proposal for solution and improvement of the purchasing process at matai vietnam co ltd

423.1 Current status of purchasing activities in the supply chain in Matai Vietnam Co., Ltd .... Addressing this matter entails a specific examination of the current operational status a

Rationale

Over the past decade, Vietnam has steadily gained prominence on the regional and global stage For instance, in 2021, the country's GDP reached $366.1 billion, marking a 2.58% increase compared to the previous year Both before and after the pandemic, Vietnam demonstrated remarkable stability in GDP growth when compared to other Southeast Asian nations In 2021, amidst the complex development of the Covid-19 pandemic, Foreign Direct Investment (FDI) inflow into Southern Vietnam reached $31.15 billion, an impressive 9.2% increase from 2020 The processing and manufacturing sector, which accounts for 47.5% of the total investment capital, was the most favored field The trend suggests that registered investment capital is expected to see significant growth in the near future

As Vietnam's economy continues to evolve, foreign-invested enterprises operating within the country encounter a blend of opportunities and challenges Consequently, competition between these businesses intensifies, necessitating the improvement of product quality alongside cost reduction efforts Recognizing this, the significance of a well-functioning supply chain for business development cannot be understated Thus, establishing an effective supply chain is pivotal for businesses to thrive comprehensively and enhance their competitiveness in the market

In alignment with the nation's economic progress, Vietnamese businesses have made positive changes in their supply chain activities However, it's notable that procurement activities have not received the same level of attention Yet, procurement is an indispensable component of supply chain operations and serves as a prerequisite for the functioning and growth of businesses This issue persists in many industrial manufacturing enterprises, including Matai Vietnam Matai Vietnam, an enterprise with Japanese investment, primarily engages in light industry packaging production Upon working at Matai Vietnam, the author observed several notable weaknesses in its procurement activities that require rectification Addressing this matter entails a specific examination of the current operational status and the factors influencing procurement activities within the Matai Vietnam supply chain From there, find the most influential factors and draw out the limitations in order to come up with solutions to improve purchasing activities in the supply chain Stemming from that urgent need, the author

2 chose the topic "Improving the purchasing process at Matai Vietnam Co., Ltd." as my thesis topic.

Objective

Autor are applying SMART to through more detail about the thesis objective:

- Specific: I will looking for inadequacies in the purchasing process at Matai Vietnam

- Measurable: I will give suggestions for businesses to consider, apply a new technology and building a new purchasing department

- Achievable: The technology including Infor system and MiT service will make the process more modern and smoothly, the new department will help other part reduce the burden

- Relevant: I will discuss with the leadership departments how to apply and usefulness of the new system in the SCM process in general, and the specific roles that employees in the new purchasing department

- Time-based: I will make a report on the effectiveness after applying the info system every month and the satisfaction of the departments during the order trial period

The goal of the research is to analyze the status of purchasing activities at Matai Vietnam Co., Ltd thereby identifying problems and issues that affect the purchasing activities and the damage it causes to the company production activities From there, propose solutions to improve goods purchasing activities in the supply chain at Matai Vietnam.

Scope and object

Research object: Raw material purchasing activities at Matai Vietnam Co., Ltd

Scope of space: SCM office of Matai Vietnam Co., Ltd

Time scope: The study will be conducted during the period from August 2023 to October

Research methodology

For this thesis, the author applied a simple quantitative analysis method according to the descriptive statistics method to evaluate purchasing activities at Matai Vietnam, thereby drawing out strengths and weaknesses in operations Purchasing at Matai Vietnam to propose solutions to improve purchasing activities in the supply chain process

Structure of report

The report includes an introduction, conclusion and main content divided into 4 chapter as follows:

CHAPTER I: INTRODUCTION TO THE COMPANY

CHAPTER II: LITERATURE REVIEW ABOUT PURCHASING MANAGEMENT

CHAPTER III: REALITY OF PURCHASING AT MATAI VIET NAM CO., Ltd

CHAPTER IV: PROPOSED SOLUTIONS TO IMPROVE THE PURCHASE PROCESS AT MATAI VIETNAM CO., LDCHAPTER 1: COMPANY OVERVIEW

INTRODUCTION ABOUT COMPANY

Information about Matai Vietnam Co., Ltd Company

Company name: Matai Vietnam Co., Ltd

Address: Manufacturing area, Tan Thuan, Tan Thuan Dong, District 7, HCMC

Website: www.matai.co.jp

Number of employees: 5 Japanese and 970 Vietnamese employees

History and development

Matai Vietnam Co., Ltd was established on March,1996 with 100% investing cost from Japan, the company has been operated for 25 years With a scale of 10,000 m2 and an operating capacity of 20,000 products/month In October 1998, the first factory expanded with 20,000 m2 The company continued to operate and aim to improve processes and products, and in December 2000, achieved the first ISO-9001 standard with an increased operating capacity of 50,000 products/month Company continuous to upgrade manufacturing the new product name “Neopallex bag” On January, 2003 and set the target for 60.000 products/month With the results and achievements achieved, the company has not stopped making efforts to improve productivity and as a result, 10 years of establishment of the company (March 1996-March 2006) the company has grown its productivity from 20,000 to 80,000 products/month, increasing 4 times In the same year 2006 in May, the company also obtained ISO-14001 certificate With the unremitting efforts of all employees, by 2008, all products of the company reached 10,000 products/month And to meet the needs of product

5 production, the company established a second factory, within 9 months of building the second factory was put into operation in May 2009 with 120,000 products/month After more than 1 year of operation, the company achieved a capacity of 150,000 products in October 2010 By August 2013, the output increased to 180,000 products/month After celebrating the 20th anniversary of the company's establishment, the company not only aims at developing product output but also towards quality certificates and with that determination, in December 2016 achieved FSSC-22000 at home machine No.2 and not long after that, in February 2017 also achieved FSSC-22000 at factory No 1 Continuing with those successes, in March 2018 the company achieved ISO-9001:2015 and ISO-140001:2015 Up to now, the company is also constantly trying to develop and achieve better achievements in the future.

Mission, vision and core value

Visions: Matai aims to be a company with pride and a dream to contribute to the development of industry and lifestyle by providing excellent heavy duty packaging products with advanced technology and services sincere distribution service, increase the value of customers' products

Missions: providing products from the heart, product quality is on top meet the highest needs of customers

Core values: customer Satisfaction: Through business activities, Matai wins customers' satisfaction and trust, and realizes customers' dreams and prosperity

Compliance: Matai is highly ethical, strictly adheres to laws and regulations, and always acts in good faith

Disclosure: try to communicate widely with society through publication information proactively and accurately

Employee satisfaction: Matai respects the value of each worker, strives to create a safe and comfortable working environment, and creates a friendly and happy

Environmental protection: Matai has always been proactive in preserving the global environment

Contributing to society: Contributing to society as a corporate citizen good

Global: Matai always aims to respond to globalization, comply with laws and regulations, consider cultural customs, and contribute to economic development and society.

