Team 1 Final Paper
Team 1 Final Paper
Team 1 Final Paper
Executive Summary 2
Introduction of ACECOOK Company and decision matrix 2
ACECOOK’s analysis 5
1, PEST 5
2, Five Forces Model 7
3, SWOT 10
4, Position in Grid 12
5, Generic Strategies: 12
Operational Issue of ACECOOK Company ( Ishikawa fishbone model ) 14
Standard Operational Procedure for production and steps to do the production
17
Re-engineering Standard Operating Procedures 19
Executive Dashboard illustrating the KPIs for new improved process 20
Health and Safety 23
Financial Rationale: 26
Product diversification. 26
Development trend of the future: Investing in people. 27
Change in SOP 28
Conclusion: 28
References 29
1
Executive Summary
ACECOOK is a well- known brand in the instant noodle industry in Vietnam. In 2020,
ACECOOK takes 35.4% of market share. With the leading position in the market and
advanced Japanese production technology, the company's generic strategy is the same
money for more value to maximize profit. Although having such developing
technologies, there are still plenty of problems in the operational system of
ACECOOK, which cause about $25.000 lost each year in product quality. Besides
operational issues, we also suggest a slight change in the standard operational
procedure ( SOP), which will improve performance of the firm, along with the KPI
dashboard to illustrate in detail the results of this change. Adding seasoning packets”
step and “Checking quality and Detecting Metal and Abnormal Object” will be
simultaneously conducted, which will decrease time and cost spending on those steps
and because of that, the cost for rearrangement is close to zero but as a backup plan,
we propose a budget of $5000 for this rearrangement. We estimate productivity will
be increased by 5%, capacity utilization increases by 15%, production cost decreases
3% and maintenance cost decreases by 5%. Apart from that, we also investigate
hazard threats that may occur and classify them by the steps in SOP that they may
occur and suggest a list of solutions to attain a safe workplace. Last but not least, we
propose the ACECOOK company to make changes on product diversification and
training human resources. The estimated cost is around $93,000 and we expect return
on these investments is about 4- 5% raise in market share.
2
familiar brands such as Hao Hao, Thai hot pot, Phu Huong Kingcook, Nicecook,
Bestcook, Oh Ricey. The whole company's staff is a young and well-equipped team.
Thorough knowledge and expertise. ACECOOK Vietnam is always ready and
confident to develop in a competitive business environment like today. The core value
of this company is to provide high quality and safe products to best meet the demands
of consumers. In addition, ACECOOK is well-known for ensuring company
management, policy compliance, targets, as well as information disclosure being
smoothly and fully implemented. The most important core value is to intense
competition for price and attain a strong position in the world’s market.
ACECOOK Vietnam is known in Vietnam as not only a leading manufacturer of
ready-to-eat foods, but also one of the typical examples of Japanese investment and
development in the Vietnamese market. The company's annual revenue has
continuously increased at a two - index growth rate. In the domestic market, the
company has built a nationwide distribution system with more than 700 agents,
accounting for more than 60% of the company share. With the export market,
ACECOOK Vietnam's products are now present to more than 40 countries around the
world such as the US, Australia, Russia, Singapore, Laos, Canada and etc.
3
Firstly, the most compulsory factor in production of instant noodles is Safety and
Hygiene. Masan and Vifon are already well-known for their food safety inspection
technology. Therefore, 9 is the best score for them. However, 8 is the score for
ACECOOK company because there have been a large number of news and reports
about ACECOOK instant noodles not meeting food safety standards.
With the advancement of today's technology, Production Technology plays an
important role. ACECOOK, Masan and Vifion are all applying noodle production
lines and disposable oil technology to produce noodles as well as buying part of the
equipment from Japan (Kerry el al 2010). Nowadays, they are even investing in and
developing a laboratory for chromatography and testing for residues of pesticides and
mycotoxins in food. Because of that reason, we agreed to score 8 for all of them.
