MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY AND EDUCATION FACULTY OF ECONOMICS ------ THESIS TOPIC: Ho Chi Minh City, Nov 07, 2023 ENHANCING INVENTORY
Rationale
In recent years, digitization has become an increasingly vital trend across various industries, marking a profound shift from traditional work processes to digital frameworks How organizations manage and optimize assets, production processes, and services has significantly transformed under the influence of digitization In today's rapidly evolving world, the ability to harness, process, and apply digital information has become a crucial factor in the success and survival of organizations
Many large enterprises globally are vigorously undergoing digital transformation, and Intel, one of the leading names in the technology sector, is no exception Intel has always been committed to developing and producing cutting-edge technological products, and to maintain competitiveness in the ever-changing world of technology, they have invested heavily in digitizing their entire supply chain
In a recent real-world case at Intel Products Vietnam Co., Ltd., a notable incident occurred Employees at the factory failed to follow the proper procedure for inspecting and identifying components (referred to collectively as "Parts") that were running low
As a result, the entire inventory of parts necessary for the production process was depleted within a short period, and the factory had to temporarily halt operations for two weeks This event caused significant inconvenience and losses for the company It is from this incident that we recognize an area where digitization can have a substantial impact: the implementation of a real-time data-based inventory management and tracking system The goal is to enable organizations to quickly identify and respond to risks related to dwindling inventory, thereby avoiding unforeseen production stoppages (line downs), ultimately optimizing performance and minimizing inventory management-related risks
Therefore, the author has chosen the topic: “Enhancing inventory management efficiency by applying digitalization: A case study of Intel Products Vietnam Co., Ltd.” Through this, I hope that Intel Products Vietnam Co., Ltd can enhance inventory management efficiency, reduce the risk of production stoppages, and promote their sustainability and competitiveness in their challenging industry through the process of digital transformation
Objective
As previously mentioned, this study aims to construct a data-driven system for the prediction of potential inventory shortages (Low Days of Inventory - LDOI), delayed purchase orders (PO late), and unplanned zero bin occurrences (UZB)
The specific objectives of this thesis are:
- Review relevant theories on digitalization, supply chain, supply chain management and inventory management
- Analyze the current factory to identify bottlenecks in inventory management
- Develop and implement a data-driven inventory management system to predict and prevent inventory shortages, delayed purchase orders, and unplanned zero bin situations
- Provide practical recommendations for continuous improvement in inventory management practices.
Scope and object
- Space: Intel Products Vietnam Co., Ltd Lot I2, Road D1, Saigon Hi-Tech Park Tan Phu Ward, Thu Duc City, HCMC
- Time: The study was conducted over a period of 2 months, from August 2023 to October 2023
Object: Assembly and Test (VNAT) factory at the Intel Products Vietnam Co.,
Research methodology
The primary data source for this research is secondary documents comprising reports and records from 2021 to 2023 These documents include internal and external reports and industry publications relevant to Intel Products Vietnam Co., Ltd.'s inventory management and digital transformation
SQL and SQL Pathfinder: These tools will be used for data extraction and exploration from relational databases, facilitating the identification of patterns and anomalies
Power BI and Power Query: Microsoft Power BI and Power Query will create interactive visualizations for better data understanding
Oracle Database: Data will be stored and managed within Oracle Database for accessibility and integrity
Data Processing: Before analysis, data will undergo thorough cleaning and transformation to ensure accuracy
Predictive Modeling: Predictive models will be developed using historical data, SQL-generated features, and relevant variables to forecast inventory shortages (LDOI), delayed purchase orders (PO late), and unplanned zero bin situations (UZB)
Evaluation: The impact of the implemented data-driven inventory management system will be assessed through key performance indicators, comparing pre- and post- implementation data
This research methodology integrates secondary documents, SQL, SQL Pathfinder, Power BI, Power Query, and Oracle Database to comprehensively analyze inventory management and digital transformation at Intel Products Vietnam Co., Ltd., providing valuable insights for enhancement and optimization.
Structure of report
The report consists of four chapters, specifically:
INTRODUCTION ABOUT INTEL PRODUCTS VIETNAM CO., LTD
General introduction about Intel Corporation
Intel Corporation was founded on July 18, 1968, by Robert Noyce and Gordon Moore, both pioneers in semiconductor design It is an American multinational corporation and technology company headquartered in Santa Clara, California, located in Silicon Valley The name "Intel" is a fusion of "Integrated" and "Electronic."
