Propose solutions to improve the efficiency of am thuong garment company supply chain

PREFACE AND ACKNOWLEDGEMENT In recent years, Vietnam's textile industry has played an increasingly important role in the growth of the economy The textile and garment industry is considered as one of the key industries and key export industries of our country (PN, 2019) This is the most labor-intensive industry in the country, creating jobs for a large number of national people Vietnam has its advantages to develop the textile and apparel industry such as a large population, a young population structure, abundant labor force, cheap labor costs and a country attracting a lot of foreign investment capital Therefore, promoting the development of the textile industry is very appropriate and necessary In recent years, Vietnam's textile and garment industry has widely penetrated the world market, achieved high turnover and promised to achieve more outstanding achievements in the future However, our country's textile industry in general and textile enterprises in particular still face many difficulties and challenges on the path of international market integration Therefore, businesses need to constantly innovate policies to improve business efficiency, the efficiency of capital use, management capacity, efficient use of labor and assets to bring competitive advantages for the business, helping to create the highest profit During my internship at Am Thuong Garment Company, I learned a lot of useful knowledge and helped me to actualize the knowledge taught by teachers at school Thereby, accumulating experience for myself and better understanding the production and business activities as well as the supply chain of a manufacturing enterprise Thanks to the help of the staff in Am Thuong Garment Company and with the enthusiastic guidance of my teacher Pham Thanh Ha, I completed my internship and internship report My internship report consists of chapters: CHAPTER 1: GENERAL INTRODUCTIONS ABOUT AM THUONG GARMENT COMPANY CHAPTER 2: CURRENT SITUATION OF AM THUONG GARMENT COMPANY SUPPLY CHAIN CHAPTER 3: PROPOSE SOLUTIONS TO IMPROVE THE EFFICIENCY OF AM THUONG GARMENT COMPANY SUPPLY CHAIN CHAPTER 1: THEORETICAL BASIS ABOUT SUPPLY CHAIN MANAGEMENT 1.1 Defining supply chains “Supply chains is defined as a group of inter-connected participating companies that add value to a stream of transformed inputs from their source of origin to the end product or services that are demanded by the designated end – consumers (Dr.Dawei Lu – fundamentals of supply chain management)” “A supply chain is less a chain but rather a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers (Ganeshan and Harrison, 1995) A supply chain consists of all parties (manufacturers, suppliers, transporters, warehouses, retailers, and customers) and, within each organization, all the functions involved, directly or indirectly, in fulfilling a customer request (Chopra and Meindl 2010) => The supply chain is a system of businesses directly involved or indirectly meet customers' needs, including not only suppliers, manufacturer, but also shipping, warehousing, retailers and its customers It is a process that starts from the raw material until the finished product and delivered to the final consumer Figure 1.1: Supply chain diagram (Source: Cafeland.vn) 1.2 Defining supply chain management “Supply chain management is the coordination of production, inventory, location, and transportation among the participants in a supply chain to achieve the best mix of responsiveness and efficiency for the market being served.” ( ESSENTIALS of Supply Chain Management - Hugos) Effective supply chain management requires simultaneous improvement customer service quality and internal operational efficiency of the business participating the supply chain The most basic level of customer service is the fulfillment rate of orders and the on-time delivery rate is always high while the rate of returned goods is low in all cases internal operational efficiency of businesses in the supply chain means the ability to earn high revenue on capital invested in goods and other assets, while also meaning that businesses must find ways to reduce production costs 1.3 Participants of the supply chain According Michael Hugos (2010), any supply chain needs a combination of businesses that perform many different functions These enterprises are manufacturers, distributors or wholesalers, retailers of goods and companies or individuals acting as customers Support for these businesses is the essential service providers a Producers Manufacturers are units that directly make products Manufacturers include companies specializing in the production of raw materials as well as enterprises that produce finished products Manufacturers use raw materials and machinery and equipment to make their products Manufacturers can create intangible or tangible products The prevailing trend is that manufacturers of tangible industrial products are moving to areas with cheaper labor costs in the world However, more and more manufacturers in developed countries in the Europe and some countries in Asia focus on providing intangible products and services b Distributors Distributors are companies that take inventory in bulk from producers and deliver a bundle of related product lines to customers Distributors are also known as wholesalers They typically sell to other businesses and they sell products in larger