Field

Matai Vietnam Co., Ltd is 100% invested from Japan, is a company that manufactures products and exports to the parent company, Nilon Matai The company's main field of activity is heavy duty packaging Main products are jumbo bag, neopallex bag, nylon bag, cloth PP PE textile, export to serve international customers

The company's customers: The main market is Japan, accounting for 65%, in addition to Japan, there are also Southeast Asian countries that also account for a high proportion of nearly 33%, the remaining 2% is for service for domestic customers

Table 1 1 List of products of Matai Co., Ltd

Company organization

Figure 1 1 Organization of Matai Vietnam Co., Ltd

The current president as well as the legal representative of the company is Kazuo AITA Chairperson is the owner of the company, decides all activities of the company, the title has the greatest power

The company's vice president is Kazuhiro HADARA As the person in charge and responsible for the production activities of the company As well as replace the president to handle and decide the work authorized

In addition to the authorized work, the Vice President is also the person with the most power in the company responsible for planning and implementing the company's production strategies Besides, set goals and policies for departmental management

QA General's full name is QA General MG & ISO Representative (Quality Manager) quality and leadership representation) More than 25 companies established in addition to trying to increase the company's output, ensuring the quality of product output is also the company's top priority The proof is that the company has so far achieved the 2015 version of ISO certificates

QA General is a quality assurance manager, manager, who is responsible for quality assurance for the entire product manufacturing process Also, plan for the quality control process and the management of the quality management system

The factory director is the person who directly supervises all production activities of the factory The factory director is also responsible for planning the factory's production as well as checking production activities and implementation, supervising and urging employees to work according to the planned schedule At the same time, the factory director also participates in the process of ensuring product quality as well as improving labor productivity

In addition, they also perform tasks authorized by superiors, manage machinery in the factory, and support periodic maintenance Participate in recruitment, training and professional improvement of subordinates

The foreman and deputy foreman positions rotate in shifts to monitor the performance of machinery and workers, ensure production progress and control the quality of the company's product output

The Chief Financial Officer is responsible for performing relevant financial and accounting operations for the company according to State regulations Accounting for the company's revenues, expenses and business performance according to regulations At the same time, also make financial plans by year, quarter and month In addition, he also advises the council on the field of finance - accounting and effective financial management of the company

The Director is responsible for effectively operating the human resources system as well as other administrative activities In the company, the Human Resources Director supports the board of directors in all activities related to human resource management and organization and training activities

In addition to the main job of managing the company's human resources, the administrative department also organizes annual activities for the company such as rewards, emulation, etc And also manages salaries, bonuses, social insurance, etc Health insurance related to all employees.

Business situation 2019-2021

Table 1 2 Business performance of Matai Co., Ltd from 2019-2021

Figure 1 2 Business performance of Matai Co., Ltd from 2019-2021

The company's business performance in recent years in the period 2019 - 2021 shows that the company's revenue from sales activities has not fluctuated much or in other words, seems to have remained unchanged within the first 3 years This is understandable because the company produces according to the production plan from the parent company and does not have a sales department to promote and develop sales Although revenue did not increase, net profit showed a clear growth Profits in 2019 increased by nearly 36% and profits in 2020 increased compared to 2019 by nearly 29% This growth of the company once again clearly demonstrates that the way for a business to increase sustainable profits is not to increase revenue but to effectively cut costs Matai has succeeded in reducing raw material costs, thanks to technology development as well as investment in recycling and recovery of substandard products in the production process for remanufacturing By 2021, the company will be heavily affected by the Covid-19 pandemic It is a product processing company for the parent company, so the products after being produced will be exported to Japan or neighboring countries The shutdown of the economy due to the epidemic has caused the

12 company's sales revenue to decrease by only 50% compared to previous years In addition, management costs have hardly changed, so the company's profits have remained unchanged.

Manufacturing activities at factory

The company specializes in manufacturing heavy-duty industrial packaging, the company's production process is as follows:

Figure 1 3 Manufacturing process of Matai Viet Nam

Fiber creation area: The purchasing department will import raw materials, in which the main raw materials are virgin plastic granules and additives Additive particles such as CaCO3 particles increase durability, UV anti-aging particles, color particles create packaging color, etc Then put into warehouse for storage Workers use a mixer to mix plastic granules, CaCO3 granules, UV granules and plastic granules together and then feed them into the fiber extruder After being extruded, the particles will be formed into thick or thin fibers depending on the function

Weaving area: After being created, the fibers will be brought into the weaving area for production according to orders Depending on the use of each type of yarn, we can weave belts or fabrics With the belt weaving process, the yarn will be braided into rope and then woven to form a belt with the purpose of creating a belt on the bag body using a bag crane to make it easier to transport In addition, circular weaving is also done At this stage, the fibers will be transferred to the weaving machine to be woven into different types of fabric according to packaging specifications: thick fabric, thin fabric, strength fabric, etc At the same time, a part of the yarn will be braided, the fibers are woven into ropes for the purpose of tying the filling and discharge mouths of the bag

Blowing area: At this stage, depending on the purpose of the type of packaging used to construct the product, it can be coated with film or blown with nylon The membrane coating process makes the bag waterproof At this stage, it is up to the customer's request to completely coat the bag or only partially coat the fabric of the bag, this also depends on the goods inside The fibers are woven into pieces and put into the coating machine to be coated with a layer of PP to form a waterproof complex For example, bags used to contain rice, beans, etc must have holes for ventilation and disinfection, so they must use twisted fabric to avoid contact with insects Powder bags need to be covered with a waterproof layer to preserve the product's quality during storage and transportation But for bags to store plastic and metal items, there is no need to twist the yarn or cover with a waterproof layer Unlike membrane coating, some types of bags do not require waterproof membrane coating on the outside of the bag but require nylon blowing inside the bag

Sewing area: Depending on each production order, what type of packaging will be produced When the semi-finished product and raw materials are ready, sewing is done to shape the product and assemble it into a complete package

Printing area: After completing the entire packaging, the packaging will be transported to the

Printing Area and printed according to the customer's request

Recycling area: Products that do not meet quality requirements will be recovered and shredded to be recycled into plastic waste to be re-produced from the beginning

Finishing area: In other words, this is the stage of checking the quality of the entire finished product Check the lint, after the product has been completed, check for lint or scraps or excess threads that have not been completely cleaned After checking, staff continue to check each product to ensure 100% quality packaging.

Oriented development

Currently, the parent company in Japan: Nilon Matai has 11 production and sales facilities in 4 countries In particular, Thailand and Indonesia, like Matai (Vietnam), are companies that mainly produce heavy-duty packaging Therefore, the company has set a goal of becoming the main manufacturer of Jumbo bags for Nylon Matai to serve the needs of Japanese and international customers

Besides, the company also wants to develop further, increase production output and quality to become a supplier to Southeast Asian countries, especially Vietnam

SUMMARY

Matai Vietnam is a packaging manufacturing company with an extensive history, a large factory with a framework built on a strict scientific process from Japan

LITERATURE REVIEW ABOUT PURCHASING MANAGEMENT16 2.1 Purchasing activities in the supply chain

Concept of purchasing activities in the supply chain

The increasing development of the manufacturing business sector is strongly supported by the growth of the world and regional economies Because there will be many reputable and quality manufacturing enterprises Competition between manufacturing companies will become increasingly fierce in terms of factory infrastructure, product quality, completion time, etc That is why purchasing activities in the supply chain are becoming increasingly fierce becomes more important than ever as this is a prerequisite and indispensable activity in the supply chain, creating timely, complete and accurate inputs so that businesses can operate production on business schedule

Nowadays, purchasing is recognized as a key function whose importance and value it brings to a business is enormous That's why the concept of purchasing is also extremely diverse and rich, depending on the industry and research purpose We can draw some typical concepts about purchasing as follows:

Purchasing is the management of an enterprise's raw material resources, providing all goods, services, capabilities and knowledge necessary to operate, maintain and manage the main activities of the enterprise, ensuring businesses always achieve the most favorable conditions (Arjan J Van Weele, 2009)

Procurement is the activity of sourcing products and services, purchasing and delivering them from suppliers to a business This is a very important activity in the manufacturing supply chain because purchased parts and materials account for more than 60% of the cost of finished goods For retail companies, this rate can be up to 90% (John, Chandra and Tim, 2008) The procedures a company follows in order to finish a transaction are known as the purchasing process Unlike consumers, businesses usually follow a formal procedure when making a purchase A firm may need to do research, get advice from several departments, negotiate, and bill for purchases

Experts could connect the procurement and purchase processes closely But the procurement process is primarily concerned with tactics, including research and bargaining The act of actually acquiring goods and services is the main emphasis of the purchase process.

