Tóm tắt Luận án Management of purchasing raw materials for garment companies under vinatex

tal cost of ownership is a financial estimate of all procurement and use relating items. There are three components in the total cost of ownership. They are are procurement, ownership and post-ownership. 1.2. The purchasing of raw materials management of garment companies 1.2.1. Characteristics of garment enterprises and garment materials a. Characteristics of garment enterprises Garment production activities have the following characteristics: Having a cooperative relationship with related parties; Specialization; Data is very important; Need lots of human resources; Focus on customers; Production line. b. Garment materials Garment materials include many different categories, each with different functions and uses. Garment materials include: (1) main materials: main fabric, lining, cotton, feather ...; (2) auxiliary materials: thread, button, buckle, label, label, packaging, chemical ...; (3) fuel: electricity, gasoline, oil ...; (4) Spare parts: sewing machine foots, bobbins, antennas, sewing needles ...; (5) recovered scrap: leftover fabric, rags, rags ... 1.2.2. Objectives and roles of the purchasing of raw material management of garment companies Objectives of the purchasing of raw materials management: The first is to ensure that there is enough raw materials required for production; The second is to ensure the quality of raw materials because it determines the quality of outputs; The third is to find how to purchase raw materials at a low level; The final one is to establish a relationship with suppliers to have the advantage of purchasing raw materials as well as to create a long-term & stable supply for the company. Roles of the purchasing of raw materials management: Firstly, it enables companies to purchase raw materials in accordance with their production requirements, allowing their production activities to take place smoothly, timely and accelerate their production activities; Secondly, it ensure the stable supply source of raw materials, allowing companies to operate their production activities continuously, avoid interruptions, timely complete orders, thereby improving their reputation in the eye of customers; Thirdly, It improves labor productivity, contributes to improving the competitiveness in the market; Fourthly, it allows companies to manage their financial operations more efficiently and conveniently. 1.2.3. Contents of the purchasing of raw materials management of garment companies Figure 2.5: Model of the steps in the purchasing of raw materials management (Source: Adjusted according to the model of Monczka, 2009) Purchasing of raw materials management is considered as a strategy to manage the external resources of companies to ensure a stable, convenient and efficient supply of raw materials. The purchasing of raw materials management has the following contents: Forecast and make a plan for purchasing; Identify the purchasing demand; Select suppliers; Order; Receive and evaluate the purchasing work. 1.2.4. Criteria for evaluating the purchasing of raw materials management of garment companies The purchasing of raw materials management of companies are evaluated by two criteria, namely, efficiency and performance. Efficiency is the real results compared to the set goals such as cost of raw materials, quality and logistics. Performance is the evaluation of aspects of the purchasing work. Such aspects are management, staff allocation or procedures, policies, information systems for purchasing activities. In addition, there are other criteria used for evaluating the purchasing of raw materials management of companies. They are: purchases. it is the performance of the supply management process, the quality of input materials, the value of input services, and the quality of the input supply management system. 1.2.5. Factors affecting the purchasing of raw materials management of garment companies After studying and reviewing documents, the author has found that there are five main groups of factors impacting the purchasing of raw materials management. They are: institutional and legal environment; technology; industry environment; resources and business strategies; power and dependence. 1.3. Experience in the purchasing of raw materials management of some garment companies in the world and lessons drawn for Vietnam's garment companies. 1.3.1. Experience of some garment companies in the world The doctoral dissertation studies and summarizes experiences from garment enterprises in Hong Kong, USA, Pakistan and Bangladesh. 