Chu Quốc Công_Final Fixed

FOREIGN TRADE UNIVERSITY

FACULTY OF BUSINESS ADMINISTRATION

--------***--------

REPORT OF MID-TERM INTERNSHIP

International Business Admistration

MAINTAINING AN EFFECTIVE SUPPLY CHAIN

MANAGEMENT SYSTEM IN NISSIN BRAKE

VIETNAM.

Full name: Chu Quoc Cong

Student ID: 1112250015

Class: A13 CLC QTKD K50

Guidance teacher: Mr. Nguyen Quang Huy, MBA

Hanoi, July 2013

Table of Contents

Preface..............................................................................................................................5

Chapter 1: Introduction of an effective supply chain management system.....................6

1.1. Definitions of suppy chain.....................................................................................6

1.2. What is an effective supply chain management system........................................7

1.3. Importance of supply chain management..............................................................8

Chapter 2: The situation of supply chain management system in Nissin Brake Vietnam.........................................................................................................................................10

2.1. Introduction of Nissin Brake Vietnam co.,Ltd....................................................10

2.1.1. Operational process.......................................................................................10

2.1.2. History...........................................................................................................10

2.1.3. Company’s basic hierarchy...........................................................................11

2.2. Supply chain management system of Nissin Brake Vietnam..............................12

2.3. Analysis of supply chain management system of Nissin Brake Vietnam...........13

2.3.1. List of suppliers and result of survey about risk management of suppliers of Nissin brake Vietnam co.,Ltd..................................................................................13

2.3.2. Process of choosing suppliers.......................................................................16

2.3.3. Nissin Brake Vienam just in time inventory system.....................................19

2.3.4. Material requirement planning process.........................................................20

2.3.5. Managing supply chain using Gantt chart.....................................................23

2.3.6. Inventory management..................................................................................26

2.4. Achievements......................................................................................................28

2.5. Assessments of the suppy chain management system of Nissin Brake Vietnam.....................................................................................................................................29

2.6. Limitation and reason..........................................................................................30

2

2.6.1. Limitation.........................................................................................................30

2.6.2. Reasons.............................................................................................................30

Chapter 3: Recommendations to maintain an effective supply chain management system.............................................................................................................................32

3.1. Development trends of Nissin Brake Vietnam:...................................................32

3.2. Recommendations................................................................................................34

3.2.1. Improving the productivity of supply chain system:....................................34

3.2.2. Selecting and negotiating suitable import/export contract conditions for international transactions with suppliers.................................................................35

3.2.3. Developing supply chain management using ERP and CRM.......................35

3.2.4. Reducing cost by using Material requirement planning (MRP):..................36

3.2.5. Developing supply chain improvement plan.................................................37

Midterm internship timeline...........................................................................................39

Lessons acquired from the midterm internship and conclusion.....................................40

Reference.......................................................................................................................41

Assessments and recommendations from Nissin Brake co.,Ltd....................................42

3

List of Tables and Diagrams

Table

Table Content Page

2.1 List of suppliers and survey

result

13

2.2 Form of Material

requirement planning

20

2.3 Form of delivery schedule 25

Diagram

Diagram Content Page

2.1 Nissin basic hierarchy 11

2.2 Delivery plan 19

4

Preface

In recent years, since Vietnam became a member of the World Trade Organization

(WTO), many international firms have invested in Vietnam especially in potential

provinces like Vinh Phuc. Nissin Brake Vietnam is one of companies which

established within a 100% capital from Japan, this firm belongs to Nissin Kygyo Japan

Incorporation and locates in Quat Luu, Binh Xuyen, Vinh Phuc.

After a period of time to consider, I decided to choose this firm for my internship

because the availability, the validity and the reliability of the information about supply

chain management system of Nissin are satisfactory. Furthermore, managing supply

chain is one of the most important process in a manufacturing firm and Nissin, a

Japanese company, requires a trustworthy and accurate system in managing suppliers.

Therefore, it is necessary to look through the supply chain and make a change in Nissin

as acquiring new system may improve the effectiveness and efficiency.

With the above fact and the experience from one month of internship in Nissin Brake

Vietnam – an international environment with the attendance of both foreigner and

Vietnamese staffs, I want to present the topic “Maintainining an effective supply

chain management system in Nissin Brake Vietnam co.,Ltd”.

The large scope and complexity of the research, in addition with limitation of my

knowledge, leave the topic inevitable shortcomings and mistakes. I hope to receive

your comments and recommendations to make the topic better.

Thank you for your kind guidance!

5

Chapter 1: Introduction of an effective supply chain

management system.

1.1. Definitions of suppy chain.

A supply chain 1 is a system of organizations, people, activities, information, and

resources involved in moving a product or service from supplier to customer. Supply

chain activities transform natural resources, raw materials, and components into a

finished product that is delivered to the end customer. In sophisticated supply chain

systems, used products may re-enter the supply chain at any point where residual value

is recyclable. Supply chains link value chains.