Objectives and roles of purchasing activities in manufacturing enterprise

Reserve consolidation goal: Purchase goods to ensure reasonable replenishment of reserves in terms of quantity, quality and time

Cost objective: Must ensure reduction of purchasing management costs

Relationship development goal: Through purchasing, develop relationships with current product sources, discover and establish relationships with potential product sources

2.1.2.2 Roles of purchasing in manufacturing enterprise

One of the main and important roles of the purchasing department is to provide a source of goods, organize a stable flow of goods for all departments in the business, so that the business has enough raw materials materials for production work The purchasing department often has links with other departments to understand the characteristics of product types so that they can accurately price products and achieve the highest efficiency in purchasing At the same time, ensure purchasing the right raw materials with good quality, delivered at the right time and place and meeting the quality requirements of other departments

In addition to selecting and searching for sources of goods and negotiating detailed contracts with suppliers, the purchasing department is also responsible for monitoring the performance of suppliers Purchasing departments must regularly evaluate supplier performance and quality control This includes monitoring delivery times, product quality, costs and performance It can be said that the most important element of purchasing activities is finding and managing the supplier system well To ensure the quality of the supplier, the purchasing department needs to put the top factors on the supplier's development prospects, raw material supply capacity, accuracy of supplied goods, and quality of goods Guaranteed quality, on-

18 time delivery, reasonable pricing, knowledgeable about industry characteristics and good reputation in the market

The purchasing department is also responsible for maintaining and properly using funding

To get the best purchasing costs, the purchasing department needs to ensure that suppliers use products at lower costs from distributors and manufacturers Purchasing departments can also implement price control measures by increasing delivery sizes to enjoy discounts and incentives, paying on time to avoid late fees, ordering online or apply the latest e-commerce tools to reduce costs.

The importance of purchasing activities in manufacturing enterprise

For production and business enterprises, according to Michael H Hugos (Principles of Supply Chain Management) purchasing is the first activity to create input factors, input factors are sources of goods in a complete, timely, synchronous, correct specification, type, and quality quantity, in accordance with production needs, in accordance with customer requirements and the business's production and sales plan

Strategic purchasing is the process of planning, evaluating, implementing and controlling important and ongoing sourcing decisions The purpose is to direct all activities of the purchasing department toward opportunities that are consistent with the company's capabilities to achieve long-term goals (Carr, 2002) Therefore, the strategic purchasing function can help increase a company's competitiveness

From an administrator's perspective, purchasing is completely opposite to selling If selling means systematically creating a need for goods and services and seeking to increase awareness of that need, then buying means negating or postponing that need until it is satisfied Find good buying conditions In essence, purchasing represents the relationship between people and businesses

Content of purchasing management in production and business enterprise

Purchasing management is the process of analyzing, selecting and deciding what to buy? How much to buy, from whom, what are the prices and payment terms? it involves the use of analytical results

Receive and approve the order

Figure 2 1 Diagram of the purchasing process in a business 2.2.1 Determine the purchasing needs

Purchasing is an activity derived from demand, so before purchasing, administrators must determine the business's purchasing needs in each period The essence of this stage is to answer the question: what to buy? how much to buy? How is the quality? To determine the actual quantity of purchased goods, people often rely on the flow balance formula:

• Quantity of goods to be purchased during the entire business period equation:

M - Quantity of goods to be purchased during the entire business period

B - Quantity of goods sold (according to plan) of the enterprise during the period

D dk - Quantity of goods in inventory of an enterprise at the beginning of the business period

D ck - Quantity of goods stored at the end of the period (planned) to prepare for the next business period according to

Dhh - Loss norm (if any)

From the balance formula, the purchasing demand during the period can be determined as follows:

• Quantity of goods to be purchased during the entire business period equation:

The above formula is used to determine the purchase demand of each item The total quantity of purchased goods of the enterprise is equal to the total quantity of purchased goods of each item How is the quality of purchases? Buying depends on the business's sales level in terms of quantity, quality, and structure

+ Enterprises set quality goals for purchased goods

+ Attention should be paid to pursuing the goal of maximum quality

+ In addition, businesses need to pay attention to requirements on structure, type, design, and time to ensure cost and safety goals are met

Determining purchasing needs will help businesses obtain the optimal amount of goods that they will buy from which they can find and select appropriate suppliers

Essentially, it's to answer the question of who to buy from To achieve the above goals, businesses must find and select suppliers The question is where and how will businesses find it

Find suppliers: There are many ways that production and business enterprises can search for potential suppliers Businesses can search through the following forms:

After having a list of selected suppliers, the enterprise will negotiate and place orders to sign a sales contract with them These constraints relate to the quantity of goods, type of goods, quality of goods, price, conditions related to purchase, and remedies if there is a breach of contract agreement and to reach a common agreement, the two sides need to divide the tight and loose constraints Issues that need to be negotiated include:

+ Technical standards of the goods to be purchased in terms of design, quality, facilities and inspection methods

+ Prices and price fluctuations when market prices at the time of delivery fluctuate + Immediate payment method, bank transfer, documentary credit and determine payment term

+ Delivery time and location: delivery location related to shipping costs and transportation conditions should be specifically recorded Enterprises place orders with suppliers in one of the following forms:

Sign a purchase-sale contract This is a form with the highest legal status Contents of the purchase and sale contract include:

• Names and addresses of the buying and selling parties or representatives of the parties

• Name, quantity, specifications, quality of goods

• Unit price and pricing method

+ Orders are a lower legal form than the above form

This is the lowest form of legality After the business agrees to place an order, if it breaks the contract, the business will be responsible before the law

Delivery of goods is carried out on a contract basis; however, it is necessary to urge suppliers to quickly deliver goods to avoid slow arrival of goods, affecting the business operations of the enterprise, causing disruption circulation process It is necessary to supervise and monitor the entire delivery process to see if the supplier complies with the conditions stated in the contract Specifically:

- Warehoused goods must be carefully accepted: whether this step is done well or not will affect the future business of the enterprise, prevent loss of assets, and prevent poor quality goods from falling into the hands of wrong people consumers to enhance the company's reputation

- Final stage of import procedures for goods

After each purchase contract ends, businesses need to organize an evaluation of the results and effectiveness of the purchase The evaluation is that the purchasing goals are determined

23 from the beginning as well as the degree of compatibility of purchasing activities with the sales goals and financial goals of the business Two cases can occur:

- Case 1: If demand is satisfied, it means the supplier can meet the needs for production and business so that the input is stable Thus, the business's purchasing decision is effective and efficient

- Case 2: If not satisfied, the business's purchasing decision is wrong, the business must continue to look for a new supplier, find and fix errors to avoid making that mistake.

Criteria for evaluating purchasing activities in the supply chain

Purchasing operations serve as an essential component of an enterprise's production and business processes, tightly interlinked with the functions of other departments The outcomes of these operations are pivotal in ensuring that the necessary resources are available for the production processes The nature of procurement activities must align consistently with the strategic outlook and mission of the enterprise The effectiveness of procurement activities is contingent upon the financial capabilities of the enterprise, with a key emphasis on the direct influence of these activities on the overall business performance Consequently, in pursuit of enhancing business outcomes, the procurement activities within the enterprise's supply chain must strive to achieve the following objectives

Ensuring precise specifications for various categories is essential to maintain uniformity across all materials intended for procurement In the context of product composition, we categorize raw materials, auxiliary materials, fuel, alternative substances, essential equipment, and so on However, it’s evident that without a comprehensive range of raw materials, comprising not only primary materials but also all the necessary components, the production process cannot be carried out, and the final product remains unattainable A product category pertains to a collection of closely related products that share common functionalities and characteristics Hence, the precision in defining these product categories is imperative for the procurement department

The first indicator to evaluate purchasing activities in the supply chain is the quantity of goods The quantity that a business needs to purchase must be enough to serve production work and have enough inventory to ensure the production process is not interrupted At the same time, it can cope with market fluctuations that create shortages or surpluses of goods Purchasing too much or too little goods causes disadvantages in the enterprise's production Therefore, the purchasing department needs to balance and reasonably calculate the quantity of goods to best meet production requirements

Product quality is the totality of criteria and characteristics of the product, demonstrating the satisfaction of needs under defined consumption conditions Products must always go hand in hand with quality This is one of the most important factors when producing products that suit customer requirements in the market Technically high quality is still not the optimal solution when it leads to the risk of increased costs and causes confusion and difficulty for customers in the process of choosing appropriate goods with their ability to pay and pay customer's conditions of use

A purchasing cycle starts from the time goods requests are received from departments until the necessary products are present at each department's warehouse This criterion is very important to evaluate the performance of the purchasing department Because the time of a fast or slow purchasing cycle causes very clear positive or negative impacts on the production process Purchasing managers play a very important role in keeping the purchasing process running smoothly and making maximum effective use of time

Minimizing the cost of input factors is one of the important conditions for lowering costs in product production To minimize costs from the purchasing process, the purchasing department needs to clearly understand the factors that affect each type of cost such as transportation costs - this cost will appear when transportation is undertaken by the buyer ; Cost of warehouse and preservation of raw materials; capital opportunity cost Understanding the factors that affect costs will help the purchasing department come up with

25 cost reduction measures to contribute to lowering prices and increasing the competitiveness of the business.

