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Developing operation strategy for outdoor furniture export to US market

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I.

GENERAL INTRODUCTION
1. Introduction
Company name: WOODSLAND JOINT STOCK COMPANY
Abbreviation name: WOODSLAND
Head office: Lot 11, Quang Minh Industrial Zone, Me Linh District, Hanoi.
Tel: +84. 435 840 122 - Fax: +84. 438 134 944
Email: info@woodsland.com.vn
The scale: Main factory:
-

Woodsland Factory: 1.5 ha

-


Tan Phu Ha Factory: 1ha

-

Phu Ha Factory: 2.5 ha

-

Thuan Hung Factory: 2.5 ha

Power production of wood products: 50 containers per month
Kitchen cabinets production capacity: 1000 sets / month
Number of employees: 1,300 people
Woodsland Joint Stock Company officially started producing from November, 2003. Up
to now Woodsland has achieved great strides in the field of timber export and became
one of the largest timber companies in Vietnam. The Woodsland products for furniture
manufacturing has been present throughout most of the United States, Canada, Europe,
Russia...
2. Vision and Mission
Becoming the leading furniture manufacturers in Vietnam and Asia Pacific region by
providing customers quality high value furniture products with the best service in
Vietnam, supported flexibility financial solutions based on the core competencies, the
ability to connect and build relationships with strategic partners, customers and
suppliers worldwide.
3. Core value

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The core value is as a guide, a model for all our actions and is the foundation for
building people's organizations and Woodsland. These are: Creative innovation, focus
on core competencies, and globally flexible thinking.
4. Organization chart

5. Business results in recent years.

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II.



IDENTIFY TARGET MARKET AND COMPETING PRIORITIES

1. Analysis the U.S. furniture market and identify the target market
The criteria for the market analysis are: income, age and geography.
Income
People who have average and high income are subjects that towards the outdoor furniture
market. High-income customers tend to purchase items with more valuable and more
frequently. For income groups often have features such as:
(1) They are the young professional age,
(2) Recently purchased the first home in the city,
(3) Proper outdoor space,
(4) Like purchasing the high quality outdoor furniture with reasonable price.
Age
The two largest age group is from 35-44 and from 45-54. Customers in the 35-44 age
groups are usually young married couples and have just built the first house, looking for
comfort like their parents' house.
45-54 age groups focus on high-income individuals, who tend to buy outdoors furniture or
furnished to their 2nd home. In fact, from the years 2006-2010, sales has increased by the
population boom of this group which is expected the consumption of luxury products.
Geographic location is also decided customer tastes and buying habits.
The US is divided into 4 regions: The North, The West, and The South. Northwest
customers are considered the most promising in the consumption of outdoor furniture. This
group also has a higher income than others, and the severe weather in the Northwest is also
necessary to create demand for using outdoor furniture. The most common reason for
promoting customer is buying outdoor furniture needs replacing broken and old appliances.
Furthermore, those in the Northwest tend to move more and they rarely move the outdoor
furniture when moving house. The customers in this area seem like small things, while
those in the West prefer the exterior products which are large and bulky size. Customers in
the coastal states have tastes of heavy structural items because of the sea breeze influence.
In the southern states, consumers prefer outdoor space as they enjoy the warm weather than

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other areas, but they create the less potential for the consumption of outdoor furniture items
than the other customers because their income is significantly lower.
Thus the target customers are the elderly, married, middle and high income in western
North and South America.
2. Competing priorities selection
Woodsland competing priority is low-cost operations following advantages:
-

The materials: Characteristics of outdoor furniture manufacturing requires a large amount
of material which is wood derived from forest trees, to ensure sufficient volume provided
in the peak period, fine quality wood and to ensure meeting the requirements for
production. Woodsland will select placement in the plant to reduce transportation costs of
raw materials and maintain stability of supply.

-

Workers: Manufacturing outdoor furniture requires high-skilled workers with certain large
numbers. The proportion of workers occupied high production costs, so we will select the
location of the plant in the province that has abundant labor force to reduce labor costs,
recruitment costs and maintaining production stability.

-

In the value chain to create outdoor furniture products, Woodsland will analyze and
processe outside the given simple tasks to cut costs and increase the flexibility capacity.

-

In manufacturing, Woodsland check regularly to improve manufacturing processes, limit
waste and rational use of materials, energy, tools to optimize production.

