Order fulfillment process improvement: a case study of an intermediary in Vietnam

Purpose – This study aims to present a case study in which the concept and methodology of Six Sigma is used to improve a process, specifically order fulfillment process, in a small-sized distributor in Vietnam. Design/Methodology/Approach – The concept of DMAIC cycle, part of the framework of Six Sigma, will be used as the methodology to improve the order fulfillment process of the case company. The research is designed to apply the steps of the DMAIC, define – measure – analyze – improve – control, to address problems seen in the process by the executives. The improvement will be realized through the rectification of the key performance indicator(s). The approach is based more on practical than theoretical perspective and thus, the solutions should be selected based on practicality and feasibility of application rather than optimal results. Findings – The best solution for the company in this case study is to increase the restocking orders to a fixed quantity of 60,000 units. The solution chosen is proposed solution #1, which results in the gained profit of approximately 370 million VND. The solution also reduced the special, urgent orders (S/U order) rejection rate to zero. The solution is the method which is most feasible to implement and produces clear results. The outcome is sustainable as shown in the consecutive period of time. Research Limitation/ Practical Implication – The research is conducted on a specific company, operated in a certain sector, in Vietnam. Thus, the proposed and verified improvement solutions in this research may not be satisfactory for other types of companies or other sectors. Unlike mathematical optimization, uncertainty and future trends are not taken into consideration. However, the principle of Six Sigma is continuous improvement, thus allow for further innovations to be made in case of changes and disruptions. The research implies the potential of DMAIC projects for small- and medium-sized enterprises (SMEs), a growing group of economic players in developing countries like Vietnam. The paper emphasizes the importance of order fulfillment process and the needs to optimize it and devise it toward more customer orientation. Originality/Value – The research is a one of few case studies utilizing the methodology of DMAIC to conduct business process improvement (BPI) project on a firm that is one of SMEs (small- and medium-sized enterprises). Most BPI projects took place in large corporations due to their well-built database and strategic intention to optimize their business processes. Moreover, the order fulfillment process (OFP) is more of a focus for electronic commerce (E-commerce) businesses rather than for other types of businesses. Thus, the research serves as a valuable example for firms to realize the benefits and importance of BPI and OFP, as well as the feasibility of DMAIC application for better process performance.