Contents

INTRODUCTION................................................................................................................................................3
Part 1:.................................................................................................................................................................... 4
1. Evaluation of approaches to continuous quality improvement.................................................................4
2. Application of OM to continuous improvement in Highlands..................................................................7
3. Continuous improvement plan for Highlands............................................................................................9
4. Total quality management concerning Highlands’ objectives.................................................................13
Part 2:.................................................................................................................................................................. 14
1. The role of SRA in Highlands....................................................................................................................14
2. Highlands’ risk identification and mapping.............................................................................................15
3. Contingency plan and strategies................................................................................................................20
CONCLUSION...................................................................................................................................................22
REFERENCES...................................................................................................................................................23
 INTRODUCTION
Production management is never simple in any industry. However, by implementing a
policy of continuous improvement and risk management, businesses can be assisted in carrying
out this activity.
The report below will provide an overview of operational management in the case of
Highlands Coffee by analyzing, assessing, planning for continuous development, and managing
risks, thereby achieving company objectives.
Part 1:
1. Evaluation of approaches to continuous quality improvement
Continuous improvement (Kaizen) is a Japanese management concept that highlights
the significance of modest improvements that contribute to an increase in value and the
resolution of a problem (Karkoszka and Szewieczet, 2007). While CI projects in the past
utilized a variety of work-improvement-related ideas (e.g: setting up incentive programs to
reward talented employees), current CI is connected with systematic and comprehensive
approaches (Bhuiyan, N., & Baghel, A., 2005). Continuous quality improvement (CQI) is
the process where an environment is created, in which management and employees strive to
enhance quality. This is concerned with Total quality management and Quality assurance.
These two concepts will be analyzed and compared through the chart below:
Quality Assurance Total Quality Management
To guarantee the quality, businesses must Total Quality Management (TQM) evaluates
identify and standardize all processes that and enhances these processes to maximize
impact output. Ensure that the strategy the performance of the customer and the
produces the desired results and that all organization (e.g: executing and planning
employees apply the same technique. Quality order-taking processes).  Total Quality
assurance is associated with the basis for ISO Control, Kaizen, Total Productive
9000, the Good Manufacturing Practices Maintenance, and Total Quality Service all
(GMP) Code of the Health Department, and share similar principles. TQM includes
other international standards (HCI, 2020). Statistical Process Control, JIT inventories,
and Quality Circles (Jabnoun, 2020).

