Improving product quality and quality management system to enter polish market a case study of a vietnamese garment factory

in the field of study Management and Production Engineering and specialisation Management and Engineering of Globalized Production Improving product quality and quality management syste

in the field of study Management and Production Engineering

and specialisation Management and Engineering of Globalized Production

Improving product quality and quality management system to enter Polish market: a case study of a Vietnamese garment factory

thesis number in the Faculty thesis register 110C-MSP-ZP/309220/1208869

Thi Hoang Ni VO student record book number 309220

thesis supervisor Ft"jcd0"Kpc0"Lcp"DcikMumk , prof uczelni

consultation -

WARSAW 2021

ABSTRACT

Improving product quality and quality management system to enter Polish

market: a case study of a Vietnamese garment factory

Quality improvement is an effective and imperative direction to improve the competitiveness of enterprises in the market through increasing production efficiency

in both productivity and quality of products and systems This study is about finding effective solutions to a company's current real demands and problems First, the research provides the company with a thorough insight into how to use concept, tools and techniques of Kaizen and Lean six sigma method in analyzing the current state of

a company's problem Typically, the skill of using 5Whys tool, pareto chart and case and effect diagram based on collected data to identify the root causes of the company's problems come from high defect rate Accordingly, the main problem facing the company, determined by the data of the second half of 2020, is that the plant's production capacity is not high while production demand is constantly increasing Not

to mention the plan to develop export markets to Europe in the coming time, will boost production demand even more It is also this strategic plan to expand the market that sets the requirements for changing the quality management system model to meet customer requirements Therefore, a study has been conducted to analyze and make the right choice for the new quality management model and to solve the problem of factory productivity and production quality Through careful analysis, the study proposed to upgrade the quality management system model to ISO 9001: 2015 standards in coordination using the concept of Kaizen, Lean six sigma to continuously improve quality Two projects have been proposed to work on this synergy to achieve two goals One is reducing the defect rate on the sewing line, improving product quality and production productivity The second is to upgrade the quality management system through the addition, modification and documentation of testing standards for materials, semi-products, finished products and processes, inspection procedures, and control of those items The company also pays attention to Corporate social responsibility with the orientation of pursuing ISO 14001: 2015 and ISO 45001: 2018 certification as well as strongly promoting local community programs Despite the barriers and limitations, this study is the basis for opening many other research directions on integrated management systems of enterprises All aim to fully achieve international standards towards long-term and sustainable development of the business

Key words: Quality improvement, Kaizen application, quality management system, ISO 9001: 2015, Corporate social responsibility

STRESZCZENIE

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TABLE OF CONTENTS

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1.2.1 Improve quality and implementation methods 14

1.2.2 Continuous improvement 15

1.2.3 Necessary knowledge, tools and techniques used in research 18

1.2.4 ISO 9001 standards for quality management system 20

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REACH Regulation 24

Intellectual property 25

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3.3.1 Internal analysis 29

3.3.2 PEST analysis 34

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3.4.1 Main products of the company 44

3.4.2 Production processes 45

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4.4.1 Proposal of project 1 61

4.4.2 Practical implement have been studied for the project 1 66

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4.5.1 Proposal of project 2 75

4.5.2 Practical implement have been studied in the project 2 81

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4.6.1 Standard ISO 14001: 2015 and ISO 45001: 2018 for the company 97

4.6.2 Series of campaigns for the local community 101

4.6.3.Covid-19 protection on the work floor 102

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Context of the research

In the context of the explosive growth of commodity production and high-tech development, the level of competition among businesses has also become extremely fierce This competition has a global scale because most businesses choose to actively expand the product consumption market as a way to increase sales, develop the company in the long term With European-Vietnam Free Trade Agreement (EVFTA), The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), there is a huge potential for market expansion in the EU for Vietnam's Textile and Garment industry as soon as the Agreement comes into effect in 2020

For a developing country like Vietnam and its businesses, quickly updating the world's development trends and needs is the key to opening the door to success This context is both

an opportunity and a challenge for the company that it needs to overcome to gain a competitive advantage in the market M.D.K is a member factory of Thuan Phuong Group specializing in the production of garments for export The company also has a certain reputation and position

in the market However, the current company is still a small and medium sized company The current main market for M.D.K is the United States Meanwhile, the company has a strategy

to expand export markets to Europe, with the current target being Poland Because Poland is

a member of the European Union, most of the requirements for its imports coincide with the EU's general requirements

Continuously improving product quality and upgrading product quality management systems according to the new definition has become a strategic step of companies in general and of M.D.K factory in particular New definitions of product quality and quality management systems will be presented in section 2 Quality improvement is not only a condition for the company's products to succeed in fastidious markets, with strict regulations on the quality of imported and consumed goods, but also a step towards creating a solid foundation for the company to constantly move forward

The complicated disease situation has profoundly affected the production and supply chain

in general around the world This is an objective risk factor that occurs, but the impact is very large Measures to prevent epidemics interrupted the supply of raw materials, the production situation was also halted, the distribution network was also attacked However, the situation will gradually be under control, operations will be resumed The important implication here is that businesses that can react quickly and have the right responses will not only overcome a difficult situation but also gain advantage after things return to a normal trajectory