Figure 1 Intel's Logo (Source: Internet)
Intel boasts a rich history of evolution, commencing in 1971 with the inception of the first microprocessor This momentous event marked the onset of a technological revolution, leading to a series of historic innovations To this day, Intel continues to pioneer technology products, chips, and microprocessors that adhere to Moore's Law Moore's Law, as defined by Wikipedia, posits that the number of transistors on a microchip doubles every two years, while the cost of computers is halved
Intel's primary focus lies in harnessing raw, unprocessed data, which holds immense potential for catalyzing groundbreaking technologies In an era characterized by an influx of interconnected devices, data has emerged as a transformative catalyst Nevertheless, data only realizes its true worth when it can be translated into actionable insights Furthermore, the burgeoning value of data is intricately linked to three prevailing technological inflection points: Artificial Intelligence (AI), the transformation of networks by 5G technology, and the proliferation of intelligent edge computing
Organizations that can leverage these inflection points to derive actionable insights are poised to lead the way in shaping our world's future
Figure 2 Intel evolved over the years (Source: Intel® Products)
The Intel® Xeon® Scalable processor family offers unmatched performance and scale in the areas of computation, storage, networking, and security
Intel® Xeon® Processors: Designed to meet the demanding processing needs of big data, cloud computing, AI, modeling, and more for use in data centers and workstations
The highest-performing Intel CPUs for laptops and desktops, Intel® CoreTM Processors offer cutting-edge responsiveness, connectivity, and graphics
The Intel® Pentium® Processor is a computing platform that combines speed, power, and value for daily use in laptops, convertibles, desktop computers, and mini- PCs
The Intel® Celeron® Processor offers entry-level laptops and desktops with a cost- effective CPU performance, robust connectivity, and extended battery life
Intel Atom® Processor: These compact, potent CPUs are perfect for high-density, low-energy data center applications as well as mobile and Internet of Things devices With deep neural networks and computer vision, Intel® MovidiusTM Vision Processing Units enable intelligent cameras, edge servers, and AI appliances
Intel® 400 Series Chipset Family and Intel® CoreTM vProTM Processors: Unlock value for your company with a variety of Intel® CoreTM processors
Single Node Servers: From edge to cloud, a variety of workloads can be supported by Intel® Single Node per chassis systems
Multi Node Servers: Designed for high-demanding tasks like HPC, these servers offer distinct security features and processor-based performance
Intel® Data Center Systems: exceptional storage performance, hyper-converged infrastructure, and high-performance computing optimized
Server Chassis: To handle a variety of workloads, Intel® Server Chassis are designed to work with Intel® Server Boards and Intel® Xeon® Processors
Server Boards: Intel® server boards meet the demands of customers for performance, security, and flexibility in small and large businesses alike
SAS/RAID: At a range of price ranges, Intel® RAID systems offer customized storage alternatives for a number of business purposes
Intel® NUC Mini PCs: Available with Windows* 10, Intel® NUC Mini PCs are ready to use right out of the box
Intel® NUC Kits: With customizable boards and chassis, Intel® NUC Kits are ideal for educators, businesses, students, gamers, and do-it-yourself enthusiasts
Intel® NUC Boards: These boards have a soldered-on CPU that can be used to create completely customized solutions
With a line of compute, board, chassis, and assembly solutions, Intel® NUC Elements: Reimagine computing to think new solutions
The tiny and light laptop kits from Intel® NUC offer exceptional gaming performance, discrete graphics, and amazing features
Products for Intel® KillerTM Wi-Fi: Discover how the Intel® KillerTM Wireless Series offers cutting-edge online gaming experiences
Products - Intel® Wi-Fi 6E: Utilizing the largest advancement in wireless technology in the past 20 years, remarkable performance gains are possible
Six Products from Intel® Wi-Fi: For densely populated areas, Intel® Wi-Fi 6 provides blazing speeds, responsiveness, security, and dependability
Intel® Wireless-AC Products: Giving consumers the ability to stay up to date with their work, entertainment, and extremely connected lifestyle
Supports speeds up to 100GbE for 800 Series Controllers
Network adapters from the 700 Series (up to 40GbE) are available in PCI Express (PCIe) and Open Compute Project (OCP) form factors, and they support speeds of up to 40GbE
Controllers in the 700 Series (up to 40GbE): 40GbE speeds are supported
500 Series Network Adapters (up to 10GbE): Available in PCI Express (PCIe) and Open Compute Project (OCP) form factors, these adapters provide speeds of up to 10GbE