Supply chain management 2 is the management of the flow of goods. It includes the

movement and storage of raw materials, work-in-process inventory, and finished goods

from point of origin to point of consumption. Interconnected or interlinked networks,

channels and node businesses are involved in the provision of products and services

required by end customers in a supply chain. Supply chain management has been

defined as the "design, planning, execution, control, and monitoring of supply chain

activities with the objective of creating net value, building a competitive infrastructure,

leveraging worldwide logistics, synchronizing supply with demand and measuring

performance globally."

1 Source: http://en.wikipedia.org/wiki/Supply_chain

2 Source: http://en.wikipedia.org/wiki/Supply_chain_management

6

http://en.wikipedia.org/wiki/Supply_chain_management

http://en.wikipedia.org/wiki/Supply_chain

1.2. What is an effective supply chain management system.

Successful supply chain management 3 requires a change from managing individual

functions to integrating activities into key supply chain processes. In an example

scenario, a purchasing department places orders as its requirements become known.

The marketing department, responding to customer demand, communicates with

several distributors and retailers as it attempts to determine ways to satisfy this

demand. Information shared between supply chain partners can only be fully leveraged

through process integration.

Supply chain business process integration involves collaborative work between buyers

and suppliers, joint product development, common systems, and shared information.

Supply chain managers have a tremendous impact on the success of an organization.

These managers are engaged in every facet of the business process – planning,

purchasing, production, transportation, storage & distribution, customer service, and

more! In short, these managers are the “glue” that connects the different parts of the

organization. Their performance helps organizations control expenses, boost sales, and

maximize profits.

Two additional roles focus on facilitation and collaboration. Because supply chain

managers touch so many different parts of the business, they are in a unique position to

help other functions execute their strategies. They are also called upon to diagnose and

support the needs of external supply chain partners.

1.3. Importance of supply chain management.

3 Source: http://en.wikipedia.org/wiki/Supply_chain_management

7

http://en.wikipedia.org/wiki/Supply_chain_management

Supply Chain Management (SCM) is an essential element to operational efficiency.

SCM can be applied to customer satisfaction and company success, as well as within

societal settings, including medical missions; disaster relief operations and other kinds

of emergencies; cultural evolution; and it can help improve quality of life. Because of

the vital role SCM plays within organizations, employers seek employees with an

abundance of SCM skills and knowledge. Supply chain management is critical to

business operations and success for the following reasons:Basically, the world is one

big supply chain. Supply chain management touches major issues, including the rapid

growth of multinational corporations and strategic partnerships; global expansion and

sourcing; fluctuating gas prices and environmental concerns, each of these issues

dramatically affects corporate strategy and bottom line. Because of these emerging

trends, supply chain management is the most critical business discipline in the world

today.

Supply chain management is necessary to the foundation and infrastructure within

societies. SCM within a well-functioning society creates jobs, decreases pollution,

decreases energy use and increases the standard of living. Two examples of the effect

of SCM within societies include:

A society with a highly developed supply chain infrastructure that includes interstate

highways, a large railroad network, ports and airports is able to trade many goods at

low cost. Business and consumers are able to obtain these goods quickly, resulting in

economic growth.

Supply chain impacts customer service by making sure the right product assortment

and quantity are delivered in a timely fashion. Additionally, those products must be

available in the location that customers expect. Customers should also receive quality

after-sale customer support.

Supply chain has a tremendous impact on the bottom line. Firms value supply chain

managers because they decrease the use of large fixed assets such as plants,

8

warehouses and transportation vehicles in the supply chain. Also, cash flow is

increased because if delivery of the product can be expedited, profits will also be

received quickly.

Supply chain management helps streamline everything from day-to-day product flows

to unexpected natural disasters. With the tools and techniques that SCM offers, you’ll

have the ability to properly diagnose problems, work around disruptions and determine

how to efficiently move products to those in a crisis situation.

9

Chapter 2: The situation of supply chain management system in Nissin Brake Vietnam.

2.1. Introduction of Nissin Brake Vietnam co.,Ltd

2.1.1. Operational process

Nissin brake Vietnam is one of companies which established within a 100% capital

from Japan, this firm belongs to Nissin Kygyo Japan Incorporation and locates in Quat

Luu, Binh Xuyen, Vinh Phuc. The main products of the firms are parts of motors and

automobiles. The date of establishment is November 19th 1996 and the initial capital is

2 million US dollar. The total area of the company is 144.296 m2 and the area of the

factory is 122.176 m2. Throughout the first 14 years of operation, Nissin without

hesitation expanded exclusively and it already owns 4 factories within over 1800

workers. Nissin is one of the main motor and car brake suppliers for Vietnamese

market as well as international export in which the domestic domain makes up for 70%

and the rest exports to Nissin Kygyo Japan. The main domestic customers of Nissin is

Honda, Yamaha, Suzuki, Vietnam Arai.… and Honda comes first with 50% of goods

in domestic market.

2.1.2. History

Nissin Brake Vietnam is established in November 1996 under the permission of the

Ministry of Planning and Investment No.1710/GP November 19th 1996.

After a period of time to arrange, the company started to operate in July 1997

From 2006, Nissin started to expand the business by building 3 additional factories and

over a thousand employees.