MRP-Material Requirement Planning

Material requirements planning is a computer-based information system for planning inventory levels based on production plans This system converts production plans into detailed material requirements, answering questions such as when and how much material should be ordered In addition, the system also provides information to plan the final product finishing steps in advance while maintaining appropriate inventory levels based on the progress of the final product

More than 1,000 companies have adopted this system because of its great benefits of reducing inventory costs, improving customer service and increasing operational efficiency (Kaimann, 1969) MRP achieves these benefits through prioritization planning and better control by taking into account the dependence of component requirements (called "dependent demand items") on the end product together (called "independent need items") The relationship between finished product completion and component requirements includes part assembly and part manufacturing schedules because parts must be available according to planned schedules to meet product completion dates finally (Walker 1985)

The method of identifying the source and data required is investigation or breakaway, the loss method is one of our approaches to the production process is to manage the entire warehouse MPR was started first producing parts and cash product production lines that produced the necessary materials and resources within a reasonable period of time MPR is okay it's designed to answer three questions: what do you need, how much do you need and what do you need?

The MPR system has three main sources of information, bills of materials, master schedule and materials information

The production method is the data sheet that shows when and how much product is required at any given time Production quantities can be obtained from many different sources such as warehouse investments, construction of entire warehouses, warehouse investment requirements for the entire warehouse, purchasing services to meet exceptional requirements

The schedule divides the planning period into many small segments and these segments are not all equal In the phasing method, the immediate short-term progress is usually weekly and for more distant planning periods and is broken down into months or quarters and they are more exploratory in nature than plans for the immediate periods

There is no time limit for MS, however it must be long enough to cover a business's production cycle It is calculated the finished product time above the processing steps and internal travel time The master schedule represents what needs to be done, not what can be done, so the master production schedule may not match the limitations of the production system or the requirements for finding and manufacturing raw materials, product components Unfortunately, MPR cannot distinguish between realistic progress and unfeasible progress Therefore, it is necessary to run a hypothetical MS test on MPR to have a complete picture of the requirements to implement a hypothetical MS From there, compare and check to make necessary adjustments in progress or process

Stability of progress plans ahead is very important Without it, changes in order quantity and timing can make the required material supply plan meaningless To minimize this impact, businesses use time-limited milestones

This list includes all the materials needed to produce a complete order Therefore, each product type has its own category BoM tells us each type of material in a finished product For example, below is an order for a BoM dog and cat drinking fountain set that will have the following shape:

Figure 2 2 Example of demonstrate BoM- Bills of materials

The table above is a complete BoM of an item Carefully analyzing the above BoM, we will have three types of component codes that make up the goods, including: AQT-HOLDER, AQT-CLAM, AQT-PIPE These three product codes all run on ABS757 plastic with each color code being 102456 And for it to complete the assembly of a finished product to reach the customer, it needs to be filled with Drinker_ND_4, Drinker_ND_5, Drinker_ND_6, Drinker_ND_7, respectively Drinker_ND_8, Drinker_ND_9, Drinker_ND_10 When looking here, the purchasing staff will easily read the requirements in an item and from there calculate and make purchase orders in time for production

The MPR implementation process starts from the main production schedule plan and converts them into components or raw materials used Quantities are determined by the master production plan and are gross production requirements; they do not consider available inventory and safety stock

Determining the net required output is the core of the MPR process It is calculated using the following formula:

For simplicity, safety stock is often omitted from the calculation And net demand is often calibrated by damage reserves

In the MPR system, release orders are stored in a separate file called a list of contracts issued according to plan, and the time and quantity received of each order is shown in the list Orders received as planned Depending on the business's ordering policy, the quantity of orders issued is a multiple of a specific quantity or is exactly equal to the quantity needed at that time

ASSY-Drinker_NĐ Bộ Drinker ( vòi nước) hàng nội địa

AQT-HOLDER HOLDER, brown, ABS757 + 102456 PURCHASE 1 PC

AQT-CLAM CLAMPING UNIT, purple, ABS757 + 102456 PURCHASE 1 PC

AQT-PIPE PIPE, purple, ABS757 + 102456 PURCHASE 1 PC

Drinker_NĐ_4 Ball (9.6mm) PURCHASE 1 PC

Drinker_NĐ_5 Bộ đầu vòi (nozzle + packin) (nozzle) have (packin) inside PURCHASE 1 PC

Drinker_NĐ_6 Ron (oring) PURCHASE 1 PC

Drinker_NĐ_7 drinker Card PURCHASE 1 PC

Drinker_NĐ_8 Straw (6.5cm ± 0.1cm) PURCHASE 1 PC

Drinker_NĐ_9 Nilon (18*13) PURCHASE 1 PC

Drinker_NĐ_10 Cacton box (460*280*310) 24 pcs/ box PURCHASE 0.04166667 PC

In short, the MPR calculation process starts from the main production schedule plan and the product tree structure Starting from the production schedule, MPR begins scanning each level of the product to calculate the gross demand of each part or material MPR will then compare the gross demand and the amount of inventory expected to be available at the beginning of the period to calculate the net demand and this is also the amount that must be received according to the plans (planned order receipts) From this quantity combined with information about raw materials (lead time, minimum order size) there will be the quantity and time to order for the types of inventories (planned order releases)

So in terms of MPR algorithm there is nothing complicated However, in reality, a company has many types of products and complex product structures, especially the phenomenon where one type of raw material is used for many types of products, the amount of calculation in MPR is very large, because So without the support of computers, this job is almost impossible to do

The two basic systems commonly used to update records in MPR are rollback and net change Recovery is updated periodically; net change is updated continuously

Restore is a batch processing system that translates all changes over time and periodically updates the system Using these information systems, a new production plan similar to the original plan is developed

Rebound is appropriate for stable systems while net change is appropriate for systems that change frequently The weakness of the recovery system is information delay On the contrary, the cost of this system is low, changes during the period can offset each other, thus avoiding the system being changed many times The weakness of the net change system is that the cost is high, and the system is changed many times Its strength is providing up-to- date information to managers

- MPR output is divided into two main types of reports and optional reports

+ Order plan: a schedule indicating the quantity and timing of future orders

+ Released orders: order planning execution process

+ Order planning changes, including revisions to due dates, order quantities, and changed orders

+ Execution-test reports are used to evaluate system performance They assist managers by measuring variances from plans, missed deliveries, inventory shortages, and providing information to evaluate performance costs

+ Use planning reports to forecast future inventory needs They include notes and other data to help forecast future needs

+ Exception reports include noting major conflicts such as late or overdue orders, unusual shrinkage rates, errors or requests for non-existent parts

2.4.6 Benefits and requirements of MPR

+ Low level of in-process inventory

+ Ability to closely monitor material requirements

+ Ability to evaluate capacity requirements based on a given production plan

+ Is a means to divide production time

+ Many subjects must use MPR's output such as production planning staff, production management staff, foremen, purchasing staff, warehouse keeper

