INTERNSHIP REPORT ON IMPROVING THE CONTROL SUPPLY OF GOODS AT EASTERN MEDICAL COMPANY Timely patient service is our No.. 13 CHAPTER 4: IMPROVING THE CONTROL SUPPLY OF GOODS AT EASTERN ME
BACKGROUND OF EASTERN MEDICAL EQUIPMENT COMPANY
OVERVIEW
Eastern Medical Equipment Co., Ltd (Eastern Company) was established on 27/11/2000 It is a leading brand specialized in distribution of medical equipment in Vietnam for the world famous brands such as Bio-Rad, Hitachi, Baxter, Siemens, BD Behnk Elektronik, Nihon Kohden, Carestream
DR NGUYEN XUAN THANH is the founder and chairman of Eastern Company He graduated
Hanoi Medical University in 1995 After a period of working at hospital, he found that Vietnamese medical has to access to modern technologies, the best things in health care and support of the world medicine Eastern Company has been developing significantly, extending in all three regions: Northern, Middle and Southern Vietnam Over 18 years on, the Company has become a major national distributor of high quality equipment
At present, besides the head office operating at 3 rd Lot CN, Dinh Cong New Urban Area, Dinh Cong Ward, Hoang Mai Quarter, Hanoi, Vietnam, the Company has two branches and one ware- house:
- Branch in Ho Chi Minh city, Vietnam: established in 2003
Address: : 94 An Binh str., No 5 ward, No 5 District, Vietnam
- Branch in Danang city, Vietnam: established in 2005
Address: 385 Tran Cao Van, Thanh Khe District, Danang city, Vietnam
- Trang An warehouse in Bac Ninh province: established in 2018
Address: Lot 83C, No 35, 11 street, Vsip Bac Ninh Industrial industrial area, Dai Dong commune, Tien Du District, Bac Ninh Province, Vietnam
Vision: become brand leader among hospital medical equipment suppliers
Mission: provide world-class medical equipment in order to improve Vietnamese healthcare Brand positioning
Timely patient service is No 1 priority
The Company commits to using the best products and services to provide its customers with optimal solution and timely patient services for the best diagnosis and treatment
Providing international standards for Vietnamese people are its commitment to supply chain including customs clearance, freight forwarding, warehousing service, transportation and delivery
Core value: leadership, customer concentric, world class medical equipment, exceptional quality employee, international standard supply chain
COMPANY’S SECTORS OF ACTIVITIES
The Company does business in two main sectors First, supplies medical devices, consumable, spare parts, technical services to hospitals This is the root business activity of the company since it has been established Revenue from providing medical equipment business reached US $ 41 million in 2018 Besides this section, Eastern Company also provides special storage service and logistics services since the end of 2018 Before 2019, Eastern Company used several warehouses in Hanoi and branches The overload status sometimes occurs with frequent increase because the volume of goods increased significantly After observation, the BOD realized that the control and preservation of goods in many different places faced with difficulties, such as large costs, long handling the order process That affected on customer satisfaction and business results BOD decided to build its own goods distribution center It is located in a very convenient place in Vietnam: Singapore Industrial Park (VSIP), only 25 km far from Noibai Airport, 100 km from Hai Phong seaport and 20 km from Hanoi center This distribution center meets the GDP quality standards, GSP and is applying modern software to manage The system to preserve warehouses and specialized transport vehicles is modern, suitable for the goods Currently, company’s warehouse storage contains four areas based on characteristics of storage temperature Firstly, the area that is used to store goods at temperature below 30 degrees C, has a square of 1900 m2 The second is the storage area of goods at temperature from 15 to 25 degrees C Currently, in this group there are 2 warehouses, each of which has acreage of 220 m2 These warehouses are mainly used for machinery, accessories and some chemicals that do not require cold storage There are two cold storage warehouses from 2-8 degrees C and one deep cool warehouse of 20 m2 to preserve goods at degree from -20 o C to -70 o C Currently, Eastern has been using this service for their own storage, logistic activities and one company in Eastern Group It is Maxcare company which distributes medical to home This business section is young and very potential in Vietnam The storage service and logistics for the pharmaceutical and medical device require strict required standards of the industry Besides the big demand in the health sector, Vietnam's fisheries sector is also a real huge market for the development of this service because technology of preserving seafood in Vietnam is still at low level
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COMPANY’S PRODUCTS
Eastern Company supplies medical devices to hospitals Its products are divided in four main categories as follow and a small group of new product: Body scale, body monitor analyzer…
First category is EASTERN laboratory: it provides a broad spectrum of immunoassay, chemistry, hematology, microbiology, molecular, urinalysis… in conjunction with automation, informatics and services, that can serve the needs of laboratories of any size
Second category is EASTERN intensive care: it provides effective solutions to dialysis clinics and intensive care units including innovative technologies for catheterization, peritoneal dialysis, hemodialysis, continuous renal replacement therapy and liver support therapy
Third category is EASTERN blood bank: it provides pathogen reduction technology system; fill and finish system; cell separation system; apheresis system; automated blood collection system; cell expansion system; platelet agitator