10

After 11 years of operation, Nissin made great contributions to Vietnamese economy

and becomes one of the best source of tax for Vinh Phuc province. Thanks to that

effort, Nissin proved themselves as the top factory in Vinh Phuc in creating jobs for

employees.

2.1.3. Company’s basic hierarchy

Diagram 2.1: Nissin basic herarchy

11

Nissin Kogyo JPN

Nissin Asia center

Director President

Director factory manager

Chief engineer

Production manager

Production manager

Control manager

Chief engineer

Quality control manager

TEAM-S Project TEAM-E Project

Director

Accounting manager

Dependable Nissin manager

NRA-V General manager

Sales manager

Purchase manager

NRA_V Engineer NRA_V manager

2.2. Supply chain management system of Nissin Brake Vietnam.

Supply chain management is a one of the most important department in Nissin Brake

Vietnam. Appearing in 1996, during its operation process, this department has

contributed a lot to the development of Nissin. Nowadays, this department includes of

8 people with the main reponsibility to deal with Nissin’s suppliers both in domestic

and international regions.

There are several functions that members in this department have to focus on:

- Customer relationship management

- Customer service management

- Demand management style

- Order fulfillment

- Manufacturing flow management

- Supplier relationship management

- Product development and commercialization

- Returns management

Within only 8 members with only one leader as Purchasing manager-Trieu Hong Lien,

The department has tried its best to fulfill all the tasks it is responsible for. In the near

future, within new source of labor from recruitments, we hope that it can be maintained

as one of the most effective part of Nissin.

12

2.3. Analysis of supply chain management system of Nissin Brake Vietnam.

2.3.1. List of suppliers and result of survey about risk management of suppliers of

Nissin brake Vietnam co.,Ltd

Table 2.1 : List of suppliers and survey result

Big Risk ＝○,Risk＝△,Small Risk＝X

Supplier Risk

Earthquak

e

Water Typhoo

n

Fir

e

Strik

e

Electri

c

Viorenc

e

Countermeasur

e

1 TOYOTAKI

INDUSTRY VIET

NAM CO.,LTD

X X X △ ○ ○ X Replacement

supply or

production

2 BORAMTEK

VIET NAM CO.,

LTD


supply or

production

3 CHE YE

HARDWARE CO.,

LTD.-2


supply or

production

4 CHIAN SHYANG

INDUSTRIAL

CO., LTD


supply or

production

5 THĂNG LONG

CO., LTD


supply or

production

6 COSMOS

CO.,LTD


supply or

production

7 TAJAN CO.,LTD X X X △ ○ ○ X Replacement

supply or

production

8 17 X X X △ ○ ○ X Replacement

13

ENGINEERING

CO.,LTD

supply or

production

9 TENMA (HCM)

VIETNAM

CO.,LTD


supply or

production

1

0

DONG ANH C&F

JOINT STOCK

COMPANY


supply or

production

1

1

EMTC JOINT

STOCK

COMPANY

X X ○ △ ○ ○ X Replacement

supply or

production

1

2

GEO-GEAR VINH

PHUC CO., LTD


supply or

production

1

3

GIAI PHONG

RUBBER CO.,

LTD


supply or

production

1

4

GMT CO., LTD X X X △ ○ ○ X Replacement

supply or

production

1

5

GSK VIET NAM

CO., LTD HA NOI

II BRANCH


supply or

production

1

6

HONDA

TRADING VIET

NAM CO., LTD


supply or

production

1

7

KYOSHIN

VIETNAM

CO.,LTD


supply or

production

1

8

LAM VIEN

WINFULL CO,.

LTD


supply or

production

1

9

NICHIAS

VIETNAM

CO,.LTD


supply or

production

2

0

NICHIRIN VIET

NAM CO., LTD


supply or

14

production

2

1

NIPPO

MECHATRONICS

(VIETNAM) CO.,

LTD


supply or

production

2

2

OKURA VIET

NAM CO.., LTD


supply or

production

2

3

PARKER

PROCESSING

VIETNAM


supply or

production

2

4

SAKURA HONG

MINH VIETNAM

CO.,LTD


supply or

production

2

5

TAN HOA CO.,

LTD


supply or

production

2

6

TSUANG HINE

INDUSTRIAL VN

CO.,LTD


supply or

production

2

7

TUNGALOY

FRICTION

MATERIAL VIET

NAM CO.,LTD


supply or

production

2

8

VIETNAM ARAI

CO., LTD


supply or

production

2

9

VIET NAM

PRECISION

INDUSTRIAL

NO.1 CO.,LTD

(VPIC1)


supply or

production

3

0

VIET NAM

PRECISION

INDUSTRIAL

JOINT

STOCKCOMPAN


supply or

production

15

Y ( VPIC)

3

1

VPMS CO., LTD X X X △ ○ ○ X Replacement

supply or

production

3

2

VIETNAM

LEAKLESS CO.,

LTD


supply or

production

3

3

YANGMIN

ENTERPRISE

VIETNAM


supply or

production

3

4

YUOYI

VIETNAM

ENTERPRISE

CO.,LTD


supply or

production

3

5

OCHIAI VIET

NAM CO.,LTD


supply or

production

3

6

PERUBCO

COMPANY


supply or

production

3

7

RKH KYOSHIN

HA NOI


supply or

production

2.3.2. Process of choosing suppliers

2.3.2.1. Purpose

This process is to clearify standards and steps to point out the best suppliers from a

bundle of companies in the market.