quantities that an individual consumer would usually buy Distributors buffer the producers from fluctuations in product demand by stocking inventory and doing much of the sales work to find and service customers For the customer, distributors fulfill the “Time and Place” function – they deliver products when and where the customer wants them A distributor is typically an organization that takes ownership of significant inventories of products that they buy from producers and sell to consumers In addition to product promotion and sales, other functions the distributor performs are ones such as inventory management, warehouse operations and product transportation as well as customer support and post sales service A distributor can also be an organization that only brokers a product between the producer and the customer and never takes ownership of that product This kind of distributor performs mainly the functions of product promotion and sales In both these cases, as the needs of customers evolve and the range of available products changes, the distributor is the agent that continually tracks customer needs and matches them with products available Michael Hugos – Essentials of supply management c Retailers Retailers stock inventory and sell in smaller quantities to the general public This organization also closely tracks the preferences and demands of the customers that it sells to It advertises to its customers and often uses some combination of price, product selection, service, and convenience as the primary draw to attract customers for the products it sells Discount department stores attract customers using price and wide product selection Upscale specialty stores offer a unique line of products and high levels of service Fast food restaurants use convenience and low prices as their draw d Customers Customers or consumers are any organization that purchase and use a product A customer organization may be an organization that purchases a product in order to incorporate it into another product that they in turn sell to other customers Or a customer may be the final end user of a product who buys the product in order to consume it e Service provider These are organizations that provide services to producers, distributors, retailers, and customers Service providers have developed special expertise and skills that focus on a particular activity needed by a supply chain Because of this, they are able to perform these services more effectively and at a better price than producers, distributors, retailers, or consumers could on their own Supply chains are composed of repeating sets of participants that fall into one or more of these categories Over time the needs of the supply chain as a whole remain fairly stable What changes is the mix of participants in the supply chain and the roles that each participant plays In some supply chains, there are few service providers because the other participants perform these services on their own In other supply chains very efficient providers of specialized services have evolved and the other participants outsource work to these service providers instead of doing it themselves Figure 1.2: Examples of supply chain structure (Source: Essentials of supply management) 1.4 How the supply chain works There are five major supply chain drivers in a supply chain: - Production - Inventory - Transportation - Location - Information Figure 1.3: The major supply chain drivers (Source: Essential of supply chain management) 1.4.1 Production The fundamental problem that managers facing when making production decisions is how to balance between the ability of responsiveness and production efficiency Therefore, the decision of the business will be based on questions such as: What product does the market want to consume? How much should be produced and when? This involves creating a flexible production cycle taking into account factory productivity, workload balancing, quality control and equipment maintenance It also means that the higher the level of wasted energy, the less efficient the operation Therefore, factories are built to serve one of two production purposes: - Product Focus: A factory that takes a product focus performs the range of different operations required to make a given product line from fabrication of different product parts to assembly of these parts - Functional Focus: A functional approach concentrates on performing just a few operations such as only making a select group of parts or only doing assembly These functions can be applied to making many different kinds of products (essential of SC) The product-focused approach aims to specialize in a given product line at a cost dedicated to developing certain features Meanwhile, functional-focused approach aims to specializes in a specific function instead of just focusing on a specific product Businesses need to decide which combination of these two directions will give them the competence and expertise needed to be proactive in customer requirements 1.4.2 Inventory According to Michael Hugos (2010), Inventories appear throughout the cycle supply chain advocacy, including everything organized by the manufacturers, distributors and retailers involved here, from raw materials to the final product Holding a large volume of inventory allows businesses or the entire supply chain to respond flexibly to market fluctuations However, the production and storage of labor productivity and improve