enhancing inventory management efficiency by applying digitalization a case study of intel products vietnam co ltd

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

MINISTRY OF EDUCATION AND TRAINING

HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY AND EDUCATION FACULTY FOR HIGH QUALITY TRAINING

CAPSTONE PROJECT INDUSTRIAL MANAGEMENT

Ho Chi Minh City, November 2023

LECTURER: HUYNH ANH TUAN MA STUDENT: NGUYEN THI KIM NGAN

S K L 0 1 2 3 8 5

ENHANCING INVENTORY MANAGEMENT

EFFICIENCY BY APPLYING DIGITALIZATION: A CASE STUDY OF INTEL PRODUCTS VIETNAM CO., LTD

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 MANAGEMENT EFFICIENCY BY APPLYING DIGITALIZATION: A CASE STUDY OF

INTEL PRODUCTS VIETNAM CO., LTD

Student: NGUYEN THI KIM NGAN Student ID: 20124019

Course: 2020

Major: INDUSTRIAL MANAGEMENT Instructor: HUYNH ANH TUAN MA

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DISCLAIMER

This thesis document contains confidential and proprietary information related to Intel Corporation All personally identifiable information, intellectual property, and business-related details, including but not limited to names, identification numbers, project codes, and equipment specifications, have been replaced with artificial terms to protect the privacy and intellectual property of the involved parties

The products and services described may contain defects or errors known as errata which may cause deviations from published specifications Current characterized errata are available on request

You may not use or facilitate the use of this document in connection with any infringement or other legal analysis concerning Intel products described herein You agree to grant Intel a non-exclusive, royalty-free license to any patent claim thereafter drafted which includes subject matter disclosed herein

Forecasts: Any forecasts of requirements for goods and services are provided for discussion purposes only Intel will have no liability to make any purchase pursuant to forecasts Any cost or expense you incur to respond to requests for information or in reliance on any forecast will be at your own risk and expense

Business Forecast: Statements in this document that refer to Intel’s plans and expectations for the quarter, the year, and the future, are forward-looking statements that involve a number of risks and uncertainties A detailed discussion of the factors that could affect Intel’s results and plans is included in Intel’s SEC filings, including the annual report on Form 10-K

Copies of documents which have an order number and are referenced in this document may be obtained by calling 1-800-548-4725 or by visiting

http://www.intel.com/design/literature.htm.

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ACKNOWLEDGEMENTS

Throughout this academic journey, the author extends heartfelt gratitude to the dedicated teachers at the Faculty of Economics, Ho Chi Minh City University of Technology and Education, whose guidance and knowledge sharing have been invaluable in shaping the author's academic foundation and professional readiness

Besides that, the author extends deepest appreciation to the thesis advisor, Mr Tuan Huynh, whose expertise, dedication, and unwavering support have been instrumental in shaping the direction of the research and ensuring its successful completion The mentorship and insightful feedback provided by Mr Tuan Huynh have been invaluable The author would also like to express profound thanks to the Board of Directors at Intel Product Vietnam Co., Ltd for their generous support and facilitation of the author's practical engagement Special thanks to Mr Nguyen Duc Loc, Mr Ho Cong Tai of TEGT department and Mr Nguyen Phuc Tam of TEG-AF department for their unwavering support, mentorship, and constructive feedback throughout the various stages of this research project Their contributions have greatly enriched the quality of this thesis Acknowledgment is also extended to Mr Nguyen Phuc Tam for providing essential resources, data, and access to facilities, which contributed to the depth and excellence of the research

Lastly, the author expresses appreciation to all the participants and respondents who generously contributed their time and insights

In conclusion, the successful completion of this thesis stands as a testament to the collaborative efforts of these remarkable individuals and organizations The author is profoundly grateful for their contributions

Ho Chi Minh City, 07 Nov, 2023

The author Nguyen Thi Kim Ngan

GSC Global Supply Chain

IPV Intel Product Vietnam AE Assembly Engineering

IE Industrial Engineering TE Test Engineering

TEG AF Technical Equipment Group Assembly Finish TEG T Technical Equipment Group Test

