Currently, the Company has a system of traditional suppliers, many of whom have worked with the Company since its inception. The purchasing work is performed relatively well by the Company. The input factors in the Company's supply chain, the items that play an important role in creating the Company's products include: main materials (natural rubber, synthetic rubber, coal powder, CaCo3 - stone powder), auxiliary materials, chemicals, additives, equipment - spare parts, energy, canvas, iron and steel ... To serve production and business activities, the Company must purchase 100% of the input factors. The Company prioritizes purchasing from traditional suppliers to ensure business safety. Purchasing activities are carried out according to strict and proper management and procurement regulations; timely supply and good control of materials; Planning to purchase sufficient materials to ensure timely production, avoiding capital stagnation and quality reduction.
Therefore, purchasing management activities play a very important role and significance for the Company in order to meet production needs, control costs, product quality and improve competitiveness.
2.2.2.4. Current status of distribution activities of 75 Rubber One Member Co., Ltd.
Sales activities have been gradually promoted effectively, stabilizing traditional markets and developing a number of new potential customers; in the period of 2015-2019, 415 economic and defense contracts were signed, developing new markets in both defense and economy with over 10 potential partners. In 2019, rubber conveyor belt consumption increased by 28.5% compared to 2018; rubber spare parts increased by 3% compared to 2018; rubber hoses were usually 85% compared to 2018.
Through investigation, in 2020 the Company transacted with 262 different large and small customers, a very large number of customers for a unit producing specialized goods such as technical rubber. This requires the distribution department to have a method of managing and operating distribution activities.
* Distribution channel system
LLC
Rubber 75
Client
Agent, distributor
Diagram 2.3: Distribution model at the Company
- Indirect distribution channel: Currently, the company's indirect distribution channel through agents only accounts for 4 to 5%. Mainly applied to markets with long geographical distances such as: Southern region and Central region. However, with a nationwide agent system, the Company should invest and develop this distribution channel in the future to expand the market and customer network.
- Direct distribution channel accounts for 95%
* Freight transport:
Table 2.17: Company transportation costs in 2020
Unit: VND
TT
Content | 2019 | 2020 | 2020/2019 (%) | |
1 | Internal truck costs | 1,089,684,369 | 1,299,863,133 | 119.3 |
2 | Outsourced transportation costs | 2,423,681,000 | 2,954,452,151 | 121.9 |
3 | Car operating costs | 1,463,563,245 | 1,642,577,564 | 112.2 |
4 | Total | 4,976,928,614 | 5,896,892,848 | 118.5 |
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(Source: Delivery Department)
In fact, due to the nature of orders of Cao Su 75, which are mainly repair orders (planned or unscheduled), distribution is quite complicated. Distribution staff plan weekly deliveries and inform the production department, warehouse department, transportation department, and sales department to coordinate delivery to customers. The Company's products are transported directly to customers who place orders and have needs by the Company's or its own means.
buyers quickly and conveniently at any time the customer needs. This is a distribution method that saves on intermediary costs, collects customer feedback on the company's products quickly and promptly, and ensures a direct relationship between the manufacturer and the customer. However, due to the large number of customers and the large volume of goods transported, the company has linked up with Logistic units for transportation and delivery, meeting the schedule and saving costs.
* Delivery method:
The company is implementing two main delivery methods: delivery to customers (accounting for 95%) and delivery to the company's warehouse (accounting for 5%).
2.2.2.5. Current status of recovery activities of 75 Rubber One Member Co., Ltd.
In reality, rubber products after use are not decomposed in nature, causing environmental pollution and affecting human health. The activity of collecting products after use has not received attention and implementation. This is a shortcoming and the company needs to have a plan to promote collection activities in the near future.
2.2.2.6. Control and evaluation activities of supply chain results of 75 Rubber One Member Co., Ltd.
* Control activities
Cao Su 75 Company Limited (Z175) is one of the first units in the General Department of Defense Industry to apply the ISO 9001 quality management system. Since 2002, the Company has always maintained and effectively applied the ISO 9001 system to the unit's operations.
