UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Tran Bao Ngoc ENHANCING THE EFFICIENCY OF INTERNAL COORDINATION AT INTERLOG COMPANY ID: 22130047 MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: NGUYEN THI MAI TRANG Ho Chi Minh City – April 20th , 2016 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEDGEMENT Foremost, I would like to express my sincere to my supervisor Mrs. Nguyen Thi Mai Trang for the support of my thesis, for her insightful comments and immense knowledge. Her guidance deeply helped me during the time of collecting information and writing of this thesis. My thought process was enriched from conversations and illustrations of Mrs.
Mai Trang especially problems identification. The attention of Mrs. Mai Trang to the details and specific theories as well as evidences in my thesis is valuable. I am deeply grateful for the time and energy that she invested in my thesis.
Likewise, I would like to thank International Logistics Company’s management team and colleagues who generously provided me much related documentations and precise information concerned the background and current problems. Especially, I am thankful to Human Resource department, Accounting department for the annual data reports. Besides, my deep gratitude is extended to each of people in several departments of International Logistics Company as Mr. Nguyen Duy Minh, Mrs.
Dang Nguyen Thao Linh, Ms. Nguyen Thi Hoang Linh, Mr. Ho Phuoc Loc and Mrs. Vo Van Cat Duyen for supporting in-depth interview as well as rich friendship.
Finally, I would like to thank all members of my family and my close friends who continuously supported me during difficult period of time when doing this research. 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TABLE OF CONTENTS Page ACKNOWLEDGEMENT. 1 LIST OF TABLES. 3 LIST OF FIGURES .1 Logistics industry overview .1 The problem symptom .2 The inefficiency of internal coordination at Interlog Company .3 The low satisfaction of salary and wages at Interlog Company .4 The limited evaluation and promotion system at Interlog Company .5 Causes and effect diagram .6 The real core problem .1 The first alternative of enhancing communication and.
40 internal sharing knowledge.2 The second alternative of standard working process. 64 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF TABLES Tables Page 1 Types of transportation. 7 2 Historical development of growth stage of logistics. 8 3 The turnover rate of each department.
16 4 List of literature reviews. 20 5 Vietnam Logistics Average Salary. 32 6 Salary scale according functional position. 34 LIST OF FIGURES Figures Page 1 Types of logistics.
7 2 Percentage changes of LPI score from 2007 – 2014. 9 3 Organizational Chart in 2015. 13 4 Ranking of Positive responses to each dimension. 19 8 Fishbone diagram of the inefficiency internal.
36 coordination in Interlog 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com EXECUTIVE SUMMARY Currently, Logistics industry is one of the key development plans of Vietnam economy, especially in the world economic integration. According to Vietnam Logistics Association (VLA), there are more than 1200 enterprises in the logistics sector which mostly small and medium company. Meanwhile, there are only 25 multinational logistics companies but they occupy 70% to 80% Vietnam logistics market share. Along with efforts to participate in the important economic agreements such as ASEAN Economic Community (AEC), EU – Vietnam Free Trade Agreement (EVFTA), Trans-Pacific Partnership (TPP), the Vietnam’s logistics industry in general and Vietnam Logistics enterprises in particular are growing constantly.
Following, import-export activities will be increasing in company with the growth of GDP. Therefore, the landscape of Logistics sector in Vietnam is fronting with opportunities and challenges not only business but also human resource management. International Logistics Joint Stock Company (Interlog) is a small and medium-sized enterprise (SME) of Vietnam Logistics industry. Interlog was established in August 2005 with its head office located in Hochiminh City.
They have developed the branch offices in South and North of Vietnam as well as the cooperated partners in Hai Phong and Da Nang. From the beginning of Interlog, they have built a powerful workforce of 30 to 100 full time employees and the number will be increasing in future. However, Interlog has currently faced with the high turnover rate of employees from 19.5% out of total in 2013 to 26.88% out of total in 2014, especially a higher rate more than 50% of Sales Division. This rate is particularly high compared with the average rate of the same industry.
Through collecting secondary data from the company as well as the Employee Satisfaction Survey (ESS) results, the author 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com conducted in-depth interview technique to find out viewpoints of some people in different position at Interlog Company. Following, there are some tentative problems include inefficiency of internal coordination, low salary and limited evaluation system that affect to employee satisfaction. Overall, the core problem of Interlog Company was identified inefficient coordination. The causes of this coordination were illustrated by communication, working relationship, knowledge sharing and working process.
In details, these causes influenced the ability of employees’ satisfaction to which performed the high turnover rate of employees through every year. Moreover, the determination of existing problems will be based to offer the appropriate solutions in order to reduce the negative impacts on the internal coordination at Interlog Company. 5 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.1 Logistics industry overview In most industries, logistics is the part of the supply chain management that includes transportation, warehousing, forwarding and other value added services. The term “logistics” refers to the process or activities of planning and managing the flow and storage of goods, services or information from the point of origin to the point of consumption in order to conform to customer requirements.