Research is carried out as a set of improvement projects that are aimed at addressing the quality issues of the product as well as the quality of the management system Since then, the company's products have the ability to reach and be accepted by the new target market, Europe, and first of all Poland

Research scope: The research is proposed conducting in internal departments of the M.D.K factory which is a member factory of the Thuan Phuong Group The focus of research is to explore the quality aspects of the production system including quality control, management and improvement

The project layout consists of 5 chapter:

Chapter 1: overview of development history in quality concept and methodology of

the study provides the process of formation and development of the concept of quality and

the world's current step in the quality aspect From that reference to establishing methodology for this study

Chapter 2: requirements for exporting garments to Europe market explain general

regulations and standards that a garment company that wants to enter the European market must adopt such as: product safety, material origin, labeling, intellectual property, social

responsibilities

Chapter 3: analysis current status of the factory provides generally information of the

factory and in-depth analysis of the factory operating environment SWOT-TOWS is powerful tool utilizes the internal and external factors to generate strategies, while PEST analysis for external factors affecting the factory This section also presents the plant problems facing through the data collection and analysis

Chapter 4: improvement solutions Possible solutions will be proposed in this chapter

based on the demand and causes of problems, expertise and practice to achieve the highest

possible efficiency

Chapter 5: evaluation of the improvement and conclusions presents the costs incurred

in the process of implementing improvements related to human and material support The expected benefits and results in terms of quality will be presented Finally, there is a summary and conclusion of the study

Following is the presentation of the main contents of the project

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Quality is a topic that has been focused, exploited and developed over the centuries A product wants to appear in the market, first of all it must be valuable to consumers, but if it wants to exist for a long time in the market, it must go hand in hand with its quality

The concept of quality is believed to have first appeared in Europe in the late 13th century1 When the quality of the product is simply recognized by an individual mark of a famous craftsman and the mark is attached by the guild of these people Thereafter, the concept of quality changes with the wheel of time, the development of mankind The industrial revolutions led to significant changes in the form of the organization of production Following in the footsteps of pioneering quality researchers such as Frederick W Taylor, Walter Shewhart, W Edwards Deming, Joseph M Juran, the concepts, philosophies, techniques in quality are born They truly created an era that people must quickly catch up to As the quality philosophies they coined to successfully apply to companies became the standard every company aspired to pursue in that era

First to mention the influence of Frederick W Taylor on the manufacturing industry in the 19th century A method of inspection is proposed for product quality control to compensate for quality gaps when a new manufacturing process is introduced tends to increase productivity (Yang, 2017) Accordingly, the concept of quality gradually changed from depending on the personal judgment of craftsmen to the method of inspection and defect correction that have been trained in factories Quality, then, is built to standards and is monitored and checked by independent departments From the late 19th century to the early 20th century, based on the manufacturing process control studied by Walter Shewhart, Deming proposed the famous Shewhart's statistical quality control (SQC) method2 Useful techniques and quality control tools that Shewhart has created include a control chart to monitor and control the production process and sampling inspection method to reduce quality costs caused by full inspection (Yang, 2017) Then, in the mid-20th century, Juran and several of experts developed the eqpegrv"qh"Ðswcnkv{"equvuÑ."which was later also considered by Feigenbaum to be not effectively controlled by SQC (Feigenbaum, 1956) Therefore, the concept of total quality control, TQC was first introduced in 1959 by Armand V Feigenbaum aimed to achieve quality assurance at all stages While Japan has successfully applied TQC in their own way and gained a competitive advantage in the world market, America and western have continued to learn and improve the Japanese way of becoming a total quality management (TQM) system (Yang, 2017) Total quality management is seen as a performance management approach both tangible and intangible to achieve customer satisfaction in the long run3 From the 1990s onwards, TQM was gradually overtaken by the ISO 9000 series of quality-management standards, Lean manufacturing, and Six Sigma To this day, the newest and most complete

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version of the ISO system is the revision in 2015 As an effective way to achieve business excellence, more than 80 countries already established National Quality Awards (NQAs) which are largely based on the Malcolm Baldrige National Quality Award (MBNQA) of the United States, the European Quality Award (EQA) of the Europe, and Deming Awards of Japan (Tan, 2003) (Cauchick Miguel, 2004) In the new era, the concept of quality tends to reach creativity

in customer satisfaction Creativity here can be responding to existing needs of customers in new ways in the process of bringing products to customers or being creative can also exploit customers' hidden needs to create breakthroughs in the product market, opening a new consumer trend

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1.2.1 Improve quality and implementation methods

According to ISO standards, quality management is accomplished by means of quality planning, quality control, quality improvement and quality assurance within the quality system framework5 Meanwhile, according to Juran, the three main functions of quality management are quality planning, quality control, quality improvement From there it can be affirmed that quality improvement is an important step of the business towards comprehensive management, satisfying customers' needs and achieving the goals