Forth category is EASTERN imaging: it supplies ultrasound platform; computed radiography system; laser imaging system; bone densitometry system; intravascular ultrasound system
Table 1: Revenue ratio by product sectors
Sector Laboratory Intensive care Blood Bank Other
Source: http://ziperp.eastern.vn/
COMPANY’S PARTNERS
Currently, Eastern cooperates with more than thirty oversea suppliers They are divided by product sectors as follows:
In the first sector, the hematology products are provided by some manufacturers, including: Siemens, Nihon Kohden, BD PAS, BE, Helena, Hortig The biochemistry products come from Siemens, Randox, Tokyo Boieki, Analyticon The microbiology products are provided by BD, Seegen
In the second sector of intensive care, most products are supplied by Baxter and Cantel Medical
In the third sector of blood bank, products are provided by Terumo BCT and JMS
In the last sector of imaging, the main manufacturers are Hitachi; Care Stream; Steam lab
Purchasing sources of Eastern Company come from two categories: domestic purchase and oversea purchase
According to the company data of 2018, B.Braun is the supplier of biggest ratio proportion in the domestic purchase - about 90%, next is Terumo Vietnam with a rate of nearly 0.5% and the rest are other suppliers
In the oversea purchase, there are several suppliers contributing high proportion of goods value, including: Baxter accounted for nearly 21%, Becton Dickinson accounted for more than 20%, Siemens accounted for 18.6% the rest are other suppliers
Figure 1: Supplier ratio by trade value
COMPANY’S CUSTOMERS
Eastern Company’s customers are network of hospitals, clinics, medical facilities and trading companies in the field The list of customers spreads all over the country from north to south, widely distributed across provinces
Market segmentation of national hospitals, provincial hospitals and big private clinics is the main direct customers of company Besides that, in order to improve the coverage of the company's products to district hospitals, commune medical facilities and other private hospitals, Eastern cooperates with a variety of local companies and trading companies to become their dealer in providing products to markets
Suppliers Ratio by trade value
Baxter Healthcare (Asia) Pte Ltd Becton Dickinson Holdings Pte Ltd CARESTREAM HEALTH SINGAPORE PTE LTD Hitachi, Ltd.
Nihon Kohden Singapore Pte Ltd Siemens Healthcare Pte Ltd Others
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EASTERN MEDICAL ORGANIZATIONAL STRUCTURE
SALES BLOCK
Head of the Sales Block is Sales Director The Sales Block is structured in two parts, including: Sales Admin and Sales Team Sales Admin is the department which prepares all tender dossiers to participate in bidding They also record tender registrations of dealers to consider whether they are allowed to use Easter’s products to offer in their bid or not, as well as provide required documents to support them to take part in the bid
Sales Team connects directly with customers to introduce products, gives the offer, persuades them buying products or taking technical information of Eastern Company product to requirement in tender book
Sales Team is vertically divided by products The National sales manager is responsible for archive target of manufacturers He/she has right to allocate regional salesmen, salesmen in branches and organize dealer networks, customer network The Regional sales managers and salesmen have responsibility to reach the target revenue of the company
FUNTION 1 BLOCK
It has responsibility for surveying the location for machine installation, installing and operating machine It also instructs customers the way to use the machine smoothly and to maintain it by refer process In addition, if there are broken machines at customer’s place, engineers will repair and fix the problem
Commercial Marketing and Media Department (MARCOM) has task to build marketing strategy, make marketing plans, write content for running both marketing online and offline It prepares all materials and operates promotion events and media events, such as: customer conventions, exhibition or sponsorship It also selects and manages marketing tools to raise reputation of the company It helps to impact customer’s awareness then contribute to push up company revenue
Regulatory Affairs Department acts as a link between the company and regulatory authorities, ensuring that products are manufactured and distributed in compliance with appropriate legislation
App Department is the department in charge of making sure that customers can understand application of products and use it by right method Thus, it has to perform some tasks as below:
Train and instruct customers to use testing machines, systems of critical machines supplied by the company;
Support customers during the process of using products provided by the company such as using testing machines and tests that are applied on the machine;
Support customers to deploy and install new tests;
Perform the settlement of customer complaints about product quality related to test chemicals, calibrator, quality control …
Solve problems related to test results, quality control of testing at customers;
Exploit, manage systematic customer information, share with Marketing and Sales
Department to support the company’s business goals
Translate, compile documents and prepare presentations in some specific cases with customers
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FUNTION 2 BLOCK
The function of the Finance Department is to ensure the cash flow meeting the requirement company's operations and to optimize cash flow
Make the budget plan for company’s expenses: internal operations of company expenses, payment for supplier and customers;
Evaluate financial effectiveness of purchasing activities or investment projects;
Use the necessary tools and measures to ensure that the budget affords business plans
2.3.2 Human Resources and Admin Department