+ Computer and necessary software to calculate and store information

Factors affecting purchasing activities in the supply chain

Purchasing operations within the supply chain represent the initial stages of the production and business processes Insufficient quality at the input stage will invariably lead to subpar outcomes To achieve this, when executing procurement activities, it is imperative to adhere closely to the raw material specifications and standards, while also aligning them with the financial resources available to the company for each type of raw material Consequently, to enhance the comprehensiveness of this process, businesses must possess a comprehensive understanding not only of the procurement procedure but also the variables that influence it, as well as the regulations necessary for consistently meeting operational objectives and achieving favorable results Numerous factors exert an influence on procurement operations within the supply chain, including the operational costs of the enterprise, the demand for production department goods, market price fluctuations, product diversity, profitability, and competitive dynamics The following section highlights the primary factors with the most significant impact on procurement activities within the supply chain of manufacturing enterprises

A Capital source of the enterprise

For production and business activities, the importance of capital is undeniable It plays a decisive role in the continuous and effective establishment of production activities and business development Capital source is also one of the criteria to classify the size of

31 businesses, creating favorable conditions for competition In particular, capital is a factor that affects purchasing activities in the supply chain

In order for purchasing activities to take place quickly and smoothly, and for goods, fuel and raw materials to always be fully supplied for the product manufacturing process, businesses need to have a strong and stable source of capital to meet their needs short-term and long- term purchasing plans Strong and stable corporate capital also brings many benefits to businesses such as minimizing high debt for suppliers, thereby enhancing the reputation and position of the business in the market market; At the same time, when there is strong capital, the purchasing department can carry out purchasing plans in large quantities necessary for production activities, thereby easily negotiating to receive discounts and price incentives from suppliers; On the other hand, it can help the purchasing department promptly capture good shipments at suitable prices For that reason, a business's capital source for purchasing activities in the supply chain is extremely important

The infrastructure of an enterprise encompasses various elements, including its physical assets such as factories, workshops, machinery, information technology systems, internal transportation networks, as well as utilities like electricity and water supply In the context of procurement activities, the key components of infrastructure revolve around the warehousing system and information technology infrastructure These constitute essential elements for every enterprise's procurement activity, forming the fundamental underpinning of its production and business processes Companies aspiring to expand their production, modernize their products, and optimize their procurement procedures must prioritize the enhancement and expansion of their warehousing and information technology infrastructure The alignment of information technology with production and business objectives is paramount

A well-advanced warehousing system infrastructure yields numerous advantages for a company's procurement activities It empowers companies to effectively manage their inventory, ensuring a consistent supply for production and distribution processes, thereby enabling seamless and efficient procurement operations Furthermore, it aids in reducing procurement lead times and minimizing transportation costs

Information technology infrastructure is experiencing robust development and plays an indispensable role in the operational processes of every enterprise The adoption of information technology has transformed conventional business models, gradually transitioning work into digitally-driven transactions and management Effective utilization of information technology within production and business operations results in heightened efficiency, modernized processes, and an improved competitive edge for companies In the context of procurement activities, companies increasingly opt for technology-driven solutions to minimize errors in order placement and management, ultimately achieving their procurement objectives in terms of accurate, timely, cost-effective, and quality-conscious acquisitions

Robust infrastructure exerts a profoundly positive influence on procurement activities, as companies operating on a stable foundation can promptly deploy activities and seize opportunities for swifter and more effective procurement operations

C Human resources of purchasing department

Personnel represent an indispensable component within any business structure Individuals are invariably engaged in all aspects and functions of the production and business framework, making them a pivotal determinant of the organization's profitability and future development

In the context of procurement activities, human resources also assume a critical role throughout all operational processes

Procurement activities within the supply chain may not have a direct influence on the production process but do exert an indirect impact on the enterprise's business outcomes Consequently, the competency of the procurement department's staff emerges as a significant factor A top-notch procurement employee typically embodies the following attributes: Profound expertise: Demonstrating a deep comprehension of raw materials and products within the enterprise's production sector, the ability to analyze market influences, and a grasp of governmental policies, legal regulations, and political dynamics

Exceptional skills: Effective communication is of paramount importance, especially during price negotiations With a solid knowledge base and a proactive approach, human resources contribute to consistently accomplishing assigned tasks, thereby elevating the organization to new heights Additionally, another equally pivotal facet of the procurement department's

33 human resources is the department's management team Numerous research findings underscore the significance of management team competence in enhancing the efficiency of production and business activities within any enterprise The management team serves as a coach, action planner, motivator for employees, overseeing their activities, participating in negotiations, and making critical decisions within the department

During the operating cycle, businesses will generate many needs, the most important need is the need for input materials, specifically here are goods and necessary fuels To determine business needs, it is necessary to answer two main questions: what to buy and in what quantity? By solving these two questions well, businesses can clearly identify purchasing needs

First, to determine what to buy, businesses need to clearly understand the needs of customers and the essential needs of the business's human resources, thereby determining the amount of demand for goods needed for the production process business and establish the most effective purchasing plan In addition, it is necessary to specifically identify each type of product and the required quantity to select a suitable supplier with good quality and reasonable price to bring optimal benefits to the business

Businesses have many options to find potential suppliers through many different sources such as media, fairs, exhibitions, magazines and must always follow the motto that as many suppliers as possible level, the more profitable the business is To do that, businesses need to focus on research and comprehensively and accurately evaluate suppliers on their ability to provide goods in the future Choosing the supplier with the most reasonable price and optimal shipping cost will also have a strong impact on the business's profits That's why choosing a good supplier is a very important factor for purchasing managers

Up to now, there have been many guidelines for choosing suppliers, one of which is to regularly change suppliers and choose the supplier with the most optimal price and cost or choose a supplier familiar with the industry High reliability in product quality Therefore,

34 businesses need to carefully consider product quality as well as price before making a decision to choose the supplier that best suits the business's production and business orientation There will be two types of suppliers in the market: existing suppliers in the market and newly appearing suppliers For available suppliers on the market, businesses can research the supplier's operating history on information media before deciding to contact For new suppliers that appear, they will often come to the business and introduce the types of goods that the business is in need of or the business can proactively seek them out through fairs and introductions introduction, exhibition…

After selecting a suitable supplier, the purchasing department will negotiate and make orders to sign a purchasing contract with the supplier

Purchasing methods and rules in production enterprise

Purchasing according to needs: This is a form of internal purchasing for a business When a business needs to buy a certain quantity, it will buy as much as it needs, meaning that each purchase only buys enough for the product's needs sales of a business in a certain period of time To decide on the quantity of goods to buy, businesses must base on market developments, the quantity of goods ordered by customers, the speed of product consumption and consider the actual quantity of goods of the company

• Quantity of goods need to buy equation:

- This method has these advantages:

+ Simple basis for determining purchasing needs Purchase demand is determined from the business's sales plan, the actual quantity of goods stored at the beginning of the period and the reserve plan for the next production and sales period

+ The amount of money spent on each purchase of raw materials for production is very large, so it helps businesses need to recover capital quickly and because the amount of production they buy is sold out, the amount of goods in reserve is small Therefore, capital stagnation will be avoided, costs for preserving goods and other costs will be saved That increases the speed of capital circulation

+ The purchasing process takes place quickly and smoothly, helping businesses avoid risks due to price fluctuations or changes in demand for goods, minimizing damage

38 caused by natural disasters (fires, floods) .) or caused by war Besides, buying according to needs also has disadvantages to note: The cost of purchasing goods is often high, businesses lose business opportunities in the market when there is a fever in the market for the goods that the business is trading, then the business's profit target will not be achieved achieved, businesses will not be able to earn "super" profits Purchasing goods in large batches: purchasing goods in large batches is a one-time purchase of goods that is more than the business's production and sales needs in a certain period of time Based on forecasting demand in a certain period of time Based on some arguments, we can determine the optimal quantity of goods to import, so we know that:

The total cost of receiving goods will be smallest when the cost of storing goods