Quality improvement plays an important role in reducing waste, improving efficiency, efficiency, and adding value to the organization and its customers The focus of quality improvement is to improve product quality in the direction that approaches customer needs There are many opportunities for improvement from reducing production time, reducing defects, damage, wasting, .; increase system performance, improve employee working environment and relationships, and support effective management

There are two basic forms of improvement: continuous improvement (Kaizen) and innovation Continuous improvement focuses on small, gradual, frequent improvements over

a long period of time, low investment costs, low level of risk, often mobilizing the participation

of many people in the organization Continuous improvement drives effort at people and often requires massive maintenance effort because visible effects often come slowly Meanwhile, innovation is usually a big, intermittent, challenging change because it often has a large investment cost and has a significant impact on the system Innovation is done based on innovation, creativity, technology oriented main and exclusive Expectation innovation delivers breakthrough results

In the movement and development of mankind throughout the history of time, there are many methods of improvement, one after another, born and inherited from each other In which, notably is the Juran method, Shewhart cycle, Deming cycle, Kaizen and Six sigma Jura's improvement methods are in Juran's Trilogy Quality improvement according to Juran is the process of creating breakthrough quality, unprecedented innovation Quality improvement focuses on reducing chronic problems through structural change and process improvement The Juran quality improvement steps are the premise for future DMAIC process development This process is designed to influence causes to improve efficiency and quality (Godfrey, 2007)

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The first concept of Shewhart cycle is a straight line with three-step scientific process of specification, production and inspection After that, Shewhart's concept eventually evolved into what became known as the Shewhart cycle when three steps Deming built off Shewhart's cycle and modified the concept into PDCA cycle (Moen & Norman, 2010)

The cycle includes:

1 What are we doing?

2 Why do that?

3 How to do it?

In recent years, many leading companies in the world have adopted the Six Sigma Quality philosophy Six Sigma (Godfrey, 2007) is now considered a breakthrough thinking improvement method that includes a rich set of concepts, statistical and management tools that support breakthroughs in quality, minimizing variation in both process and product Six standard deviations from the upper and lower specifications would produce essentially perfect products But since most real-life processes have some shift around the mean, an empirically based 1.5 sigma shift is introduced into the calculation the higher the sigma is the better Six Sigma levels are achieved using the DefineÎMeasureÎAnalyzeÎImproveÎControl (DMAIC) problem solving and improvement methodology

Kaizen (Singh, (2009).) was introduced and applied by Imai in 1986 to improve efficiency, productivity and competitiveness in Toyota The Kaizen word includes two concepts: Kai (change) and Zen (for the better) (Palmer, 2001) Kaizen is a system that continually improves

on quality, technology, process, productivity, leadership, culture, with many small, low-cost improvements, implemented continuously in a long time The core principles from the Japanese kaizen concept to identify the sources of continuous improvement are: Process orientation, Improving and maintaining standards, People orientation (Berger, 1997) Kaizen, along with its tools and techniques, is a powerful support method in the process of approaching and solving business problems towards efficiency improvement Kaizen's continuous improvement will be discussed in more depth in the next section

1.2.2 Continuous improvement

Continuous improvement (CI) was especially popular in the USA during the Second World War and in the TWI program, which was imported into Japan by the US military occupation authorities (Singh and Singh, 2015) There are many different definitions of CI, but most of them do not contradict each other Featured including the following definitions Anand et al

(2009) find that CI is often defined as a systematic struggle to seek and apply new ways to actively and constantly achieve process improvements CI is also seen as a method of creating

a culture of improvement in systems with the participation of all people at all levels to eliminate waste, improve the efficiency of the system (Singh and Singh, 2015) Another definition of a

CI process is processes that are scheduled for change These processes are interrelated in varying degrees and involve everyone in the organization towards the goal of achieving something better (Jurburg et al., 2017) Then, according to Singh and Singh (2015) and (Imai, 2013), CI is known as Kaizen in Japan as a low investment, high efficiency method Imai explains that Kaizen is "improving everyday, improving everyone and improving everywhere" Two basic functions of management are distinguished in Japan:

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Application process of kaizen method basically consists of:

be translated to English as "sort", "set in order", "shine", "standardize", and "sustain" shown below (Wikipedia, 2020):

Sort (seiri) 1S Î the area will be filtered and red tagged for unnecessary items Then remove them from location

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Set in order (seiton) 2S Î locating the items Select the appropriate position to place the items according to their function and how often they are used for optimum work convenience

Objectives: tidy and orderly workplace; convenient for work; save time and effort Implementation:

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Shine (seiso)3S Î always keep the work area and tools and equipment clean after use check and perform cleaning regularly

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Sustain (shitsuke) - maintains the implementation of 5S with the self-discipline of workers, making 5S a habit is the culture of the workplace community

Objectives: Maintain 5S implementation into a habit

The principles, tools and techniques used in Kaizen are varied and rich The choice and extent

to which these tools and techniques are used and used are dependent on the organization implementing Kaizen, not under a strict regulation The commonly used principles, tools and techniques are (Karkoszka, 2009):

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1.2.3 Necessary knowledge, tools and techniques used in research

Acceptable Quality Limit (AQL)