ATK Adjust to Keep BOM Bill of Materials

ROP Reorder Point

Dept Cost Rep Department Cost Representative

POR Plan of Record

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LIST OF TABLES

Table 1 Terms at Intel (Source: TEGT Department) 26

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LIST OF FIGURES

Figure 1 Intel's Logo (Source: Internet) 5

Figure 2 Intel evolved over the years (Source: Intel® Products) 6

Figure 3 Intel evolved over the years (Intel® Products) 10

Figure 4 Intel’s Product Vietnam (Intel Vietnam) 13

Figure 5 Vietnam Assembly/Test Manufacturing (Explore Intel's history) 14

Figure 6 Major Milestones (Explore Intel's history) 16

Figure 7 Intel Product Vietnam Organization (Source: HR Department) 16

Figure 8 Email sent by GSC (Source: TEGT Department) 28

Figure 9 Email sent by GSC (Source: TEGT Department) 29

Figure 10 Implementation plan ((Source: TEGT-Department) 34

Figure 11 UZB/LDOI Review Process on system (Source: TEGT Department) 38

Figure 12 Data Retrieval for System Development by SQL PathFinder(1) (Source: TEGT-Department) 40

Figure 13.Data Retrieval for System Development by SQL PathFinder (2) (Source: TEGT-Department) 40

Figure 14 Data Retrieval for System Development by SQL Server (Source: Department) 41

TEGT-Figure 15 Data Transformation for System Development by Power Query (Source: TEGT-Department) 41

Figure 16 Request access to system (source: TEG-AF Department) 42

Figure 17 The overall interface of the high-risk parts review system (source: TEG-AF Department) 42

Figure 18 High risk parts list of AE (source: TEG-AF Department) 43

Figure 19 High risk parts list of MFG (source: TEG-AF Dept) 44

Figure 20 High risk parts list of TE (source: TEG-AF Dept) 44

Figure 21 Detail of high-risk part list (Source: TEG-AF Dept) 45

Figure 22 VNAT Critical Part List (source: TEG-AF Dept) 45

Figure 23 VNAT Critical Part List: Summary DOI by Area (source: TEG-AF Dept) 46 Figure 24.VNAT Critical Part List: Detail Data by Area (source: TEG-AF Dept) 46

Figure 25 UZB/LDOI Tracking: Guidance for Users (Source: TEG-T Department) 47

Figure 26 Log in to the System (Source: TEG-AF) 48

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Figure 27 Filter by Department (General Page) 48

Figure 28 Filter by Module (Department Page) 49

Figure 29 Filter by Machine Type (Machine Type Column) 49

Figure 30 Input Proposed Max (Proposed Max Column) 50

Figure 31 Input Proposed ROP (Proposed ROP Column) 50

Figure 32 Input Proposed ROP (Proposed ROP Column) 51

Figure 33 Provide Justification for Proposed Changes (Justification Column) 52

Figure 34 Submit ATK Change Request (If Applicable) 52

Figure 35 Inventory dashboard (Source: TEG-AF) 53

Figure 36 Filter type of risk (Source: TEG-AF) 54

Figure 37 DOI Trigger Dashboard 55

Figure 38 Read me - DOI Trigger on Dashboard 56

Figure 39.UZB/LDOI review results - WW202338 56

Figure 40 UZB/LDOI review results - WW202339 57

Figure 41 UZB/LDOI review results - WW202340 57

Figure 42 UZB/LDOI review results - WW202341 57

Figure 43 Review results monitoring (WW202338 to WW202340) 58

Figure 44 Building the Application using Power App Tool (Source: TEG-AF Department) 60

Figure 45 Interface of the VNAT Cost Eco System Application (Source: TEG-AF Department) 61

Figure 46 VNAT Cost Eco System: Cost Processes (Source: TEG-AF Department) 62

Figure 47 All documents, guidelines of VNAT cost processes (Source: TEG-AF Department) 62

Figure 48 VNAT Cost Eco System: Cost Stories (Source: TEG-AF Department) 63

Figure 49 VNAT Cost Eco System: Cost Webpages (Source: TEG-AF Department) 64 Figure 50 All dashboard used for controlling cost (Source: TEG-AF Department) 64

