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MINISTRY OF EDUCATION AND TRAINING

<b>HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY AND EDUCATION FACULTY FOR HIGH QUALITY TRAINING </b>

<b> CAPSTONE PROJECT INDUSTRIAL MANAGEMENT</b>

<b>PROPOSAL FOR SOLUTION AND IMPROVEMENT OF THE PURCHASING PROCESS AT MATAI VIETNAM CO., LTD </b>

<b>LECTURER: NGUYEN PHUONG QUANGSTUDENT: ĐINH SI HUNG</b>

<small>S K L 0 1 2 3 8 2</small>

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<b>HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY AND EDUCATION FACULTY OF INTERNATIONAL EDUCATION </b>

<b>THESIS </b>

<b>ĐINH SỸ HƯNG Student ID: 19124040 </b>

<b>Major: INDUSTRIAL MANAGEMENT </b>

Ho Chi Minh City, November 2023

<b>PROPOSAL FOR SOLUTION AND IMPROVEMENT OF THE PURCHASING PROCESS AT MATAI VIETNAM </b>

<b>CO., LTD </b>

<b>Advisor: NGUYỄN PHƯƠNG QUANG, Senior Lecturer. </b>

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<b>HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY AND EDUCATION FACULTY OF INTERNATIONAL EDUCATION </b>

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<b>HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY AND EDUCATION FACULTY OF INTERNATIONAL EDUCATION </b>

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<b>HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY AND EDUCATION FACULTY OF INTERNATIONAL EDUCATION </b>

<b>ACKNOWLEDGEMENTS </b>

First of all, I would like to sincerely thank Ho Chi Minh City University of Technical Education, especially the teachers who have guide and support me in recent years and imparted their knowledge. valuable knowledge, skills as well as experience from practice so I can do research this thesis topic.

I wish to show my appreciation to my instructor Mr. Nguyen Phuong Quang has always been dedicated and helped me answering questions throughout the process of completing the graduation thesis. and one of my importance people Mr. Tran Van Thuan a Maintenance Manager now is working at Matai Vietnam CO., Ltd has supported me every time everywhere I need

During the process of writing the graduation thesis, the author tried to implement as accurately as possible what he had experienced at the company as well as tried to avoid errors. However, practical experience is still young, so mistakes cannot be avoided. We hope that teachers will ignore them. At the same time, during this research process, I also hope to receive valuable comments and contributions from teachers so that the author can improve better in the future. Sincere appreciation!

<b>... </b>

<i>HCMC, 01/11/2023 </i>

<b>Student name Đinh Sỹ Hưng </b>

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MPR Manufacturer's Production Run

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<b>LIST OF TABLES </b>

<b>Table 1. 1 List of products of Matai Co., Ltd. ... 6</b>

<b>Table 1. 2 Business performance of Matai Co., Ltd. from 2019-2021 ... 10</b>

<b>Table 3. 1 List of raw materials for production of Matai in the last 3 months 2021 ... 42</b>

<b>Table 4. 1 Statistical table of losses due to machine downtime ... 60</b>

<b>Table 4. 2 Material and cost for 1 day downtime ... 61</b>

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<b>LIST OF FIGURES </b>

<b>Figure 1. 1 Organization of Matai Vietnam Co., Ltd. ... 8</b>

<b>Figure 1. 2 Business performance of Matai Co., Ltd. from 2019-2021 ... 11</b>

<b>Figure 1. 3 Manufacturing process of Matai Viet Nam ... 13</b>

<b>Figure 2. 1 Diagram of the purchasing process in a business ... 19</b>

<b>Figure 2. 2 Example of demonstrate BoM- Bills of materials ... 27</b>

<b>Figure 3. 1 4 types of Materials at Matai Vietnam ... 44</b>

<b>Figure 3. 2 3 types of material using purpose at Matai Vietnam ... 45</b>

<b>Figure 3. 3 Matai's quantity target accuracy chart from 2018-2021 ... 46</b>

<b>Figure 3. 4 Accuracy of quantity of goods types according to production characteristics </b>chart in 2021 ... 47

<b>Figure 3. 5 Chart about accuracy of purchases by intended use of Matai 2021 ... 47</b>

<b>Figure 3. 6 Purchasing requirement sheet ... 49</b>

<b>Figure 3. 7 Chart about domestic purchase times in Matai in 2021 ... 50</b>

<b>Figure 3. 8 Chart about Matai's overseas purchases in 2021 ... 51</b>

<b>Figure 3. 9 Chart about purchasing time for a PO at Matai ... 52</b>

<b>Figure 3. 10 Repair cost chart for 1 month at Matai Vietnam ... 53</b>

<b>Figure 3. 11 Purchasing process at Matai Vietnam Co., Ltd ... 55</b>

<b>Figure 4. 1 INFOR logo ... 67</b>

<b>Figure 4. 2 Diagram of INFOR CLOUDSUITE INDUSTRIAL solution modules ... 69</b>

<b>Figure 4. 3 Function of INFOR CLOUDSUITE INDUSTRIAL solution ... 70</b>

<b>Figure 4. 4 Diagram about how a process operate with Infor system. ... 72</b>

<b>Figure 4. 5 Propose purchasing model diagram at Matai Vietnam ... 74</b>

<b>Figure 4. 6 Purchase request display of Infor system ... 74</b>

<b>Figure 4. 7 Manage quotes display of Infor system ... 75</b>

<b>Figure 4. 8 Manage PO contract of Infor system ... 75</b>

<b>Figure 4. 9 Goods receiving display of Infor system. ... 76</b>

<b>Figure 4. 10 Manage purchase invoice of Infor system. ... 77</b>

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CHAPTER 1: INTRODUCTION ABOUT COMPANY ... 4

1.1 Information about Matai Vietnam Co., Ltd. Company ... 4

1.2. History and development. ... 4

1.3. Mission, vision and core value. ... 5

2.1.1. Concept of purchasing activities in the supply chain. ... 16

2.1.2 Objectives and roles of purchasing activities in manufacturing enterprise. ... 17

2.1.3. The importance of purchasing activities in manufacturing enterprise ... 18

2.2. Content of purchasing management in production and business enterprise. ... 19

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2.2.1. Determine the purchasing needs ... 20

2.2.2. Finding and selecting supplier ... 21

2.2.3. Negotiate and place orders ... 21

2.2.4. Tracking and checking order. ... 22

2.2.5. Evaluating purchase result ... 22

2.3. Criteria for evaluating purchasing activities in the supply chain... 23

2.4.6. Benefits and requirements of MPR. ... 29

2.5. Factors affecting purchasing activities in the supply chain ... 30

2.5.1. Internal factors ... 30

2.5.2. External factor ... 35

2.6. Purchasing methods and rules in production enterprise ... 37

2.6.1. Based on purchase size ... 37

2.6.2. Based on the form of purchase ... 39

2.6.3. Based on credit ... 39

2.6.4. Based on material source. ... 40

2.6.5 The rules ensure effective purchases. ... 40

CHAPTER 2 SUMMARY ... 41

CHAPTER 3: REALITY OF PURCHASING AT MATAI VIET NAM CO., Ltd... 42

3.1 Current status of purchasing activities in the supply chain in Matai Vietnam Co., Ltd ... 42

3.1.1. Current status of species ... 43

3.1.2. Current status of quantity ... 45

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3.1.3. Current situation of time ... 48

3.1.4. Current status of cost ... 52

4.2.1 Solution 1: Provide material backup measures ... 59

4.2.2. Solution 2: Building human resources. ... 63

4.2.3. Solution 3: Information technology system. ... 66

CHAPTER 4 SUMMARY ... 80

CONCLUSION ... 81

REFERENCES ... 82

APPENDIX ... 83

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<b>INTRODUCTION </b>

<b>1. RATIONALE </b>

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

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

<b>2. OBJECTIVE </b>

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.

<b>3. SCOPE AND OBJECT </b>

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

<b>2023. </b>

<b>4. RESEARCH METHODOLOGY </b>

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

<b>solutions to improve purchasing activities in the supply chain process. </b>

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<b>5. STRUCTURE OF REPORT </b>

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

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<b>CHAPTER 1: INTRODUCTION ABOUT COMPANY </b>

<b>1.1 INFORMATION ABOUT MATAI VIETNAM CO., LTD. COMPANY </b>

Company name: Matai Vietnam Co., Ltd.

Address: Manufacturing area, Tan Thuan, Tan Thuan Dong, District 7, HCMC. Website: www.matai.co.jp

Fax: (028) 37701775 Capital: 5,4 million USD

Number of employees: 5 Japanese and 970 Vietnamese employees Factory 1: 20.000m2

Working time:

Factory 2: 12.000m2

Working time: 2 shifts (6:00-14:00, 14:00-22:00)

<b>1.2. HISTORY AND DEVELOPMENT. </b>

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

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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.

<b>1.3. MISSION, VISION AND CORE VALUE. </b>

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.

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

<b>1.4. FIELD. </b>

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

<b>Table 1. 1 List of products of Matai Co., Ltd. </b>

Jumbo Bags:

Neopallex bag:

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<i>Source: Nguyen Phuong Quang</i>

<b>1.5. COMPANY ORGANIZATION 1.5.1. Organization chart. </b>

Inner liner bag:

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<b>Figure 1. 1 Organization of Matai Vietnam Co., Ltd. </b>

<i>Source: Nguyen Phuong Quang</i>

<b>1.5.2. Department function. </b>

<i><b>1.5.2.1 The Chairman </b></i>

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.

Garment vice director factory

Leader 2Leader 1

Garment vice director factory

Leader 2Leader 1

Manager Vice

Chairman

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<i><b>1.5.2.2. The Vice Chairman </b></i>

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.

<i><b>1.5.2.3. QA General </b></i>

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.

<i><b>1.5.2.4. Factory management </b></i>

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.

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<i><b>1.5.2.5. Financial Manager </b></i>

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.

<i><b>1.5.2.6. HR manager </b></i>

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.

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<i>Source: Nguyen Phuong Quang</i>

<b>Figure 1. 2 Business performance of Matai Co., Ltd. from 2019-2021 </b>

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

<small>Revenue</small> ^Materials<small>cost</small>

<small>Netprofit2019 631.985 348.826 283.15832.764200.77818.90930.7062.42428.2828052020 636.901 334.885 302.01632.75212.8518.23738.1781.75436.4241,0922021 304.429 192.905 111.52385795.44817.89-2.6721.89-4.5631,407-200</small>

Business situation 2019-2021 (10

<small>6</small>

VND)

<small>201920202021Linear (2019)Linear (2020)Linear (2021)</small>

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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.

<b>1.7. MANUFACTURING ACTIVITIES AT FACTORY </b>

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

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<i>Source: Nguyen Phuong Quang</i>

<b>Figure 1. 3 Manufacturing process of Matai Viet Nam </b>

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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.

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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.

<b>1.8. ORIENTED DEVELOPMENT </b>

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

<i>to become a supplier to Southeast Asian countries, especially Vietnam </i>

<b>CHAPTER 1 SUMMARY </b>

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.

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<b>CHAPTER 2: LITERATURE REVIEW ABOUT PURCHASING MANAGEMENT </b>

<b>2.1. PURCHASING ACTIVITIES IN THE SUPPLY CHAIN. 2.1.1. Concept of purchasing activities in the supply chain. </b>

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.

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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.

<b>2.1.2 Objectives and roles of purchasing activities in manufacturing enterprise. </b>

<i><b>2.1.2.1. Objectives </b></i>

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.

<i><b>2.1.2.2. Roles of purchasing in manufacturing enterprise. </b></i>

<i>A, Business supply sources </i>

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.

<i>B. Manage supply system </i>

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-

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

<i>C. Control pricing system </i>

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.

<b>2.1.3. The importance of purchasing activities in manufacturing enterprise </b>

<i>For production and business enterprises, according to Michael. H. Hugos (Principles of </i>

<i>Supply Chain Management) purchasing is the first activity to create input factors, input factors </i>

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.

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<b>2.2. CONTENT OF PURCHASING MANAGEMENT IN PRODUCTION AND BUSINESS ENTERPRISE. </b>

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.

Identify the need

Specify the requirement

Find and choose a supplier

Negotiate costs

Get order approval

Place the order

Receive and approve the order

Review supplier performance

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<b>Figure 2. 1 Diagram of the purchasing process in a business </b>

<b>2.2.1. Determine the purchasing needs </b>

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 + 𝐷 𝑑𝑘 = 𝐵 + 𝐷 𝑐𝑘 + 𝐷ℎℎ

Which is:

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: 𝑀 = 𝐵 + 𝐷 𝑐𝑘 – 𝐷 𝑑𝑘 + 𝐷ℎℎ

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.

- Quality requirements:

+ Enterprises set quality goals for purchased goods.

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

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+ 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.

<b>2.2.2. Finding and selecting supplier </b>

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:

- Through fairs and exhibitions. - Through the offer letter.

- Through customer conferences

<b>2.2.3. Negotiate and place orders </b>

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:

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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. • Delivery methods and conditions. • Shipping conditions.

Payment methods and conditions

+ Orders are a lower legal form than the above form. + Sales invoice.

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.

<b>2.2.4. Tracking and checking order. </b>

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.

- Check the correct quantity - Check the correct quality

- Final stage of import procedures for goods

<b>2.2.5. Evaluating purchase result </b>

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

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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:

and business so that the input is stable. Thus, the business's purchasing decision is effective and efficient.

continue to look for a new supplier, find and fix errors to avoid making that mistake.

<b>2.3. CRITERIA FOR EVALUATING PURCHASING ACTIVITIES IN THE SUPPLY CHAIN </b>

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.

<b>2.3.1. Category </b>

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

<b>is imperative for the procurement department. </b>

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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.

<b>2.3.3. Quality </b>

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.

<b>2.3.4. Time </b>

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.

<b>2.3.5. Price </b>

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

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cost reduction measures to contribute to lowering prices and increasing the competitiveness

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?

<b>2.4.2. Input quantity of MPR. </b>

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

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<i><b>2.4.2.1. Master schedule. </b></i>

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.

<i><b>2.4.2.2. BoM-Bills of materials </b></i>

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:

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<i>Source: Author's own compilation</i>

<b>Figure 2. 2 Example of demonstrate BoM- Bills of materials </b>

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.

<b>2.4.3. Implementation process of MPR. </b>

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:

𝑛𝑒𝑡 𝑑𝑒𝑚𝑎𝑛𝑑 𝑖𝑛 𝑝𝑒𝑟𝑖𝑜𝑑 𝑡 = 𝑔𝑟𝑜𝑠𝑠 𝑑𝑒𝑚𝑎𝑛𝑑 − 𝑝𝑙𝑎𝑛𝑛𝑒𝑑 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 + 𝑠𝑎𝑓𝑒𝑡𝑦 𝑠𝑡𝑜𝑐𝑘 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

<b><small>ASSY-Drinker_NĐ Bộ Drinker ( vòi nước) hàng nội địa</small></b>

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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.

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.

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