AQL (Acceptable Quality Limits), which is defined in ISO 2859-3" cu<" ÐNqyguv" Ceegrvcdng"Swcnkv{" NgxgnÑ" ogcpu" vjcv" CSN" tgrtgugpvu" vjg" oczkowo" pwodgt" qh" ceegrvcdng"defects Currently on the AQL tables there are 2 metrics for the maximum number of accepted and the minimum number of defects rejected the customer or inspector relies on the number of defects

in the sampling data and the level of the collated AQL to make the correct decision to accept

or reject the shipment Each customer typically has a different vendor-level AQL process Most suppliers involved in international trade in general and the European market in particular are familiar with it6

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The AQL standard identifies two important numbers:

Vcdng"3/3"Vcdng"wugf"vq"kfgpvkh{"Ceegrvcdng"Swcnkv{"Ngxgnu

Source: document of the factory

They are 3 General Levels that are I, II, and III These levels depend on the requirements of the customer, which determines the number of samples to test In addition to the General Inspection Level there are Special Inspection Levels such as S-1, S-2, S-3 and S-4 that specify

a smaller number of test samples There are three types of defects identified: critical defects (0), major defects (2.5), minor defects (4.0)

For example, your lot size is 13000 So, it falls between 10001 and 350220"ÐIgpgtcn"Kpurgevkqp"NgxgnÑ chosen is level II As we can see on table 1 vjcv"{qwt"ucorng"uk|g"eqfg"ngvvgt"ku"ÐMÑ0"Yg"chose {qwt"ucorng"uk|g"eqfg"ngvvgt."yjkej"yg"fgvgtokpgf"ycu"ÐMÑ0"[qwt"ucorng"uk|g"hqt"vjg"inspection is 315 units

There are different levels of AQL With most consumers in the world, the standard AQL levels are 2.5% for major defects, 4.0% for minor defects, and 0 for critical defects Your inspector will accept a maximum of: 14 major defects, and 21 minor defects Otherwise, if there are 15 major defects, 22 minor defects, or 1 critical defect, the shipment will fail

Flowchart

A flow chart is a chart describing the evolution of a certain process A flowchart shows by-step information with drawings of different shapes according to a given convention The

step-drawings represent jobs that are interacting with each other by connecting the arrows Flowchart has the benefit of describing processes in an intuitive, easy-to-understand way There are different types of diagrams: each of its own types of conventions The two most common types of shapes in a flow chart are (Wikipedia, 2020): rectangular box and diamond box

Ishikawa diagrams (also called fishbone diagrams or cause-and-effect diagrams) are causal

diagrams created by Kaoru Ishikawa that show the potential causes of a specific event The intended use of the Ishikawa diagram identifies the factors that cause a problem or factors that influence a given result Each cause arising from one or more major sources is classified under different rules (Wikipedia, 2020)

In manufacturing, the 5 Ms is identified for root-cause analysis:

1.2.4 ISO 9001 standards for quality management system

The ISO series of standards is an international standard written by a worldwide organization called ISO (Lamprecht, 1992) The set of standards requires and guides the company to have

an improvement policy to improve the efficiency of the quality management system of the business, to meet the needs of both internal and external customers and enhance competitiveness market ISO 9001 first version was introduced in 1987 by ISO, now the 5th version was released in 2015 ISO 9001 specifies the requirements for an effective quality management system so it will focus on the following goals: organizing the quality management system, aiming for internal and external customer satisfaction, continuous improvement and cost saving

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2.1 Vjg"ukvwcvkqp"qh"Xkgvpco)u"ictogpv"gzrqtv

According to statistics of website statista.com, with an export turnover of more than US$

36 billion in 2018, Vietnam is the fourth country worldwide in the export of textiles, apparel and clothing and has become an important export sector of the country

Hkiwtg"4/3Vjg"ictogpv"gzrqtv"kpfkecvqtu"qh"Xkgvpco"kp"423:

Source: https://www.statista.com/topics/5820/apparel-industry-in-vietnam

With thousands of large and small businesses, this industry has provided millions of jobs for employees every year, contributing to solving the unemployment rate and stabilizing the social situation However, it is worth mentioning that because the domestic raw material supply

is often not enough to meet production needs, most of it depends on imports The workforce

of this industry has skillful skills, hard work, and low labor cost to help Vietnamese clothes to have a great competitive advantage in the market In recent years, Vietnam has focused on building and developing Logistics infrastructure to meet the increasing export demand of domestic goods, including garment Vietnam's garment export growth rate has always been at two digits, which is expected from 2018 Major export markets for Vietnam's textiles and garments include the United States, the European Union, Japan and Korea A number of international trade agreements including the EU-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) have fueled growth in merchandise exports for Vietnam.7

Located in the development context of the Vietnamese garment industry, the company also inherits many beneficial and outstanding features These features are advantages that are not available in all countries Therefore, the company should focus on promoting these

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advantages to get a competitive advantage in the market In addition, the company needs to improve the constraints brought on by the business environment

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Source: https://www.statista.com/statistics/650851/vietnam-forecast-apparel-market-value/

