MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY AND EDUCATION GRADUATION THESIS INTERNATIONAL BUSINESS ANALYZING THE CAUSES OF DELAYS IN PROCUREMENT LEAD TIME USING VALUE STREAM MAPPING: A CASE STUDY OF BOSCH VIETNAM CO., LTD INSTRUCTOR:MBA. NGUYEN DANH HA THAI STUDENT: NGUYEN THI NHU THUY SKL012739 Ho Chi Minh City, April 2024 MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY AND EDUCATION FACULTY OF ECONOMIC --------- GRADUATION THESIS MAJOR: INTERNATIONAL BUSINESS TOPIC ANALYZING THE CAUSES OF DELAYS IN PROCUREMENT LEAD TIME USING VALUE STREAM MAPPING: A CASE STUDY OF BOSCH VIETNAM CO., LTD Instructor: MBA. Nguyen Danh Ha Thai Student: Nguyen Thi Nhu Thuy Student ID: 20136153 Ho Chi Minh City, April 2024 COMMENTS OF INSTRUCTOR. month… year Instructor i ACKNOWLEDGMENT The Graduation Thesis on the topic “Analyzing the causes of delays in procurement lead time using value stream mapping: A case study of Bosch Vietnam Co., Ltd was completed at Bosch Vietnam Co.
The author would like to express deeply thankful to Bosch Vietnam Co., specifically the exceptional members of the Supply Chain department and my mentor, Ms. Tran Thi Ngoc Mi (Manager). Their unwavering support, guidance, and the invaluable opportunity to work alongside them during my internship have been instrumental in bringing this thesis to fruition. The author truly grateful for their belief in my abilities and the immense assistance they provided throughout this journey.
Sincerely thanks to the teachers of the Faculty of Economics, Ho Chi Minh City University Of Technology And Education, for directly teaching and imparting specialized knowledge to the author during their studies at the school. Above all, the author would like to express my sincere thanks to Mentor - MBA. Nguyen Danh Ha Thai, who enthusiastically guided the author during the process of completing this graduation thesis. Due to the limited knowledge, the thesis will surely may contain errors.
The author looks forward to reviewing from you. Many thanks! HCM City, Apirl 22, 2024 Student Nguyễn Thị Như Thúy ii LIST OF ABBREVIATIONS Abbreviation Explanation Direct and Control Department - Bosch Rexroth DCVN Vietnam PO Purchase Order OC Order Confirmation PR Purchase Request RFQ Request for Quotation RFP Request for Proposal KPI Key Performance Indicator PPDA Public Procurement and Disposal Act SPL Sanctioned Party List VSM Value Stream Mapping WI Work instruction VA Value added time NVA Non-Value added time NNVA Necessary Non-Value added time FDI Foreign Direct Investment iii LIST OF TABLES Table 1.1: The comparative figures for 2022/2023 .1: Outsourcing Advantages / Disadvantages .1: Identification of value - added time and non-value added time in procurement .2: Pareto chart dataset .3: Proposed solutions for addressing the causes of waste in procurement .1: Summary of Training Program .2: Identification of value-added time and non-value added time in procurement .3: Comparisons of Current State Value Stream Mapping with Future State Value Stream Mapping in terms of Procurement Lead time .78 iv LIST OF FIGURES Figure 1.1: Logo the Company .2: Brands of the Company .3: The target vision “New Dimensions — Sustainability 2025.4: Logo of Bosch Rexroth - A Bosch Company .6: Factory Automation Products .7: Summary of services provided by the company .8: Organization chart of Bosch Rexroth Vietnam .9: Summary regional collaboration in 2022 .10: Summary regional collaboration in 2023 .11: Summary revenue by region in 2022 .12: Summary revenue by region in 2023 .13: Research and development costs .14: Order Intake development .3: The outsourcing process .1: Bosch Rexroth’s Supply Chain Management as per 2023 .2: Illustration of the Supply Chain Management Process .3: Legend of the map. Current State Value Stream Mapping in procurement lead time .5: The percentage comparison of VA and NVA value of procurement lead time.6: Fishbone causes the length of document review. Fishbone causes the length of the negotiation process by the Purchaser.8: Fishbone causes the duration of the offer from the Vendor .1: Flow Process for new suppliers .2: Percentage of VA and NVA values in future state value stream mapping 77 Figure 4.3: Future state value stream mapping of Procurement .77 vi TABLE OF CONTENTS COMMENTS OF INSTRUCTOR .ii LIST OF ABBREVIATIONS .iii LIST OF TABLES.
