIL

29 working days 75 calendar days 5 months

CHINA

4076062

CN-8760 PART B,KG,25KG-PAIL

25 working days 45 calendar days 4 months

CHINA

4076063

CN-8760 PART A,KG,25KG-PAIL

25 working days 45 calendar days 4 months


USA

2277298 170 SIL ELASTOMER PT A,KG,20KG-PAIL 21 working days 75 calendar days 4 months

USA

2277301 170 SIL ELASTOMER PT B,KG,20KG-PAIL 21 working days 76 calendar days 4 months

USA

4085928
4068447
4017484

3-1944 HP RTV COATING,CRT,305ML24CTN

1-2577 LOW VOC CONFORMAL COATING
25 working days 30 calendar days
, 1KG Can
1-2577 LOW VOC BLADDER
PAK,KG,15KG-PAIL

6017266 3140 RTV FL/SL CLR,CRT,300ML-24CTN
6017269

25 working days 30 calendar days 3 months
3 months

KOREA

KOREA

20 working days 75 calendar days 4 months

USA

30 working days 15 calendar days 3 months

KOREA

3145 RTV ADH/SLNT CLEAR,TUBE,90ML23 working days 15 calendar days
12CTN

2 months

USA

4018917

3-6635 DIELECTRIC GEL 3.6KG PAIL

31 working days 15 calendar days 3 months

USA

4113190

TC-4605 PART A,15 KG PAIL

30 working days 45 calendar days 4 months


CHINA

4113191

TC-4605 PART B,15 KG PAIL

30 working days 45 calendar days 4 months

CHINA

2565129

SE 9186L CLEAR,330 ML CTD

42 working days 15 calendar days 3 months

JAPANES
E

3121372

1200 OS PRIMER CLEAR 5 L CANISTER

23 working days 70 calendar days 4 months

EU

3235840


DY 39-067 (UN), KG, 1KG-6CTN , CAN

80 working days 30 calendar days 5 months

JAPANES
E

2756030

7091 SLNT BLACK,CRT,310ML-12CTN

80 working days 70 calendar days 6 months

EU

Source: Dow ASEAN Customer Service Department
Table 2.4 Lead time of popular products in E-chem Vietnam
According to Mr. Quang Minh – Logistics staff, who is in charge directly of each shipment:
Production lead time usually can be kept as a commitment, but due to logistics constraints, it frequently
happens delivery delay; we signed an extended contract with CJ Logistics forwarder to make the exportimport procedure, custom clearance, and trucking service. The service expense of CJ Logistics is relatively

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high, their issue responses are fast, but in urgent cases, they are not flexible and experienced enough to
support the constrained logistics and prioritize E-chem goods. The actual depart and arrival schedules
normally delay comparing to their initial information to our company.
2.3.2 Late response for customer request
For all information delivered to customers, the Sale and customer Service departments have to get approval
from top managers like quotation, product inquiries, product consultant, etc. The E-chem products are

diversified but divided into 3 main categories: Adhesive, Conformal coating and Thermal conductivity. If
all the standards for setting quotations and product-related consultant are set up, it shortens time to respond
to customers. This late response problem will be improved considerably if the company system is adjusted
to be more flexible and straightforward.
In the in-depth interview, Ms. Loan – Sale department expressed her opinions:
When getting requests for quotation, Sale staffs will check the purchase prices from suppliers. Their
response takes around 2 days to get feedback from the logistics team for all related import fees such as
delivery fee, import tax, customer, etc. Then sale will check the competitive price, set the margin and
make the quotation. It is compulsory to send our suggested quotation to Korea Assistant – Mr. Lee Dong
Huyn or Mr. Lee Cheol-Ho, and they will send it to General Director to get the final decision about the
quotation. The duration of this process can take 3-4 days to finalize; sometimes, if Dow provides the
purchasing price late, it can last for one week. It regularly happens the complaint of customers for
waiting too long, due to their demand, they quickly choose other suppliers giving fast response instead of
E-chem.
Nowadays, speed, quality and flexibility are the prioritized competitiveness to respond to the unique needs
of customers and the market [1]. Sanchez and Perez found a positive relationship between a superior
performance in flexibility capabilities and firm performance, although flexibility dimensions are not equally
important for firm performance [2]. Voigt et al. show that German OEMs, especially the premium OEMs,
overestimate the value of change flexibility and short delivery times for their customers [3].
2.3.3 High competitive price
E-chem is a branch of a big mother company in Korea called Win9 – one of the best Silicone providers in
Korea; their finance is extremely solid and prospective. They are willing to spend huge investment amounts
on every branch in different countries. That strength creates the unplanned spending habits of all employees
in E-chem, even top management level. They do not need to spend much time researching the most
reasonable suppliers in the market that suit the demand and business size of E-chem. Director easily
approves the suppliers that provide good services, but their prices are relatively high.