According to the website's forecasts, Vietnam's apparel market value will continuously increase from 2018 to 2022 as shown in the figure It is estimated that the apparel market value

of this sector will reach US $ 3.13 billion (Statista, 2020) However, due to the sudden impact

of the Covid-19 epidemic, the value of Vietnam's garment exports decreased significantly According to the Vietnam Textile and Apparel Association (Vitas), despite the disease situation

at the end of the year, in 2019 the total export turnover of the industry reached 39 billion USD,

up 7.55% compared to 2018

With European-Vietnam Free Trade Agreement (EVFTA), there is a huge potential for market expansion in the EU for Vietnam's Textile and Garment industry as soon as the Agreement comes into effect in 2020 With 42.5% of tariff lines applied to textile products, it will be reduced to 0% as soon as the Agreement comes into effect, the rest will be reduced to 0% according to the 3-7 year schedule, which will help Vietnamese goods have competitive opportunities are stronger for other countries8 Meanwhile, The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)9, although still beneficial for Vietnamese exports, but due to the strict regulations on the origin of the fabric, these opportunities have not been fully utilized Specifically, CPTPP requires to meet the Rules of Origin from yarn onwards, while EVFTA requires only fabrics At the same time, the EU allows

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people to combine origin with countries that already have FTA with the EU such as Korea, Japan EVFTA and CPTPP are both agreements that are expected to facilitate garment exports

in particular, help Vietnam overcome difficult times and move towards long-term development

There are several mandatory national and international requirements that exporters to the European market need to comply with This includes legal requirements concerning product uchgv{."vjg"wug"qh"ejgokecnu"*TGCEJ+."swcnkv{"cpf"ncdgnnkpi0"Ejgem"vjg"GWÓu"Vrade Helpdesk for an overview Additionally, many buyers have created non-negotiable terms and conditions which all their suppliers need to respect These requirements are non-legal, but still mandatory Both categories of requirements have become stricter in recent years.10

The Act of 23 June 2014 Customs Law The Act of 26 November 2014 Investment Law Circular of the Minister of Industry and Trade on 15 June 2020 on rules of origin in the Free Trade Agreement between Vietnam and the European Union

Standard have been met

ISO 9001: 2008 quality management system complies with international standards

ISO 14001: 2004 management system and environmental protection in line with the international standard

Standard requirements11

Product safety (GPSD)

Rtqfwev" uchgv{" cnuq" mpqyp" cu" vjg" GWÓu" Igpgtcn"Product Safety Directive (GPSD)12, is the first standard that must be followed if a product is to be found in the European market In addition, there are specific safety requirements that take precedence over GPSD for some textile products The product will be tested to meet applicable safety requirements in the country targeted by the company If the product does not meet these requirements, it will be rejected from the European market

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It is the responsibility of the buyer to ensure that it is legally safe for consumers to use if they are the supplier of the product design

Make sure your company's suppliers of fabrics, trims and accessories are familiar with the legal safety requirements for apparel exports to the EU

Find out the list of rejected apparel items with detailed descriptions of previous safety risks in the European Union's RAPEX database13

An instruction is provided to check pending requests in the database14 An effective method is to get in touch

to see how to do it from people who have successfully passed legal and non-legal safety standards

REACH Regulation

REACH is the most common legal requirement that apparel exporters to the EU must comply with including Registration, Evaluation, Authorization and Restriction

of Chemicals REACH focuses on regulations restricting the use of chemicals in the manufacturing of clothing The full list of REACH-restricted chemicals should be checked at Substances restricted under REACH15

REACH conducts the collection, study and evaluation

of information on the hazardous properties of substances in order to establish requirements and regulatory procedures Companies register for their REACH compliance to be assessed by the ECHA While EU Member States conduct an assessment of the effects on human health or the environment of the substances in the clothing ECHA then analyzes the risks of administering these substances

Requirement to prohibit or limit the use or condition the use of substances by authorities according to their ability to control risks REACH's sphere of influence is wide and covers many fields, even when the business itself is not aware of its relevance

In general, according to REACH, the company acts as Importer, Downstream User, Companies established outside the EU Importer: If the company purchases

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anything from outside the EU / EEA, then the company has certain responsibilities under REACH Downstream users: the company should check your obligations if there are any chemicals in your industrial

or professional activity Companies established outside

of the EU: The company is not bound by REACH's obligations

Responsibility to fulfill REACH's requirements remains with importers in the European Union Also possible with representatives of a non-EU producer established

in the European Union

CE marking: Because the company tend to export apparel to Europe including personal protective equipment (PPE) to the EU, it must be compliant with specific EU safety standards16 for the design, manufacturing, material use, testing and user instructions concerning PPE You are obliged to affix

CE marking17 requirements for PPE must be complied with as an indication of PPE's compliance with the safety and environmental protection requirements of the company's products

1007/2001 Regulation of Europe Union

It is essential to announce the ingredients of the apparel product that the company intends to export to the EU, in accordance with EU Regulation 1007/2011.18European consumers value the inclusion of care labels

in the company's clothing products So there is an incentive to do so even though country of origin and care instruction labeling are not required in the EU This also facilitates product traceability if a defect occurs On the other hand, in the ISO standard there is also a priority standard for the labeling of care