-

Combining with the competing priorities of maintaining stable quality, timely delivery, and
high yield will take Woodsland up to the leading position in the production of outdoor
furniture exporter in Vietnam and the region.
III.

MANUFACTORING PROCESS AND CAPACITY SELETION

1. The process of export furniture manufacturing

in

Woodsland

factory

is

simulated in the following block diagram:

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Input material
Returning vendors

Receiving
Inspection

Pre-processing
- Cut-off
- Drying
- Classification

Handling

inappropriate

product

QC

Intermediate Warehouse

Fine woodworking
- Spore
- Cut to shape
- Cut back, graft
- Milling
- Drilling holes

Handling

inappropriate

product

QC

Finishing
- Sanding
- Preliminary assembly
- Coatings, wiping oil

Handling

inappropriate

product
Handling

QC

inappropriate
product

Packaging

- Assembling more
clusters
- Packaging and labeling

Final
Inspection

Loading
Dispatch
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Power option
Planning is defined as a capacity building project. The export outdoor furniture
production line is calculated on the basis of output power over a period of one year after
production to stabilize.
In the furniture industry, statistical power is often measured by the number of cubic
meters of products.
With 4 factories, Woodsland estimated maximum capacity of approximately 10,00012,000 m3 of product per year.
Capacity for outdoor furniture production line plans 50 x 15m3 container per month x
12 months = 9,000 m3 of product per year.
Power lines for kitchen cabinets, domestic goods = 1000-2000 m3 of products per year.
IV.
CHOOSING LOCATION AND SUPPLY CHAIN BUILDING
1. Choosing location
Place is related to location, activity is done in parts of the supply chain. The choice here
is the quick response and efficiency. The decision will be focused on activities in a
number of areas to achieve efficiency and economies of scale. The decision will reduce
the focus on activities in the area near our customers and suppliers to work more timely
response. The decision on the location is seen as a strategic decision that impact to the
financial in a long-term planning. When deciding on the location, managers need to
consider a range of factors such as department costs,

labor and skills needed in

manufacturing, infrastructure conditions, tax . . . and closer to suppliers or consumers.
To make an informed decision requires carefully research a variety of complex issues.
Specifying the priority order of the above issues, keeping an open attitude to other
options, conducting research and making available are one of the most important
decisions to start business activities.
Building supply chain has its own market needs and challenges in operations, but in
general there are similar problems in some cases. Any company in the supply chain
needs to individually decide their course of action and the five following areas:
Field

The related decision

Related activities

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1.

Furniture -Which product?

- Production scheduling and this

manufacturing -When and how many?

schedule must be consistent with
production capacity of the plant
- Balancing work process
- Quality control

2. Inventory

- Equipment Maintenance.
- Which Inventory will be stored at Against uncertainty of the supply
each stage in the supply chain

chain.

- How many inventory levels for
raw materials, semi-finished and
finished products
- Determining inventory levels and
3. Location

the best re-order point
- The place can facilitate the When the decision is made that
production and storage of goods

we

have

defined

a

logical

- The most cost effective in the direction to take the goods to
production and storage of goods consumers through distribution
place.

systems.

- The use of the existing favorable
conditions or create new favorable
conditions

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4. Transport

-

What

way

inventories

are -

Cost of shipping comparison:

transported?

Transported by air or by truck is

- When using the best transport?

faster and more reliable, but the
cost is expensive. Shipping or by
train has lower costs but longer
and unreliability transit times.
- Reserving inventory at a higher
level to compensate for the
unreliability of transport.

5. Information

-

Collecting

and

information
-

Catch-accurate

sharing Good information will make
people

determine

the

timely effectiveness of what to produce,

information creates the ability to how much, where to put the
combine and make better decisions. inventory and what the best
transportation is.
All decisions will determine the capacity and efficiency of the supply chain. The effectiveness
of the supply chain creates operational efficiency and competitiveness of the company.
Woodsland supply chain included suppliers of raw materials which are wood, sawn timber,
kiln drying service providers, satellite manufacturers offer semi-finished products, suppliers of
materials other combinations such as steel, aluminum, glass, fabric cushion, plywood,
packaging suppliers, chemicals, plastic with metal accessories, labels, transport services,
customs services ..
V.

GENERAL PLAN

Production related to the supply chain capacity and storage products. The means of production
are factories and warehouses. The basic problem of the manager when making production
decision is: how to resolved balance between responsiveness and efficiency. If factories and
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warehouses are built with high excess capacity, the flexibility and quick response to large
volumes demand of products. However, the factory was built by one of the two following
methods to match production.
-

Focusing on a factory production and manufacturing a product, we can perform many
different operations in manufacturing production from the different parts to the assembly of
the parts.