1.3.2. Lessons drawn for Vietnam's garment companies Lesson to be applied by Vietnam's garment companies Firstly, it is necessary to establish a long-term and close relationships with suppliers and to be cautious in selecting suppliers before entering any contract. Secondly, it is advised that companies should have a team of good, experienced managers who are in charge of materials management and regularly participate in the purchasing of raw materials. Thirdly, it is important for companies to change the purchasing of raw materials management strategies and plans in accordance with the market changes and customer needs. Fourthly, it is essential to pay much attention to the on-time delivery factor when the efficiency of purchasing management is evaluate to ensure sufficient supply for production activities. Fifthly, it is required to promote technology application in the purchasing of raw materials management. Lesson to be avoided by Vietnam's garment companies Firstly, experiences gained from other countries show that production time plays an important role in the performance of companies. This is the reason why delaying in handling orders is to be avoided. Secondly, trust between the two parties plays an extremely important role in any commercial transactions with suppliers. Therefore, it is essential for companies to avoid abusing contract and deliberately misleading the contractual terms. CHAPTER 2 ANALYSIS AND EVALUATION OF THE PURCHASING OF RAW MATERIALS MANAGEMENT OF VINATEX'S GARMENT COMPANIES 2.1. Overview of Vietnam’s garment industry and Vietnam National Textile 2.1.1. Overview of Vietnam’s garment industry 2.1.2. Overview of Vietnam National Textile - Vinatex a. History of formation and development b. Overview of business results Table 2.1: Vinatex’s business results Unit: Billion dong No. Criteria 2014 2015 2016 2017 2018 Growth in the 2014-2018 period 1 Total revenue 13,5 15,2 16,5 18,5 19,4 10% 2 Total costs 11,9 13,3 15,8 15,3 14,7 5% 3 Profit before tax 530 646 684 749 799 11% 4 Profit after tax 617 704 579 685 728 4% (Source: Vinatex, 2018) In 2018, Vinatex's net revenue from sales and service provision accounted for 99% of its total revenue, reaching nearly VND 19,418 billion, up 11% compared to 2017. Income from financial activities and associates made a significant contribution to the Group's revenue. In terms of production and business, textile and garment accounted for 81.9%; import-export and trade accounted for 9.8%; the rest was from other activities. In 2018, Vinatex's total assets reached 21,976 billion VND; Its owner's equity reached 7,985 billion VND. Liabilities amounted to VND 13,990 billion, equivalent to 63.6% of total assets, most of which are short-term debts (i.e: 8,644 billion VND for short loans and 5,326 billion VND for medium & long-term ones). By the end of 2018, Vinatex accumulated 582.3 billion Vietnamese dong of undistributed profit after tax. c. Material purchasing activity of Vinatex. Because domestic demand is not enough, the majority of raw materials are imported from abroad. During the last year, garment raw materials have always accounted for a large proportion of the total import-export turnover of the garment industry in particular and the total import turnover of Vietnam in general. Of the imported garment raw materials, fabric always accounts for the largest proportion. For example, in 2017, fabric import turnover reached 11.3 billion USD in the total import turnover of the garment industry. Thus, in 2017, the costs of importing raw materials accounted for nearly 73% of the total export turnover of the garment industry. Of the export revenue of 25.91 billion USD, companies only get 7 billion USD, including costs of labor and production. This shows that the garment industry of is heavily dependent on imported raw materials. Table 2.5: Total amount of materials of Vinatex Type of material Cotton (tons / year) Fiber (tons / year) Woven fabrics (1000m2/year) Knitted fabric (tons / year) Amount 125.214,2 122.759 35.857 9.821,7 (Source: Vinatex, 2017) 2.2. The current purchasing of raw materials management of some Vinatex's garment companies and some impacting factors 2.2.1. The current purchasing of raw materials management of some Vinatex's garment companies In this section, the author will focus on studying the purchasing of raw materials management of some Vinatex's garment companies, namely, Vinatex's garment companies in 03 regions, which play important roles in the business activities of Vietnam Textile and Garment Group. These companies are Viettien General Garment Joint Stock Company; Nha Be General Garment Joint Stock Company; Garmant 10 Corporation - Joint Stock Company; Vinatex Da Nang. 2.2.2. Survey results of the current purchasing of raw materials management of Vinatex's garment companies 2.2.2.1. In term of forecasting and making a plan for purchasing raw materials Table 2.10: Levels for evaluating the forecasting and making a plan for purchasing raw materials of companies No. Criteria Mean Std. Error Std. Deviation 1 Demand analysis 3.17 .092 1.191 2 Quality characteristics 3.21 .088 1.138 3 Plans for logistics activities 2.87 .086 1.107 4 Studying legal requirements 2.62 .084 1.076 5 Studying environmental requirements 2.88 .083 1.072 6 Studying the costs of raw materials and related activities 3.14 .090 1.165 ( Source: The author's survey data and calculation results) In this doctoral dissertation, the author carried out a survey on companies' evaluation levels for forecasting and making a plan for purchasing goods. Survey results show that garment companies have well done three following activities such as analysing the purchasing demands; studying the quality characteristics and studying the costs of raw materials and related activities. In spite of Vinatex's garment companies' significant improvements in forecasting and making a plan for purchasing raw materials, this activity is overall assessed only at a normal level. The reason is that many garment companies have not really considered forecasting and making a plan for purchasing raw materials as a very important stage. 2.2.2.2. In term of identifying the demands for raw materials In general, all activities associated with identifying the raw materials requirements of companies are only at an average level and still uneven among the companies. Each companies has their own awareness and selection for making decisions. When being asked to give assessments of the importance of determining the demands for raw materials, 14.5%, 24.7%, 39.2%, 19.9% and 7.8% of participants rated it very important, important, normal, unimportant and very unimportant respectively. The mean value is 3.24. 2.2.2.3. In terme of selecting supplier Evaluation results of the supplier selection process of companies show that Vinatex's garment companies have quite well done the steps in the process of selecting suppliers. Most of the surveyed companies have scientifically developed potential supplier evaluation criteria and used a set of criteria for supplier evaluation and analysis before next decisions. And then, these garment companies have used evaluation results to select suppliers. All three activities are evaluated by garment companies to have been done as quite good with high mean values of 3.52; 3.62 and 3.59 on a 5-point scale. These mean values are significantly higher than those of other activities. 2.2.2.4. In term of ordering and signing a contract Table 2.12: Interest levels of Vinatex's garment companies for contents related to signing contracts and ordering materials No. Criteria Mean Std. Error Std. Deviation 1 Discount conditions by quantity and size of order 3.48 .087 1.127 2 Terms of delivery 3.43 .089 1.141 3 Terms of payment 3.47 .087 1.121 4 Penalties 3.43 .090 1.162 5 Terms of guarantee 3.33 .092 1.182 6 Terms of international trade 3.29 .091 1.176 (Source: The author's survey data and calculation results) Survey results show when Vinatex's garment companies order and sign contracts, discount conditions by quantity and size of order are the contents which they are most concerned about with the highest mean value of 3.48. Of which, 30.7% of survey companies said that the discount conditions by quantity and size of order are the contents are important and 21.1% said that these contents are very important. Nextly, many Vinatex's garment companies are pay more attention to the terms of payment. Besides, Vinatex's garment companies are also quite interested in terms of delivery and penalties in the process of ordering and signing contracts. Two less concerned contents are terms of guarantee and terms of international trade. 2.2.2.5. In term of delivering and receiving raw materials Table 2.13: Use pressure on raw materials suppliers No. Methods Mean Std. Deviation 1 Periodically contact suppliers 3.32 1.126 2 Contact before delivery time 2.96 1.151 3 Proactively check large orders/suppliers at key stages 3.58 1.091 (Source: The author's survey data and calculation results) The majority of Vinatex's garment companies actively check large orders or suppliers at key stages with the highest mean value of 3.58. Of which, 40% of survey companies regularly and check large orders or suppliers actively at important stages and 19.9% do it very regularly. Regularly checking orders at important stages shows that companies has taken the initiative in ensuring timely raw material shipments for production. 2.2.2.6. In term of evaluating and adjusting the purchasing of raw materials management Table 2.14: Assessment of the evaluating and adjusting work of the purchasing of raw materials management No. Criteria Mean Std. Deviation 1 Release statement and impose punishment with suppliers 3.33 1.182 2 Companies record purchasing experience 3.29 1.176 3 Evaluate the effectiveness of the content of operations related to suppliers 2.8 1.243 4 Companies re-evaluate the relevance of suppliers periodically (at least once a year) 3.01 1.152 5 The re-evaluation is placed under new conditions through new criteria 3.19 1.044 6 Criteria for evaluating suppliers take strategy, cultural suitability, organizational structure and technology between the two parties into consideration. 3.31 1.149 7 Companies re-classify the purchasing strategies of suppliers (eliminate inappropriate suppliers, build new relationships, raise relationships with potential suppliers, etc.) 2.95 1.063 8 Re-adjusting relationship is done on the basis of previously done re-evaluations. 3.47 1.071 9 Suppliers understands and accepts to the re-adjustment of companies for purchase activities. 3.52 1.105 (Source: The author's survey data and calculation results) After purchase activites, Vinatex's garment companies re-evaluate their purchasing work as well the whole supply chain management process. Garment companies have recorded their purchasing experience for next times. This activity is well done and appreciated by many companies. However, there are certain limitations in the supplier evaluation work. For examples, garment companies have not effectively classified the raw materials strategies of suppliers to eliminate inappropriate suppliers, build new relationships, and raise the relationships with potential suppliers. 2.2.3. The situation of factors affecting the purchasing of raw materials management of Vinatex's garment companies 2.2.3.1. Testing reliability of variables in the Confirmatory Factor Analysis (CFA) model After the test for checking the reliability of these factors before the EFA analysis is done, it shows that the Cronbach's Alpha value of all items is much more than 0.5, which depicts that the factors are highly reliable. In addition, when the Cronbach alpha value is calculated, it is found that the Corrected Item-Total Correlation is greater than 0.5, which proves that the observed item has an impact on the general composition in the correlation between variables (Cronbach, 1951, Nunnally and Burnstein, 1994, Nunally, 1978). Therefore, after the correlation of the variables and the reliability test are considered, the observed variables are retained with high reliability. Table 2.15: Cronbach alpha tests and Exploratory Factor Analysis Factors Cronbach alpha KMO Chi-square Bartlett's Test Average Variance Extracted Corrected Item-Total Correlation TCPL 0.892 0.853 0.000 65.286% 0.874; 0.824; 0.810; 0.802; 0.773; 0.760 MTCN 0.888 0.810 0.000 69.255% 0.934; 0.902; 0.865; 0.750; 0.684 MTN 0.914 0.779 0.000 74.395% 0.930; 0.886; 0.865; 0.831; 0.794 NLVCL 0.867 0.828 0.000 66.629% 0.922; 0.90; 0.869; 0.677; 0.676 QLVAPT 0.893 0.755 0.000 75.749% 0.941; 0.884; 0.841; 0.810 QTMNVL 0.857 0.726 0.000 64.780% 0.880; 0.849; 0.833; 0.817; 0.618 2.2.3.3. Exploratory Factor Analysis (EFA) EFA results of the selected dependent variable group show that the KMO value is 0.726, satisfying the condition of 0.5 <KMO <1 with Sig = 0.000 in the Barlett's test (Sig <0.05). The number of extracted items is 5 and the factor loading of observed items is greater than 0.5. This shows that the factor analysis results are consistent and the variables correlate with each other in the whole. Based on EFA results, it can be concluded that the extracted items in the main research hypotheses are qualified. Therefore, a model consisting of 5 independent variables and 1 dependent variable is formed as expected. Table 2.16: Results of Exploratory Factor Analysis Variable Factor 1 2 3 4 5 TCPL05 .823 -.150 .131 .081 .219 TCPL04 .803 .106 .155 .130 .055 TCPL01 .788 -.194 .078 .035 .179 TCPL02 .738 -.148 .143 .124 .196 TCPL03 .732 -.048 .010 .044 .235 TCPL06 .711 -.130 .166 .096 .140 MTN05 -.118 .913 -.096 -.066 -.024 MTN02 -.099 .860 -.098 -.116 -.054 MTN01 -.063 .835 -.163 -.118 .004 MTN03 -.152 .815 -.051 -.115 -.078 MTN04 -.053 .784 -.056 -.113 -.037 MTCN02 .079 -.108 .928 .069 .139 MTCN05 .106 -.057 .891 .074 .157 MTCN04 .025 -.065 .884 .064 .091 MTCN01 .328 -.184 .624 .038 .245 MTCN03 .345 -.144 .574 .135 .056 NLVCL02 .111 -.128 .040 .900 .105 NLVCL03 .110 -.188 .042 .867 .048 NLVCL05 .186 -.205 .045 .821 .047 NLVCL01 -.062 .103 .099 .712 .166 NLVCL04 .115 -.140 .089 .655 -.077 QLVAPT02 .253 -.036 .122 .137 .894 QLVAPT04 .217 -.009 .117 .093 .852 QLVAPT01 .177 -.053 .151 .037 .807 QLVAPT03 .359 -.094 .254 .005 .682 Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 6 iterations. 