Intellectual property

Make sure that the company does not infringe any intellectual property (IP) rights if you are selling its own designs on the European market If your buyer provides the design, they will always be responsible for ownership Compliance with intellectual property rights also means that you cannot copy or share successful designs or other designs from one buyer with another

prospective or existing buyer Necessary to visit the website of the European Union Intellectual Property Office (EUIPO) for examples of designs and trademarks as well as a database containing some of the designs protected by IP rights in the European Union to prevent duplication In addition, the World Intellectual Property Organization (WIPO) website is a trusted site for accessing databases of protected designs outside of the European Union

The company may use an unregistered community design (UCD), which provides protection from copying for a period of up to three years in Europe without paying registration fees Officially register your designs

in the EU online via EUIPO

Corporate Social Responsibility

Corporate social responsibility (CSR) in Europe is growing A signing must be made with provisions on respecting local labor and environmental laws In addition to certification in relation to fair and sustainable production, the Corporate social responsibility is required from some customers The client's factory visits for inspection become a requirement that needs

to be met

Other non-legal requirements

There are non-legal but non-negotiable requirements that buyers have created to deal with suppliers This means that the requirements are mandatory and the company will not be able to sign a contract without complying with the requirements Often these requirements are related to the level of quality to which the buyer later becomes the seller committed to the customer Requirements related to your supply chain and requirements related to your products, people, and the environment such as: non-legal Requirements for Base Materials, non-legal Requirements for textile and fabric processing, non-legal requirement for garment production

Covid-19 protection on the work floor

The requirement to comply with local rules and regulations relating to occupational safety and protection of COVID-19 is also becoming a requirement for EU buyers

Source: self-editing from many cited sources

These are requirements that are both general and specific to the garment industry These requirements are the basic legal conditions that the company needs to prepare carefully before entering the European market in general and the Polish market in particular It is necessary to consult import and export experts for advice on the procedure as accurately and completely

as possible These procedures can be completely prepared by the company in advance without waiting for changes in research Taking time will increase the company's competitiveness in new markets

3 CPCN[UKU"EWTTGPV"UVCVWU"QH"VJG"EQORCP[

Thuan Phuong Embroidery Garment Co., Ltd was established in 1983 Up to now, the company is one of the largest garment manufacturing and embroidery companies in Vietnam Thuan Phuong Group developed on the foundation of Thuan Phuong Embroidery Company has been operating in many different fields such as garment, embroidery, hospital, school, restaurant, and real estate In which, M.D.K factory specializes in the production of garments, mainly knits and woven

In 2002 M.D.K Factory was established on 17.000 SQM (183.000sq.ft.) of land M.D.K factory which is a member factory of the Thuan Phuong Group Factory related information includes19:

Conduct in-depth analysis of company status through SWOT-TOWS and PEST analysis in the next section after an overview of the company's basic information

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Internal aspects Weight External aspects Weight

Modern high-yield and

large-scale factory and production

process

0.2 Demand for apparel is essential

that never stops

0.2 Vietnam is a member of the

WTO (The international trade association)

Not focused much on

marketing

0.2 Covid-19 pandemic affect the

supply chain of businesses

0.3

The fluctuation of exchange

rate affects to company

0.2 the emergence of new

competitors

0.1

Product quality and

management system have not

been improved

0.2 Inflation, crisis which threatens 0.2

Staff training is not

comprehensive

0.2 High quality requirement of

product

0.3

Internal quality standards have

not been synchronized

0.2 Natural disasters affect the

supply chain of businesses

0.1

Source: own study

There are many factors for each aspect of strengths, weaknesses, opportunities and threats

of the company Specific analysis by SWOT / TOWS method to understand the impact of these factors on the company's strategy First of all, analyze the interaction between the two aspects The analysis results for each pair of factors are shown in tables (appendix tables) However, the four following analysis tables are considered important things that companies need to pay attention to in order to implement the right strategy to develop the company

Vcdng"5/4"Cpcn{uku"tguwnvu"qh"kpvgtcevkqp"qh"uvtgpivju"cpf"qrrqtvwpkvkgu

Source: own study

Strengths will allow you to take advantage of the opportunities that are in the enterprise The most important strengths are S1 and S4

S1O: the company owns the Modern high-yield factory and production process This is a

special advantage for the company to develop science and technology, produce quality products with large volume Thus the company can expand the market through global cooperation

S4O: Abundant and cheap human resources are a great driver of a competitive advantage

in the market when creating more products at cheaper prices These features are advantages that are not available in all countries Therefore, the company should focus on promoting these advantages to get a competitive advantage in the market and take the opportunity to enter the European market opening

Source: own study

The company's weaknesses are product quality and management system have not been improved This makes the company not ready to accept orders with strict quality requirements From there, a good opportunity to develop and expand the market is lost

Other weaknesses of the company related to inconsistent internal quality standards that could limit the consistency in the way of measuring, testing, controlling as well as the coordination between individuals and departments together Because of this, customers' needs will be difficult to meet precisely The need for the company now is to have a strategy to improve internal quality standards to increase product quality and to meet potential customer needs