C2 - Cost of preserving a unit of goods in a unit of time

C - Number of units of goods needed in a unit of time

Q - Quantity of goods purchased at one time

Assuming Q is constant and the quantity of goods stored in the warehouse is equal to Q/2, we have:

• Quantity of goods purchased at one time equation:

• Number of units of goods purchased at one time equation:

𝐶 = 𝐶2 ∗ (𝑄/2) + 𝐶1 ∗ (𝑄/𝐷) This formula shows us the optimal quantity of imported goods with the lowest total purchasing and storage costs

- This method has the following advantages:

+ Simple basis for determining purchasing needs Purchase demand is determined from the business's sales plan, the actual quantity of goods stored at the beginning of the period and the reserve plan for the next production and sales period

+ The amount of money spent on each purchase of raw materials for production is very large, so it helps businesses need to recover capital quickly and because the amount of production they buy is sold out, the amount of goods in reserve is small Therefore, capital stagnation will be avoided, costs for preserving goods and other costs will be saved That increases the speed of capital circulation

+ The purchasing process takes place quickly and smoothly, helping businesses avoid risks due to price fluctuations or changes in demand for goods, minimizing damage caused by natural disasters (fires, floods) or caused by war Besides, buying goods according to needs also has disadvantages that need to be noted (purchasing costs are often high, businesses lose business opportunities in the market when there is a fever for goods in the market that the business is doing business, then the business's profit target will not be achieved, the business will not be able to earn "super profits")

2.6.2 Based on the form of purchase

Sizeable enterprises frequently establish specialized procurement departments responsible for acquiring products based on categories and specific items This procurement approach offers cost-saving benefits but entails the drawback of separate procurement and production processes

Decentralized Procurement: In scenarios where companies delegate the responsibility of buying essential items to individual departments, each unit manages its own source of goods for production The advantage of this method lies in the ability to precisely discern requirements and market dynamics, facilitating the acquisition of suitable products for specific needs However, the downside includes limited purchase volumes, higher prices, and increased contract costs

In adherence to this method, when an enterprise receives goods from the seller, it necessitates completing seller-related procedures

Pre-purchase of goods: Following the seller's delivery of the goods, the enterprise accepts the shipment, after which there is a time interval before payment becomes due

Pre-purchase, deferred goods delivery: Upon entering into a purchase agreement with the supplier, the enterprise is required to make an upfront payment for the scheduled delivery, with the seller subsequently arranging for the goods to be delivered to the buyer at a later date

Domestic purchasing: a form of purchasing in which all purchasing activities of the business are conducted within a country

Buying from abroad (import): This is a form of business buying goods from abroad with two forms of import:

- Entrusted import is a form of import in which the company acts as an intermediary to carry out the import operations of foreign goods, equipment and machinery into Vietnam at the request of domestic customers

- Direct import is a form of import in which the company performs from the beginning to the end

Contract purchasing method, direct or indirect purchasing method, contract purchasing method or order purchasing method, wholesale or retail purchasing method Each of the above methods has its advantages Because of their own advantages and disadvantages, businesses depend on their current situation in each given time and period to decide which method is most convenient and best to follow

2.6.5 The rules ensure effective purchases

Rules for purchasing from many suppliers: businesses should choose a certain number of suppliers That will help businesses disperse risks because purchasing activities can face many risks from suppliers With the idea of spreading risks, many people call this principle the

"don't put money in one pocket" principle, creating competition between suppliers Businesses can only buy from one or a very few suppliers, and these suppliers can force prices and impose sales conditions on businesses

- The rule of always being proactive with suppliers: purchasing is solving a number of problems with countless different constraints Meanwhile, suppliers always provide

41 rich and attractive information about price, quality, shipping and payment conditions, after-sales services

- Rule to ensure "reasonableness" in the relationship of interests between businesses and suppliers: if a business accepts unfavorable conditions for itself when purchasing, it will negatively affect purchasing efficiency products and risk a significant reduction in operating profits On the contrary, if a business deliberately "forces" the supplier to achieve its own benefits without paying attention to the supplier's interests, it is easy to encounter problems in negotiating and implementing the contract.

SUMMARY

In chapter II, the author explained the concepts of the importance of purchasing in a manufacturing enterprise, the purchasing process of a manufacturing enterprise, factors evaluating the production process and influencing factors

REALITY OF PURCHASING AT MATAI VIET NAM CO., Ltd

Current status of purchasing activities in the supply chain in Matai Vietnam Co., Ltd

IN MATAI VIETNAM CO., LTD

Purchasing activities are an extremely important element in Matai Vietnam’s supply chain Input materials for production work such as raw materials and spare parts for machinery, raw materials for machinery, chemicals, input plastics, and technical facilities serving the operation of the business are all tested by the supply chain department and technical department Even the naming of the company department shows that Matai company managers do not take this job seriously Purchasing activities of Matai Vietnam are very simple Every month, the staff in charge is responsible for making a list of items used frequently or very often and the sales volume of the previous months (based on data compiled from the warehouse - usually 3 months) and estimating Calculate the output used for the planned month by taking the average value of the output used for the planned month by taking the average value of the output used in those months The purchase quantity is calculated by multiplying the estimated quantity used by the safety factor

Table 3 1 List of raw materials for production of Matai in the last 3 months 2021

Unit Origin Consumption of Previous

October Consumption October November December Average

PP Yarn 6000d BEIGE Kg Japan 12,818 16,657 10,825 13,433 13,433

PP Yarn 6000d BLUE Kg Japan 1,586 372 653 653

PP Resin EA-7 Kg Japan 71,250 78,000 53,500 67,583 67,583 CaCO3 - JP.130 (Indo.) Kg Indones ia

Sul-Cal (CACO3 VN) Vietna m

Source: Matai Vietnam purchasing department

Based on the Table and information such as lead-time and minimum purchase quantity, the staff prepares the orders and sends to the corresponding supplier The time of ordering is calculated so that the goods arrive at the company's warehouse before the first day of the planning month and the order quantity is equal to the quantity planned to be purchased during the month or equal to the minimum order quantity in this case larger than the expected purchase amount

To understand the current situation of purchasing activities in the supply chain at Matai Vietnam, the author will analyze and present the current status of purchasing activities according to 5 evaluation criteria of quantity, type, and quality quantity, time, and cost help the study gain an overview of the current operational status of the purchasing process at Matai Vietnam

Product category refers to a group of products that are closely related to each other and have similar functions and characteristics Based on production and business characteristics, Matai Vietnam divides commodity groups into 4 categories including machinery supplies, raw

44 materials, fuel and basic equipment The raw materials here include raw materials and materials involved in the production process such as plastic heads; the rest are mainly packaging supplies that do not participate in the production process but are is the ingredient so that the order can be 100% complete Fuel plays a role in providing energy for the production process, creating a premise for product manufacturing activities, and can exist in many forms of solid, liquid, and gas

Based on the purpose of use, Matai Vietnam also divides groups of goods into 3 categories including production materials, management materials, and other materials Whether it is a main material or a secondary material, it is very necessary and important in the production process Therefore, the purchasing department must always classify and strictly manage each type of goods to bring the best efficiency

Source: Matai Vietnam purchasing department

Figure 3 1 4 types of Materials at Matai Vietnam

Source: Matai Vietnam purchasing department

Figure 3 2 3 types of material using purpose at Matai Vietnam 3.1.2 Current status of quantity

Matai Vietnam always aims at the motto of always ensuring the correct and sufficient quantity of final products delivered to customers as required in the contract To do that, purchasing activities must meet the quantity of input materials to promptly meet the production schedule for business operations to be effective

At Matai Vietnam, the assessment of actual goods quantity is based on three criteria: accurate quantity, surplus quantity, and deficient quantity Specifically, 'accurate quantity' signifies that the supplier delivers the precise amount of goods stipulated in the purchase contract, representing the most desirable outcome regarding quantity 'Surplus quantity' pertains to instances where the supplier provides more goods than initially agreed upon in the contract

If the excess quantity remains within a 10% margin of the total order quantity, the business may opt to accept the excess at a discounted rate offered by the supplier Conversely, 'quantity shortage' arises when the supplier falls short of delivering the agreed-upon quantity specified in the contract In cases where the business still maintains inventory, it can supplement the shortage and furnish the factory to avert disruptions in the production process However, if the business lacks any inventory, this scenario is the least favorable, as it leads to production

46 interruptions, resulting in delays and diminished overall production and business efficiency.