Figure 51 VNAT Cost Eco System: Request Pages (Source: TEG-AF Department) 65

Figure 52 Request BO, ATK, xPOR, Purchasing (Source: TEG-AF Department) 65

Figure 53 BO Request - Request list (Source: TEG-AF Department) 66

Figure 54 BO Request - Create new BO request (Source: TEG-AF Department) 66

Figure 55 BO Request - Edit Bo Request (Source: TEG-AF Department) 67

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Figure 56 BO Request - Delete BO Request (Source: TEG-AF Department) 67 Figure 57 ATK Request - Request list (Source: TEG-AF Department) 67 Figure 58 ATK Request - Create new ATK Request (Source: TEG-AF Department) 68 Figure 59 ATK Request - Edit ATK Request (Source: TEG-AF Department) 68 Figure 60 ATK Request - Delete ATK Request (Source: TEG-AF Department) 68

LIST OF TABLES vii

LIST OF FIGURES viii

1.2.4 Vision and mission 16

CHAPTER 2: LITERATURE REVIEW 18

2.1 Literature review about digitalization 18

2.1.1 General concepts of digitalization 18

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2.1.2 General concepts digitalization in business 20

2.2 Literature review about inventory management 22

2.2.1 General concepts of supply chain 22

2.2.2 General concepts of supply chain management 23

2.2.3 General concepts of inventory management 24

CHAPTER 3: ANALYSIS OF THE STATUS OF THE VNAT FACTORY IN THE INVENTORY MANAGEMENT AND METHODOLOGY DEPARTMENT 26

3.1 Some terms, concepts at Intel 26

3.2 The status of risk control in inventory management at Intel 27

3.1.1 Previous risk control system 27

3.1.2 Current risk control system 28

CHAPTER 4: PROPOSED SOLUTIONS FOR ENHANCED INVENTORY MANAGEMENT AT INTEL PRODUCTS VIETNAM CO., LTD FACTORY 31

4.1 Business case 31

4.1.1 Problem Statement of the UZB/LDOI Tracking Process 31

4.1.2 Ideal state of the UZB/LDOI Tracking Process Control Project 32

4.1.3 Implementation plan for the UZB/LDOI Tracking Process Control Project 34 4.1.4 Finance plan for the UZB/LDOI Tracking Process Control Project 36

4.2 Process Review UZB/LDOI Parts (High-risk parts) on system 38

4.3 UZB/LDOI parts system (High – risk parts system) 40

4.3.1 Overview about UZB/LDOI parts system 40

4.3.2 System interface 42

4.3.3 Parts Within Trigger Scope 46

4.3.4 Review UZB/LDOI 47

4.3.5 Inventory dashboard 53

4.4 Assessing Project Efficiency: A Four-Week Monitoring Review 56

4.4.1 Evaluating User Compliance in Relation to the Project 56

4.4.2 Limitations of the UZB/LDOI Tracking Process Control Project 59

4.5 Proposed Strategies for Overcoming Current Project Limitations 60

4.5.1 Overview about VNAT Cost Eco System 60

4.5.2 Cost processes 61

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

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2 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

3 Scope and object Scope

- 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.,

Ltd

4 Research methodology Data Collection

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

Data Analysis

SQL and SQL Pathfinder: These tools will be used for data extraction and exploration from relational databases, facilitating the identification of patterns and anomalies

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

5 Structure of report

The report consists of four chapters, specifically:

Chapter 1: Introduction about Intel Products Vietnam Co., Ltd

In Chapter 1, we provide an introductory overview of Intel Products Vietnam Co., Ltd This chapter encompasses the company's history, its evolution, its core business operations, product offerings, and the organizational structure, with a particular focus on the VNAT factory This chapter aims to offer readers a comprehensive understanding of the company and its operations

Chapter 2: Liturature review

Chapter 2 delves into the theoretical underpinnings of our study It encompasses essential concepts and theories relevant to our topic, including inventory management and digital transformation theory, and other relevant theoretical frameworks that provide the foundation for our research

Chapter 3: Analysis of the status of the VNAT factory in the Inventory Management and Methodology Department

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In Chapter 3, we conduct an in-depth analysis of the current state of affairs at the factory with a specific focus on inventory management and the methodology department We highlight operational challenges and issues encountered within the factory Additionally, we explore innovative solutions and strategies that have been implemented to address and improve these challenges

Chapter 4: Proposed Solutions for Enhanced Inventory Management at Intel Products Vietnam Co., Ltd Factory

Chapter 4 is dedicated to proposing practical solutions aimed at optimizing inventory management within the VNAT factory at Intel Products Vietnam Co., Ltd We draw upon real-world challenges faced by the enterprise and offer insightful recommendations This chapter concludes by evaluating the outcomes of implementing these solutions, shedding light on the improvements achieved in inventory management at the factory