Vcdng"5/6"Cpcn{uku"tguwnvu"qh"kpvgtcevkqp"qh"qrrqtvwpkvkgu"cpf"uvtgpivju

Source: own study

The important opportunities are:

Source: own study

Currently, Covid-19 pandemic is the biggest threat to the company Financial resources and high technology can help the company overcome challenges by investing heavily in production, quality improvement, racing against time to take advantage of unexpected opportunities They also help the company stand firm when there are market fluctuations, increasing inflation and other risks

Summary of SWOT and TOWS analysis is presented in Figure 4

Vcdng"5/8"Vjg"uwooct{"qh"cpcn{uku

Source: own study

From the summary it shows that the interaction between strengths and opportunities is greatest (9.5) Have an optimistic view on the success of the project We can use our strengths

to seize opportunities and rely on opportunities to maximize our strengths From there get the best development for the company First of all, the company needs to select an appropriate operations strategy for the company

Vcdng"5/9"Tguwnvu"qh"cpcn{uku"cpf"ugngevkpi"uvtcvgi{

Source: own study

After analysis carefully SWOT and TOWS, a good signal is presented Aggressive strategy

is proposed for the company to enter the Poland market According to this strategy, the company should strive to maximise its strengths to capitalise on new opportunities (Weihrich, 1982) Based on the idea ThreatÎOpportunityÎWeaknessÎStrength (TOWSs) Matrix of Gupta,

M (2015), conduct specific actions for Aggressive strategy

S1O: the company owns the Modern high-yield factory and production process This is a special advantage for the company to develop science and technology, produce quality products with large volume Thus the company can expand the market through global cooperation

S4O: Abundant and cheap human resources are a great driver of a competitive advantage

in the market when creating more products at cheaper prices From there, take the opportunity

to enter the European market opening

The other company's weaknesses are product quality and management system have not been improved This makes the company not ready to accept orders with strict quality

requirements From there, a good opportunity to develop and expand the market is lost

If the company implements these strategies well, the goals of the company are clearly achievable

Besides the internal factors, the external factors are equally important The specific analysis

of external factors helps the company to be more proactive to take opportunities and prevent risks Another important thing is it also helps the company to know better in an outside environment to come up with the right strategies to achieve the goals Analysis of external factors is presented in the next section

3.3.2 PEST analysis

PEST analysis (political, economic, socio-cultural and technological) illustrates a framework

of macro-environmental factors used in the environmental scanning component of strategic management It is an external analysis for doing market research to take an overview of the different macro-environmental factors before entering a new market It is an effective tool for gaining understanding of the market situation, potential needs and the growth direction of companies around the world (Wikipedia, 2020)

The basic PEST analysis includes four factors:

-3

2

5

0.3 0.5 0.2

-0.9

1

1 B: Level of tax rate for

import material resources

Growing Constant Falling

-6

2

6

0.2 0.5 0.3

-1.2

1 1.8 C: Level of quality

standards that required in

the market

Growing Constant Falling

-3

4

6

0.6 0.3 0.1

-1.8 1.2 0.6 D: Cooperation between the

Vietnam and EU

Growing Constant Falling

6

3 -6

0.7 0.2 0.1

4.2 0.6 -0.6 E: Policies to encourage

this industry investment

Growing Constant Falling

5

1 -4

0.4 0.4 0.2

2 0.4 -0.8 F: Support for anti-dumping

laws

Growing Constant Falling

-4

3

7

0.3 0.5 0.2

-1.2 1.5 1.4

Source: own study

The company's information and the environment shows that the most probable factors of the political environment include: maintaining a constant level of import regulations and maintaining a constant level of tax rate for import material resources Increase the level of

quality standards of products for now and future, cooperation between Vietnam and EU in trading and economics Focus on encouraging policy of garment industry investment as well

as not supporting for anti-dumping laws Given this trend, it almost seems to benefit the company if the company knows how to improve its quality further

After analyzing PEST in policy elements, continue the chapter with economic factor analysis

7

3 -6

0.5 0.3 0.2

3.5 0.9 -1.2 H: Reaction speed of the

market when there are

fluctuations

Growing Constant Falling

5

2 -3

0.5 0.3 0.2

2.5 0.6 -0.6 I: Fair trade competition Growing

Constant Falling

4

3 -3

0.4 0.5 0.1

1.6 1.5 -0.3 J: Inflation in Vietnam Growing

Constant Falling

-4

3

5

0.3 0.4 0.3

-1.2 1.2 1.5 K:World economic

instability

Growing Constant Falling

-5

2

6

0.3 0.4 0.3

-1.5 0.8 1.8 L: Unemployment rate Growing

Constant Falling

-4

2

4

0.2 0.6 0.2

-0.8 1.2 0.8

Source: own study

When considering the economic environment, the most probable factors include: growing level of development speed of the garment industry and reaction speed of the market when there are fluctuations This development is due to gradually being assured of people's urgent needs, people tend to upgrade their living needs as they have higher demands than fashion The other trend is maintaining a constant level of fair trade competition Inflation in Vietnam, World economic instability, unemployment rate Apart from the first two trends, the remaining trends do not bring many benefits to the company but do not hinder the company to achieve the goals