2.3.2.2. Suppliers assessment

Step 1: Search for information and find out more about background, abilities,

capabilities,…of the suppliers.

16

Step 2: Contact and price quote with suitable suppliers.

Step 3: Assess at the suppliers’ factories.

2.3.2.3. Standards to exclude an unsuitable supplier

- Suppliers without demanded capabilities, characteristics, backgrounds,….provided by

supply chain operators.

- Suppliers without quality assurance process.

- Suppliers with history of strikes, labor safety violence,…

- Suppliers without demanded infrastructures, tools, devices,…

- Suppliers which is not qualified to ISO 9000, TS 1649.

2.3.2.4. Procedures before production and official transactions

- Formal contracts ( 2 sets in English and 2 sets in Vietnamese)

- Quality assurance instructions.

- Formal seal, transferring requirements.

- IMDS registration.

2.3.2.5. QAV (Quality assurance valuation).

- Quality.

+ Assess by testing the first products.

+Errors and Curings

+Upgrading process and requirements

17

- Delivery date

+ Compliance with expected date and quantity of products

+ Packing and requirements

+ Justifying process

- Environments

+ Packing quality

+ Production capabilities (meet the demands of 150% quantity of current order

forecast)

18

2.3.3. Nissin Brake Vienam just in time inventory system

Just in time inventory system is an inventory strategy companies employ to increase

efficiency and decrease waste by receiving goods only as they are needed in the

production process, thereby reducing inventory costs.

A good example would be a car manufacturer that operates with very low inventory

levels, relying on their supply chain to deliver the parts they need to build cars. The

parts needed to manufacture the cars do not arrive before nor after they are needed,

rather they arrive just as they are needed.

This inventory supply system represents a shift away from the older "just in case"

strategy where producers carried large inventories in case higher demand had to be

met.

Diagram 2.2: Delivery plan

19

20

Planning(18th of each

month)

Forecasting sale(19th of each

month)

Forecasting supplies

(20th of each month)

Sending Purchase order

(22nd of each month)

Sending Delivery order

(24th of each month)

2.3.4. Material requirement planning process

This is a form of material planning that Nissin used to caculate quantity of supply that

they think they need in their inventory.

Table 2.2: Form of Material requirement planning

2.552 7th-14th 5.30

0

5.25

0

5.300 5.25

0

Part Name Part No Customme

r

Description 30 1 2 3

Production Plan

(OK)

250 200 150 300

PANEL

ASSY RR

43000-

KTL-

6401

HONDA Actual OK 223 225 210 222

(SILVER) NG 4 5 4

Balance Every

day

-27 25 60 -78

TTL -27 -2 58 -20

Delivery Plan 200 200 200 300

Stock

take

Actual. 223 225 210 222

Inventor

y LR

0 0 0 0 0

Inventory 10 33 54 59 -23

Production Plan

(OK)

0 500 500 0

PANEL 43000- HONDA Actual OK 52 0 508 505

21

ASSY RR KWB-

9200 B

(SILVER) NG 0 17 19 6

(NEW

WARE)

Balance Every

day

52 -500 8 505

TTL 52 -448 -440 65


Stock take Actual

.

52 0 508 505

Inventory

LR

0 0 0 0 0

Inventory 463 515 -2 -13 486

PANEL

ASSY RR

Production Plan

(OK)

500 0 0 500

(GREY) 43000-

KWB-

9200 X

HONDA Actual OK 0 503 0 598

(NEW

WARE)

43000-

KWB-

9200 X

HONDA NG 0 0 0 0

(NEW

WARE)

43000-

KWB-

9200 X

HONDA Balance Every

day

-500 503 0 98

(NEW

WARE)

43000-

KWB-

9200 X

HONDA TTL -500 3 3 101


Stock take Actual 0 503 0 598

22

.

Inventory

LR

12 0 0 0 0

Inventory 22 -478 25 25 123

PANEL

ASSY RR

Production Plan

(OK)

0 300 900 100

XAM HONDA Actual OK 0 0 1.267 440

(NEW

WARE)

43000 -

KWW

- A800

( NH-

303)

HONDA NG 20 4

Material requirements planning is a computer-based information system designed to

handle ordering and scheduling of dependent-demand inventories, e.g.: raw materials,

component parts, and subassemblies…

*Material requirement planning input includes 3 major sources:

- Master production schedule

+ Are made by demand from the known customers and forecast demand

- Bill of materials

+ Called as Production Structure Tree

+ Contains a list of all assemblies, subassemblies, parts and raw materials that are

needed to produce one unit of finished product

- Inventory records

23

+ Information on the status of each item by time periodGross requirements, scheduled

receipts, expected amount on hand.

+ Details for each item: supplier, lead time, lot size.