This department performs two major tasks The first one is to ensure the quantity and quality of human resources for the company by many methods to attract, recruit employees, stabilizing quantity of employees and increasing labor productivity The human resource team includes one recruitment specialist, one training specialist and one legal specialist in charge of legal issues with employees under the law The second major responsibility relates to administrative activities This admin team is responsible for controlling all income and outcome of company’s documents, controlling internal company’s regulation are implemented by employee and ensuing the environment Moreover, this team is also responsible for providing lunch for company employees This is really important task because it affects directly health of all employees
Accounting Department is responsible for recording, accounting all economic activities s arising in the Company in a timely and adequately manner Currently, the Accounting Department is being organized into groups based on job characteristics, including:
Sales accounting team: it performs accounting department's procedures related to sales activities such as: delivery bills, issue tax invoices, bank guarantee
Debt accounting team: it monitors accounts receivable, payable to suppliers and customers
Payment accounting team: it checks and controls documents of payment documents and makes payments
Tax accounting team: it collects tax documents, executes accounting and manages tax book in accordance with the law
The Purchasing Department has the function of advising and assisting the Director Board in purchasing, importing and exporting goods as well as controlling inventories, ensuring stock of goods enough to supply in right time, right place for the business activities of the company
There are six employees in the Purchasing Department They are structured into oversea purchasing team, domestic purchasing and import - export team The purchasing team begins its jobs when it gets request to purchase from the sales team, finds out suppliers, evaluates them to choose the most suitable supplier Besides, it negotiates with them to sign contract, follows performing contracts and handles claim with suppliers
The Purchasing group contains two teams: oversea purchasing team who contact with foreign suppliers to purchase and domestic purchasing team who buy from supplies in Vietnam Eastern targets to do business directly with oversea manufacturers However, the Company still remains domestic purchasing to responds max
The Import export team is in charge of handling shipment since goods shipped, do clear customs and follow shipment until to get in They also have responsible to compare services of transportation companies, make sure to find out the most suitable supplier This team also checks trace, controls goods on road to prevented goods quality, as well as goods are released at right time, right place
The first task of this department is warehouse management It has to make sure storing and preventing goods in accordance with manufacturer’s instruction Furthermore, it performs import and export work according to company’s principles, avoiding losses and damages
The second one of this department is handling delivery goods It has responsibility to coordinate appropriate transport means, combine orders according to delivery lines to ensure saving cost and reducing time of delivery It has to closely monitor the conditions of goods preservation during
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9 transportation (temperature, vibration, light ) and delivery of right quantity and categories to customers, as well as to collect fully signed delivery proof
This department consists of 2 groups The first group is responsible for acquiring information related to orders of customers The customer services staff receive orders from customers and proceed it with related departments such as Purchasing department, Accounting department, warehouse department, delivery department to ensure customers' orders are delivered as customers require The second group is responsible for receiving other requests from customers such as: requesting technical information, product information, user guide then forward them to relevant departments to respond customers
THE MISSION, ASSIGNED TASKS & GOALS
THE TASKS ASSIGNED TO MY POSITION
In my internship time at Eastern Company, I was assigned to be a purchasing cum import-export staff The tasks I was assigned to perform include the following
Oversea purchasing task : I was assigned to take care of some traditional suppliers, including: Siemen Healthcare Pte Ltd; Randox Laboratoies Company I performed the task following to the supply process as below:
Table 2: Supply process at Eastern Company
Step 1: Sales executive makes request purchase order (RPO) basing on customer’s demand and sales plan then submit to sales manager
Step 2: National sales manager considers and confirms RPO then sends to Purchase Department
Step 3: Purchasing specialist gets confirmed RPO and checks storage space, inventory then sends PO to the suppliers after purchasing managers approves it
Step 4: After suppliers send sales confirmation (SO), purchasing specialist makes contract
Step 5: Purchasing specialist requests to payment and follows it
Step 6: Purchasing specialist requests import – export team to arrange shipping
Step 7: Import-Export team do customs clearances and arrange to transport goods to warehouse
Step 8: Import-Export team give documents of shipments after customs clearance to post goods receive information on Enterprise resource management system (ERP)
Step 9: Logistic Department receives goods at warehouse, tests goods abide by quality control process (QC) and confirms to receive or reject
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Step 10: If goods are damaged or they did not meet information on document, the purchase specialist will collect report and send to the supplier to do claim process with them