-

Focusing on functionality. Just focus on a number of activities such as producing a set of
performance parts or assembly. This approach can be applied to produce a variety of
different products. Tendency to approach a product often leads to the development of
specialized products for a cost equivalent to the force. Approach toward generating
functions creates the professional development of the special function rather than
developing a given product. The company should decide to approaching method and what
combination of these two methods to give the ability and knowledge to meet customer
needs. Similarly, for the warehouses are also built many different approaches. There are
three main approaches used in the warehouse.

-

Stock Keeping Unit: In this traditional method, all products of the same type are stored
together. It is effective and easy to implement storage products.

-

Batch storing: Under this method, all products which were related to the needs of a
particular customer or a job are stored together. This allows the selection and effective
packaging but requires more storage space than SKU traditional storage methods.

-

Cross-docking: This method is designed to increase the efficiency of the supply chain.
Under this method, the product is not classified as parts inventory. Instead of parts that are
used to store a product from the suppliers trucks unloading bulk to many different products.
The major shipment is divided into smaller lots. The smaller shipment with more different
products are combined according to daily needs and loaded onto trucks sent to the end
customer.
Inventories include raw materials, semi-finished products, and finished products by the
manufacturer, distributor and retailer of storage spread throughout the supply chain. The
managers have to decide where to store to balance between responsiveness and efficiency.

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There are three basic decisions to make and store inventory:
-

Inventory cycle: This is needed to determine the stage of demand between the products
purchasing period. Many companies aim to produce or purchase the large to achieve
economies of scale. However, large shipments also increase storage costs.

-

Safety inventory is stored against uncertainty. If demand forecast is made entirely accurate,
inventory is only periodically necessary levels. Each of the forecast errors should have to
compensate for this uncertainty. It is higher or lower level by storing goods when demand
spikes than expected.

-

Seasonal inventory is built on the basis of forecasts. Inventory will increase demand and
this demand usually occurs a few times a year.
VI.

HUMAN RESOURCE PLAN

1. Project board
To implement a business plans, the company will establish a project board to make this
project. The proposed project model as follows:

Project Manager

Analysis

and

Customer

Management

market

relations

and

and

investigation

market

production

group

development

coordination

group

group

Project support
group

Functions and duties: The project team is responsible for implementing business projects
“export outdoor furniture products to the U.S. market”. Among them:
+ Project manager

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 Project Manager is responsible for coordinating and managing the entire process of
project operation.
 Supervising, managing staff and taking measures to accelerate the process of project
implementation.
 Decision of competent leaders to report.
+ Market research group
 Planning, conducting market surveys U.S market about outdoor furniture products.
 Providing the market analysis report, assessing market potential and development
orientation.
 Monitoring and analysis of project activities and providing alternatives to market
changes.
+ Customer relation and market development group
 Planning market analysis report of market analysis team
 Searching for potential customer
 Implementing customer relationships, seeking sales opportunities, contracting with
partners and customer care.
 Coordinating with delivery team and implementing other provisions in the contract.
+ Production management team
 Receiving contract from the customer development team.
 Coordinating with production department to plan and implement production contract
 Coordinating with business development team to check the quality of products which
will be delivered to customers.
 Report to project manager
+ Support team
 Monitoring the progress of the contract, synthesizing report
 Reporting directly to the Board of Directors and warning of possible problems
 Support other groups on documents, forms, plans, costs and other office work.
2. Human resource
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No
1
2
3

Position
Number
Personnel manager
01
Market survey group
02
Customer relationship and
02

market development group
4
Production management team
05
5
Sales support
05
3. Arranging directly production force

Note
Sales director or deputy sales director
Transfer from sales department
Transfer from sales department
Transfer from the planning department
Transfer from accounting department

This is the main resource of direct labor to create products. Woodsland main stages are
organized into groups with production force as follows:
-

The preliminary: 80 people, including 4 groups: receiving timber, sawn, drying, sorting:
the preliminary work includes unloading logs reception, sawn timber for warehousing
and receiving input checking. Unloading the pallet lumber, in wood stoves and wood

-

classification after drying into categories corresponding to the request.
The refined: 60 people, including groups working on the planer, cut, milling dream,

-

drilling holes
The completed: 60 people, including the working group made sanding stages,

-

preliminary assembly details, clean oil storage or decorative coatings.
The packing: 50 people, including the group assembled sub-assemblies after surface

-

finishing, packing, loading container shipment.
The electric: 10 personnel performing duties in support of production, repair service,
tool sharpening, balancing installation...