With the goal of continuing to improve the effectiveness of the Quality Management System, aiming to provide high-tech rubber products for the automobile, motorbike, electrical, electronic assembly industries... and export, the Company's leaders and commanders have aimed to build a quality management system according to the IATF 16949: 2016 standard. IATF 16949: 2016 is an international standard for the Quality Management System developed on the ISO 9001: 2015 standard but adds more stringent and stringent provisions on quality system management. With the goal of achieving system certification
IATF 16949: 2016 quality management in 2022, from May 15, 2021, 75 Rubber One Member Co., Ltd. (Z175) has started organizing advanced training on the IATF 16949 quality management system and necessary skills for internal auditors with the guidance of experts from ECO Consulting Co., Ltd. These will be the core internal experts in assessing and improving the Company's quality management system.
- Supplier control
The company applies the ISO 9001:2015 management system to the process of controlling and evaluating suppliers with the purpose of evaluating, selecting, monitoring capacity and periodically evaluating external sources of supply of products/services that affect the quality of the Company's products.
The company's current evaluation control criteria are as follows (refer to Appendix 1). Annually, the QA department and the leading department will review the capacity of
Suppliers provide based on historical data to set quality targets for a number of raw material suppliers and notify the targets to suppliers. The QA department and the leading department are responsible for monitoring the target implementation results and periodically informing suppliers, and taking corrective actions when there is a tendency to not meet the target.
- Production process control:
Rubber conveyor belt products are manufactured according to JIS K6322, JIS K6369 standards… using advanced technology in the region as well as in the world. With a synchronous equipment line system imported from Russia, Germany, Japan, Korea, Taiwan, China…
The system of equipment for testing and analyzing physical and chemical properties is invested synchronously such as: Machine for testing vulcanization characteristics, hardness, strength, elongation, abrasion resistance, aging resistance... of rubber and bearing core. It can be said that the Company has a complete system of equipment to manage the quality of products leaving the factory to achieve the highest quality.
The Company's production process is strictly controlled by the ISO 9001-2015 Quality Management System such as:
+ Input materials: Have full origin, physical and chemical properties, packaging, labels... And all parameters are checked at the Company's Central Physical and Chemical Department.
+ Products are manufactured according to strict technological processes. There are technical staff supervising each technological stage, shown by Technology Sheets.
+ Semi-finished products on all stages of the production lines are fully tested for necessary features to minimize defects arising during the production process.
+ Manufactured products are 100% inspected according to issued acceptance standards, and are accompanied by a quality certificate from the manufacturer upon delivery.
- Distribution control
The distribution process is given great attention and care by the Company. To control the distribution process, the Company also applies the ISO 9001:2015 management system with a customer satisfaction measurement process aimed at measuring the level of customer satisfaction related to the following contents:
+ Summary of customer complaints;
+ Assess customer satisfaction through sending survey forms;
+ Internal assessment activities of the implementation of quality system processes towards customer satisfaction
In the past, products were warranted according to the Company's regulations. If any abnormality or damage occurs (due to manufacturer's fault, confirmed by both parties), 75 Rubber Company Limited commits to fix it in the fastest time.
* Evaluate the supply chain management results of 75 Rubber One Member Co., Ltd. through several criteria:
- Measure delivery efficiency, customer service
One of the factors that increases the quality of customer service and delivery efficiency is the rate of on-demand delivery:
Table 2.18: Table of delivery rates according to customer requirements.
Total orders
2018 | 2019 | 2020 | |
556 | 640 | 670 | |
Delivery on time rate | 85% | 86.5% | 87% |
Non-conforming delivery rate | 15% | 13.5% | 13% |
(Source: Company's Planning and Materials Department) According to the data compiled from the table above, in 2020, only 13% of the total orders delivered to customers did not meet customer requirements. A decrease of 2% compared to 2018 shows that the company has made changes.
in ensuring better delivery of requirements.