Source: Matai Vietnam purchasing department

Figure 3 3 Matai's quantity target accuracy chart from 2018-2021

Looking at figure 3.3 the percentage of Matai's purchase quota from 2018-2019, we can see that the level of purchasing the right quantity of goods increases steadily each year, and the over-purchase of goods also follows suit decrease In 2018, the percentage of missing goods was only 13% away from the correct quantity, which also shows that the efficiency in calculating the order quantity in 2018 is not effective But in the following years from 2019 to 2021, the number of full orders increased by 20% from 57 to 77 percent and the number of under orders decreased by 15% from 23 to 8 percent

Matai's quantity target accuracy from 2018-2021

Correct amount Excess quantity Missing quantity

Source: Matai Vietnam purchasing department

Figure 3 4 Accuracy of quantity of goods types according to production characteristics chart in

2021 The figure 3.4 describes the accuracy of the target number of goods types according to production characteristics on each supplier order delivered to Matai Vietnam in 2021 Looking at the column chart above, we can see It can be seen that the fuel purchasing target is the highest with 88% and the raw materials purchasing target is the lowest with 60%

Source: Matai Vietnam purchasing department

Figure 3 5 Chart about accuracy of purchases by intended use of Matai 2021

Machinery supplies Materials Fuel Basic equipment

Accuracy of quantity of goods types according to production characteristics in 2021

Correct amount Excess quantity Missing quantity

Production materials Management materials Other ingredients

Accuracy of purchases by intended use of Matai 2021

Correct amount Excess quantity Missing quantity

The figure 3.5 above depicts the accuracy of the target number of goods types by purpose of use on each supplier order delivered to Matai Vietnam in 2021 The chart shows us that raw materials are always managed properly calculate the most accurate supply with 78% compared to the number of raw materials produced with 61%

With the current situation, the quantity of goods delivered according to the contract accounts for the majority This is a passive indicator; businesses cannot be completely proactive in ensuring suppliers deliver the correct quantity of goods as stated in the contract Instead, businesses have taken measures to evaluate and respond to suppliers so they can improve this situation

In addition to the above criteria, another criterion that is also important and greatly affects purchasing activities is the issue of implementation time Short or long time will affect the production process of the enterprise That's why Matai always prioritizes time-based options to minimize the purchasing process

At Matai Vietnam, domestic ordering time will be shorter than foreign orders because of the following factors Regarding domestic orders, before sending the order, the technical department will make a proposal to request a purchase to send to superiors for approval One application will require two signatures time After the superior has approved the purchase request, the order will be made, the contract will be drafted and sent to the supplier for them to proceed with production As for purchasing goods abroad, the geographical distance factor makes the purchase process take longer During the order fulfillment process, the purchasing department also needs to carry out customs procedures to make an import declaration Orders usually take about 3-4 hours to be sent to customs

Source: Matai Vietnam purchasing department

Purchasing process

Matai Vietnam’s purchasing process is quite simple, the company will have two types of purchases: domestic and foreign The difference between these two types is not much because the process for both is the same, but unlike domestic purchases, the foreign purchase process must add a mandatory task, which is customs declaration before purchasing Only when the goods arrive at the port can they be received

After receiving a purchase request from the relevant departments, the purchase request form will be sent to the specialized purchasing department From there, we get a diagram of the purchasing process at Matai as follows:

Evaluate purchasing activities at Matai Vietnam Co., Ltd

1 • Receive signed and approved orders

• Send the approved purchase request quantity to the purchasing department

7 • Purchasing department submits for signature

9 • The supplier sends a contract signed by both parties

10 • The buyer transfers the deposit

11 • Carry out customs procedures to import goods into the port

12 • Pick up goods at the port and bring them to the warehouse

13 • Make payment of all debts

At Matai Vietnam, there are strengths that no other business has Through the arguments and analysis above, the author has drawn out the strengths that purchasing activities at Matai are implementing

With Matai Vietnam having a very large parent company in Japan, most of the raw materials will be supplied from the parent company, so the company has a stable source of raw materials, always in a state of availability Full range of running supplies

With the supply of raw materials, the quality of the company's products is always guaranteed at the highest level, from which the quantity of goods produced will always maintain the quality delivered to customers, thus the company always ensures A stable customer base is maintained to distribute profitable products for the company

With a parent company nearby, Matai Vietnam's capital is always maintained strongly, which helps Matai feel comfortable in measuring the number of materials purchased to maintain sales

With Matai Vietnam Co., Ltd having highly technical labor resources, the company can deploy its own technology in the production of packaging materials, thereby helping the company save a large amount of raw material costs supplies as well as the storage costs that the amount of packaging supplies maintained in the warehouse

There are many outstanding problems and inconveniences in the performance of purchasing tasks at Matai Vietnam Co., Ltd Through research, the author concluded the following issues:

- The division of responsibilities is widespread and unclear when there is no unified management of purchasing at Matai Vietnam There are too many people assigned to perform the work of purchasing and ordering: import-export staff, process management staff, and technical department head staff This situation leads to the phenomenon of some items being ordered many times while others are forgotten

- The connection between the three departments of production - warehouse - purchasing is not tight Information exchange between these three departments is very limited and delayed, leading to many unnecessary problems Raw materials are available in warehouse but are still ordered and vice versa, purchasing activities do not closely follow actual production

- The process of calculating the order quantity of used raw materials often malfunctions As we know, Matai Vietnam's products are non-standard and uneven, so we cannot simply rely on past usage numbers to calculate raw material needs

- Purchasing work is limited to placing orders Operations such as negotiating prices or finding more suppliers are ignored Even though most of the raw materials used at Matai Vietnam come from the parent company, price negotiation is not necessary because of a specific valuation But the company has forgotten potential domestic and regional suppliers that have advantages in price, labor and transportation costs This invisibly increases the company's costs

- Order management is not done too well Even the ordering staff does not know how many orders are currently undelivered or unfinished because they must take on other jobs and do not focus on closely monitoring the purchasing work.

SUMMARY

Through chapter III, the author clearly presents the current status of purchasing activities at Matai Vietnam according to evaluation criteria and analyzes the impact of factors of business resources, processes, and influencing suppliers Finally, evaluate the positive points and limitations in purchasing activities at Matai Vietnam

PROPOSED SOLUTIONS TO IMPROVE THE PURCHASE PROCESS AT

Development orientation of Matai Vietnam in the coming time

The company's orientation in the coming years is to become a leading manufacturer in the field of packaging and clean plastics in Vietnam through strengthening business capabilities, improving competitive products and project management Proactively project based on the important foundation of a safe, healthy and proactive working environment, cooperation and creativity in the organization, focusing on human development In order to make the company a leading manufacturer in the field of business and production of packaging and industrial plastics in Vietnam, there needs to be clearer directions for the development of the company's activities

First is the business direction Recently, our Vietnam was visited by working delegations from the economic powerhouses of the United States and South Korea The purpose of this business trip is to upgrade the relationship to the highest level in international relations diplomatic relations between the two countries to a global strategic partnership During their business trip, America's leaders made many contributions to our country's leaders After two working days, Prime Minister Pham Minh Chinh has drawn up economic strategies that our country targets domestic businesses such as focusing on green transformation, circular economy and sharing economy In addition to domestic business, our country has more opportunities to export goods to major powers to expand its market

Regarding production orientation, focus on green transformation and clean plastic production based on directives of the prime minister and the state Minimizing environmental pollution, our country is in the stage of promoting industry combined with digitalization, so focusing on the environment is also very important in today's times

Regarding purchasing activities in the supply chain, Matai Vietnam aims to improve the purchasing process according to international standards In addition to focusing on infrastructure, it is necessary to simultaneously upgrade information technology infrastructure

59 and a highly qualified IT team to support software and parts issues during the process Improve process operations

Thus, the development orientation of Matai Vietnam's activities is quite reasonable compared to domestic and foreign market practices Based on the factors affecting purchasing activities in the supply chain along with the above development directions, the author will outline some solutions to improve purchasing activities in Matai Vietnam.