+ Changes due to stock receipts and withdrawals, canceled orders…

* Material requirement planning Process

Step 1: Specify end item requirement

Step 2: Time-phased requirement

Step 3: Determine net requirements in period t:

Net requirements in period t = Gross requirements in period t - Projected inventory in

period t + Safety stock

2.3.5. Managing supply chain using Gantt chart

A Gantt chart is a type of bar chart, developed by Henry Gantt in the 1910s, that

illustrates a project schedule. Gantt charts illustrate the start and finish dates of the

terminal elements and summary elements of a project. Terminal elements and summary

elements comprise the work breakdown structure of the project. Modern Gantt charts

also show the dependency (i.e. precedence network) relationships between activities.

Gantt charts can be used to show current schedule status using percent complete

shadings.

Think about how challenging it would be to juggle a dozen balls at once.

You'd have to keep your eye on all of them, and know when to catch each one. If you

missed just one, this could spoil your whole performance.

24

Project management is similar to this. To complete a project successfully, you must

control a large number of activities, and ensure that they're completed on schedule.

If you miss a deadline or finish a task out of sequence, there could be knock-on effects

on the rest of the project. It could deliver late as a result, and cost a lot more. That's

why it's helpful to be able to see everything that needs to be done, and know, at a

glance, when each activity needs to be completed.

* Gantt chart:

- Popular tool for simple projects

- Process to draw a Gantt chart

+ Identify the major activities required.

+ Estimate time for each activity.

+ Determine the sequence of activity.

- Within a Gantt chart, project managers are able to know:

+ Activities and planned duration

+ Activities were on time and ones delayed

+ Direct attention for the one needed most

* Critical path method

- Developed by Remington Rand Corporation and Dupont in 1950s and is used for

planning and coordinating large projects.

- Steps to take:

+ Draw a network diagram.

+ Determine a critical path.

25

+Calculate EF (earliest finish), LF (latest finish)

+ Calculate slack

+ Calculate ES (earliest start), LS (latest start)

A form of delivery schedule that Nissin used to manage supply chain ( Green column

resembles the final date that suppliers have to deliver the demanded quantity)

Table 2.3: Form of delivery schedule

CUSTOMER PARTS NAME PARTS NUMBER 1st 2nd 3rd 4th 5th

HVN

CAM REAR

BRAKE 008 - D38 - 137-1 2.000 2.000 2.000 2.000 2.000

HVN

BOLT FLANGE 6

* 28 069 - Z12 - 119-1 2.500 2.500 2.500 2.500 2.500

HVN

BOLT FLANGE 6

* 35 069 - Z91 - 032-1 4.000 4.000 4.000 4.000 4.000

HVN

BOLT FLANGE 6

* 22 069 - z89 - 011 900 900 900 900

HVN

BOLT HAND

LEVER 003 - M87 - 11O-2 2.400 2.400 2.400 2.400 2.400

HVN PIN BOLT A 002 - C92 - 004C-3 1.800 1.800 1.800 1.800 1.800

HVN PIN HANGER 002 - C50 - 115-4 5.000 5.000 5.000 5.000 5.000

HVN PIN BOLT 082 - c48 - 041b-2 5.000 5.000 5.000 5.000 5.000

HVN

BOLT HAND

LEVER 063 - M87 - 104 1.200 1.200 1.400 1.400 1.400

HVN PIN, SLIDE 003 - M92 - 164 1.000 1.000 1.000 1.000 1.000

HVN WASHER PLAIN 049 - Z25 - 100-1 10.000

HVN

BOLT, SPECIAL

6x22 069 - z91 - 114-1 1.200 1.200 1.200 1.200 1.200

YA PIN BOLT 082 - C48 - 023A-3 1.400 1.400 1.400 1.400 1.400

YA PIN HANGER 002-C50- 025B-5 1.000 1.000 1.000 1.000 1.000

26

YA PIN BOLT A 012 - C46 - 005A-3 1.400 1.400 1.400 1.400 1.400

YA TORQUE NUT 032 - C96 - 033-4 1.200 1.200 1.200 1.200 1.200

YA BOLT LEVER 083 - M87 - 023-3 800 800 800

2.3.6. Inventory management

- Fixed-time Period Model (P-model) is a model to manage the inventory in which:

+ Periodic system, in which inventory is counted only at particular times (every week,

every month…)

+ Order quantity varies each time order is placed

+ Order when the review period arrives

+ Recordkeeping is counted at review period

+ Size of inventory is larger than fixed-order quantity model(Q model)

- Fixed- order Quantity Model (Q-model) is a model to manage the inventory in

which:

+ Perpetual system, which requires that every time a withdrawal from inventory or an

addition to inventory is made, records must be updated to reflect whether the reorder

point (Q0) has been reached.

+ Order quantity is constant at each time order.

+ Order when inventory position drops to reorder level.

+ Recordkeeping when a withdrawal or addition is made.

+ Size of inventory is less than P-model.