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Ms. Nga and Mr. Dat have the same idea about this problem:
Besides using high-cost agency services, they have product demand for irregular customers, but E-chem
doesn’t have safety stock for their demand. The product inventory range of E-chem is not diversified. If it
happens suddenly, E-chem will calculate all logistics costs and purchasing costs for this order. Therefore,
the selling price is extremely high comparing to other competitors. It results in customer complaints
about the price.
By ineffective cost management, it results in offering a high price for customers of E-chem. Currently, the
selling price is set up based on purchasing price (from Dow ASEAN supplier), logistics fee to import in
Vietnam, and warehouse fee. E-chem can increase customer satisfaction by managing lower supply chain
costs. In a bid to deal with market instability, all companies try to enhance their price competitiveness; the
organization concentrates on its core activities, resulting in lower costs and better customer service [4].
Ms. Nga shared a typical case that customer complained a lot about the price at E-chem:
“SPG used to complain a lot when receiving the quotation. They are using 3140 RTV. This product is
used for coating motor components. Currently, it is imported from Korea by CIP price (same as E-chem).
However, their importing price is only $10.69/ Cartridge while E-chem sent the quotation with $23.90/
Cartridge.”
Currency
USD

SPG PRICE FROM KOREA
Price
Packing
$10.69
CARTRIDGE
$256.56
BOX
VND 247,580.40
CARTRIDGE

VND

VND 5,941,929.60

BOX

E-CHEM QUOTATION
Price
Packing
$23.90
CARTRIDGE
$573.60
BOX
VND 553,524.00
CARTRIDGE
VND
13,284,576.00
BOX

REMARK
2.23 times higher
than SPG's current
purchasing price.

Source: Quotation record from Sale department
Table 2.5 Price comparison 3140 RTV products between E-chem quotation and the current buying price
of SPG – potential customers.
2.3.4 Product Shortage
The dealer channels got 139 new purchase orders in 2020, but E-chem only finished 91 purchase orders
(approx. 66%) and remaining 36 sales orders are ongoing and postpone into 2021 (approx. 26%).
Additionally, it happens orders cancellation with 12 sale orders due to production planning and late in
production.


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Sale Orders Status
9%
9%
3%
14%

65%

Delivered

Postponed

Hold

Moved to 2021

Cancelled

Source: Yearly report of Sale order status – Sale Department
Figure 2.5 E-chem Vietnam’s Sale Process
Ms. Nga – Sale department showed her disappointment for product shortage issue as below:
“We always put effort to show E-chem advantages when approaching promising customers: competitive
price, good lead time, on-time customer service. Nevertheless, after receiving Purchase Order (PO) from
customers, E-chem does not have enough safety stock, so we face with shortage products for urgent
orders or during the peak season (3 months’ end of the year).”
Moreover, the CEO of SN Hitech Corp – current customer of E-chem Vietnam complained about a

shortage of products:
“The shortage of products makes us face big challenges to keep commitment on production plan with our
customers. After releasing Purchase orders to E-chem, then we get material cancellation or postpones
information, we must urgently check stock of other suppliers to make sure there is no material shortage
for production, it is very risky for our production plan.”
As a result, the shortage of Silicone products in E-chem is a possible problem of dealer’s channel in 2020,
leading to low performance of dealers’ channel during peak season (3 months’ end of 2020).