2.2.3.4. Testing hypotheses and analyzing the research results of impact factors Linear regression analysis results show that the adjusted R2 coefficient is 49.4%, the model's significance level factor (Sig.F = 0.000) is less than 0.05. It means that the combination of the existing independent variables in the model can explain the variability of the dependent variable. The linear regression model is built in accordance with the existing data set. In order to address questions about the relationship between items in the research model, the author has used multiple regression analysis to find the best forecast equation for a set of items, and to test research hypotheses with a 95% confidence. The research hypothesis will be accepted to be correct if the significance level (sig.) is less than 0.05. The Durbin-Watson coefficient results show the autocorrelation and VIF coefficients of items when Collinearity Statistics are tested in the regression model with a value which is over 2.106 but less than 10, so there is no collinearity in the model, which shows the relevance of the research model. The analysis results also show that 4 variables of the items in the model have statistical significance level with a high confidence of less than 1% (Sig<0.01). Table 2.18: Multiple regression results with partial regression coefficients Model Unstandardized coefficients Standardized coefficients t Sig. Multicollinearity statistics B Std. Error Beta Tolerance VIF 1 (Constant) 0.000 0.055 0.000 1.000 TCPL 0.372 0.067 0.372 5.515 0.000*** 0.676 1.480 MTCN 0.120 0.063 0.120 1.902 0.059 0.771 1.296 MTN 0.163 0.060 0.163 2.724 0.007** 0.856 1.169 NLVCL 0.196 0.059 0.196 3.311 0.001** 0.873 1.145 QLVAPT 0.328 0.067 0.328 4.915 0.000*** 0.691 1.447 a. Dependent Variable: QTMNVL Sig < 0.05 reliability 95% (standard *) Sig < 0.01 reliability 99% (**) Sig < 0.001 reliability 99.9% (***) Based on the statistical analysis results in the regression model, the multivariate linear regression equation of the factors affecting the purchasing of raw materials management performance of Vinatex's garment companies will be as follows: QTMNVL= 0.372*TCPL + 0.328* QLVAPT + 0.196NLVCL + 0.163*MTN 2.3. Overal assessment of the current purchasing of raw materials management in Vinatex’s garment companies 2.3.1. Achievements and reasons Vinatex's garment companies have understood that purchasing raw materials plays an important role in their business activities. This fact can be seen clearly when each company has a specialized department in charge of purchasing raw materials and all the companies have built their own process of purchasing raw materials and each operation in the process has clear principles and criteria to evaluate the purchasing management performance. Vinatex's garment companies have selected appropriate suppliers and have decided to be in the long-term cooperation with not only raw materials suppliers from America and Europe. Currently, Vinatex's garment companies have selected suppliers in Asia, namely, China, Japan, Korea, etc. Garment companies have significantly reduced their costs of input materials, which enables them reduce the prices of finished products, making products made by Vinatex's garment companies more competitive in the market. Companies have conducted the purchasing of raw materials management through many specific activities participated by different departments. In the purchasing of raw materials management, departments have known how to coordinate in harmony with each other, bringing practical effects in the purchasing of raw materials for companies. Well conducting the purchasing of raw materials management has enabled companies to meet the requirements of customers. Vinatex's garment companies have drawn precious lessons in the purchasing of raw materials management after each purchase. 2.3.2. Limitations and reasons Firstly, of the purchasing of raw materials process, two steps such as foresting and making a plans for purchasing raw materials are still poorly by Vinatex’s garment companies. Secondly, in spite of clear criteria for selecting suppliers, companies have not paid enough attention to all the criteria for evaluating and selecting appropriate suppliers. Thirdly, there are still garment companies which select one-supplier strategies or enters into alliance with one supplier. Forthly, garment companies have not fully exploited information sources to selecting suppliers. Fifthly, searching for and evaluating suppliers are usually carried out only on certificates and legal documents. In fact, companies have not actually visited suppliers' production facilities directly or actively controlled suppliers. Sixthly, tracking logistics activities by Vinatex's garment companies is still quite loose. Seventhly, re-evaluating contents in the purchasing of raw materials process has been implemented by garment enterprises but not really methodically. Not all orders (or suppliers) are regularly reevaluated due to lack of manpower and due to high costs. 2.3.3. Problems associated with the purchasing of raw materials management of Vinatex’s garment companies Firstly, all companies have identified and understood the role of forecasting and determining the demands for raw materials. However, there is many limits in applying technologies in accurately calculating and forecasting the dem