- Basic Economic Order Quantity (EOQ) Model

27

D: Demand given in time t (per year)

Q: Order quantity

H: Holding cost per unit

S: Ordering cost per order

TSC (total annual stocking costs): include holding costs and ordering costs

Annual ordering costs = D/Q*S

Number of orders (D/Q)*Ordering cost per order (S)

Annual holding costs = Q/2*H

An average amount of inventory (Q/2) * Holding cost per unit (H)

n: number of orders in given time t

n = D/Q

Optimal number of orders:

n* = D/EOQ = √DH/2S

Optimal inventory costs:

TSC* = (Q*)/2 H+D/(Q*)S= (Q*)/2×H+n*×S

- Quantity Discount Model

P: purchase price per unit

TMC (total annual material cost):

TMC =TSC +D.P

TMC = (Q/2)H + (D/Q)S + D.P

28

2.4. Achievements

During those years of operation, despite of the financial crisis spreading

worldwidely, Nissin stands stills and achieves different goals which are beyond

expectation. In 2009, the revenue of the company reached 1,278 billion VND, increase

14% compare to 2008. From 2009 to 2010, the revenue of Nissin raised 35%. Every

year, company provides approximate 5 million products and supplies for 1.7 million

Honda motors and 0.73 million Yamaha motors. It is not boastful to say that this

company has dominated Vietnamese market.

According to Mr. Kiyoshi Sakashita, General Director of the company, thanks

to nonstop efforts from the Board of Director as well as all workers that the company

has many outstanding achievements. Moreover, Vinh Phuc is an ideal business market

with many policies and projects which encourage international investment.

Last but not least, motor is the main vehicle in Vietnam and due to the better

and better living standard here, people are willing to spend money on buying motors.

Accompanying with operating and business activities, Nissin also takes great care of

employee’s life because they believe that human resource is the most valuable asset

and the main factor leading to success. He also secured that the company tried their

best to offer all medical insurance, social insurance, bonus, pay raise, subsidy,…at

once for working in toxic environment. More than that, Nissin also pay strict attentions

to labor security with guards on duty all day and programs educated employees about

security matter.

2.5. Assessments of the suppy chain management system of Nissin Brake Vietnam.

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- Nissin is a good example of a Japanese company which can maintain a good supply

chain management system due to several reasons:

+ A professional systems which originated from Nissin Kogyo Japan.

+ Choosing suppliers carefully within a special process including many standards

complying with ISO and TS

+ Using just in time delivery system to reduce holding cost and storing cost

+ Getting the right part to the right place at the right time – as quickly as possible

+ Each time a trigger occurs or data is collected, Nissin supply chain includes a

mechanism for answering the following question: Is this a “normal” event, an

“extraordinary” one, or something in between?

+ A network to contact with suppliers through e-mails from the suppliers or as robust

as a shared portal.

+ Supply chain management system of Nissin is a good combination of :

The fastest way to move the parts,

The lowest cost way to move the parts

The lowest cost way to store the parts.

+ Nissin with the most efficient way is to group by any of the following:

Similar items,

Items going to similar locations, and/or

Items with similar manufacturing and handling requirements.

+ Good at evaluating the risks of the possible downside as well as caculating cost and

forecasting demands

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2.6. Limitation and reason

2.6.1. Limitation.

- Despite of the fact that supply chain is well-managed in Nissin, it is not totally a

perfect system in which there are things can be improved.

+ Businesses in Nissin are being squeezed by the pressures of the economic downturn

and the need to produce and sell their products for less, while the external costs of

manufacturing and transporting goods are rising.

+ Company have outsourced stages of their supply chain to cut costs which has, in turn,

made them longer.

2.6.2. Reasons

Inertia: Most managers, including executives, simply are more comfortable “staying at

rest” than they are driving constant change. It may even be partly hard wired into our

brains to usually act that way. If we have been doing something the same way for a

long time, the natural tendency is often to stay that way.

Things Change: Related to inertia, processes that were once good go bad because

things change and processes don’t. In this crazy and volatile world we live in now, this

is more likely to be true than ever. The obvious implication is that you have to relook

at processes more frequently than ever.

Managers/Executives Just Don’t Know: One thing I have learned is if the details of a

process are invisible to you as a manager or executive, you are obviously unlikely to

push for that process to change

Job Preservation: Again related to the above, the people that are involved in Nissin

poor processes may be highly unmotivated to call this out to superiors because they

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(too often correctly) fear that process improvement could, in fact, land them out of a

job. While the company may have a large incentive to stop doing something that

shouldn’t be done, the individuals doing it often have a large incentive to ensure that

step in the process continues on forever.

Processes Must Evolve: In general, things progress in evolutionary ways. So, you are

unlikely to get to process nirvana on the first attempt. It takes evolution and continuous

improvement – and companies often don’t have the wherewithal or culture to continue

that evolution over time.

Leaning of Staffs: I continue to be astounded at how lean Nissin supply chain

organizations are running today. What that means, in practice, is that everyone is so

busy and so stretched that just getting one’s day-to-day job done – staying one step

ahead of the devil – is difficult enough. Who has time for process improvement in that

environment? To give just one of many anecdotes, I spoke with one global logistics

manager at a medical devices company last year who said that he and his small team

were so stretched that they simply had no time to make the changes that he knew they

needed to take out costs and move to higher levels of performance.

Cross Functional Challenges: Today, a high percentage of opportunities for process

improvement involve cross functional processes. That, of course, means a whole set of

issues, and a significant amount of effort and often pain to bring the functions together

to identify the opportunities and roll out the new process. It's simply much easier to

stay out of that morass.