Besides that, I was also assigned to support to find new suppliers for new products of healthcare device used in home like body weighing scale, massage device With new suppliers, we have to pass through evaluating suppliers process before purchasing The evaluate new supplier process is described in the below Figure
Table 3: Evaluate supplier process at Eastern Company
Step 1: Search for suppliers whose products match company requirements, classify them based on mark, rate of each requirements
Step 2: Submit report to Board of Director (BOD) to select suitable suppliers
Step 3: Negotiate with suppliers regarding detail terms to sign the contract
After the contract signed, the jobs are performed similar to step five to step ten of the above supply process
Import – Export tasks: main tasks that I had to work are listed as follows:
I had responsibility to find, evaluate, select suitable forwarder to handle company’s shipments Control debit with forwarder and make payment procedure to make sure debit is no t overdue
Make booking transportation, inspect shipping documents: invoice, packing list, bill of lading, CO…
Buying insurance for import shipments and making claims with them for loss of shipments
Preparing documents and doing customs clearance
Providing fully purchasing, import-export documents to Accounting Department.
THE LINK BETWEEN THE SUBJECT MATTER AND MY MISSION
In the internship at Easten Company, I acted as both a purchasing employee and an import export employee I had an opportunity to practice my knowledge as well as have a chance to observe the company's goods supply process and the departments involved in this supply system to understand the operation of the system and the functions of departments contributing value to this supply system Thus, in my opinion, the mission is close to my subject of “Improving the control of supply goods at Eastern Medical Equipment”.
THE GOALS TO REACH
The goals that I had to reach during the internship program are:
Place orders and handle them to make sure they arrive right time, right place
Follow and control debits with suppliers so that they are not overdue
Find out suitable suppliers of goods and services who meet requirements of BOD
Do customs clearance quickly, minimize storage charge at ports
Make sure to identify HS code and use required documents of customs procedure abide by law that make save time, taxes and duties.
WHAT I CAN BRING TO THE COMPANY
In the internship period at Eastern Company, I always tried to complete all the assigned tasks and brought to Eastern Company several results as below:
Carried out executive jobs of a purchasing employee, as well as an import export employee
Figured out some points that Eastern Company has not done well and found out reasons which lead to that points
Proposed some solutions to improve the supply of goods at Eastern Company
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THEORETICAL KNOWLEDGE ACQUIRED THAT I COULD PUT INTO PRACTICE
It was so lucky for me to attend this MBA course I learned a lot of things from many subjects that
I applied them to my jobs in time of internship and it has brought me good result I believe that they are still very valuable for me in my future career
I write down shortly the benefits of some subjects that I used them into practice as below:
I understand international trade conditions according to international trade practices: rights and obligations, risk allocation between buyers and sellers
In addition, this subject also helps me understand effective regulations of government regarding to import-export activities Thus, I know the steps to do customs procedure and government’ requirement with dossiers
- I understand the important differences between international and domestic commercial contracts;
- I understand usual model contracts of international standards (issued by ICC and other international commercial organizations);
- I understand and can deal with “pitfalls” in international commercial contracts;
- I know how to prevent and resolve disputes related to international commercial contracts;
- I understand intercultural communication and differences between legal systems, to avoid misunderstanding in dealing with international commercial contracts
I understand how the product moves through the supply chain and
How to identify optimal order quantity
It instructs me how to make budget plan for purchasing;
I understand deeply financial statement that is one of factors help me to evaluate suppliers abilities
It guides me the steps of negotiation process and the factors affect to result of negotiation It also gives me information of culture areas That improves my skills to deal with partners and handle conflicts
This subject guides me how to identify HS code of import export goods; which kind of tax and duties may be imposed on import-export goods and how to calculate it Moreover, it also provides me how to access information of economic partnership agreements among countries, area on the world and how to qualify requirements of that agreements to get best preferential tax and duties
This subject provides me knowledge to understand payment methods that can be used in international commerce; weaknesses and advantages of them That are the basics which help me to use suitable method with each EASTERN COMPANY business activity
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IMPROVING THE CONTROL SUPPLY OF GOODS AT EASTERN
ANALYSIS OF EMVIROMENT
Vietnam is assessed as a country with stable politics and safe security
The legal system has been developed quite rapidly: the civil law, the commercial law, the investment law, the bidding law and others have been promulgated Regarding medical equipment business, there is Decree No 36/2015/ ND-CP and some circulars guiding the implementation of the Decree Although the legal basis exists, many companies are not aware of the regulations and they do not abide by laws strictly
Vietnam is a developing country which has achieved good GDP growth rate during last ten years