Next are Manufacturing Scale and R&D, we all agreed to score 8. About
manufacturing scale, when it is large, the quantity and the quality of product will
increase as well. Otherwise, R&D is also an important factor because R&D will find
out what ingredients in instant noodles make consumers choose and from there
develop to attract more customers. 9 is the score of ACECOOK company in
manufacturing scale because ACECOOK owns 10 factories, over 300 distribution
agents and 5,000 employees in Vietnam. However, Masan and Vifon have 8 as they
have fewer factories as well as the number of workers compared to ACECOOK. On
the other hand, ACECOOK, Masan and Vifion companies are scored 7 in R&D due to
their lack of innovation in products. All of their products have the same ingredients:
instant noodles, wrapped oil and wrapped vegetables (Kai Peng 2011).
Customer Service and Marketing are less than 1 point compared to last criteria. We
believe that when the consumers trust and consume the product, they will keep buying
that product from the companies. Therefore, that criteria is not compulsory for a
noodle company. About the customer service, some reports said that a large number
of customers have sent complaination but ACECOOK had little response so we scored
6. Otherwise, Masan and Vifon have more response to the consumers. Nowadays,
consumers always accidentally see many ads for Masan and Vifon instant noodles. By
that reason, 8 is the score for masan and vifon’s marketing compared to the lack of
marketing for ACECOOK which is scored 7.
4
Next one is the diversity in production. ACECOOK is obviously scored 10 because
they are well-known for producing many kinds of noodles such as instant noodles,
instant vermicelli, and instant noodle soup and etc with familiar brands such as Hao
Hao, Thai hot pot, Phu Huong Kingcook, Nicecook, Bestcook, Oh Ricey. Vifon also
has many brands of instant noodles like Hoang Gia noodles, Ramen etc but they are
not as famous as ACECOOK. Therefore, we scored just less than 1 point compared to
ACECOOK .Otherwise, Masan only has 4 kinds of instant noodles of one brand called
Omachi so 4 points is suitable.
Lastly is about environment friendly criteria. ACECOOK has environmentally
friendly noodle production technology which is imported from Japan (Kim 1996).
Besides, many reports said that Masan and Vifon want to save their production costs,
so they haven’t invested much in protecting the environment. Hence, 6 and 7 are the
scores of Masan and Vifon environment friendly respectively.
In conclusion, ACECOOK's total weighted score of ACECOOK is 479 while that of
Masan is 475. 477 is the total weighted score of Vifon. Therefore, ACECOOK
Company is the best choice for customers to consume.
ACECOOK’s analysis
PEST
Political:
ACECOOK is one of the largest instant food companies in Vietnam. They produce a
lot of types of food such as instant noodles, fish sauce, pho and so on. In recent years,
the government has adopted policies to expand the business market outside the
country. This has created favorable conditions for businesses to thrive. Therefore,
ACECOOK is promoted to develop production, expand market share. Moreover,
Vietnam has a complete law, creating an action management system for economic
activities. This creates confidence for business activities under the regulation of the
State.
Economic:
5
For the market, ACECOOK offers high quality products. GDP in 2020 reached an
index of 2.9%. This means that GDP increases with increase of demand, quantity of
goods, service, quality, and favorites. Average CPI of ACECOOK will rise to 3.23%
in 2020 which is lower than 4%. Means that ACECOOK creates a positive economy
in Vietnam. About the lending interest rate, the long term is 9-11% per year whereas
the short term is 4-5% per year. Therefore, ACECOOK will attract more investors and
promote market expansion. ACECOOK always maintains the first position and keeps
a long distance from the rest, with 35.4% in volume and 36% in revenue. In 2019,
ACECOOK held the top position, recording revenue of VND 10,648 billion and profit
of VND 1,660 billion. Especially during the time of social distancing, ACECOOK
increased production with an increase of about 30% to meet the market's demand.
Each day, this business can produce 400,000-450,000 boxes of products, equivalent to
12-13 million packages of noodles.