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

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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

The highest-performing Intel CPUs for laptops and desktops, Intel® CoreTM Processors offer cutting-edge responsiveness, connectivity, and graphics

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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 effective CPU performance, robust connectivity, and extended battery life

cost-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

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

Memory and Storage

Client SSDs: On laptops, desktops, and other client devices, dependable, performance data storage improves gaming and productivity

high-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

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

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

1.1.6 Intel’s value Customer First

- 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 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

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One Intel

- 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

Inclusion

- 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

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1.2 General introduction about Intel Products Vietnam (VNAT Factory) 1.2.1 Overview

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

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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)

1.2.2 History and development

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

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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 46 supported products

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

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from VNAT after a decade of operation, supporting 54 products across 13 segments.

Figure 6 Major Milestones (Explore Intel's history)

1.2.3 Organizational structure

Figure 7 Intel Product Vietnam Organization (Source: HR Department)

1.2.4 Vision and mission

Vision: In alignment with Intel Corporation's overarching vision, Intel Vietnam

holds a profound aspiration: "Create the future of Intel and Vietnam."

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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

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CHAPTER 2: LITERATURE REVIEW

2.1 Literature review about digitalization 2.1.1 General concepts of 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

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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

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

Collectively, these diverse definitions underscore the intricate, multifaceted nature of digitalization They provide rich insights into the myriad ways in which digitalization has permeated academia and various industries, shaping the contemporary landscape in profound and transformative ways

2.1.2 General concepts digitalization in business

According to Marco Botta, Fabio De Felice, Antonella Petrillo, and Antonio Piccolo (2019), the adoption of digitalization in business offers a plethora of advantages,

- Enhanced competitiveness: Embracing digitalization empowers businesses to refine their products and services, bolstering their competitiveness in the market while simultaneously curbing production costs

- Advanced analytics and prediction: Digitalization equips businesses with predictive and data analytics tools, facilitating more precise and informed decision-making processes

- Increased flexibility: Businesses that integrate digitalization into their operations gain the flexibility to swiftly adapt to evolving market dynamics and customer preferences This extends to the enhancement of warehouse management and data storage practices

- Enhanced customer interaction: Leveraging digital technology allows businesses to craft superior customer experiences, heighten customer engagement, and elevate overall customer satisfaction levels

For small and medium-sized enterprises (SMEs), digitization offers the opportunity to boost productivity, cut operational costs, elevate customer service standards, access untapped markets, and refine decision-making processes Moreover, digitization aids in error reduction, enhancing data accuracy, which in turn facilitates more precise forecasting, efficient planning, and superior inventory control (T Garengo)

In summary, the integration of digitization within enterprises promises to enhance their competitiveness, elevate operational efficiency and production productivity, provide superior customer experiences, and reduce downtime while optimizing workflow This transformative approach can lead to a wide array of benefits, including improved risk management, the creation of novel revenue streams, expansion into new markets, and the ability to serve previously untapped customer segments, as outlined by N Venkatraman et al in 2019

Similarly, Lambert, Stock, and Ellram further expound upon this concept by defining a supply chain as a cooperative alignment of firms collaborating to bring products or services to the market This definition accentuates the collaborative nature of supply chains, emphasizing the coordinated efforts of various entities in ensuring the successful delivery of goods and services Notably, these definitions also acknowledge the end consumer as an integral part of the supply chain, recognizing their pivotal role in the ultimate consumption of products

Christopher (1992) adds another layer to our understanding of supply chains, defining them as intricate networks of organizations intricately linked through both upstream (supply) and downstream (distribution) processes and activities These processes and activities collectively generate value in the form of products and services that are ultimately delivered to the end consumer This perspective highlights the multifaceted nature of supply chains, where multiple entities, both upstream and downstream, contribute to the creation and delivery of value

Drawing from these definitions, we can synthesize a comprehensive understanding of a supply chain as a dynamic and interconnected system comprising three or more entities, encompassing organizations or individuals These entities play integral roles in the complex web of upstream and downstream flows, encompassing products, services, finances, and information, all of which journey from source to customer This holistic view encapsulates the essence of supply chain management, emphasizing its