After analyzing PEST in economic elements, continue the chapter with social factor analysis

3 -1 -3

0.2 0.6 0.2

0.6 -0.6 -0.6 N: Population structure in

young age of Vietnam

Growing Constant Falling

7

3 -4

0.3 0.5 0.2

2.1 1.5 -0.8 O: Open culture and

integration

Growing Constant Falling

6

1 -5

0.4 0.4 0.2

2.4 0.4 -1 P: Population growth rate Growing

Constant Falling

7

5 -3

0.6 0.3 0.1

4.2 1.5 -0.3 Q: Effects of climate

change

Growing Constant Falling

-5 -1

6

0.4 0.4 0.2

-2 -0.4 1.2

Source: own study

When considering the social environment, the most probable factors include: growing level

of trend of fashion care, open culture and integration, population growth rate and effects of climate change Thanks to the economic development of the whole society, people's living standards have been improved day by day Therefore, people are more and more interested

in fashion care, easier to absorb new cultures and open to integration Thus, the demand for the garment industry in both quantity and quality also increases Maintaining a constant level

of population structure in the young age of Vietnam Almost all factors of Vietnam society have

a positive influence on the company except effects of climate change Pollution is definitely an issue that the country is currently concerned about Limiting this amount of environmentally damaging waste will put pressure on the company It is not only a community responsibility but also the mission the company pursues to achieve its goals

After analyzing PEST in social elements, continue the chapter with technology factor analysis shown in table 3.11

6

4 -5

0.5 0.4 0.1

3 1.6 -0.5 S: Using AI technology in

production management

Growing Constant Falling

2

4 -4

0.5 0.3 0.2

1 1.2 -0.8 T: Innovation in supply

chain management

technology

Growing Constant Falling

6

2 -5

0.4 0.3 0.3

2.4 0.6 -1.5 U: Application of

sustainable development

technology

Growing Constant Falling

7

4 -4

0.5 0.3 0.2

3.5 1.2 -0.8 V: Application of automatic

logistics technology

Growing Constant Falling

6

3 -4

0.5 0.3 0.2

3 0.9 -0.8

Source: own study

When considering the technology environment, the most probable factors include: growing level of Focus on modern technology and machines to production, Using AI technology in production management, Innovation in supply chain management technology, Application of sustainable development technology, Application of automatic logistics technology This trend has both positive effects and challenges for the company Because the company also owns modern machines and production lines, synchronization of all parts requires more effort After determining the factors in each environment The company needs to build optimistic, pessimistic, the most probable scenarios to ensure all possibilities are under control The following is the optimistic scenario shown in the table below

Vcdng"5/34"Qrvkokuvke"uegpctkq"qh"RGUV"cpcn{uku

influence

Positive influence

POLITICAL FACTORS A: Falling at Vietnam and Asia regulations of the industry 5

B: Falling at Level of tax rate for import material resources 6

C: Falling at Level of quality standards that required in

XkgvpcoÓu"tgiwncvkqp

6

D: Growing at Cooperation between Vietnam and EU 6 E: Growing at Policies to encourage this industry

are fluctuations

5

SOCIAL FACTORS

N: Growing at Population structure in young age of

Vietnam

7

TECHNOLOGICAL FACTORS R: Growing at Focus on modern technology and machines

U: Growing at Application of sustainable development

technology

7

V: Growing at Application of automatic logistics technology 6

Source: own study

Following the table, there are different tendencies of each type of environment to create a completely optimistic scenario for the company There are three aspects that bring much more positive effects are politic, society and technology with an average score of 6 In which technology is most influential with a score of 6.4 while the economic is the least influential aspect Of all the above-mentioned factors, situations have the greatest impact: Falling at level

of tax rate for import material resources, quality standards that are required kp" XkgvpcoÓu"regulation Decrease of Support for anti-dumping laws, World economic instability, effects of climate change On the contrary, there is growth at the development speed of the dairy industry, population and population structure in the young age of Vietnam Expanding open culture and integration Increasing focus on modern technology and machines to production, innovation in supply chain management technology, application of sustainable development technology and automatic logistics technology The remaining factors have less impact on the company

The following is the pessimistic scenario shown in the table below

Vcdng"5/35"rguukokuvke"uegpctkq"qh"RGUV"cpcn{uku

influence

Positive influence

POLITICAL FACTORS A: Growing at Vietnam and Asia regulations of the industry -3

B: Growing at level of tax rate for import material resources -6

C: Growing at level of quality standards that required in

XkgvpcoÓu"tgiwncvkqp

-3

D: Falling at Cooperation between Vietnam and EU -6

E: Falling at Policies to encourage this industry investment -4

F: Growing at Support for anti-dumping laws -4

ECONOMIC FACTORS

G: Falling at Development speed of the garment industry -6

H: Falling at Reaction speed of the market when there are

fluctuations

-3

SOCIAL FACTORS

N: Falling at Population structure in young age of Vietnam -4

O: Falling at Open culture and integration -5

S: Falling at Using AI technology in production management -4

T: Falling at Innovation in supply chain management