Social:
Vietnam is known as a country with diverse cultures, the culture of each region is
different, so to approach and capture the market, ACECOOK has created many types
of products suitable for each unique feature of each place, meeting the standards of
convenience, nutritional value, design and price. For society, ACECOOK wants to
harmonize the interests of the business with the social benefits. They contribute
actively to community activities and demonstrate the spirit and responsibility of
Vietnamese citizens. Our population is growing. Besides, the proportion of high-
income earners also accounts for a larger proportion. Capturing this opportunity,
ACECOOK has built many restaurants for customers to experience. Whereas
customers with low income, people from lower class, ACECOOK has many types of
instant noodles which are affordable and suitable for them.
Technological:
Technology is also the factor that confirms the position of ACECOOK. ACECOOK is
known as a noodle manufacturing company applying the most modern technology in
Vietnam. They apply Japanese production lines and disposable oil technology to
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produce noodles. This will improve the quality of goods as well as reduce cost.
Moreover, communication technology develops strongly so that ACECOOK can
promote products in many media, reach many audiences. ACECOOK even invests
heavily in research and development (R&D). In 2015, ACECOOK invested and put
into use a GMO (genetically modified organism) laboratory in food. From 2018 up to
now, investing in and developing a laboratory for chromatography and testing for
residues of pesticides and mycotoxins in food.
7
Determinant of Buyer Power:
Like other businesses, Vina ACECOOK always has to face pressure from customers.
Always have regular customer care programs and make customers happy. At any time,
customers can abandon their own products and switch to competitors' products. This is
the pressure that always pursues businesses and it never subsides. Even if your
business is making a lot of customers happy today, maybe tomorrow all will change.
The market share of ACECOOK is the largest in the Vietnamese market, so the
number of customers is also very large. Therefore, ACECOOK also has many
difficulties in customer service and it takes a lot of time to find out customer
information.
At present, there are many customers who do not thoroughly research products of
ACECOOK in particular and instant noodles products on the market in general. This
has generated a lot of negative and biased information. It led to a decrease in the
number of products sold by ACECOOK. This shows that the buyers have a great
impact on the quality, quantity of products and revenue of the company. The need for
customers’ standards is also important for the development of ACECOOK.
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noodles from well-known Korean brands. This has seriously affected the number of
ACECOOK ’s products sold in Vietnam’s market.
Masan and Asianfood are main competitors of Hao Hao. Although, ACECOOK still
holds the largest market share in Vietnam and position in the heart of Vietnam ‘s
customers, the percentage of market share has decreased gradually.
This is shown that the intensity of competition in the instant industry is relatively
high.
SWOT
9
· Suitable taste for Vietnamese culinary culture
10
· It takes a lot of times for Japanese experts to come to Vietnam if
the machines have problems
· Alternative products
11
Position in Grid
ACECOOK is the leader in the industry with 35,4% market share ( the highest one in
the industry) as its brand awareness is widely recognized. Its R&D department is hard
to develop because they have the most modern technologies from Japan. Hence, the
position in grid for this firm should be the same money for more value.
Generic Strategies:
Industry Differentiation
Force
Buyer Large buyers have more power to negotiate because of many close
Power alternatives.
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product does not change too much.
In the case of ACECOOK company, product quality is a compulsory factor that needs
to be taken into consideration because of its essence which creates competitive
advantage against other rivalries. As the ACECOOK company has the largest market
share in Vietnam, changes to continuously improve product quality is necessary to
maintain the company's current number one market share position. Quality factors
important for instant noodles are color, flavor, and texture, cooking quality,
rehydration rates during final preparation, and the presence or absence of rancid taste
after extended storage (Sarah Jinhui Wu et al, 2012). Considering those factors and
their impacts on the performance of the company, we come to the conclusion about
13
the financial burden that they cause to ACECOOK yearly as below:
Our production line is mostly automatic which leads to the problem of machinery
equipment cost, also the problem with the highest expense. Every year, broken and
faulty machinery and equipment is a common problem and therefore requires
spending a large amount of money to restore and maintain the machinery. In the worst
case, the machine needs to be replaced. Besides, in order to improve the production
efficiency of the line as well as create products with better quality, it is necessary to
replace machines and update with up- to - date technologies to maintain a competitive
advantage in this industry. Hence, we estimate the annual amount of machinery
problems to be about $10,000.
In order to improve product quality, ACECOOK company also pays great attention to
input materials, so this is the second biggest cost consuming problem after machinery.
Every year, ACECOOK's experts are looking for new ingredients with better quality,
fresher, ensuring food hygiene and safety and can be preserved for longer. In addition,
the improvement of the mixing formula is regularly tested to come up with new
recipes suitable to the taste of consumers. We estimate the annual amount of materials
problems to be $7.000.
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Health hazards can readily establish themselves in poorly maintained and unhygienic
environments. As such, employers who don’t pay attention to best practice hygiene
put their employees, customers and visitors at risk of infection or contamination.
Workplace hygiene has a direct impact on the product quality referring to employees’
consciousness and level of supervision. Hygiene is important in the workplace
because it contributes to a healthy workforce. A healthy workforce is happier and
more productive. A healthy workplace also means workers take less sick leave. Which
will reduce the huge cost that sick leave places on business (Neelam et al, 2013) To
ensure everyone is involved in maintaining a clean and healthy working environment,
staff should be provided with a written hygiene policy. This policy should outline
intentions, the control measures, expectations of cleanliness, and the role workers play
in maintaining high standards. Because of its importance, our firm estimates the cost
of workplace hygiene about $5.000
Training labors is also a perspective of product quality problems. Employees who feel
inadequate, underachieving, or unsupported are unhappy. They aren’t satisfied with
their work, which will cause them to underperform, make mistakes, and not care about
their work product. By providing them the resources to do their jobs properly, a
business can mitigate the costs of lost time and money by underperforming
employees. If an employee does not know how to properly use all the tools at their
disposal, the quality of their work is lower and of less value. The quality in
performance is then lower than it could be. More time and therefore money and effort
are spent when employees aren’t fully or properly trained to perform their tasks or to
fulfill their responsibilities (A. De Winter, 1994). It takes them longer to do the work,
and they may need help from other employees to complete their tasks. When an
untrained worker makes a mistake, the time and materials used are lost. The work then
has to be done again. Or worse, the inadequate product was delivered to the client.
Training an employee prevents wasted products and protects a brand’s reputation with
customers. Untrained employees can cause many of the mistakes listed above, and
those mistakes and inefficiencies can cause your business to lose customers. That is
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the worst possible scenario, but it can happen. We estimate the training labor around
$2.000.
Last but not least, environmental factors also have an effect on the quality of instant
noodles. Employees spend almost a quarter of their lives at work, which means
workplace environments are a very important part of most people's lives. Working in a
safe, healthy environment is important for your physical safety, mental well-being and
work productivity (Grzelczak et al, 2016). Bad air quality and ventilation, as well as
asbestos-riddled structures, can lead to sick building syndrome, which can
compromise the health and comfort of your employees. Not only can poor workplace
environments reduce productivity, but research has shown they may be linked to
asthma, lung cancer and other medical problems. Therefore, environmental issues cost
$1.000.
Overall, the annual product quality cost is $25.000
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This process starts from the selection of wheat flour and ingredients in seasoning
packages such as vegetables, dried tubers, seasoning powder, refined oil, shrimp,
chicken, dried pork etc. Accordingly, the main raw materials used to produce instant
noodles are imported wheat flour, high-quality palm oil and other familiar spices and
vegetables. All of them go through the testing process to ensure that they are not
genetically modified, have no pesticide residues... before being put into production.
Wheat flour, turmeric solution and spices (salt, sugar, monosodium glutamate, soy
sauce, fish sauce...) are mixed in a mixing bowl, by automatic and closed equipment.