product quality, ensure to meet the quality requirements of domestic and foreign markets The company takes charity work as a bridge for businesses to participate, share with the community for mutual development Am Thuong Garment Company aims to become one of the leading garment enterprises in Vietnam as well as a prestigious garment enterprise in the international apparel market in the future 3.2 Solutions to improve the efficiency of supply chain 3.2.1 In materials purchasing activity 3.2.1.1 Basis for proposing a solution For a manufacturing enterprise, material purchasing is the first stage of the supply chain This is an important stage - a prerequisite stage for determining product quality as well as production process in the next steps A shipment is considered successful when the product is sewn from good material with reasonable prices, completed and delivered on time This requires the materials purchasing process to be carefully calculated and implemented quickly, avoiding delays that leading to disruption of the next steps After many years of operation, Am Thuong garment company has done quite well However, after analyzing the current situation of material purchasing, some limitations still need to be overcome From that, it is necessary to propose some solutions based on the weakness to improve and improve the purchasing efficiency of the company 3.2.1.2 Content and implementation In purchasing raw materials, the company needs to find reputable suppliers, provide quality raw materials at reasonable prices Besides, the purchasing department needs to work closely with the planning, production, accounting, engineering and warehouse departments to carry out its activities well To improve purchasing efficiency, Am Thuong Garment Company needs: - Coordinating supply network activities and transportation activities from suppliers to factories - The company needs more flexibility in finding and selecting suitable raw material suppliers, reducing dependence on some fixed suppliers as well as reviewing and filtering out unsatisfactory suppliers Purchasing raw materials from multiple suppliers give the company greater flexibility in converting orders with suppliers in a variety of situations This is to prevent some bad situations, such as when the supplier goes bankrupt or lacks the necessary raw materials or when the supplier raises the costs and prices of goods when economic and social fluctuations occur Finding more suppliers helps the company have more options in purchasing materials - Need to find some sources of domestic quality materials to replace some imported types to reduce input costs With some orders requiring high quality products, especially strict standards of materials, the company often has to import high-quality materials and accessories from abroad If the company can use domestic materials, that help the company save some costs such as transportation costs, import procedures, exchange rate differences - Forecasting the demand for products should be calculated closely and reasonably to plan to buy raw materials for production needs, avoid forecasting a large difference to actual demand resulting in product overcapacity or shortage - Implementing the negotiation with the partner supplying raw materials to get the most reasonable price The company also needs to create good relationships with long-term suppliers of qualified raw materials and accessories to receive the most preferential price policies 3.2.2 In production activities 3.2.2.1 Basis for proposing a solution In the supply chain of Am Thuong garment company, the production process plays a key role and most important step of the chain This is also the activity that requires the most investment in both labour force and infrastructure, technology and machinery to produce products with high quality Especially, for high-class products that bring high value or foreign markets, the quality requirements of production are always on the top Over the past years, Am Thuong Garment Company has always tried to apply advanced technologies to production activities, focusing on brand and image development, gradually asserting its position in the textile industry Despite the commendable achievements in manufacturing operations, the company still has some shortcomings such as limitations in production technology Therefore, Am Thuong garment company needs to offer solutions to overcome the above shortcomings to improve production activities, helping businesses operate as optimally as possible 3.2.2.2 Content and implementation Although the company has achieved commendable achievements, the company still needs to focus more on investing in modern equipment and machinery, updating technical progress in the garment industry Also, researching production methods to cut costs to increase labor productivity, improve product quality to meet the needs and satisfaction of customers and consumer markets In addition, the company needs to improve production planning steps and specific production schedules, inspection steps, labeling, packaging and product delivery The production plan is logically formulated with clear and specific schedules, the steps in the production process take place seamlessly, making the production process easier, saving time and optimizing production capacity Besides, it is necessary to closely inspect and supervise the quality standards of the finished product after each production stage to detect and eliminate defective goods and poor quality goods Moreover, the company needs to regularly pay attention to the performance of employees to avoid the lack of concentration and effort at work of employees In addition, for the production to be more effective, the company needs to develop methods to monitor the production line to ensure the most effective production process, contributing to improving the efficiency of the supply chain of the company The company needs to organize and arrange quality inspection staff at each stage, identify the right location and specific tasks for each object to avoid the clutter and lead to the wrong function Each inspecting and the supervising officer needs to have a separate book recording all the data and current situation of goods in the day to help update the most accurate product information 3.2.3 In storage activities 3.2.3.1 Basis for proposing a solution For the last years, inventory management of Am Thuong garment company has been implemented quite effectively However, sometimes the large amount of inventory leads to difficulties in management The inventory data is tracked and recorded by the storekeeper then transferred to the software so it is easy to cause the data discrepancy Besides, the storage activities of Am Thuong garment company still have some difficulties Therefore, it is necessary to have measures to help the storage activities as well as warehouse management becoming easier and more effective 3.2.3.2 Content and implementation Company needs to have an inventory plan with a reasonable amount and be seriously and closely calculated to serve the rising demands of the market Avoid stocking too much, which can make it difficult to manage and not sell out the product In addition to planning inventory, the company should plan to buy enough raw materials to meet production needs, avoiding material shortages In addition, it is necessary to buy an excess of a certain amount of raw materials to prevent damage, ensuring sufficient production according to orders Need to arrange goods in a reasonable warehouse by each zone, each category to facilitate order processing and management Using RFID tag technology to replace the recording of import and export information, inventory information from the notebook The RFID tag provides all product information such as product name, type, date of delivery, product value or location in the warehouse and more (Hoa, 2016) This information will be encrypted and transferred to the server for processing Compared to keeping the information in notebooks, RFID tags are smarter and more convenient, helping to manage information fully and accurately 3.2.4 In distribution 3.2.4.1 Basis for proposing a solution Distribution is the last step in a supply chain It performs the role of bringing the product to the consumer market For Am Thuong garment company, the main consumer market is in the country Therefore, the issue of freight is quite convenient and easy The company has a lot of customers as well as agents, shops are partners with close relationships built over the years Therefore, the problem of product consumption is not too difficult However, in order to expand the market and minimize distribution costs, Am Thuong garment company needs to offer some solutions to help distribution activities more reasonable, contributing to building the most effective Am Thuong garment company supply chain 3.2.4.2 Content and implementation After the production process is completed, the product is labeled, packaged and next will be distributed to consumers The distribution process of Am Thuong Garment Company is divided into separate processes: distribution by order and distribution of inventory products The distribution process of inventory is implemented only when the company finds a consumer market, customers have a purchase request, then the company sets a delivery plan The method of transportation and delivery will be agreed upon in the purchase contract by the buyer and Am Thuong Garment Company For the distribution process to be most effective and to minimize shipping costs, ensure that goods are delivered on time and in the right place, the company needs to make specific forecasts and plans for each stage as: - Warehouse Management: Control, manage and check activities of transport goods within the warehouse or distribution center Warehouse management includes inventory management, storage, tracking of orders and order fulfillment Depending on the capacity and business situation of each company, each company will have its options, suitable for warehouse management such as: Reducing inventory: Operate the company at the lowest possible cost Eliminate defective products, work closely with suppliers to ensure delivery of raw materials on time Researching the order structure to identify products that are best-selling, then keep them in the front of the warehouse to minimize finding and loading times Making sure every truck arrives at the warehouse as scheduled Each packing station must comply with the defined packing schedule to avoid overlapping work, reduce goods quality Transport Administration: is the choice of carrier, transportation management, itinerary and schedule so that the cost is minimal but still meets the desired requirements Managing orders and invoices for customers: include tasks such as shortening the time it takes for waiting to receive goods and paying from customers and improving the level