Further, logistics nowadays is a significant component of global trade. Accordingly, logistics in business has the main function of control the movement of resources and supplies. The business in logistics industry need to be sure that required items are in the right place at a right time. In brief, the lower the logistics cost and the greater the quality of logistics services available, the higher the amount of word trade being conducted.
Regarding to World Bank (2004), logistics activities typically involve the following elements: - Infrastructure: ports, terminals, railway, roads; - Operations: warehousing, storage, local distribution, trucking, cabotage; - Services: freight forwarders and customs brokers. 6 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Figure 1: Types of logistics Source: Decree No. 140/2007/ND/CP issued by September 5, 2007 Among the types of logistics includes Forwarding, Transportation, Warehouse and Other value added services, Transportation is the most common one which occupies 40% to 60% of logistics cost. Besides, Transportation can create many combinations of transport modes appropriately.
There are five common modes of transportation as follows: Table 1: Types of transportation Transport modes Description Limitation Airways / airplanes Airplanes are the fastest mode but very Availability of appropriate airport facilities expensive Roadways / trucks Trucks are relatively quick and a very Subject to the fluctuation of fuel cost and flexible mode road conditions Railway / rail Rail is a cost efficient mode but can be Availability of rail lines slow Shipping / vessels Ship is very cost efficient but the slowest Availability of port and canals mode of transport Pipelines Pipelines can be very efficient Restricted to liquid commodities and gases Source: VPBS collected 7 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Moreover, according to the historical economic development, logistics has grown from the simplest stage as first party logistics (1PL) to more complex and upper stages such as third party logistics (3PL) and fourth-party logistics (4PL). Currently, following the advancement of technology, infrastructure and human resource, the upper stages of logistics services especially 3PL are more applicable in developed countries as Vietnam. In fact, the 3PL in Vietnam is developing quickly in terms of revenues and number of active firms. The Vietnam Logistics Association stated that their 3PL members increased from 4 members in the period of 1994 to 1997 to 275 members in 2014.
Table 2: Historical development of growth stage of logistics First party logistics Second party logistics Third party logistics Fourth party logistics (1PL) (2PL) (3PL) (4PL) 1960s 1970 – 1980 1980 – 2000 >2000 Logistics were limited to Corporate logistics were Companies create Integrated logistics distribution. Problems gradually extended to complete logistics chains system is a very complex, relating to transaction supplying (purchases, and systems connected system-related problem. with finished products procurement) and to with customer and One of the requirements and related physical production supplier. The integration is the establishment of distribution were management.
of corporate activities and strategic alliances dominant. The problem of the development of between companies, their inventories was not supplying, production customers, products important. and distribution systems suppliers and logistics is actually being providers. Source: Technical University Liberec In Vietnam, logistics are now becoming a major driving force in the development of national economic development.
In fact, Vietnam’s logistics cost nowadays occupies about 25% of GDP that it still much higher than peer countries. Reality, logistics development in Vietnam still meets difficulties with limitations of logistics sectors include bulky and inconsistent government regulations easily enable payment to officials, separation of planning 8 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com and implementing in transportation infrastructure without considering of supply and demand. Further, the limitation also represent with fragmented trucking industry as well as imbalances in infrastructure provision. In the other hand, Vietnam showed the consistent improvement over each year through economic growth.
According to the World Bank report of connecting to compete 2014, Vietnam ranked number 48 among 166 countries and number 5 in the Association of Southeast Asian Nation with a Logistics Performance Index (LPI) score of 3.15 which following after Singapore (4. Figure 2: Percentage changes of LPI score from 2007 – 2014 Source: World Bank Moreover, the free trade agreements such as the Trans-Pacific Partnership (TPP) and Free trade agreement (FTA) of Vietnam – European Union (EU) was established at the end of 2015 that will boost Vietnam economy as well as international trading. Especially, logistics will be one of the strongest growing sectors through these agreements. 9 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.2 Company background International Logistics Joint Stock Company with the short name Interlog is a small and medium-sized enterprise (SME) of Vietnam Logistics industry.
Accompanying the important role of Logistics industry in the development of the economy, Interlog was established in August 2005 with its head office located in Hochiminh City. They have developed the branch offices in South and North of Vietnam as well as the cooperated partners in Hai Phong and Da Nang. From the beginning of Interlog, they have built a powerful workforce of 30 to 100 full time employees and the number will be increasing in future. Their employees have been constantly improving and enhancing their professional qualifications in order to respond to the growing and competition of a market in general and Logistics industry in particular.
Operating in logistics business, Interlog has developed a mission to create the effective supply chain that brings benefits to customers, itself and community. Besides, Interlog has oriented in the next 5 years to become the leading supply chain innovator not only in Vietnam but also in Indochina area. Together with its own vision and mission, Interlog consciously builds the corporate culture through important criteria. The first criterion is teamwork which working skills play a vital role.
This one aims to working together towards the same objective and sharing responsibility. In additional, the information interacts in precise, prompt and sufficient way as well as rapidly and accurately targeting, analyzing and solving problem. The next criterion of corporate culture is knowledge which individual background combines with intense training. Accordingly, knowledge is defined to positive attitude as non-stop learning and willing to adopt by changing all the time.