Controllers in the 500 Series (up to 10GbE): Up to 10GbE speeds are supported View Intel-based Gigabit Ethernet Adapters (up to 2.5GbE) and access product specifications, technical documentation, downloads, and Intel support
Gigabit Ethernet controllers: They are capable of 2.5GbE speeds
View Intel-based Ethernet Connections (up to 100GbE) and access product specifications, technical documents, downloads, and Intel support
Optics: For high-density Ethernet connections, Intel® Ethernet Optics are tested and dependable options
Based on 10nm SuperFin and Intel 7 technology, the Intel Agilex® FPGA Portfolio allows for customized acceleration
The Intel® Stratix® Series gives you the ability to provide cutting-edge, high- performance products
Midrange Intel® performance and power efficiency are provided by the Intel® Arria® Series
The Intel® MAX® Series offers the best pricing on the market and has a distinctive, non-volatile architecture
The Intel® Cyclone® Series is designed to satisfy your demands for low-power, economically conscious designs
FPGA configuration devices from Intel®: These devices are made to support ASMI parallel IP blocks or FPGA serial flash loaders
Development Kits for Intel® FPGA: To speed up the FPGA design process, a variety of development kits are available from Intel® FPGA and its partners
Check out the portfolio of Intel® FPGA platforms and acceleration boards, which includes IPUs and SmartNICs
Client SSDs: On laptops, desktops, and other client devices, dependable, high- performance data storage improves gaming and productivity
Data Center SSDs: Enjoy increased endurance and dependability while avoiding data center bottlenecks
Intel® OptaneTM Persistent Memory: Take advantage of a new, big memory tier in data center design and experience breakthrough performance at a reasonable price With Intel® OptaneTM Memory, you can enjoy faster and more responsive laptops and desktop computers without sacrificing system storage
Client SSDs: On laptops, desktops, and other client devices, dependable, high- performance data storage improves gaming and productivity
Data Center SSDs: Enjoy increased endurance and dependability while avoiding data center bottlenecks
Intel® OptaneTM Persistent Memory: Take advantage of a new, big memory tier in data center design and experience breakthrough performance at a reasonable price With Intel® OptaneTM Memory, you can enjoy faster and more responsive laptops and desktop computers without sacrificing system storage
Figure 3 Intel evolved over the years (Intel® Products)
We are at the forefront of pioneering technology that transforms the lives of every individual across the globe
Intel played a pivotal role in establishing Silicon Valley as the tech epicenter Over half a century, Intel and its talented workforce have left an indelible mark on the world, propelling both business and society forward through groundbreaking innovations that redefine our way of life
Today, we leverage our extensive reach, vast resources, and unmatched scale to empower our customers to harness the full potential of digital technology Guided by the enduring principle of Moore's Law, we are committed to continuously advancing
11 semiconductor design and manufacturing This dedication allows us to effectively address the most pressing challenges faced by our valued customers
Intel's Vision: "To stand as the reliable performance leader, entrusted with the task of unlocking the boundless potential inherent in data."
Intel's Mission: "Our mission is to craft innovative solutions that address the most pressing challenges faced by our customers, focusing on dependable computing from the cloud to the edge, while drawing inspiration from the enduring principles of Moore's Law."
In a world where data is dramatically shaping the future of humanity, Intel remains steadfast in its commitment to unleashing the latent power of data This dedication drives us to pave the way for more dynamic and efficient networks and to infuse pervasive Artificial Intelligence into smart devices Moore's Law, which originally set the tempo for the digital revolution, serves as an enduring source of inspiration that continues to guide us today
- We listen, learn and anticipate our customers’ needs
- We deliver to our customer commitments with simplicity, clarity and speed
- We nurture partnerships and foster growing ecosystems
- We take informed risks together, learn and pivot quickly from mistakes to be better, faster, smarter
- We continuously improve, enabling us to be more curious, bold and innovative
- We are competitively paranoid to anticipate change and disrupt markets
- We prioritize, focus and execute flawlessly with urgency
- We make data-driven decisions with intellectual honesty and constructive debate; we disagree and commit
- We assume responsibility to deliver long-term stakeholder value
- We commit to team success, doing what’s best for Intel