- Order completion rate
In supply chain operations, on-time delivery is a very important indicator to evaluate the ability and speed of supplying goods of a business. We have the data in the following table.
Table 2.19: On-time delivery rate table.
STT
Area | 2019 | 2020 | |||
Total order | 640 | Total order | 670 | ||
On-time delivery rate | Delivery rate late | On-time delivery rate | Delivery rate late | ||
1 | Central | 82% | 18% | 84% | 16% |
2 | Male | 85% | 15% | 86% | 14% |
3 | North | 91% | 9% | 91% | 9% |
Total | 86% | 14% | 87% | 13% | |
(Source: Data compiled from the Company)
According to the data compiled from the table above, in 2019, the on-time delivery rate of customers in the Northern region was the highest: 91%, the lowest in the Central region: 82%. The reason is that the Z175 factory is the main factory producing rubber products located in Son Tay, Hanoi, so the delivery rate to customers in the Northern provinces is higher than that of the Central region (because it takes more time, traffic conditions, weather, etc.). In 2020, the on-time delivery rate of the Southern and Central regions
increased by 2% and 1% respectively, while the on-time delivery rate of the Northern region remained the same at 91%.
Table 2.20: Statistical table of reasons for late delivery
( Only count main GT channel orders )
Reason
Late order | Proportion | |
Late delivery | 45 | 67 |
Slow warehouse loading | 15 | 22 |
Item not in stock | 0 | 0 |
Inventory is reorganized | 2 | 3 |
Late production | 5 | 8 |
Total | 67 | 100 |
(Source: 2020 data synthesis from the Company)
According to the above table, we can see that the main reason for late delivery is still the late delivery of the carrier. According to feedback from the driver team, this is an objective reason due to: traffic situation on the shipping route, weather, problems, damage... To overcome this situation, the dispatch department needs to increase delivery time.
- Selling expenses
Supply chain management includes managing supply and demand throughout the organization's system. Thanks to efficient supply chains, world-class corporations such as Dell and Wal-Mart achieve 4% - 6% higher profits than their competitors, a significant competitive advantage.
Faced with a volatile and fiercely competitive economy, in addition to promoting marketing measures and developing new products to enhance competitiveness in the market, the company has focused on strengthening control of sales costs and supply chain costs.
Table 2.21: Logistic operating cost table in supply chain
Unit: Dong
Cost Type
2018 | 2019 | 2020 | 2019/2018 % | 2020/2019 % | |
Shipping costs | 3,673,472,466 | 3,770,830,816 | 3,857,025,264 | 102.7 | 102.3 |
Customer Service Cost | 14,466,768 | 16,757,355 | 21,459,324 | 115.8 | 128.1 |
Storage costs | 2,223,378,907 | 1,646,974,976 | 2,253,355,401 | 74.0 | 136.8 |
Total | 5,911,318,141 | 5,434,563,147 | 6,131,839,989 | 91.9 | 112.8 |
(Source: Compiled data from the Company) According to the table, the total supply chain logistics cost in 2019 decreased by 8% compared to 2018, and in 2020 it increased by only 12.8% compared to 2019. This
shows that the company has controlled costs for supply chain logistics activities. Transportation costs, this is the type of cost that accounts for a high proportion of over 59% in
Supply chain in 2020, 2019 increased by 3% compared to 2018, but by 2020 it only increased by 2%, proving that 75 Rubber Company has begun to pay attention and control this transportation cost.
Customer service costs include complaint handling costs, customer visit costs, etc. Customer service costs in 2019 increased by 15.8% compared to 2018, and in 2020 increased significantly compared to 2019 by 28.1%.
Storage costs include the following costs: warehouse rental, warehouse repair and upgrade costs, electricity and water costs, security... This cost in 2020 increased by 36.82% compared to 2019.
- Completion time
Response time is one of the important criteria for customers to decide to choose a supplier. Response time is not only the time for raw materials to be processed but also the time wasted waiting or moving. Therefore, managers always look for ways to reduce response time by eliminating gaps in the process. We have the following order completion cycle time table: