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 3 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.1: Supply chain diagram (Source: Cafeland.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.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. 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. 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.
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. 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 do 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.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) 1.1 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.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 inventory is costly, so in order to achieve a high level of efficiency, storage costs must be as low as possible. Therefore, enterprises should clearly identify the following issues: What types of goods should be stockpiled at each stage of the supply chain? How much raw material, semi-finished and finished products should be stored? The basic purpose of storing inventory in a warehouse is to prevent possible fluctuations in the supply chain. However, the cost of warehousing is quite expensive, so businesses must be determined optimal inventory levels and new order timing. There are three basic decisions regarding the production and storage of goods: Cycle Inventory: This is the amount of inventory needed to satisfy demand for the product in the period between purchases of the product.
Companies tend to produce and to purchase in large lots in order to gain the advantages that economies of scale can bring. However, with large lots also come increased carrying costs. Carrying costs come from the cost to store, handle, and insure the inventory. Managers face the tradeoff between the reduced cost of ordering and better prices offered by purchasing product in large lots and the increased carrying cost of the cycle inventory that comes with purchasing in large lots.
Safety Inventory: Inventory that is held as a buffer against uncertainty. If demand forecasting could be done with perfect accuracy, then the only inventory that would be needed would be cycle inventory. But since every forecast has some degree of uncertainty in it, we cover that uncertainty to a greater or lesser degree by holding additional inventory in case demand is suddenly greater than anticipated. The tradeoff here is to weigh the costs of carrying extra inventory against the costs of losing sales due to insufficient inventory.
Seasonal Inventory: This is inventory that is built up in anticipation of predictable increases in demand that occur at certain times of the year. For example, it is predictable that demand for antifreeze will increase in the winter.