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collaborative nature and the critical role of each participant in the seamless delivery of products and services to the end consumer

2.2.2 General concepts of supply chain management

In the realm of supply chain management (SCM), scholars have contributed valuable insights into its multifaceted nature and underlying principles:

Monczka, Trent, and Handfield (1998) underscore that effective SCM necessitates a transformative shift in the traditional materials functions within an organization In this paradigm, these functions are brought under the purview of an executive responsible for overseeing and coordinating the entire materials process Additionally, successful SCM hinges on establishing collaborative relationships with suppliers across multiple tiers At its core, SCM is conceived as a comprehensive concept with the primary objective of seamlessly integrating and managing the sourcing, flow, and control of materials This approach adopts a holistic systems perspective that spans across diverse organizational functions and extends to multiple tiers of suppliers

La Londe and Masters (1994) delve into the strategic dimensions of supply chains They highlight critical elements such as long-term agreements between two or more firms within a supply chain, the cultivation of trust and commitment in these relationships, and the integration of logistics activities This integration encompasses the sharing of crucial demand and sales data, which facilitates a deeper understanding of market dynamics and demand patterns Furthermore, their definition acknowledges the potential for a shift in the locus of control within the logistics process, underlining the evolving nature of supply chain dynamics

Stevens (1989) articulates the central objective of supply chain management as the synchronization of customer requirements with the material flow from suppliers This synchronization aims to strike a balance between seemingly conflicting goals, such as ensuring high levels of customer service, optimizing inventory management, and achieving low unit costs This perspective underscores the importance of aligning supply chain processes with customer needs while maintaining operational efficiency

Jones and Riley (1985) provide a succinct definition, characterizing supply chain management as the comprehensive management of the entire material flow, extending

In summary, these definitions collectively contribute to our understanding of supply chain management by highlighting its multidimensional nature, the importance of collaboration, and the overarching objective of optimizing the flow of materials and information from source to customer This comprehensive view underscores the pivotal role of SCM in achieving operational efficiency, cost optimization, and enhanced customer service

2.2.3 General concepts of inventory management

Inventory management is an integral component of supply chain management, playing a pivotal role in the efficient functioning of organizations across various industries Effective inventory management strikes a delicate balance between ensuring that adequate stock is available to meet customer demand while minimizing carrying costs associated with excess inventory In essence, it serves as the backbone of supply chain operations, influencing production schedules, customer satisfaction, and overall operational efficiency In this context, the judicious handling of inventory becomes a critical factor in maintaining competitiveness and profitability in today's dynamic business environment

As to Kotler's (2000) definition, inventory management encompasses all the tasks associated with creating and overseeing the stock levels of raw materials, semi-finished materials (work-in-progress), and finished goods to ensure sufficient supply and minimize expenses associated with excess or insufficient inventory

According to Rosenblatt (1977), "The consumer's final price includes the cost of inventory maintenance." An item in inventory has a cost to its owner The cost of labour and materials falls on the manufacturer The wholesaler is likewise financially constrained Thus, the primary objective of the researchers is to keep inventory at a level that will yield the best stock at the lowest possible cost

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Morris (1995) emphasized that, when viewed in its broadest sense, inventory management aims to maintain the least quantity of one type of asset in order to support a rise in the overall value of all organizational assets, including its material and human resources

The main goal of inventory management and control, according to Keth et al (1994), is to advise managers on how much of a good to reorder, when to do so, how often orders should be placed, and what the necessary safety stock is in order to minimize stockouts Thus, having what is needed and reducing the frequency of stock outs are the two main objectives of inventory

Inventory is the stock of items that a company keeps on hand in case there is a future need, according to Drury (1996) Schroeder (2000), who emphasized that inventory management affects all corporate areas, including operations, marketing, accounting, and finance, concurred with this concept He proved that there are three reasons to keep inventory on hand: transactional, preventive, and speculative When stock must be kept on hand to satisfy demands for both production and sales, the transaction incentive emerges

Additionally, a company may choose to retain more stock in order to offset the risk that it underestimated the quantity of production and sales it would need in the future This is a cautious motive that only makes sense in situations when demand is unpredictable in the future A company may be persuaded to buy more materials than usual out of the speculative desire to maintain inventory in the hopes of realizing extraordinary profits One example of speculative behavior during inflationary times is the advance purchase of raw commodities