- We recognize, respect and build trust with each other
- We value and grow passionate, empowered teams
- We value diversity and embrace differences
- We build inclusive teams where everyone does their best work, celebrates and has fun
- We care and make a difference to each other and our communities
- We are disciplined to deliver products and services that our customers and partners can always rely on
- We set and achieve high quality and security standards
- We cultivate talent to do the right things right
- We are truthful and transparent and act with uncompromising integrity
- We ensure a safe and healthy workplace
- We shape technology as a force for good
General introduction about Intel Products Vietnam (VNAT Factory)
Figure 4 Intel’s Product Vietnam (Intel Vietnam)
Intel Products Vietnam (IPV) is the single largest assembly and test plant within Intel Assembly and Test (ATM) network The $1B investment was announced in November 2006 to build a 500,000 sqf (~47,000 square meters) clean room facility in Saigon High Tech Park in District 9, Ho Chi Minh City To date, it is seen as the biggest
US high-tech investment in Vietnam Ever since operations started in Oct 2010, Intel Vietnam has created over 5000 jobs of highly skilled and diverse talents The accumulated export value is over $36B (2010-2019) which is over 60% of SHTP annual export values in2019 IPV is very proud of producing Intel’s latest technology chip products including 5G, IOT, Desktop, Mobile etc for worldwide customers (Source: Amcham Website)
Assembly and Test is considered a key part of Intel’s semiconductor manufacturing process It is the final step in the manufacturing of Intel’s silicon products, readying
14 them for shipment to customers around the world Intel’s assembly and test facilities are located in Penang and Kulim, Malaysia; Chengdu, China; San Jose, Costa Rica; and Ho Chi Minh City, Vietnam At Intel Vietnam, there are critical departments beside Assembly and Test Departments that involving in the operation In this book, we simplify 6 main departments including: Assembly Engineering (AE), Industrial Engineering(IE), Manufacturing (MFG), Test Engineering (TE), Technical Equipment Group Assembly Finish (TEG AF) and Technical Equipment Group Test (TEG T) Intel Products Vietnam has achieved several significant milestones It was the first multinational investment in Vietnam and set up the pioneering mega factory in assembly and test manufacturing Additionally, it established the initial modem factory in this field, contributing to over 60% of the volume in assembly and test manufacturing Semiconductor manufacturing typically encompasses two primary processes: wafer fabrication (front end) and assembly and test (back end)
Figure 5 Vietnam Assembly/Test Manufacturing (Explore Intel's history)
On November 10, 2006, Intel Corporation made a significant announcement of its plans to allocate a staggering USD 1 billion for the construction of a sprawling clean- room facility, spanning an impressive 500,000 square feet (equivalent to 46,451 square meters) within the Saigon High Tech Park in Vietnam
In March 2007, construction commenced on the Vietnam Assembly and Test factory Beyond the Assembly and Test facility, this sprawling 500,000 square foot campus encompasses various essential components These include an office building, a central utility building, a warehouse for raw materials and finished goods, a dedicated electrical substation, and a chemical storage facility
By June 2010, the Vietnam Assembly and Test facility of Intel Corporation commenced its operations, and merely one month later, the first "Made in Vietnam" chip was exported, marking a significant milestone
December 2013 marked a pivotal moment for NVNAT (Vietnam Assembly and Test facility) as Intel Corporation made the strategic shift from manufacturing computer chips to producing more sophisticated, value-added System-on-Chip products tailored for tablets and mobile devices This transition underscored the enhanced technological capabilities of VNAT and Intel's unwavering commitment to Vietnam
In 2016, Intel Products Vietnam Ltd achieved a remarkable milestone by successfully shipping a total of 1 billion units after several years of production, spanning
The year 2019 witnessed a notable development at VNAT, as it embarked on manufacturing SG chip products, marking a significant advancement in the factory's complex technologies
October 2020 marked another significant achievement for VNAT, as Intel Products Vietnam Co., Ltd celebrated the remarkable milestone of shipping out 2 billion units
16 from VNAT after a decade of operation, supporting 54 products across 13 segments.
Figure 6 Major Milestones (Explore Intel's history)
Figure 7 Intel Product Vietnam Organization (Source: HR Department)
Vision: In alignment with Intel Corporation's overarching vision, Intel Vietnam holds a profound aspiration: "Create the future of Intel and Vietnam."
Intel's enduring dedication to corporate responsibility and sustainability, firmly grounded in principles of transparency, governance, and ethics, is seamlessly woven into every facet of their operations This comprehensive approach has yielded substantial value for Intel and its stakeholders It has helped them manage risks, reduce expenses, enhance brand reputation, and discover fresh market prospects, enabling them to leverage technology to address some of society's most intricate challenges
Mission: Our mission is to lead through innovation, striving to become the preferred manufacturer within our industry We are steadfast in our commitment to perpetually innovate our products, elevating the levels of speed, precision, and quality in our manufacturing processes Together, we can envision a world where people and data come together to effect positive change on a global scale
LITERATURE REVIEW
Literature review about digitalization
In contemporary academia and the dynamic landscape of businesses, the term
"digitalization" has emerged as a prominent buzzword, reflecting its pervasive influence and multifaceted nature Various definitions have been put forth by scholars, government authorities, and industry experts, each offering unique perspectives on this transformative phenomenon Here, we delve into a comprehensive exploration of these definitions:
Maxwell and McCain (1997): Maxwell and McCain characterize digitalization as a process that dissects information into its smallest components By converting analog signals into discrete elements, this digital transformation empowers individuals and organizations to manipulate a wide array of data types, including text, graphics, software code, audio, and video, in innovative and previously unimagined ways This definition accentuates digitalization's capacity to unlock new possibilities for information handling and transformation
Hagberg et al (2016): Digitalization, as presented by Hagberg et al., signifies an ongoing and pervasive transformation that permeates various facets of contemporary society It is a term that encompasses a dual connotation: the transition from "analogue" to "digital" realms (e.g., shifting from cash to electronic payments) and the fostering of novel forms of value creation This includes enhancing accessibility, availability, and transparency across a broad spectrum of domains
Clerck (2017): Clerck's definition places a strong emphasis on the utilization of digital technologies and data to drive revenue growth, enhance business operations, streamline processes, and cultivate an environment conducive to digital business Central to this definition is the notion that digital information serves as the fundamental cornerstone of these endeavors
Lenka et al (2017): According to industrial management literature, digitalization is the phenomenon characterized by the integration of intelligent, interconnected machines, all powered by information and digital technologies This definition highlights the pivotal role of technology in redefining traditional industrial processes
Machekhina (2017): Machekhina's definition casts digitalization as the process of transforming diverse data types, ranging from text and sound to visuals and video, into the universal language of the digital realm It underscores the fundamental shift toward digitizing information
Parviainen et al (2017): In its simplest form, this definition encapsulates digitalization as the process of converting analog data, particularly images, video, and text, into a digital format, thus enabling its manipulation, storage, and dissemination in digital contexts
Thorseng and Griot (2017): Thorseng and Griot shed light on digitalization's transformative nature, characterizing it as the reshaping of pre-existing socio-technical structures that were once mediated by non-digital elements or relationships These structures are now being reimagined and restructured with the infusion of digitized artifacts and relationships empowered by emerging digital capabilities
Valenduc and Vendramin (2017): Contrary to perceiving digitalization as the irruption of a new revolution, Valenduc and Vendramin position it as the pervasive synergy of digital innovations that have permeated the entire economic and societal landscape Here, digitalization is viewed as a continuum rather than a revolutionary break
Crittenden et al (2019): Crittenden and colleagues define digitalization as a transformative process that engenders new forms of interaction between companies and their customers This transformation is primarily facilitated through diverse channels, marking a shift in the dynamics of customer engagement
Devereux and Vella: Devereux and Vella contextualize digitalization as the diffusion of a general-purpose technology, akin to past phenomena such as electrification It is characterized by the digitalization of products and services, which significantly reduces geographical barriers, enhances mobility, leverages network effects, facilitates data-driven personalization, stimulates innovation, attracts investments, and fosters the creation of new businesses and employment opportunities Eling and Lehmann (2018): Eling and Lehmann's definition emphasizes the fusion of analog and digital domains, facilitated by innovative technologies that amplify
20 customer interactions, augment data accessibility, and streamline core business processes
Gobble (2018): Gobble's characterization of digitalization centers on its role in leveraging digital technology and digitized information to create and harness value in novel and transformative ways
Morley et al (2018): The definition put forth by Morley et al posits digitalization as the expanding application of Information and Communication Technologies (ICT) across the economic landscape It encompasses a broad array of digital technologies, concepts, and trends, including but not limited to artificial intelligence and the Internet of Things (IoT)
Ringenson et al (2018): Ringenson and associates view digitalization as a profound restructuring of social life, primarily revolving around digital communication and media infrastructures This characterization highlights the profound impact of digitalization on the way individuals interact and engage with one another
Gebre-Mariam and Bygstad (2019): This definition aligns digitalization with the development and implementation of ICT systems, accompanied by concurrent organizational change The core of this transformation is the conversion of socio- technical structures from non-digital mediation to mediation through digitized artifacts and relationships
Srai and Lorentz (2019): In its simplest form, this definition frames digitalization as the reorganization of numerous aspects of social life around digital communication and media infrastructures, leveraging digital technologies to drive innovation and transformation
ANALYSIS OF THE STATUS OF THE VNAT FACTORY IN THE
Some terms, concepts at Intel
Table 1 Terms at Intel (Source: TEGT Department)
High Risk Item Estimated inventory can last for