Lack of Technology Enablement: Clearly, many opportunities for process

improvement depend on some sort of technology enablement to make it happen. If the

resources or appetite for such an investment.

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Chapter 3: Recommendations to maintain an effective supply chain management system

3.1. Development trends of Nissin Brake Vietnam:

- General targets:

+ Contribute to the national GDP.

+ Keeping up with the average Human Development Index (HDI) by educating

workers carefully and developing their abilities

- Economic targets:

Maintaining such good ratios:

+ Incremental Capital Output Ratio (ICOR).

+ Labor productivity

+ Contribution ratio of Total Factor Productivity.

+ Energy consumption reduction ratio per unit of GDP.

+ Ratio of recycled energy in the energy consumption structure.

+ Current account.

Reducing such ratios:

+ Budget overspending.

+ Government’s debt.

+ Foreign debt.

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- Social targets

+ Reducing Unemployment rate.

+ Increasing Rate of trained labor of the economy.

+ Increasing Ratio of people participating in social insurance, healthy insurance, and

unemployment insurance.

+ Reducing Number of deaths due to traffic accidents and labor accidents

- Targets of natural resources and environment.

Maintaining these natural resources:

+ Forest coverage.

+ Rate of protected land, maintenance of biodiversity.

+ Area of degraded land.

+ Reduction rate of underground and surface water.

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3.2. Recommendations

3.2.1. Improving the productivity of supply chain system:

- Training can improve the knowledge and skills of staff. Improved recruitment and

selection may have the same effect

- Investment in equipment and new technology may enable output per worker to

increase

- Better employee motivation can be the most powerful factor of all. Gaining

engagement and loyalty of staff can bring major gains in output and quality.

- Using quality circles in which there is a volunteer group composed of workers (or

even students), who do the same or similar work, usually under the leadership of their

own supervisor (or an elected team leader), who meet regularly in paid time who are

trained to identify, analyze and solve work-related problems and present their solutions

to management and where possible implement the solutions themselves in order to

improve the performance of the organization, and motivate and enrich the work of

employees. When matured, true quality circles become self-managing, having gained

the confidence of management. Quality circles have the advantage of continuity; the

circle remains intact from project to project

- There are a range of other techniques that can be employed to improve productivity

through quality by getting employees to work smarter rather than necessarily harder it

is possible to raise output.

- An obvious way of increasing productivity is to reduce waste.

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3.2.2. Selecting and negotiating suitable import/export contract conditions for

international transactions with suppliers.

Among many preventive methods used in international commercial, being cautious in

contract negotiating, contract signing and conditions selecting in order to ensure the

fluent of delivery is absolutely important. On the other hand, the exporters should get

their payment after delivery on agreement.

Strict regulations and conditions in contract will ensure both parties’ good

performances in every step of doing business while reducing flaws, avoiding risks and

saving time. However, being strict does not mean being too complicated, but to choose

suitable solutions to create safety condition for the contract executing.

Wrong choice in international commercial conditioning will affect directly to

companies’ foreign trading activities, and the first and foremost being suffered will be

payment activities, because they have influence on all the processes of the business

and contract regulations. Therefore, Europlast has to be wise, careful in negotiating

contract, to make sure the business will be transparent and quick in executing, while

there are still high chance of safety, and good conditions for payment.

3.2.3. Developing supply chain management using ERP and CRM

Many supply chain management applications are reliant upon the kind of information

that is stored inside enterprise resource planning (ERP) software and, in some cases, to

some customer relationship management (CRM) packages. Theoretically a company

could assemble the information it needs to feed the SCM applications from legacy

systems (for most companies this means Excel spreadsheets spread out all over the

place), but it can be nightmarish to try to get that information flowing on a fast, reliable

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basis from all the areas of the company. ERP is the battering ram that integrates all that

information in a single application, and SCM applications benefit from having a single

major source to go to for up-to-date information. Most CIOs who have tried to install

SCM applications say they are glad they did ERP first. They call the ERP projects

"putting your information house in order." Of course, ERP is expensive and difficult,

so you may want to explore ways to feed your SCM applications the information they

need without doing ERP first. These days, most ERP vendors have SCM modules, so

doing an ERP project may be a way to kill two birds with one stone. In addition, the

rise and importance of CRM systems inside companies today puts even more pressure

on a company to integrate all of its enterprisewide software packages. Companies will

need to decide if these products meet their needs or if they need a more specialized

system.

Applications that simply automate the logistics aspects of SCM are less dependent

upon gathering information from around the company, so they tend to be independent

of the ERP decision. But chances are, companies will need to have these applications

communicate with ERP in some fashion. It's important to pay attention to the

software's ability to integrate with the Internet and with ERP applications because the

Internet will drive demand for integrated information. For example, if a company

wants to build a private website for communicating with their customers and suppliers,

the company will want to pull information from ERP and supply chain applications

together to present updated information about orders, payments, manufacturing status

and delivery.