of accuracy of order processing 3.2.5 Forecast the factors affecting supply chain management efficiency In business, managers must always predict the factors affecting supply chain efficiency to reduce risks by preparing for different situations and implementing them following the cautious step Information between partners and the market will always have deviations leading to a series of different forecasts of the managers Conducting forecasts short term and long term factors influencing supply chain processes and the performance of the entire supply chain is essential In the forecasting process, the feedback must always be updated promptly so that the managers have the necessary corrections In general, forecasts include: - Forecasting market demand: consumption trends, categories, characteristics, quantity of products, revenue and profit in the market (Hugos) - Forecasting potential risks: that help the company leadership to plan the operation strategy However, if the forecast is wrong, the company will have to deal with a range of financial and manufacturing consequences facing the risk of imbalance with market demand Predictions cannot be exactly correct Forecasts always contain risk factors However, forecasts help leaders carry out the necessary preparatory steps, can immediately seize the opportunity or take the most appropriate measures to solve the problem 3.2.6 Plan the risk management Supply chain risk management is a system that manages unexpected changes in the supply chain (Blanchard, 2007) In fact, it is very difficult to manage all risks but businesses always try to limit to the lowest to minimize costs Table 4.1: Types of risks and solutions Environment Risk Solution - The materials supply is - Building a long relationship Input not enough and intimate with the supplier - Low quality material - Build a backup supply network - High cost - - Delivery time is not on time Strict information management, especially feedback from customers and suppliers - Orders change Output - Price is higher than the price that customers can - Coordination inspection and supervision between packaging department, stock out and pay shipping department - Time, quality, quantity - Control the source of of goods are not meet the information from factory and requirements place of receiving finished - Delivery at the wrong products customer place, lost goods - Understanding the market and customer - Financial risks - - Out of stock, excessive inventory internal audit regularly - Strengthen inspection and Internal environment Perform - Damaged and outdated products supervision - Standardize processes and products - Natural disasters External environment - Other appear - competitors Collect information from multiple sources - Build the different relationships (Source: Am Thuong garment company) 3.3 Petition 3.3.1 The petition to the government and state agencies The Government should quickly issue legal corridors to facilitate production and business enterprises in the following areas: In materials, this is the least developed aspect of the garment industry, which requires careful planning to have enough raw material for production The Government must have a specific strategy and determine which stages of time still need to import raw materials in textile industry? What stage can self-supply raw materials? How many percent of the material is self-sufficient in total production demand? In order to achieve the set goals, the government needs: - Promulgating textile and garment industry development plan to 2030 with a vision to 2050, which clearly defines the role, position and size of the textile and apparel industry: Because the goal of the textile industry is to reach export turnover of US $ 50-60 billion, it is necessary to carefully prepare raw materials, production areas as well as labor force to avoid unplanned production Therefore, the development strategy of the companies will depend greatly on the industry's planning, so it needs to have a detailed, clear and well-prepared preparation in terms of adaptation time - Having policies to encourage textile and garment enterprises to expand and associate in the direction of using domestic raw materials without having to import: Currently, there is no policy to encourage the use of domestic raw materials, not only Am Thuong Garment Company but also other enterprises in the industry use domestic materials without any benefit, even have to pay VAT immediately, while importing raw materials from abroad are entitled to a tax period of 275 days - Increase connections between local authorities with the Ministry of Industry and Trade and Vietnam Textile and Apparel Association - Creating conditions for businesses to participate in trade promotion programs, to access developed markets such as the United States, EU and Japan Besides, textile industry towards marketing and expanding to other markets such as Russia, Eastern Europe, Africa and have policies to encourage exploitation of the domestic market - Training, improving marketing knowledge, technical barriers to trade and knowledge of international law, basic information for businesses to cope with the risk of initiating anti-dumping lawsuits, formulating anti-dumping safeguard measures in Vietnam - Developing business support services such as: market information, research market research, trade promotion, technology transfer, ISO certification, enterprise brand, product brand - Building a