 To conclude, Quality Assurance and Total Quality Management are complementary

despite some overlapping or conflicting aspects; nevertheless, Total Quality
Management reflects the more dynamic and flexible end, while Quality Assurance
covers the more formal end of the spectrum of management approaches.
 CQI builds on some common approaches such as JIT, Six Sigma, Lean, TQM, and
PDCA cycle,… but highlights that internal and external customer satisfaction is of the utmost
importance (Kate, 2017). These approaches will be discussed as follows, however, 2
approaches that are considered suitable for Highlands including Lean and PDCA will be
compared to other approaches.
+) JIT
JIT is a part of the Lean system, a control and planning method and operational
philosophy that strives to satisfy demand immediately with optimal quality and zero waste
(Slack and Brandon-Jones, 2019). By applying JIT, businesses can reduce production time and
costs by minimizing the need for warehousing and spending less money on raw materials.
However, JIT has the disadvantage of potentially disrupting the supply chain (for example, the
delay of one supplier can slow down the entire production line).
Qualification: SPC (Statistical Process Control), feedback on supplier dependability,
installation delays, delivery timeliness, waste, inventory turnover, and equipment failures.
Application scope: JIT is usually applied to small batches with almost the same production
scale (VILAS, 2021). This optimizes the system through a top-down methodology.
+) Six sigma:
Six Sigma was created in the 1980s by a scientist at Motorola, is a tool for process
improvement that helps businesses to reduce faults and improve processes. It includes 5 phases
(DMAIC): Define, Measure, Analyze, Improve, and Control. Besides, Lean Six Sigma (the
combination of Six Sigma and Lean manufacturing) is a team-oriented management strategy
that aims to enhance performance by removing waste and faults and increasing work
standardization. Six Sigma has the advantage of increasing customer satisfaction and
optimizing supply chain processes. However, it has the drawback of being time-consuming
and having complicated processes (Chron, 2012).
Qualification: Cpk, Customer CTQs, X-bar, Range of Tolerance, Defects rate, Variance, and
Process cycle time (Patel and Desai, 2018).
Application scope: Six sigma is applied to many businesses, not only manufacturing
enterprises but also service industry enterprises.
+) Lean
Lean is a method of managing an organization that promotes continuous improvement,
which is a long-term approach to work that deliberately strives to accomplish modest,
incremental improvements in processes to increase efficiency and quality. The lean system not
only concentrates on the elimination of processes but also focuses on customer value, purposes
and work process improvement. Lean techniques benefit to contribute to cost reduction and
savings for profits. This approach begins with the client in mind, focusing on their
communication with employees and attention to their problems. The lean methodology
also improves quality and value, therefore preventing possible errors. However, Lean has its
disadvantages of inventory problems, implementation costs and difficult changeover
(PlanetTogether, 2022).
Qualification: Total effective equipment performance (TEEP) and overall equipment
effectiveness (OEE) (Guimares, 2019).
Application scope: The Lean approach is applied to any industry or business model.
Especially for a coffee production company like Highlands, it is very necessary to apply the
Lean approach.
Comparison: Compared to JIT, Lean focuses more on the customers’ value while JIT just
focuses only on the process.
+) TQM
A fundamental concept of total quality management (TQM) offers a long-term success
strategy based on customer satisfaction. TQM benefits in the production of higher-quality
goods at a cheaper cost. The emphasis on utilizing high-quality information to enhance
processes eliminates waste and saves time, resulting in cost savings that may be passed on to
customers in the form of cheaper pricing, thus enhancing customers’ satisfaction. However, this
approach has its disadvantage of the difficulty of acquiring the company-wide commitment to
quality improvement (Asq.org., 2021)
Qualification: Process sequence flow charts, Baldrige Excellence Framework, Cause and
effect diagrams (Kumar et al., 2008), TQM‐related performance measures (PMs) (Capon et al.,
1995).
Application scope: TQM focuses on long-term change rather than focusing on short-term
goals. TQM has its roots in the manufacturing sector. However, TQM principles can be
applied to different industries such as finance, banking or medicine.
+) PDCA cycle
Walter A. Shewhart invented the Plan-Do-Check-Act (PDCA) Cycle. This is a four-step
iterative problem-solving method used to enhance business operations. The advantage of this
approach is to assist companies in increasing their external and internal processes, it can be
effective in any situation. However, PDCA’s disadvantage is that one often responds
reactively and seldom proactively, and the imprecise definition might lead to the improper
application (Investopedia, 2022).
Application scope: PDCA can be used for all types of business, especially businesses starting
a new process/project, improving an existing process or defining an iterative workflow.
Qualification: ISO 27001 (ISMS – Information Security Management System), ISO 9001
(Linkedin, 2022)
Comparison: Compared to the DMAIC cycle in Six Sigma, PDCA can be analyzed more
simply and easily. This can save time for the company when making plans and it is very
necessary for a production company like Highlands.