4. Material panning
-

The cost of materials used in production accounts for a large proportion of production
costs. Perform material cost reduction slows spinning faster than the working capital
and facilitate critical to lowering production costs. Thus, each stage of the procurement
process management, storage transportation, storage of used materials is directly

-

affecting cycling the working capital of the business.
Organize working plan, tasks and materials supply is an indispensable condition, which
will always provide timely, uniform material for the production process, the basis for
the use and storage of materials logical. Savings and prevent the consumption, losses
and waste materials in all stages of the production process.

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-

During the manufacturing process, material planning, the existence of materials in
storage buffer necessary steps to ensure the continuous operation of the enterprise. The
enterprises in a market economy should not be engaged in the production which should
have a reserve source of materials. Reserve materials not directly generate revenue, but
it has a huge role to the production process is continuous. Therefore, if the company is
large reserves of raw materials will also costly, capital accumulation. If too few reserves

-

to make business process is interrupted, causing a series of subsequent consequences.
Raw material is one of the current assets of the company, which is often circulated in
the business process. Management and rational use of raw materials affect critical to the

-

completion of common tasks of the enterprise.
 Materials classification and assessment
Raw materials: wood, sawn timber wood derived from forest
Semi-finished products purchased are also reflected in the materials as detailed, more

-

clusters of outdoor furniture products have undergone processing, refining
Raw and auxiliary materials: metal accessories to link the product, chemicals such as
glue, oil coated, coating, packaging, labels, paper printed assembly instructions, user

-

manual ...
The standards and testing of materials shall comply with the requirements of the

-

customers or the manufacturer’s standard.
Use of standard raw materials required by the import market is a prerequisite for export
production.

VII.

PRODUCTION PLANS CONTROL

The process of planning and scheduling including these steps:
-

Capacity Planning.
Production Planning.
Production Schedule
Production Level.

Capacity planning is the long-term resource decisions including production facilities and
production equipment. Production planning decides medium-term on the use of the
production machinery, manpower, inventory, subcontracted from outside for the
manufacturing activity. Scheduling detailed producing to carry out production. This level

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of production is short-term decisions about the allocation of specific, detailed machinery,
labor and materials to perform working production.
Due to the nature of export production, delivery time is competing priorities, so that the
opposite approach is used by Woodsland. Starting from the due date of the job, the end of
the previous steps, back to work the first step, in order to complete the work on time.
The common method aims to:
-

Minimum time completed.
Maximizing the use of machinery.
Minimum amount of work being done.
Minimum time overdue.

Completion time is determined by the average completion time for each moderation job.
The used machines are defined by the percentage of the total available time. Amount of
done work is measured by the average amount of work in the system. Minimizing the
amount of done work is to minimize the amount of sold inventory in the system. Delay
time limit is determined by the average number of late working days.
Product strategy is often used in production is interrupted production orders. Product in
interrupted production is often different about used materials, manufacturing processes,
machining time, and setup time. These differences lead to the interruption of production
which is very complex. The production system must be:
-

The orders to the binding capacity of the processing stations.
Check the availability of materials and tools before the purchase.
Set due date for each task, check the progress of the due date and time order fulfillment.
Check the work being done to implement the order.
Feedback status job done.
Noting the necessary statistics, such as working time for analysis and distribution of
manufacturing workforce.

Production system is held by one information system with a database including Planning
Records, records control
Profile planning includes:
-

Profile of materials
Product Profile Design
Profile of the production process
Produced documents station
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Profile of materials containing records for each material consists of information materials
and supplies such as code, description of materials, production time, inventory availability,
the amount of the appropriation, the amount of willing, of receive scheduled production.
Products Profile Design contains a list of ingredients and supplies corresponding number.
Profile also provides information on parent material for easy traceability of used materials.
Records production process contains the records of the production process for each
material. Record production process includes the trade unions, the same sequence, the
fragment described, performed the stations, the tools needed to perform the fragment,
setup time, the time taken following .
Records production stations including all information, data of each station as the station
code, station name, capacity, number of shifts worked per week, number of hours worked
per shift, performance, utilization, future average consumer, alternative stations.
Profile control including record of the purchase in the workshop include: Profile record
orders and tasks
Profile order is the order of the records contained in the record shop to open in factory
orders. Each order has 1 record in the workshop summary information such as the
application code workshop, orders, output has completed, not completed quantity, damage
amount, the amount of materials used, date completed, the priority first single of the same
information about the costs involved.
Profile task is a detailed record for each order at the factory, which contains records for the
necessary production tasks include the following information: code-tasking, time to plan
and set realistic time task planning and practice, the amount has been completed, the
amount of damage, completed time and remaining time.
VIII. QUALITY MANAGEMENT PLANS
Quality management is the process of identification and management activities needed to
achieve the quality objectives of the organization 1. The functions of quality management
are: Planning Quality - QP, Quality Control - QC, Quality Improvement – QI.
1. Quality Planning