iv LIST OF FIGURES .v TABLE OF CONTENTS. Reasons for choosing the topic. Research focus and scope. The structure of the topic.
3 CHAPTER 1: THE INTRODUCTION OF BOSCH VIETNAM COMPANY LIMITED. Summarizing about Bosch Vietnam Company Limited. General information about the Bosch Vietnam Co. Founding and developing period.
Bosch Rexroth - A Bosch Company .3 History of the company. Bosch Rexroth Vietnam’s organizational structure. Company organization chart. Functions and obligations of each department .1 Associates by region .2 Revenue by region .3 Research and development costs .4 Business performance of Bosch Rexroth Vietnam and outlook for 2024 24 CHAPTER 2: LITERATURE REVIEW OF PROCUREMENT LEAD TIME AND VALUE STREAM MAPPING .1 Basics of procurement .2 The role of procurement in the supply chain .4 Methods of Procurement .5 Procurement Lead time .6 Factors that influence Procurement Lead-time .7 Lean Manufacturing for Procurement .8 Value Stream Mapping for Procurement .1 Semi-structured Interviews .2 The Result of the Interview.
42 CHAPTER 3: THE CURRENT STATUS OF PROCUREMENT LEAD TIME AND SUPPLY CHAIN MANAGEMENT AT DCVN - BOSCH VIETNAM CO.1 Supply Chain Management at Bosch Rexroth Company .2 Current State of Supply Chain Management at Bosch Rexroth Vietnam .3 Current State of Procurement at Bosch Rexroth Vietnam .4 The process flow of Procurement lead time at the Bosch Rexroth Vietnam .5 Waste identification in the procurement lead time .1 Results of the interview .1 Evaluation process of request documents conducted by Purchaser .2 Negotiation Process By Purchaser .3 Waiting for Offer from Vendor .59 CHAPTER 4: PROPOSED IMPROVEMENT IN PROCUREMENT LEAD TIME AT DCVN - BOSCH VIETNAM CO.1 Training for employees .2 Establishing a Checklist Form .1 Development of the Checklist Form .2 Training and Implementation .3 Developing a Vendor Management System .4 Tracking and Following up .2 Future State Value Stream Mapping .3 Comparison between Current Sate VSM and Future State VSM in the procurement Lead time. Reasons for choosing the topic In today's fast-paced and highly competitive manufacturing landscape, the efficiency of the procurement process plays a vital role in establishing a strong and resilient supply chain. It directly impacts a company's ability to meet customer demands, maintain optimal inventory levels, and effectively manage costs. One crucial aspect of this process is the lead time from Purchase Requisition (PR) to Purchase Order (PO) issuance.
For companies like Bosch Vietnam Co., operating in the dynamic manufacturing sector, the agility of this process is paramount. It determines their ability to adapt swiftly to market dynamics and customer preferences, which in turn influences their operational success and strategic positioning. Insights from the industry reveal significant variations in procurement lead times across different sectors, ranging from a few weeks to several months. This underscores a considerable area for improvement.
In the manufacturing context, where the speed of supply chain operations is a crucial factor in market competitiveness, delays in procurement can result in increased holding costs, diminished customer satisfaction, and compromised operational flexibility. To enhance supply chain efficiency, implementing value stream mapping as part of Lean Manufacturing principles promises to be a strategic approach for streamlining the procurement timeline from PR to PO. Thus, the objective of the thesis is to delve deep into the procurement lead time at Bosch Vietnam, assess the current lead time, and identify any bottlenecks that hinder efficiency. Recognizing the critical role of procurement within the supply chain and its significant impact on a company's operational framework, coupled with the urgent need to enhance supply chain agility in response to evolving market demands and competitive pressures, the motivation for this topic becomes evident.