Proposed solutions

The optimization of procurement activities within the supply chain carries significant importance for business growth As the enterprise expands in scale, the relevance of procurement activities becomes increasingly evident To excel in this endeavor, it is imperative to devise strategies that bolster the strengths and mitigate the challenges that impede procurement activities within the supply chain, steering Matai Vietnam in the right direction for development and realizing the best possible outcomes

Upon analyzing the factors influencing procurement activities in Chapter II, which encompass enterprise resources, procurement processes, suppliers, competitors, and economic policies, it is apparent that certain areas exhibit strengths, while others demonstrate weaknesses that require enhancement Therefore, practical insights must inform the formulation of solutions aimed at refining procurement activities to align with the company's operations This will contribute to the comprehensive development of procurement activities in line with Matai Vietnam's long-term goals

4.2.1 Solution 1: Provide material backup measures

The importance of maintenance work at Matai Vietnam is very important, all days of the week the line must run continuously without stopping, all machines are operating, all stages are related to together Therefore, machine maintenance takes place regularly every week according to the schedule, so it is very important to inventory materials and prepare machine parts to ensure they are always available so that the maintenance department can operate quickly

The shortage of machinery materials is very serious when a machine has hundreds of parts If there is no preparation, it will cause production activities to stagnate, causing a loss of costs certain That's something management won't be happy about

Table 4 1 Statistical table of losses due to machine downtime

Machine stoppage damage due to lack of raw materials

Losses due to emergency raw material purchases

Although the causes have not been fully calculated, the loss of high production preparation costs due to unreasonable processes (long preparation time due to constantly changing processes, large loss of raw materials), the possibility of losing business opportunities due to improperly used equipment and high product prices, but the statistics of losses that can be calculated or estimated at Matai Vietnam really surprise the managers of the company company

The shortage of machinery materials is very serious when a machine has hundreds of parts If there is no preparation, it will cause production activities to stagnate, causing a loss of costs certain That's something management won't be happy about

Looking at the number of days of machine downtime, we can see that the number of days is gradually decreasing, but raw materials are increasing day by day due to the post-epidemic situation of countries closing import and export, and the amount of goods being scarce, causing costs to increase By finding more domestic material suppliers, we can minimize the need to face machine downtime

Statistics table below is about calculating the amount of costs lost during machine downtime in case a machine downtime takes 1 day:

Table 4 2 Material and cost for 1 day downtime

When stopping the machine, the first loss we can see is the electricity to operate the facility, which costs 55,878,528 million VND for lighting systems, air compressor systems, refrigeration systems and Air conditioning, ventilation fan and vacuum system, water pump system, production equipment system, other systems Water cost is 110,556 VND

The total output of the machines is 23,192 m of semi-finished products, equivalent to 13,532 kg of plastic that must be run to produce finished products, along with 4,200 USD to buy emergency machinery supplies A large number of cost problems confront managers

Search for new qualified domestic suppliers, evaluate and periodically inspect suppliers to find and maintain qualified suppliers with the most favorable prices

For items that always has to be ordered abroad, compile a list, ask partner companies about the domestic supply of that item, order a test batch and install and test run, after the team If approved by the management board, it will be put into use

Maintain relationships with potential suppliers to meet new requirements and prevent possible risks from traditional suppliers

+ Save on wastage in raw materials, costs, and labor

+ Limit passive influence and dependence from foreign suppliers

+ Diverse raw material supply sources

+ Reduces customs declaration steps compared to when buying foreign goods

+ Save time ordering and waiting for goods to arrive at the warehouse

+ Convenient availability of goods at the warehouse helps the maintenance department ensure work is completed on schedule

+ Ensure delivery time is on schedule

+ The quality of materials from domestic suppliers will not be equal to foreign ones + The durability of machinery materials is not guaranteed, leading to having to buy in large quantities

To improve the performance and ability of today's employees to improve the quality of purchasing activities and improve processes to become faster and more effective, improving the quality of human resources is extremely necessary

Human resources are always an important factor, causing a great impact on the field's operations No matter how modern the infrastructure and physical and technical conditions are, the quality of human resources is weak and without extensive knowledge and experience, it is difficult to develop as desired At the same time, to be able to improve the quality of human resources participating in purchasing activities in the supply chain requires a detailed and long-term strategy

Regarding human resources in the future, currently, universities in the city in particular and the country in general, with economics majors, are still not focusing on creating a major or a program Purchasing related training Therefore, in order not to be passive, the company must be proactive in exploiting abundant human resources in the future Therefore, building a human resources training program for the purchasing department is very important By establishing a long-term plan by coordinating and investing in universities in the city such as

Ho Chi Minh City University of Technical Education, Ho Chi Minh City University of

Technology, Ho Chi Minh City University of Economics, HCM, to connect with the school to build a training department specializing in private purchasing activities When detailed knowledge is imparted to students from a very systematic and detailed training program, a large number of knowledgeable human resources will be created The benefits of this will be long-term and in the future the company will receive a large number of qualified employees for the company Besides, when there are many training resources, the competition will be very fierce, which stimulates the workers themselves to have the thought of upgrading to compete, cultivating and learning to be able to position helps the company grow more and more

SUMMARY

In chapter IV, the author presents the limited current situation in Matai and then offers solutions to improve it in the most optimal way

During the process of researching and writing a thesis with the topic "Proposing and improving the purchasing process at Matai Vietnam", the author assessed that the current process of Matai company still has many inconsistencies and shortcomings consistency With the great advantage of sourcing goods from the parent company, Matai Vietnam always ensures the amount of input materials for the production process Due to the lack of investment in building purchasing management software and the management board not paying attention to purchasing activities or the team, the purchasing work is always scattered among too many people who are responsible for it inconsistently and also causing costs and time With these issues, businesses need to consider and evaluate them early to make changes to avoid affecting the purchasing process and related parties

After the research and evaluation process, the author has proposed a number of solutions to improve the purchasing process in order to improve operations and improve the ability to predict information systems using Infor recommendation software, expanding the network of suppliers located in cities and provinces near the company These suggestions are capable of being implemented in a production enterprise environment that is close to reality With practical suggestions, the author hopes that the company's leadership and departments will participate and coordinate with each other to discuss to be able to put the above suggestions into practice to quickly upgrade and improve Improve the purchasing process at Matai Vietnam Co., Ltd

Dũng, P V (2001) Xây dựng cơ sở dữ liệu và hệ quản trị cơ sở dữ liệu hỗ trợ cho công tác quản lý sản xuất và quản lý nguyên vật liệu tại công ty TNHH Matai Việt Nam, Luận văn Thạc sĩ Trường Đại học Bách Khoa TP Hồ Chí Minh

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Appendix 1: Energy consumption and total costs from 2019-2021

Appendix 2: Electricity consumption for facilities

897,05 3.890.612 19,29 Ventilation fan system and vacuuming

Appendix 3: Current situation of electricity usage for production machinery systems:

Appendix 4: Electricity consumption and output of yarn machine group in 2021

Yarn machine 1 Yarn machine 2 Yarn machine 3 Belt yarn machine

Appendix 5: Electricity consumption and output of Lami machines and nylon blowing machines in 2021

Month Máy Lami Máy thổi ni lông

Appendix 6: Electricity consumption and output of textile machine group

Appendix 7: Electricity consumption of refrigeration and air conditioning systems in 2021

Appendix 8: Electricity consumption of air compressors in 2021

Cons (KWh) Cons (KWh) Cons (KWh) Cons (KWh)