Table 4: Vietnam GDP Growth from 2009 to 2018
Source: https://databank.worldbank.org
Vietnam participated in many economic agreements with countries around the world In particular, bilateral trade agreements include: VJEPA, VCFTA, VKFTA, EAEU-VN, Vietnam - Laos, Vietnam - Cambodia In addition, there are multilateral trade agreements include: ATIGA, AKFTA, ACFTA, AJEPA, AIFTA, AANZFTA, CPTPP
According to the 2019 Population and Housing Census done by the Vietnam General Statistics Office, the total population of Vietnam reached 96,208,984 people at 0h on April 1, 2019 The average population growth rate in the period of 2009-2019 is 1.14% / year With this result, Vietnam is the 15th most populous country in the world and the 3rd in Southeast Asia (after Indonesia and the Philippines)
Health budget gets high ratio in State budget expenditure of Vietnam This ratio in 2014 year was 10.3% and 2015 year was 13.10%
Table 5: GDP & State Health Budget in 2014-2015
Currently, there are two largest health centers in Vietnam located in Hanoi and Ho Chi Minh city Almost national hospitals, large public hospitals and private hospitals are concentrated in Hanoi and Ho Chi Minh city Besides that, most provincial and regional hospitals are located in the center of the provinces and numerous small medical centers are located in rural, mountainous areas
Vietnamese desire to use medical devices that have original source from Japan, the US or Europe They especially dislike Chinese-made health products That set in their mind
Private relationship or introduced people are still factors that make influence clearly on the business results in Vietnam
Technology created by domestic companies in Vietnam is very limited They don’t have ability to produce modern medical equipment to meet the requirements of hospitals except some simple medical devices However, Vietnam is a country with relatively good IT and internet infrastructure
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Figure 4: Number of internet users in Vietnam from 2017 to 2023 (in millions)
4.1.2 Analysis of industrial competitive environment
According to the Health Ministry’s data, in 2016, Vietnam had a total of 1,346 hospitals across the country In particular, the ratio of public hospitals was 86.3% while the number of private hospitals was much smaller – accounted for 13.7%
Figure 5: Quantity of public hospitals and private hospitals in Vietnam in 2016
This structure is similar to the Eastern Company customer structure The main customers group of Eastern Company are the public hospitals that have 65% sales revenue The sales products to them almost via tenders that operate by their own hospitals or by Heath Department of each province If Eastern Company win tender of Health Department It will be allowed to sell medical devices to all hospitals listed in the tender book in that province The pressure from this customer group is big Health Department or provincial Medical Center organizes competitive bidding If Eastern Company wants to win a bid, it must meet the strict conditions in the bidding dossier and to have the most competitive price compared to the contractors After winning the contract, the company must comply with the contract to goods supply of the hospitals in the list stated in the bidding document If the supply of goods does not comply strictly, that lead to any complaints from the hospital, the company may suffer critics or even “boycott” in the whole province, even in the industry and if it is serious, it will be prohibited to take part in next tender On one other hand, the payment time of the public hospitals is often long because it depends on approval of State Health Insurance Fund Maintaining a good relationship with hospitals can help payment dossier completed accurately and shorten the debt time
The second customer group of Eastern Company are dealers, partners who buy Eastern Company products to sell in to hospitals via tender also Thus, with these companies, price and ability to supply of goods on schedule are deciding factors Eastern Company currently has very good price policy for dealers Therefore, if they use Eastern Company's exclusive products to offer in tender,
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19 when they win tender, they must buy products from Eastern Company due to they have no other choices Thus, the pressure from this group is not too high
According to the data of the Department of Medical Equipment and Construction, there are nearly 1,000 enterprises producing and providing medical equipment in Vietnam Products are diversified of origin and price The competition pressure in this industry is assessed to be high
The cultural environment in Vietnam is special, the laws are complex and unclear Thus, many manufacturers in the world prefer to do business through cooperation with local companies rather than operating their own company in Vietnam For example, Siemen Healthcare and Becton Dickinson are the two of big medical device manufacturers in the world They only set up representative offices in Vietnam to support distributors such as Eastern Company to sell their products in this market
The current medical equipment products are diverse and necessary with the need for medical examination and treatment for humans It can be seen that the risk from substitutes is very low
In Vietnam, the current market of medical equipment mainly relies on import source, say 90% market value, and the remaining10% is from domestic source Thus, almost companies doing business in this sector are trading companies This field does not require legal capital to enter the industry
Currently, the Government manages the market of medical equipment via Decree 36/2015/ND-CP, and some circulars guiding implementation of Decree 36/2015/ND-CP But the market has not been strictly controlled yet by government agencies There are a lot of companies do not abide by the law
