UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ TANG HOA THUAN INEFFECTIVENESS SUPPLY CHAIN PERFORMANCE IN JOHNSON & JOHNSON VIETNAM MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: PHAN THI MINH THU Ho Chi Minh City – Year 2020 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ TANG HOA THUAN INEFFECTIVENESS SUPPLY CHAIN PERFORMANCE IN JOHNSON & JOHNSON VIETNAM MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: PHAN THI MINH THU Ho Chi Minh City – Year 2020 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CONTENTS EXECUTIVE SUMMARY. 1 CHAPTER 1: PROBLEM CONTEXT.1 Company introduction & organization chart .2 Key competitors of Johnson & Johnson products .2 Situation and symptom analysis .1 Symptom 1: Low operational sales performance .2 Symptom 2: Low customer service level. 14 CHAPTER 2: PROBLEM IDENTIFICATION. The first tentative problem: High Mean Absolute Percentage Error (MAPE).
The second tentative problem: High Forecast BIAS. The third tentative problem: Low On Time IN Full (OTIF) .4 The fourth tentative problem: High turn-over rate .5 The fifth tentative problem: complexity internal process .2 The central problem. 25 CHAPTER 3: CAUSE VALIDATION .1 Potential cause 1: Transportation failure .2 Potential cause 2: Customer service failure .3 Possible cause 3: Customer order un-expectation .4 Possible cause 4: Slow moving stock and obsolete (SLOB). 33 CHAPTER 4: ALTERNATIVE SOLUTION .1 Solution 1: Enhance transportation service provider (2PL) performance .2 Solution 2: Disengage current transportation service vendor .3 Solution 3: Move to inhouse transporters.
52 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF FIGURES Figure 1: Johnson & Johnson organization chart. 4 Figure 2: Supply Chain Department organization chart. 5 Figure 3: Johnson & Johnson consumer health products. 6 Figure 4: Top five suppliers in Fast Moving Consumer Goods (FMCG) industry.
7 Figure 5: Top 3 competitors in consumer healthcare products. 7 Figure 6: Gartner 2020 Supply Chain Top 25. 8 Figure 7: Top 3 competitors in consumer healthcare products. 9 Figure 8: Distribution channel in Vietnam.
10 Figure 9: Consumer distributor in Vietnam. 10 Figure 10: Organic growth among top main competitors. 14 Figure 11: Organic growth of main competitors. 15 Figure 12: Deep-dive analysis of customer surveys.
15 Figure 13: Distribution complaint based on category. 16 Figure 14: MAPE monitoring between 2018 and Year to Date (YTD) Nov-2019. 18 Figure 15: On Time In Full (OTIF) monitoring in 2019. 22 Figure 16: Update cause and effect map of J&J Company by using literature review.
25 Figure 17: Final update cause and effect map of Johnson & Johnson company by using literature review and data according to in-depth interview, primary and secondary data. 27 Figure 18: The routine of information and transportation in a basic supply chain management. 28 Figure 19: The percentage of late order. 31 Figure 20: Distributor inventory (week).
34 Figure 21: Cause and Effect mapping. 36 LIST OF TABLES Table 1: Key retails chain in Vietnam. 11 Table 2: Reported sales by quarter – Unit: MM Dollar. 12 Table 3: Reported sales by quarter – Unit: MM Dollar.
12 Table 4: Reported sales by quarter – Unit: MM Dollar. 13 Table 5: Reported sales by YTD – Unit: MM Dollar. 13 Table 6: Deliver Service Excellence in 2019. 16 Table 7: Interpretation of typical MAPE values.
19 Table 8: Forecast bias performance in 2019. 20 Table 9: Turn over-rate in Supply Chain. 23 Table 10: OTIF failure analysis FY-2019. 29 Table 11: Root cause analysis for MAPE & error bias.
32 Table 12: SLOB expense monitoring and tracking. 33 Table 13: Solution description comparation based on theory. 39 Table 14: Feasible and Infeasible analysis. 40 Table 15: Benefit and expected results.
41 Table 16: Design plan and expected results. 42 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com EXECUTIVE SUMMARY This thesis of “Ineffectiveness supply chain performance through customer service logistics and operational planning process (S&OP)” has been proposed and finished in four main parts: problem context, cause validation, alternative solutions, conclusion and supporting documents. Chapter 1: Problem context contained company background beginning from industry general overall, company history and business competitors and the vision, mission and the organization structure of the firm in Ho Chi Minh. Furthermore, in this session, the author has explored two (2) symptoms which are concerns of stakeholders of the company according to a wide variety of in-depth interview, surveys, primary and secondary data regarding company profits and loss, performance trending and tracking in supply chain division.
Chapter 2: Problem identification means that a problem mess had been faced according to all symptoms, organization results and problems as a general image. Additionally, a key issue of ineffective supply chain organization structure was selected to be multiple resolutions as a central problem of company with the modification of its existence and critical factor. The author shows ineffectiveness supply chain performance through customer service logistics and operational planning process (S&OP) should be central problem based on high MAPE, high BIAS and low OTIF indicators. Chapter 3: After validating there possible problems and choosing the main issue of the firm, three potential causes of central problem noted down as transportation failure, customer failure, customer order unexpectation and slow moving stocks were carefully verification and determination so as to provide out multiple solutions which were representative in the sector.
Chapter 4: In this argument, the long-term solution is suggested to offer proper transportation issue at the change moment of business in the future. In the parallel, there are there proposals 1|Page LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com for Enhance transportation service provider (2PL) performance, disengage current transportation service vendor and move to inhouse service to tackle problem with digital application. The final debate was named as the supporting documents to support all information and sources for the above three chapters. It composed sections of in-depth interview transcript to justify central problem and selected solution.
In-depth interviews were widely used at various levels from many related departments of Johnson & Johnson (JNJ) Vietnam to select data and to analyze various perspective of the problem. 2|Page LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CHAPTER 1: PROBLEM CONTEXT 1.1 Company introduction & organization chart Johnson & Johnson is the USA international firm started in 1886 that manufactures medical devices diagnosis, drug and consumer goods industry. Its popular stock is a component of the Dow Jones Industrial Average and the company is the top of 37 in the 2018 Fortune 500 magazine of the largest United States corporations by total revenue. The company is one of the most valuable around the word.
Johnson & Johnson headquarter located in New Brunswick, New Jersey. The cooperation has totally 250 branches with operations in 60 countries and products sold in over 175 nations. Johnson & Johnson had sales volume of $81.5 billion during financial report 2018 in the word. Mission: “For nearly 125 years Johnson’s® mission has been to create the gentlest baby products in the world.
Products so mild, they can be used for every age and stage of a baby’s life. That is our standard of gentle. But gentle isn’t only in our bottles, it is also in our heart”. Johnson and Johnson Vietnam (LTD) is one of a part of Global Johnson and Johnson.
Its representative office is located at No. 5 Me Linh Vietbank Tower, Ho Chi Minh city. It is a well-known and high-quality brand in consumer health sector for baby care industry such as bodywash, shampoo, wipe and baby powder… with organization chart as following areas: 3|Page LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Figure 1: Johnson & Johnson organization chart Deliver Operations division takes responsibility the flow of import products and services and includes all procedures that transfers from manufacturers upcoming local distributors. The duties include in the active streamlining of a business's supply-side activities to give the best customer valuable and win the competitive advantage in heart of consumers.
Supply Chain division coordinates the logistics of all aspects of the supply chain which consists of five steps: • The strategy of planning • The capable of imported products or export • Producing (concentrated on efficient and effectiveness) • Shipping and warehouse • Products returned and destruction (for defective or unwanted products) Human Resource organization chart as following areas: 4|Page LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Figure 2: Supply Chain Department organization chart Common consumer healthcare products including skin health products (NEUTROGENA; AVEENO, CLEAN & CLEAR…), OTC Products - TYLENOL and necessity healthy goods brands such as LISTERINE, BAND-AID, JOHNSON’S 5|Page LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Figure 3: Johnson & Johnson consumer health products 1.2 Key competitors of Johnson & Johnson products In Consumer Products segment, other major companies include Unilever International, Nestle, Kimberly-Clark Corporation, and Procter & Gamble. Among of competitors, Johnson & Johnson gains appropriately 10.4% of the total contribution in terms of sales volume. 6|Page LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Figure 4: Top five suppliers in Fast Moving Consumer Goods (FMCG) industry Source: Neilsen’s research in 2019 Figure 4 showed that Johnson & Johnson is behind Fav Score compared to competitors such as Procter & Gamble; Unilever and Colgate-Palmolive. Therefore, to win customer heart or repurchase of customers need to be proactive and react as fast as possible.
Now, Johnson & Johnson is the fourth range in the list. The company should move up level to win sales performance. Figure 5: Top 3 competitors in consumer healthcare products 7|Page LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Figure 6: Gartner 2020 Supply Chain Top 25 Source: J&J source Industry rewards and recognition provide another opportunity to benchmark the progress we are making through the lens of our outside stakeholders. I am proud to share that Gartner, Inc.
– the worldwide on he top quantitative research and consultant firm – has pointed out ranking as #3 on the 2020 Supply Chain Top 25 list. This recognition reinforces that J&J is delivering on the strategic journey we’ve been on for the past several years to become even more customer-focused (all while continuing to strengthen our operations in areas like digital, planning and manufacturing technologies). More importantly, this recognition reaffirms the importance of every single one of us driving the future of supply chain for our customers and our industry.3 Positioning strategy The beginning journey to find out the scope of level alternatives is to gather many ways which a level strategy could be received as well as executed. After that, six approaches to positioning strategy will be showed and debated positioning by attribute including money that customers are ready to buy, functions, products aiming, classification, and the competitors.
Johnson and Johnson consumer health goods created the mission “the gentlest baby products 8|Page LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com in the world” for 125 years as Positioning by the Product User compared to Unilever, P&G and Nestle. Figure 7: Top 3 competitors in consumer healthcare products Source: J&J marketing department source 1.4 Distribution Channel J&J Consumer Vietnam is an importer from J&J Malaysia and Thailand exporter. Then, J&J Vietnam dedicate for third party service logistic (3PL) for handling, storage and transportation to distributors (DKSH, Tien Thanh and Duong Anh), Key Account (Coopmart) and Convenience Store (Bach Hoa Xanh, Concung, Circle K, The Guardian) as following the flows: 9|Page LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Figure 8: Distribution channel in Vietnam Figure 9: Consumer distributor in Vietnam Source: J&J Supply Chain Vietnam 10 | P a g e LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Table 1: Key retails chain in Vietnam Source: USDA In summary, it mentioned clearly that the distribution channel of Johnson & Johnson is likely other competitors both general trade channel and modern trade channel.