The author's choice to embark on this research is driven by the understanding of these challenges and the potential for substantial operational improvements. Therefore, the chosen topic for in-depth exploration is: "Analyzing the causes of delays in procurement lead time using value stream mapping: A case study of Bosch Vietnam Co.” This decision reflects a comprehensive approach to addressing a pivotal issue, combining academic 1 inquiry with the aim of achieving tangible improvements in procurement efficiency and overall supply chain performance. Research objective The research objective of the thesis is to identify opportunities for improving the procurement process at DCVN - Bosch Vietnam by applying VSM, a part of Lean Manufacturing principles. The specific objectives are as follows: Assess the current lead times in the procurement: The research aims to analyze the duration from Purchase Requisition (PR) to Purchase Order (PO) issuance and identify the existing lead times within the procurement process at Bosch Rexroth Vietnam.
This assessment will provide a baseline understanding of the current state of the procurement. Identify bottlenecks and areas of improvement: Through the utilization of VSM analysis, the research seeks to identify bottlenecks and areas of waste within the procurement process. By visualizing the current state of the process and mapping out the flow of activities, inefficiencies and opportunities for improvement can be identified. Provide recommendations for implementation: Based on the analysis and evaluation, the research will provide practical recommendations for implementing the identified strategies to optimize the procurement lead time at Bosch Rexroth Vietnam.
These recommendations will consider the specific context and challenges faced by the company, aiming to guide management in implementing effective changes and achieving tangible improvements in procurement efficiency. By achieving these research objectives, the thesis aims to contribute to both theoretical knowledge and practical application in the field of supply chain optimization, specifically in the context of procurement. Research focus and scope Research focus: This research aims to analyze the causes of delays in procurement lead time using value stream mapping at Bosch Vietnam Co. Scope of research includes: - In terms of space: The research is conducted at DCVN - Bosch Vietnam Co.
2 - In term of time: The thesis researches the procurement lead time of DCVN at Bosch Co., Ltd in the period of 2022-2023. Research method The research methodology employed in this study aims to address issues within the procurement process through a series of structured steps. These steps involve problem identification, data collection and processing, VSM analysis, the creation of a fishbone diagram, and pareto diagram. During the data collection stage, multiple sources are utilized to gather information.
These include direct observation, extraction of procurement history data from the SAP system, studying relevant literature, and conducting interviews or discussions with subject matter experts. The collected data primarily consists of qualitative information, specifically the lead time in procurement. The primary data is obtained directly from the SAP system. Data processing employs three main methods: VSM, the fishbone diagram and the pareto diagram.
VSM is employed to identify areas of waste and inefficiency within the procurement process. By mapping out the current state of the process, existing areas of waste can be pinpointed. Additionally, a future state value stream mapping is created to visualize the anticipated condition of the procurement process after implementing improvements. The fishbone diagram is utilized to identify causal factors that contribute to the failure in achieving the target procurement time.
These diagrams are constructed based on the outcomes of discussions and interviews conducted with knowledgeable employees who specialize in the procurement field. The pareto diagram is utilized to prioritize and visualize the most significant causes of delays in the procurement. It helps identify the key factors that have the greatest impact on the overall procurement lead time. The structure of the topic Chapter 1: The Introduction of Bosch Vietnam Company Limited Chapter 2: Literature review of procurement lead time and value stream mapping 3 Chapter 3: The current status of procurement lead time and supply chain management at DCVN - Bosch Vietnam Co., Ltd Chapter 4: Proposed improvement in procurement lead time at DCVN - Bosch Vietnam Co., Ltd 4 CHAPTER 1: THE INTRODUCTION OF BOSCH VIETNAM COMPANY LIMITED 1.