In addition, the medical device market in Vietnam is in a good development stage Therefore, the risk of competitors/new comers joining the industry is high
Medical device industry is a developing market
A lot of manufacturers enjoy Vietnam
Vietnam has signed a lot of economic partnership agreements that have import special preferential taxes
High competitive pressure of the industry
Regulations of state authorities are complex
Good reputation in the medical device market
The control of logistics costs has not been optimal
The financial plan has not matched with the import plan
The company’s strategy focuses on improving control of supply of goods On the one hand, the company diversifies its products and suppliers to meet the growth of the market and maximizes exploitation of the company's existing distribution channels On the other hand, the company has to increase control of supply to optimize costs and ensure that goods are always available.
SOME WEAK POINTS OF GOODS SUPPLY AT EASTERN COMPANY
4.2.1 Big short date and over expiration date reagents
According to the report of the finance department from January 2019 to August 2019, the amount of reagents and consumables that short the expiry date or over expiration date are near 3 billion VND (around USD 120.000) These items can note be accepted by customer, we have to dispose them This is really huge expense that Eastern Company needs to control strictly to reduce immediately Base on current purchasing process, the purchasing department purchase quantity of goods conform to request of sales department It can be seen that this quantity is determined in one direction of sales department Therefore, if the sales department make forecast not meet with the business plan, it may lead to oversupply or shortage of goods
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After placing an order to a supplier, the Purchasing Department gets specified the payment terms and time of payment, then it makes request payment and sends to the Financial Department for implementation In some cases, the Finance Department cannot make payment meet recommended payment schedule because there is not enough time to arrange cash flow to pay that amount These cases affect significantly image of the company with the supplier and the delivery progress of the supplier It can affect negatively sales activities if the inventory is not enough to supply to customers during late delivery time
Lately, according to the records of the Quality Control Department (QC) and customers’ complaints, there was a significant number of damaged goods, defected goods or low quality goods compared to the quality standards This seriously affects the business and reputation of the company Firstly, the company has no qualified goods to deliver to dealers or hospitals that lead to the need of importing an additional shipment urgently to respond customers’ orders Secondly, it incurred additional expenses for company due to handling urgent shipment, cost of violating the signed contracts or cost of recall defected the products
After researching, I found out that there were a several reasons for unqualified goods:
Errors in the packaging of goods during transport: defected goods after packaging shipped with normal goods, or refrigerated goods 2-8 degrees, cause the phenomenon of deep negative temperature infection, causing chemical damage
Storage condition of goods which must keep cold 2-8 decree of deep cold has not been abided by strict regulations during transportation time Typically, the case of coagulation of reagent shipment, it required refrigeration at 2-8 degrees C during transport But after delivering to the hospital for use, the hospital informed that its test gave other unreliable results due to using regents of Eastern Company After inspecting the entire shipment, 80% of the lots were found not to meet the standard quality and have to be destroyed Eastern Company requested the transporter to provide storage information, the image of the shipment on the entire transport route It was discovered that during the process of transporting goods, the right temperature was not guaranteed This is considered to be the main cause of product quality degradation
Eastern Company has diversified products, including: equipment, accessories; consumable supplies; chemicals The products must be refrigerated or be stored at deep cold temperatures Due to the characteristics of each product group it requires suitable storage conditions The number of monthly import shipment is also very large In addition, there are some cases where some items are out of stock and urgent orders have to be processed to meet customer requirements The costs of shipping and handling imported goods for these shipments are sometimes even greater than the order value All these factors make increase the number of imported goods, that means that the cost of importing goods is large and not optimal
4.2.5 Limited knowledge of purchasing, import export staff
The habitual working style and no standard order process make the ordering process disturbed when there is a change of person in charge
Employee are unaccustomed to apply certificate of origin (CO) of economic partnership agreement that Vietnam involved to take advantage of tax and procedure During my internship at the company, I found that company imported electrical health scales from a seller in Hongkong but these products were made by a manufacturer in China Previously, Eastern Company imported these products directly from Hongkong port and was imposed Most favoured nation (MFN) import tax rate of 20% Meanwhile, electronic health scales are one of the goods which have preferential tax rate of 0% under the Asean - China trade agreement After getting the advice from a c specialist, Eastern used certificate of origin form E and changed port of loading from Hongkong to Shenzhen sea port Eastern has already been allowed to import special preferential rate of 0%, saving a big amount of import tax and VAT tax.
SUGGESTED SOLUTIONS
4.3.1 Reduce volume of short expiration date and over expiration date
It can be seen that the purchasing quantity of goods has not been strictly controlled In my opinion,
I would like to propose the following solutions to reduce quantity of over expiration date and short expiration date of goods
Firstly, one is more stringent requirements for each salesperson when they do estimate the number of orders If they confirm the order amount with the purchasing department, after the goods arrive at the warehouse, that employee is responsible for selling all the goods requested to order If past the average inventory period, at present, it is 3.5 months and the goods have not been delivered to
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23 the warehouse yet, it is considered as delayed goods and the employee who orders the item is assessed minus in the performance results
Secondly, we should have a planning employee who will evaluate inventory with request purchasing quantity of sales department He also inspects the balance between sales plan of sales employees with each their customers and quantity they request to purchase After performing the mentioned jobs, the planning staff will finalize the order quantity then pass to purchasing staff to continue handling order follow company’s order process
In order to ensure goods to be always ready to supply to customers, avoid shortage of goods leading to handling urgent shipment, the Company should consider increasing the amount of inventory Safe inventory needs to be carefully considered, based on sales speed, seasonal characteristics of each item, duration handle order of suppliers until to goods arrival at warehouse
In addition, the Company should set minimum order quantity for one purchase order from each supplier
Moreover, Company should evaluate partners who supply transportation service or insurance service for import export cargos Then selecting company who has goods service and most competitive price
4.3.3 Improve quality control of goods during transportation
Make a score matrix to get points of each transportation service provider to assess and select the appropriate provider Using at least two suppliers to ensure price and good services to be competitive
Use automatic thermometers to record and transmit signals of storage conditions: temperature, humidity, light, vibration when importing a number of special shipments and randomly applying some cold shipments, depth sound to assess, monitor transporter
4.3.4 Raise role of the Finance Department
At present, the Finance Department makes the payment basing on request of the Purchasing Department after collecting contracts with the suppliers I suppose, the Company should get order confirmation of the Finance Department before placing orders to suppliers This helps Finance Department have more time to proactively prepare cash flow to pay for the confirmed order, ensuring time of delivery goods as in the plan
4.3.5 Enhance knowledge and skill of purchasing, import export staff
Currently, Vietnam has involved in many trade agreements with countries around the world Understanding the agreements, applying the preferential tariffs in the company's supply of goods can bring in great benefits Especially, using certificate of origin form AJ, form E, and applying self-certification under the CPTPP would be extremely important However; that is quite complex, it requires the staff have good knowledge and research capacity
In my opinion, in case that the enterprise is inexperienced but must to know effective solution immediately to respond exist situation, it should employ consultants The Company also can cooperate to train key employees to improve understanding Secondly, the Purchasing Department should have specialized personnel who must understand clearly terms, regulations and trade agreements to be able to flexibly apply to get benefits from them This specialist will train other persons in the Purchasing Department to perform work effectively Thirdly, in order to minimize the errors during the process of work, especially in checking import, export shipping documents, Eastern Company should elaborate the implementation process, the content of document required to check at each step
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CONCLUSION
THE RESULT OF INTERSHIP
Through the working period as a purchasing staff in Eastern Company, I executed purchasing, following the orders of two suppliers: Siemen Healthcare and Randox Laboratories from the beginning step of placing orders and handled them to make sure they arrive on right time and in right place I understood purchasing process and elements which may affect to this process Besides, through checking shipping documents and doing customs clearance for imported shipments, I can identify Harmonized System code (HS code) exactly for goods In case, the characteristics of goods are not clear enough to determine HS code, I made dossier to send to Customs Agent to ask HS code before shipping That help company do customs clear quickly, save cost and avoid legal risk Especially, I know more regulations which enterprises have to comply strictly to get special preferential tax rates This may create more advantages for them
One other hand, finding out and developing suppliers is one of the interesting jobs In particular, the application of knowledge and negotiating skill in practice are the activities which I really wanted to do However, because of the short internship period, I did not have the opportunity to perform this task.
THE IMPORTANT ELEMENTS TO IMPROVE CONTROL SUPPLY OF GOODS
During my internship at the company, I was able to find out more about the medical equipment business in Vietnam It can be said that this is a big market with ninety-six million people and this market is continue growing Expenditure for health gets high ratio, around 10% of total government spending
Addition, Eastern Company has created a good reputation in this industry after nine-teen year development period Company has nationwide customer network, include a lot of national hospitals, province hospitals, district hospital and well known private hospitals They are all large hospitals Company’s warehouses and logistics get international standards The Company should diversify products and suppliers to satisfied customers an d optimize infrastructure exploitation structure
However; beside achievements, the company still faces some issues I would like to review some of them as follows:
The first one, the volume of short expiration date and over expiration date reagents from the beginning of 2019 to now are very big It is estimate USD 120,000 This figure is not really small
26 and can be used to invest other activities if controlling supply of goods strictly can save this cost Therefore, it is necessary to control aim to minimize the value of similar goods in the future Secondly, the issue is related to defect goods, damage goods, low quality goods Some cases were discovered problem when QC department checked the goods before taking in or out warehouse In this situation, the company suffers loss of damaged goods or loss due to not having goods delivered to customers However, there were a few cases of broken reagents detected by the hospital where they use the product These case, we are not only loss of damage goods, but it also affects our company's reputation and image Therefore, in order to become a big company, leading the medical device business market in Vietnam, controlling strictly quality of products is one of the key factors that make company success
Thirdly, issues related to saving purchase costs According to statistics of the purchasing department in the first 6 months of 2019, One purchase order was shipped in 2.2 shipments This lead to large logistics costs and company have to use more employee to process orders
Fourthly, company departments involve in the supply process did not work closely to ensure supply goods meets sales activity at safe inventory levels
Fifthly, Eastern company should improve knowledge and skills of company employees, especially import-export employees to save input tax, increase competitive advantage for products.
RECOMMENDATIONS TO IMPROVE THE CONTROL OF GOODS SUPPLY
After observing the situation of the company and finding out the causes of existing supply problems of Eastern Company, I would like to suggest some recommendations based on my knowledge and my point of view as follow
The first group of solutions regarding to changing the processes of supply of goods processes in the company to better control the quality of goods, save costs, ensure goods are always ready to meet customers’ requirements
The second solution group is evaluation, selection and quality control of partners providing services to companies, such as insurance companies, logistics companies, international couriers or domestic transportation company
The last solution group is to enhance the knowledge and working skills for company employees This can be done by hiring consultants, training key personnel Then company builds standard implementation processes to train and guide relevant staff to follow They are foundations that employee can follow to bring good efficiency and avoid unnecessary risks
Thư viện ĐH Thăng Long
1 https://vietnamnet.vn/vn/thoi-su/dan-so-viet-nam-hon-96-2-trieu-dong-thu-15-the-gioi- 549259.html
2 http://cafebiz.vn/chi-tap-trung-xay-benh-vien-ban-duoc-pham-cac-nha-dau-tu-lai-dang-bo- quen-thi-truong-thiet-bi-y-te-quy-mo-ty-do-tang-truong-18-nam-lai-nhap-khau-toi-tren-90-tu- nuoc-ngoai-20190517101504312.chn
3 https://www.statista.com/statistics/369732/internet-users-vietnam/
6 http://ziperp.eastern.vn/#!/mainPage
8 Decree No 36/2015/NĐ-CP regarding to manage medical device in Vietnam
9 Circular 38/2015/TT-BTC regarding to customs procedure, manage import export tax in Vietnam
Table 1: Revenue ratio by product sectors
Table 2: Supply process at Eastern Company
Table 3: Evaluate supplier process at Eastern Company
Table 4: Vietnam GDP Growth from 2009 to 2018
Table 5: GDP & State Health Budget in 2014-2015
Thư viện ĐH Thăng Long