After mixing, the powder is transferred to the plate rolling device by the conveyor
system. Here, the dough will be gradually thinned until it meets the requirements of
toughness, thickness - thin according to the specifications of each product.
After being rolled, the dough will be cut into different large, small, round and flat
noodles and form ripples characterized by the comb system.
Noodles are cooked inside a completely sealed steamer, at a temperature of about
100°C.
After being steamed, the noodles are cut short by an automatic knife system and fall
into the hopper, neatly placed in the frying pan. Depending on the product, the frying
pan has a square, round, ... to create the corresponding shape for the noodles.
Next, the noodles will go through the frying or drying system to reduce the moisture
in the noodles to the lowest level. Fried noodles: Squeeze noodles are fried in oil at a
temperature of about 160°C - 165°C for about 2.5 minutes. The moisture content of
the noodles after frying is about 3%. The oil used to fry the noodles is vegetable oil
(derived from palm oil). Noodles are not fried: The noodles are dried by wind heat at
65 - 80°C for about 30 minutes. The moisture content of the noodles after drying is
about less than 10%.
After that, the natural air is filtered and led into the pipeline system, blown through
the noodles to cool the noodles to the temperature of the environment before passing
through the packaging stage.
The 9th stage, seasoning packages will be replenished by automatic equipment.
After having all the ingredients according to the specifications of each product, the
noodles will be completely packaged.
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To ensure the best quality, each product has to go through 03 testing equipment,
including: metal detector, weighing machine and foreign body detector (X-ray
machine). Products that do not meet the standards will be removed from the line and
sent to the defective product processing department.
Finished products are packed in cartons according to the specifications of each
product, printed with the date of production, storage and quality checked by the QC
department (Quality Control) before being distributed to the market.
The cost of production and the steps it takes to do the production
Each instant noodle production line can produce 720,000 packs of noodles per day.
Production cost is estimated at 90000 USD per day.
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documents (Tannady, Hendy, et al; 2019) . This re-engineering operating procedure
consists of 11 steps instead of 12 steps.
“Adding seasoning packets” step and “Checking quality and Detecting Metal and
Abnormal Object” should be simultaneously conducted, which will decrease time and
cost spending on those steps. After cooling, an automated system will add seasoning
packets of various tastes to the noodle block. At the same time, the finished noodle
block will go in turn through the detectors and weighing instrument to check for metal
and abnormal objects and standard weight. Unqualified noodle blocks will be removed
from the line. In this new step, we will check the quality of the noodle package before
adding the finished noodle block in at the next step. When combining these steps, the
laborers will work semi – automatically with the support from machines to ensure the
quality of the product.
This is the only step that changes from standard operating procedures and makes the
production become more productive and still ensure the hygiene and safety of the
product. It is very critical because it affects the weight and quality of the finished
products (Büchi et al, 2020). So this combination of two steps with the participation of
laborers and an automatic system will limit the mistakes from the finished products.
And this change can reduce production time and production costs significantly. In
estimation, we can also increase productivity and capacity utilization (César Camisón,
Alba Puig-Denia, 2015). The cost for rearrangement is close to zero but as a backup
plan, we proposed a budget of $5000 for this rearrangement.
And below is the producing Instant noodles re-engineering process. After that, we will
see the estimated positive results from changing the production process through a KPI
dashboard in the next part.
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Executive Dashboard illustrating the KPIs for new improved process
We improve the standard operating process to 11 steps instead of 12, which will
increase productivity and reduce production time. In addition, with the 11-step
process, the "Adding seasoning package" step and the "Quality check and metal and
irregular object detection" step will be conducted simultaneously. This will reduce
time and make production more productive while still ensuring quality . Specific data
in the chart below:
The graph shows that the estimated productivity will have to increase by 5%
compared to the original and the production time will have to be shortened by 10%
(from 20 hours to only 18 hours per day). And because of that, capacity utilization
will be optimized, the KPI set is to increase by 15%, from 60% to 75% after re-
engineering process:
20
In addition, these changes to the production line will not only reduce production costs
by an estimated 3%, but will also reduce maintenance costs by 5% compared to
before, which is shown in the chart below:
21
Health and Safety
ACECOOK's advanced production lines are mostly automated, and require very little
human intervention so there are just a few risks of injury and they have low likelihood
level. Here below are some possible hazards with particular rating levels.