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Quality Planning including: Strategic planning quality, strategic quality planning, and
planning tasks quality
Strategic planning is the quality of the process of setting long-term goals, customer
orientation and identifies solutions to satisfy the goals set forth. Quality Planning is a
strategic part of the overall strategic plan of the organization, developed, and directed by
leadership organization, is made at the highest level of the organization.
Strategic planning is planning quality products and processes. Planning products and
processes are very important and affect product quality, customer satisfaction, market
share, sales of which affect profits. Planning products and processes often take time and
effort. These organizations tend to not take the time to plan, but take the time to edit the
mistakes by bad planning led to.
Planning tasks are to develop the quality of production quality, made in the workshop
when the material transformed into products. Planning the production quality is the quality
of integrated production planning in order to prevent damage and minimize variability.
Planning the quality of production including design testing to ensure product technology,
process checks to ensure consistent product created and designed to minimize test
damaged in the production process.
The quality policy is Woodsland publicly for all officials and employees as well as
stakeholders for implementation.
2. Quality Control
The system of quality control process of Woodsland include: 1. Product launch process, 2.
Inspection process to receive input, 3. The process of checking in-line, 4. End process
control, 5. Process control of the container, 6. Document Process Management, 7. Testing
process instrumentation, 8. Process product traceability.
All kinds of materials, supplies received are checked before being put into production
warehouse.
The quality control on raw materials can be conducted in-house or at the customer's
facility, subject and commodity contracts. Staff set up quality control inspection records
input quality, certified by the purchasing staff, customers and storekeepers. This record is a

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record supplies used later traceability. These materials are satisfactory warehousing and put
into use. The types of materials and supplies unsatisfactory be handled according to the
provider or return, or reduce the rate of delivery or reduced, depending on agreements with
employees and customers purchase.
Quality control on the ball is a key step in the production process to prevent defects and
ensure quality maintenance during operation.
At Woodsland, each worker is trained as a real "QC staff" per production. The slogan and
act like: "I do not do product damage, do not accept damaged products, our products are
not handed down" is common to their workers to be conscious about quality. At the transfer
point between the main stages of production, QC personnel must be available daily for
quality control, along with statistics. Logistic semi-finished products between
manufacturing processes such as processing, refining, finishing and packing are counting
statistics of staff and verified by QC checks on the assembly quality.
Woodsland made last quality check after the product packaging and warehousing of goods
to the test in a strict order to bring quality products to customers to maintain.
Division QC - Quality Control responsible to the Board of Directors on the activities of
quality control. The control of records and samples as well as updated standards, the trial is
guaranteed by the process.
During the inspection, receiving inspection area, control area is set at the end nearest
warehouse near the input and finished product inventory, is equipped with tables, chairs,
filing cabinets, process control samples, stored samples, measuring equipment, proper
lighting to ensure the quality of the inspection process.
3. Quality improving
Quality improvement is the operation of the entire organization, addressing long-term
issues, in order to improve the effectiveness, efficiency, generates additional benefits for
organizations and customers. Quality improvement is the ongoing effort to maintain and
improve the quality of products with the principle of better product after product to the
distance between the front and product specifications to the requirements of customers is
decreasing.

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Woodsland apply 5s, Kaizen and the principles of lean quality improvement, reduction of
waste in order to improve competitiveness

REFERENCE
1. Bernard W. Taylor III and Roberta S. Russell (2011) - Operations Management - 7th
Edition - John Wiley & SONS, INC.
2. Lee J. Krajewski. Larry P. Ritzman. Operations Management Processes and Value
Chains. 7th Edition. Intermational Prince-Hall, Inc., U.S.
3. Woodsland website: www.woodsland.vn

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