2. Application of OM to continuous improvement in Highlands

Regarding Highlands, the company has applied the concepts and approaches of
continuous improvement for better efficiency. The main applied concepts of Highlands include
the 5s model (which belongs to the Lean production approach) and training activities.
Highlands’ level of application includes the company’s culture and departments. These
continuous improvement concepts and approaches will be analyzed as follows:
+) Training activities
Every employee who comes to work has the opportunity to be trained and developed to
increase their value and contribute to the company's success. Before starting work, new hires
receive integration training (culture, information, regulations), professional training, and
development orientation. This training framework will be updated annually to meet market
changes. Every year, the company provides professional training to long-term employees by
hosting a class or registering them to attend. In addition to the annual professional training
plan, the company will organize training courses to improve service and product quality.
+) 5s model
5S (Sort, Simplify, Shine, Standardize, and Sustain) creates a clean, uncluttered, safe,
and well-organized workplace to reduce waste and boost productivity. This is applied in
Highlands as follows:
Step 1 (Sort): Employees observe the workplace and production to spot unnecessary objects
like tables and chairs, personal belongings, old boxes, etc. Then, unnecessary items are
removed and put in lockers, they can also be donated to another department or sold. 
Step 2 (Simplify): This step involves placing tools in convenient locations to ensure safe use.
Employees analyze and discussed the arrangement to facilitate operations. Specifically,
frequent-use items (e.g.steam cleaning towels) are placed nearby to reduce commuting time.
Step 3 (Shine): All employees must clean tools after use, and general cleaning, floor sweeping,
trash removal, etc. are assigned on a reasonable schedule.
Step 4 (Standardize): The department head creates a system of to-dos based on the above
tasks to maintain the workplace's cleanliness and orderliness and assigns a Cleaning schedule to
staff. The cleaning work is maintained and regularly checked, and staff remind each other to
follow regulations.
Step 5 (Sustain): Make the above 4S a habit for everyone. Bonus points will be awarded to 5S
workers at the end of the month. Because the company lacks a clear evaluation system for 5S
work, some employees have a negative attitude when implementing 5S and only deal with
speakers. This sets a bad precedent for other employees.
In recent years, the company has had some limitations and misconceptions (regarding
the comparison with the company’s rivals, requirements and customers, as well as 10 OM) that
affect its overall results:
+ Some quality policies are unclear and difficult to implement (compared to the company’s
requirements, OM: Quality management)
+ Some employees disagree about results and product quality due to unsynchronized
information (compared to the company’s requirement, OM: Human resources and job design)
+ The implementation of 5S of employees is still neglected because there is no specific rating
scale (compared to the company’s requirement and the company’s rival, OM: Human resources
and job design)
+ Some training programs are still theoretically impractical, wasting staff time (compared to
the company’s requirement and the company’s rival, OM: Human resources and job design)
+ Some of the company's documents are outdated (compared to the company’s rivals, OM:
Quality management)
+ Some equipment used to pack product packaging has degraded, or damaged during use,
reducing productivity. Bag welds are not properly welded, affecting coffee bean quality
(compared to the needs of Highlands’ customers, OM: Maintenance)
After applying the 5s model as well as training activities, Highlands has improved the
quality of products and the way employees work, however, despite the benefits of quality
management, the company still has 2 problems currently:
+ The implementation of 5S of employees is still neglected because there is no specific rating
scale.
+ Some training programs are still theoretically impractical, wasting staff time due to lack of
practice time.
+ The company only solved immediate problems without analyzing and improving quality
because the company lacks an information system to collect, analyze, and report data, only the
company's overall results are reflected, not individual departments. Investigations and research
haven't identified the causes that affect quality management, so the incidents aren't resolved.

3. Continuous improvement plan for Highlands

The most significant aspect of coffee-producing firms is the flavour and quality of their
products. This is the direct factor that influences customers' purchasing decisions and is greatly
influenced by the way employees work. Therefore, in this part, a plan will be proposed to
improve production quality, thereby enhancing product quality, by employing fishbone and
PDCA. While the fishbone helps visualize and identify the problem's core cause, PDCA will
assist Highlands in better understanding its goals, hence ensuring continuous improvement.
+) Fishbone

Figure 1. Highlands' fishbone model

As can be seen from the fishbone, Management, Process, Equipment, Environment,
Material, and People are factors creating quality improvement problems in Highlands.
First, Highlands may have human resource management issues. The lack of precise
rating scales and regular reviews is one reason why employees do not take the 5s process
seriously. Inconsistency in information exchange also hinders the enhancement of product
quality. As far as equipment goes, Highlands still possesses loose packing and obsolete
machines. Not only that, but meteorological conditions such as excessive rain and climate
change also harm coffee. Other problems, such as ineffective management and faults in the
production process, can impede the enhancement of product quality.

+) PDCA
 Figure 2. PDCA cycle

*Plan
In this part, planned solutions that seem to work and have a chance of success are
developed after needs, goals, and the underlying difficulties that prevent progress toward the
goals have been recognized. Regarding Highlands, the main content of quality planning is:
- Define overall quality objectives and quality policy
- Identify customers, identify needs and characteristics of customers' needs.
- Determine key product features to satisfy customer needs
- Process design capable of creating product characteristics
- Transfer planning results to operational departments
This plan will be built based on SMART criteria. With Highlands, the most important thing
when producing and packaging coffee is to bring the taste to customers' satisfaction. Therefore,
Highlands's plan can be made based on a clear objective: Sales of packaged coffee in the first
month of 2023 will be 20% larger than the total volume of packaged coffee in the same period
last year.
*Do
 After completing the quality improvement plan, the department responsible for
implementing the quality improvement program must begin implementing the program.
Specific tasks of this stage include (1) organizing and forming the quality management system,
and (2) implementing economic, political, ideological and administrative measures to
implement the plan. As per schedule, tasks include:
- Inform those who implement the plan clearly about the goals, needs, and content of the work
they have to do.
- Organize training programs for business leaders and followers so that they have enough
awareness and qualifications to undertake the work they do.
- Provide the necessary resources for implementation.
Besides, Highlands needs to improve the coffee production process. They will have to
use more advanced technologies, upgrade machines, and improve the quality of employee
training to create better products.
*Check
In this part, the suggested tasks for Highlands include:
- Organize activities to create products with the required quality
- Compare actual quality and planned quality to find deviations
- Carry out necessary activities to correct deviations and ensure compliance with requirements.
The company need to evaluate the coffee quality and production process, compare it
with issued quality policies, directions and regulations and activities to bring products to a
higher level, gradually reducing the gap between the customer's expectations and the actual
quality achieved. Quality assessment is the function of departments such as: checking in the
workshop (checking the quality of raw materials, semi-finished products, etc. before entering
the workshop), process inspection, and factory inspection of the testing department.
*Act:
In this part, Highlands should engage in adjustment and improvement activities for
improving quality: Developing new coffee products, diversifying products; implementing new
technology; change the disability reduction process.
This step will perform the following main tasks:
- Set up the necessary infrastructure to ensure perfect product quality
- Identify specific needs for quality improvement. Proposing complete plans
- Establishing a working group capable of successfully implementing the project, and providing
the necessary resources (financial, technical, labour,…)
- Motivating, training and stimulating the project implementation process to improve quality
quantity.
Besides, Highlands should also minimize giving customers plastic cups and plastic bags

Minor conclusion: To effectively use the PDCA method, Highlands must properly organize
the work so as not to fail during the planning phase. In addition, to sustain the effectiveness of
this method, the PDCA cycle must be repeated continually on the scale of the entire firm, and
the entire business and an environment must be developed to facilitate its repetition.

4. Total quality management concerning Highlands’ objectives

Taking the information in the previous assignment, Highlands’ objectives will be
mentioned as follow:
+ Strategic objective: Highlands Coffee's goal is to be the most loved coffee and tea brand,
lead the high-end beverage retail industry in Vietnam, serving Vietnamese people anytime,
anywhere, and proudly spread the message "Pride of Vietnamese land". (Highlands Coffee,
2018)
+ Tactical objective: Highlands Coffee's objective from 2022-2023 is to bring the best coffee
experience with attentive, contemporary luxury service, and new premium drinks,
(HighlandsCoffee, 2022).
By applying the fishbone model and PDCA cycle, Highlands can address the company
The quality plans and goals created in PDCA can help businesses have orientation for
production and business activities and jobs to be done to ensure quality. Through the set quality
policy, Highlands can provide a framework for quality goals, from which, each part can be
based on the actual situation to set appropriate objectives.
Regarding the objectives, The Fishbone Model and PDCA might help the company
offers the appropriate actions on the cause of the problem such as organizing training activities
to improve the service, increasing sales thus enhancing the position in the Vietnamese coffee
market, upgrading machinery to create better quality ..., from there achieve the company's
strategic goal: Leading the high-end beverage retail industry. Additionally, PDCA also helps in
creating new products that suit the taste of Vietnamese people, thus achieving the tactical
objective of the company: Bringing the best coffee experience with new premium drinks.

Part 2:
1. The role of SRA in Highlands
Risk is defined as the chance that something bad may happen (Cambridge, 2022). There
are several strategic risks (the most serious risks to an organization's capacity to execute its
strategy and achieve its objectives) that might have a major influence on shareholder value and
the long-term viability of a firm if they were to materialize and threaten the company's ability
to execute its strategy and achieve its goals (Business Dictionary, 2018). Risk management is
the process of recognizing things that may go wrong, preventing them from occurring,
minimizing the repercussions when they do occur, and recovering once they have occurred
(Slack and Brandon-Jones, 2019). Strategic Risk Analysis (SRA) is a process that involves
identifying, controlling, and mitigating the dangers posed by a given strategy that would
prevent the business from achieving its strategic objectives (Wire, 2022). Although "Strategic
Risk Management" (SRM) and "Strategic Risk Analysis" (SRA) might be used
interchangeably, they refer to different things. SRA is a step in the evolving SRM process
(Reciprocity, 2022).
The role of the risk assessment procedure is to analyze risks and, if required, eliminate
or reduce their risk by implementing control measures. Regarding Highlands, SRA helps the
company in creating a safe and healthy workplace (Canada, 2017). SRA is of tremendous
importance inside a company because it involves the convergence of risk management,
strategic planning, and strategy implementation (Khan, 2021). Besides, SRM plays the
important role in creating a proactive approach, mitigating negative consequences and
surprises, preparing the project manager to capitalize on suitable risks, offering enhanced
control over the future, and increasing the likelihood of reaching project performance
objectives within budget and on schedule.

2. Highlands’ risk identification and mapping

In this part, SRA will be built on the risk management process, which includes 4 main
steps: Risk identification, Risk assessment, Risk response development, and Risk response
control.
+) Step 1: Risk identification
Using brainstorming, problem identification, and risk profiling, this step involves
generating a list of potential risks.
Highlands’ macro risks and specific events will be described as follows:
 Macro risks
In coffee production, risks and uncertainties are common and varied. Studies
around the world show that risks in agriculture are directly related to negative outcomes
stemming from biological variables, climate and price fluctuations. These variables
include natural factors such as pests and diseases, climatic factors not within the control
of coffee producers, and adverse changes in input and output prices (Hardaker et al.,
2004; Harwood et al., 1999; Worldbank, 2005).
Currently, in Vietnam, the coffee industry is facing many great challenges,
especially the issue of hedging against price risks. Risks in coffee production can be
divided into 3 groups: production risk, market risk and financial risk. The risk of
coffee production is due to the causes stemming from the characteristics of agricultural
production depending on weather, climate and living environment, and malfunctioning
equipment. Market risk and financial risk arising from fluctuations in input prices, prices
of coffee products, fluctuations in exchange rates and interest rates. Besides, internal bad
news leaked out is also a risk related to market and financial risk (Thang et al., 2017).
+) Step 2: Risk assessment
 Specific risk events
 The risk assessment form is demonstrated as follows:
Risk events
Climate change creates a
decrease in coffee
production (lack of supply)
Lack of capital to invest in
taking care of the coffee
Equipment malfunctioning
Internal bad news leaked
out
Probability Impact Detection difficulty When
4 5 4 During the process
2 4 3 Post-process
3 4 3 In-process
2 3 2 Pre-process+In-
process
Figure 3. Risk assessment form
The impact scale will be described as follows:

Figure 4. The impact scale

 Figure 5. Risk severity matrix
+) Step 3: Risk response development
Risk Respond Contingency plan Trigger Who is
responsible?
Climate change Mitigate: planting Contact more The majority of Operation
creates a decrease shade trees, different suppliers suppliers are short of
in coffee windbreak trees like supply
production (lack durian tree, senna
of supply) siamea,…
Lack of capital to Mitigate: Contact Using own capital Decrease in the Finance
invest in taking other sponsors in the (bootstrapping, company’s profits
care of the coffee list relatives, friends,…) and coffee quality
Malfunctioning Mitigate: upgrade Increase staff Equipment fails, Maintenance
equipment old equipment, support, and buy errors occurred Department +
 increase the new equipment. Finance
intensity of the
inspection of
machinery and
equipment
Internal bad news Mitigate: Propose Increase staff Call from top All
leaked out rigorous policies in support, contact management
protecting internal related parties to
information agree to delete
leaked internal
information

As can be seen in the risk response development table, there are 4 highlighted risks for
Highlands and each of them has its contingency plan. Regarding the risk of lack of supply due
to climate change, the proposed contingency plan is to contact as many suppliers as possible,
this helps in increasing the amount of supplied coffee. This risk is the responsibility of the
operation department, which has a close relationship with the suppliers. Besides, the proposed
contingency plans for the second and the third risks are raising funds by own capital
(bootstrapping, relatives, friends,…), and using labour forces instead of machinery. These risks
are the responsibility of the Finance and Maintenance Department. The last potential risk for
Highlands is the internal bad news being leaked out. The proposed contingency plan for this
risk is increasing staff support and contacting related parties to agree to delete leaked internal
information. Each of the aforementioned ideas must be authorized by the management.
+) Step 4: Risk response control
Besides controlling risks by the aforementioned elements (risk assessment, contingency
plan,…), another key point in risk response control is establishing a Change Management
System. The Change Control System Process involves 8 detailed stages (NEU, 2022):
+ Find out the considered changes
+ Detail the influences of changes on budget and schedule
+ Assess, and show approval of changes
+ Resolve and negotiate disagreements over scope, timeline, and budget
+ Designate responsibility for change implementation
+ Adjust budget and schedule
+ Track implemented changes
In short, the suggested Change Control Process implementation for Highlands can be
applied as follows:
Implementation scope: List the parts that need to be changed after conducting a needs
assessment, looking at suppliers that fit within the budget. The considered changes for
Highlands are the management methods, specialized personnel, machinery and equipment.
Implementation plan: Build a cross-functional team with the necessary knowledge to create a
contingency plan, and conduct a training program for employees to fill the skills gap following
implementation.
Testing: Run tests of newly purchased equipment several times before launch, retry functions
of old equipment after maintenance
Feedback: Collect regular feedback from equipment operators/managers to provide timely
support

3. Contingency plan and strategies

Among these mentioned risks, the major risk of the Highlands is the lack of supply due
to climate change. However, this risk can not be controlled as the weather is an objective factor
and cannot be affected by humans. Each of the aforementioned risks can have a variety of
contingency plans, however, Malfunctioning equipment is one of the serious risks for
Highlands. Therefore, more different contingency plans and strategies will be proposed to
address this risk. Besides, the stakeholders of Malfunctioning equipment risk include Labour
forces, Maintenance, Finance Departments, and Managers.
In addition to buying new equipment, Highlands can apply these other suggested
contingency plans:
 + Using labour forces (short-term solution): this assists the Maintenance Department
during equipment system testing.
+ Using a backup generator (in case of power failure): this keeps the production
process running smoothly and saves labour.
+ Associating with a certain Vietnamese coffee production company to negotiate to
borrow their equipment (lower expense compared to buying new equipment): this assists
the financial management of the Finance Department.
Regarding the contingency strategies, based on the above analysis, Highlands should
continue to implement the Risk Reduction Strategy (Nibusinessinfo.co.uk, 2022). This
strategy entails taking steps to reduce the likelihood and severity of risks. This helps in
reducing risk to an acceptable level (residual risks). It is suggested that Highlands improve
internal controls, implement new safety measures, and diversify business activities to mitigate
the most severe risks.
 CONCLUSION
In summary, the report offers a comprehensive examination of continuous quality
improvement and risk management in the Highlands. In each part, the approaches and analysis
are suggested, thus assisting Highlands in enhancing product quality and mitigating potential
risks of the company concerning the Vietnamese coffee market.
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