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2.4

Identify the central potential problems

After an in-depth interview, it is essential to review some theoretical frameworks to approve and
conceptualize the potential problem that leads to the customer complaints symptom in E-chem Vietnam.
2.4.1 Poor Demanding forecast
Demand forecasting is the foundation for many decisions related to management levels in the supply chain,
such as demand planning and order fulfillment [9], production planning [10], and inventory control [11]. It
is tough to perform demand forecasting at a high level of precision due to underlying volatility and many
uncertainties [12]. Forecasting for customer demand is crucial information that can be shared and used in
supply chain management. Accurate and reliable demand forecasts provide vital intelligence and intensely
competitive for supply chain managers to support the company’s planning and decision making.
The limited visibility of actual demand is the most difficult in the most supply chain [6], the future is always
uncertain, and most people do not have enough crystal ball to predict precisely about it. Forecasting process,
along with the supporting mechanisms for information provider and elicitation of assumptions. It is a
helpful way to manage the organizational conflict, the informational and procedural shortcomings that
emerged from the forecasting biases of the functional areas [7].
The sale procedure in E-chem Vietnam is described as below:


Dealer’s
warehouse
Sale’s planning
demand

Production
Planning

Customer

E-chem’s
Warehouse

Production

Customer
Sale planning
strategy
Dow ASEAN Production Plan
Inventory Management

Source: E-chem Sale Policies and Regulations
Figure 2.6 E-chem Vietnam’s Sale Process
As the Sale process table, E-chem can adjust and take responsibility for two main stages: Sale demand
planning and inventory management. In the Sale planning step, the Sales department takes responsibility

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for combining all related information to fulfill the sale demand plan. It is compulsory to consider monthly
customer volume, demand possibility of promising customers, stock status, delivery time. Firstly, Customer
Service takes responsibility to collect estimated orders from customers to calculate the total demand. Then,
Sale will check any special offer for promising customers and estimate the possible quantity they may order.
After that, Logistics will check the stock status in the warehouse, including quantity, expired date, quality,
etc. Finally, Sale will combine all information and send it to Dow ASEAN for their production plan.
Therefore, the supplier must gather appropriate customers demand information for the forecasting process
(usability), and it must be available and applied in time at the right place. Corresponding the combination
of the mechanisms include agreeing on a standard frequency and format of exchanging point of sales and
completion of demand information [8].
Lee Dong Huyn – Manager in Sale HCM department, stated that:
The characteristics of chemicals sold in E-chem is an extremely high price, due to the high quality. Some
Adhesive products have double or triple prices comparing the common products in the chemical market.
The demand in the South is too small; it is a big challenge for the sales team to find available demand or
persuade the customers to use Dow Chemical instead of their current usage. When the Sales team found
promising companies, many customers (1st vendor of Samsung Electronics) such as Daeyeong Vina,
Novas EZ, Dongyang E&P showed their unsatisfied attitude due to lead time of nearly 5 months not wait
so long.
Demand planning is a process to build a reliable demand forecast. Furthermore, an effective demand
planning forecast can create a balance between supply and demand, obtain customer satisfaction,
competitive advantages, and profitability improvement for a specific channel [18].
2.4.2 Inflexible system
Flexibility is the ability of a corporate system to deal with changes in the industry nature, mix, volume, or
timing of every activity. Flexibility in the company can enable every employee to raise their own opinion
to improve, cope with the situation, or customize the service to match customer demand and meet their
satisfaction [1]. It is found that there is a positive relationship between a superior performance in flexibility
and firm performance [17].
It can be achieved through two types of changes: internal system change and structural supply chain change
to enhance flexibility. Internal system changes, including how information is used and the decision, are
taken [20]. Regarding supply chain systems, the flexible system results from advances in information

technology coupled with more efficient transportation networks. It enhances the communication connection
between buyers and suppliers with cost-effective and time-saving ability [19].

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