national testing center for textile products to build national quality standards and for each type of product in the industry - Associating closely with Textile Association to create a bridge between government and businesses Vietnam's textile and garment industry wants to develop, it needs to invest in developing raw materials and equipment In the context that the supporting industry for textile is still weak, the textile industry wants to promote the development of the supply of raw materials that need long-term investment Meanwhile, the industry has not had appropriate investment, and if any, it is difficult to access this capital Therefore, the State should have policies to support preferential loans for businesses Besides, the Government should have incentive policies enterprises registering and promoting brands of Vietnamese textile products Textile and apparel industry needs to develop in concentrated areas with a large enough scale, ensuring economic efficiency and environmental protection to meet the standards of developed markets in the world 3.3.2 The petition to the Vietnam Textile and Apparel Association: CONCLUSION OF CHAPTER After years of establishment and development, Am Thuong garment company always strive to become a reputable and big garment company The company has achieved achievements, a lots of awards and positive results in business When competition in the market as well as the requirements of the market are increasing, Am Thuong Garment Company needs to focus on improving the efficiency of production and business activities of the company, especially improving supply chain efficiency Besides the strengths of the company's supply chain, there are still disadvantages that need to be overcome From the disadvantages analyzed in chapter 2, the components of the company's supply chain need to work more efficiently in order to gain the highest benefit - In materials purchasing: The company needs to cooperate with many suppliers That helps the company more flexibility in purchasing as well as diversifying materials - In production: In order to expand markets in developed countries, investment in infrastructure, equipment and production lines is essential That helps the company meet the stringent production requirements of foreign markets - In storage: The company needs to calculate a reasonable amount of inventory In addition, the company needs to apply technology in recording and processing warehouse information to avoid confusion - In distribution: The company needs to plan its delivery and calculate shipping costs carefully to ensure the cost is minimal CONCLUSION In recent years, Vietnam's textile industry has grown strongly and played an important role in economic growth In the context of integration internationally, the competition between enterprises is increasingly fierce, Am Thuong garment company needs to focus on research and application of supply chain management in the company The application of supply chain management will help the company establish alignment between suppliers, factories, agents and customers to improve the added value of product and competitiveness of the company In my internship at the company, I learned about some of the following issues: - Assessing the current situation of Am Thuong garment company supply chain and come up with the advantages and disadvantages - Proposing solutions to improve the supply chain at the company, including solutions related to materials purchasing, improve production capacity, storage activities, distribution and completing the cooperative relationship in the chain Successful management of the company supply chain will help increasing profit not only for the company but also for the participants in the chain That motivates supply chain participants to promote their capabilities and advantages Since its inception, Am Thuong garment company has not stop developing and operating effectively Despite many difficulties in recent years, the company still ensures its business with the annual growth rate, the life of employees is improved, contributing significantly to the overall development However, besides the strengths to be promoted, weaknesses and shortcomings need to be overcome That helps the company exist and develop in a professional business environment, highly competitive and increasingly internationalized References Blanchard, D (2007) supply chain management Dung, N D (n.d.) Quan tri chuoi cung ung 4.0 nha xuat ban the gioi Fortenberry, J (2018) Huong dan toi uu hoa chuoi cung ung nha xuat ban tri thuc Hoa, D D (2016) ỨNG DỤNG CÔNG NGHỆ RFID TRONG QUẢN LÝ Cong ty CP thong tin va cong nghe so Hugos, M H (n.d.) nguyen ly quan tri chuoi cung ung nha xuat ban the gioi Lysons, K (2000) Purchasing and supply chain management PN (2019) Năm 2019, ngành dệt may Việt Nam dự kiến tăng trưởng 7,55%, ... Overview of the supply chain of Am Thuong Garment Company The supply chain of Am Thuong Garment Company is generally not different from the supply chain of other garment companies in Vietnam Currently,... Distributor Storage Transport Figure 2.1: Supply chain diagram of Am Thuong Garment Company (Source: Am Thuong garment company) 2.3 Current situation of Am Thuong garment company supply chain 2.3.1... responsive these needs 1.5 The role and function of supply chain management 1.5.1 The role of supply chain management Supply chain is the decisive factor to the efficiency of business operations: The