3.2.4. Reducing cost by using Material requirement planning (MRP):

Just in time manufacturing isn't the only way companies have used their supply chains

to reduce cost. Material related costs are reduced by reducing the number of suppliers a

company deals with and developing long-term contracts through creative supplier

networking, eliminating the need to count individual parts, reducing order scheduling,

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eliminating expediting, simplifying receiving systems, eliminating receiving

inspection, eliminating most unpacking, eliminating the stocking of inventory, and

eliminating excess material spoilage.

Manufacturing related costs are reduced by design for manufacture and design for

assembly techniques where unnecessary parts or processes are eliminated. They are

also reduced through the elimination of excess material handling, inspections, and

storage of parts. The primary goal is to eliminate non-value adding tasks. Quick

change over techniques replace long set-up times. Cells will replace traditional

assembly lines.

Visual controls are often used to schedule the production of parts in place of systems

such as MRP. Statistical process control is used to assure that the outcome of

production is consistently met with desired results.

3.2.5. Developing supply chain improvement plan

Follow these steps and you will find it useful for your supply chain:

- Educate. All departments within your link and all links in your supply chain must

have a common understanding of the supply chain.

- Benchmark. Understand how your performance compares to your competitors, to

other industries, and to best in class.

- Assessment. Understand the status of all departments within your link and all links in

your supply chain. Compare them to the Six Levels of Supply Chain Excellence:

Level I, Business as Usual

Level II, Link Excellence

Level III, Visibility

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Level IV, Collaboration

Level V, Synthesis

Level VI, Velocity

- Prioritize. Use the information from your benchmark and assessment efforts to

identify specific targets for supply chain enhancements.

- Weakest Link. Be aware that the weakest department within your link and the

weakest link in your supply chain will drive performance.

- Communicate. Even over-communicate with all involved in your supply chain so that

everyone understands what, why, when, who and when. Let there be no surprises.

- Partnerships. Only join with supply chain partners who are ready to partner.

Partnering with a link that has not achieved Level II Link Excellence will not net

positive results.

- Leadership. On each supply chain initiative, identify the proper skill sets required to

lead the effort. Assure clarity of roles and responsibilities and cultural compatibility.

- Core Competencies. Identify these, focus on them and outsource the rest. Determine

the unique business processes that make you successful, then use a robust process to

outsource other functions.

- Continuous Improvement. An ongoing process is required for you to pursue Supply

Chain Excellence. Never stop pushing for the next level of excellence.

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Midterm internship timeline

40

Week Tasks Note

1

Introduced myself and send Letter of Introduction

to Nissin Brake Vietnam co.,Ltd, received

uniforms and learned rules and regulations of

Nissin

Started late due

to interview and

introduction

process.

2Learned about history, achievements, functions

and departments in Nissin.

3

Acquired informations about Purchasing

department in Nissin, learned about tasks that I

would be offered

4

Assisted Mr Long and Nhan to send, receive and

fix contracts, purchase order, price quotations,..

from various suppliers

5Went on a trip to different parts of factories to

discover the supply chain process.

End early to

complete report.

Lessons acquired from the midterm internship and

conclusion.

During the internship, I have opportunities to research Nissin internship program,

which I find really helpful and beneficial for my future career. Moreover, it is a

precious chance for me to work in various departments, namely admission (marketing)

department, human resource department, administration department, and accounting

departments. These are some tasks that I did during the internship such as making a

marketing plan, defining target parents; making a list of foreign company in Vinh Phuc

province ; finding contact information of those companies.

Although the access to work is still limited, I now have a picture in mind of how the

business is really conducted, how Nissin internship program runs and its advantages.

Besides, I also learn of what people do in departments and the work flow among the

departments. This helps me understand that the organization works like a machine,

everybody and every department must stay connected to run an organization

successfully.

During the five-week internship at Nissin, I have learned both the advantages and

disadvantages that the company has to face in doing business internationally and

detailed steps in the complicated process of managing suppliers. I have been taught

how to write and send professional enquiries, orders, offers and contracts in practice,

by my considerous instructor, Mrs. Trieu Hong Lien – Nissin Purchasing manager .

These valueable experience will certainly help me a lot in my future career in the field

of managing supply chain.

On writing this report, I have received careful instruction from Mr. Nguyen Quang

Huy. He helped me to choose a suitable topic for the report, make a clear outline and

write the thesis with reasonable content. Thanks for reading my report!

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Reference

- Book:

Charles.W.L.Hill and Gareth R.Jones, 2010, Strategic management theory

Jack R. Meredith and Samuel J.Mantel, 2009, Project management-A managerial

approach

S.Anil Kumar and N.Suresh, 2009, Operation management

- Website:


http://www.nissinkogyo.co.jp/en/

http://multichannelmerchant.com/marketing/channel-integration/the-top-10-supply-

chain-improvement-strategies-02032005/

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http://multichannelmerchant.com/marketing/channel-integration/the-top-10-supply-chain-improvement-strategies-02032005/

http://multichannelmerchant.com/marketing/channel-integration/the-top-10-supply-chain-improvement-strategies-02032005/

http://www.nissinkogyo.co.jp/en/


Assessments and recommendations from Nissin

Brake co.,Ltd

Signature

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