Description of Workplace/task
22
annually
23
Lack of Personal All staff *Inexperienced staff to 5 2
awareness of injury complete a familiarisation
hazards tour of plant environment
present in prior to start of work
working
environment
24
protection.
Do not approach
the noodle
frying
equipment but
monitor and
control it
remotely
Financial Rationale:
Product diversification.
In this subject, they often suffer from high blood pressure and the seasoning package
of noodles contains many additives that have a palatable effect. Yet, these substances
also have no nutrition and are still hot and spicy, which is detrimental to people with
25
high blood pressure or high body temperature.Therefore, ACECOOK should focus on
research and produce products for this customer.
In particular, when rival Masan launched the Omachi product line, it was a
breakthrough in the technology of "promoting" instant noodles. Choosing the mid-
range segment and conveying a very practical message "not afraid of heat" is an
excellent strategic choice of Masan. Therefore, ACECOOK needs to produce more
non-fatty, non-hot products for consumers to choose from.
With the trend of healthy eating becoming more and more important, the above
products will surely meet the needs of many customers. Therefore, within a 3-5 year
period, ACECOOK will get their investment back.
The trend of training and building high-quality human resources has been focused on
by many regional economic powers such as Japan, Korea, ... for many years.
Typically, the United States is one of the countries that attach great importance to
fostering and encouraging talent development. This is the driving force that helps
major economies promote the efficiency of business and production chains by
improving the technical and professional qualifications of their employees.
Recently, training and developing high-quality human resources has also become a
new strategy of many enterprises in Vietnam. The Human Development Index (HDI)
in 2019 of Vietnam was 0.704, ranking 117 out of 189 countries and territories, still
26
modest compared to other countries in Southeast Asia. However, the growth rate of
HDI value to 46% from 1990 to 2019 shows that Vietnam is increasingly focusing on
human development, especially labor resources.
ACECOOK needs to understand the importance of human resource training and not
hesitate to build its own fund for internal training and invest about 18,000 USD to
organize training courses that provide professional certifications. Throughout the
training, employees will receive both theoretical and practical training in a variety of
areas and professional skills.
It can be seen that internal training is the optimal solution to build a team of qualified
officers and employees and keep pace with scientific and technical advances.
Possessing abundant resources and many innovations to help the business grow more
and more.
Change in SOP
As mentioned above, adding seasoning packets” step and “Checking quality and
Detecting Metal and Abnormal Object” will be simultaneously conducted, which will
decrease time and cost spending on those steps and because of that, the cost for
rearrangement is close to zero but as a backup plan, we proposed a budget of $5000
for this rearrangement.
Conclusion:
In production and business, business strategy is extremely important to help achieve
the goals and vision of the organization, to meet the needs of the organization and
relevant individuals such as customers, employees. ... Organizational management
also helps to link short-term development in the long-term context, improving
efficiency and labor performance.
In fact, ACECOOK is currently one of the leading large and reputable companies in
Vietnam in general and in the field of instant food production in particular. Consumers
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are no longer unfamiliar with ACECOOK's products, achieving where they are today
is the result of the process of formulating and implementing short-term to long-term
strategies.
To be confident with its strengths to gradually develop market share and affirm the
growth of a leading prestigious brand, ACECOOK needs to expand domestic and
foreign markets with different types of objects to meet consumer’s demand and
simultaneously develop the Standard Operational Procedures to optimize production
line. At the same time, ACECOOK needs to innovate in accordance with present
trends, namely towards health and environmental protection.
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