Analysis of inventory problems of vietnam pharusa join stock company

Specific standards of each inventory group shall be determined as follows: - group a: including the highest - value inventory, they have a value of 70 – 80% compared to the total invento

HO CHI MINH UNIVESITY OF TECHNOLOGY AND EDUCATION INVENTORY MANAGEMENT

Analysis of inventory problems of VietNam Pharusa

Join Stock Company M.E Nguyễn Hoàng Long

Name ID Student

Phạm Thúy Hiền 19124046

Đoàn Quang Anh 19124058

of customers.

The storage of the enterprise' s reserves is the enterprise assets stored for production or sale later In enterprises, inventories include raw materials, production fuels, unfinished products, products of goods waiting for consumption Depending on the business lines of which the proportion of the property is different from the same

The management of inventory in enterprises is very important, not just because in the inventory business that accounts for a significant proportion of the total assets of the enterprise More importantly, thanks to the proper reserves, it will make daonh non - disruptive in business, without product shortage to sell, while helping businesses use savings, reduce inventories

CHAPTER I: INVENTORY THEORY

1. Inventory management

1.1.General inventory

Inventory is one of the most valuable assets in the total value of an enterprise, usually the value of inventory accounts for the total value of assets of the enterprise As a result control, good control of inventory is always a necessary problem, mainly in production management.

Inventories are considered all reserve resources to meet current or future needs Inventory consists of unfinished product materials, semi - finished products, accessories, finished products, depending on different types of enterprises that form contents of the contents of the plan as well as the control control system.

1.2.Inventory classification

Inventory is the quantity of goods that are generated in business to meet future demand.

In production, inventory is usually classified as four categories, namely:

1) inventory of raw materials / components

2) inventory of unfinished products

It is the products being turned into products from raw materials but not yet, and

on the line of production, the product is already finished, but the packaging is not packaged, which is considered unfinished, not published There may be a situation in which the inventory remains in progress is due to non - rhythmic coordination between production phases.

1.2.3.Finished product

The inventory of finished goods is all the goods that have been perfected all the stages and ready to be sold For example, a number of garment men' s shirts, which have completed all of the sewing lines, are in the warehouse of the producers and the distribution, which is considered to be inventories in the product form as a product of the product, which is still in the manufacturer' s warehouse, and the product is considered to be inventories in a product form as a product.

1 2 4 inventory of auxiliary materials

All types of company items purchased are not part of the product but necessary

to serve the production of the products called miscellaneous items serving production, stationery in this category.

1 3 inventory expenses

There are three kinds of inventory

1.3.1.Purchase cost

Is the cost to buy or produce each item inventory This cost is often expressed

in the cost of a unit multiplied by the quantity received or produced Sometimes the price of goods is reduced if we buy the same at the same time Usually the purchase costs affect the selection of inventory models, except the output model.

1.3.2.Order cost

Including the costs in finding the supply, the form of order, the implementation

of the order of order to support the phòng…khi activities of the order, which is still available, they are understood as the cost - preparing cost of the order.

1.3.3.Reserve cost

In the course of storage of raw materials, unfinished products, finished products

to keep them secure to serve their production and consumption, the storage management department needs to apply some of the measures to preserve and store These activities also cost a substantial expense This cost is usually calculated as the percentage of the item' s value The costs related to the storage or operation of this inventory can be statistically statistical below:

Table 1 1 Ratio of inventory

5 Damage caused by loss of damage caused by

damage can' t use it

of inventory is approximately 40% value inventory.

1.4.Inventory management function

1.4.1.Link function

The most important function of inventory management is the link between production and supply.

When the supply and demand of a stock of a stock is irregular between periods

of time, maintaining a constant inventory of inventory to accumulate enough time is

an essential problem.

1.4.2. The prevention of inflation

A business if the price increases of materials or goods, they can reserve inventory to save costs Thus, the inventory will be a good investment activity, which

is of course when we have to consider the costs and risks that may occur in the process of inventory.

1.4.3. Lượng function

A rather important function of the inventory administration is deducted by quantity Many vendors are willing to accept deductions for orders with large numbers The purchase of a large quantity may lead to the decrease in production costs, however, purchases with large quantities will incur high inventories due to the

inventory management, which is expected to determine a maximum amount of goods

to enjoy, which is not significant.

1 5 inventory management measures

1.5.1. Inventory system

The inventory system is a collection of procedures or business policies that income or maintenance is based on There are two basic inventory systems:

In a continuous review system, inventory is always monitored When the inventory is low, they will order Lại

The company keeps q - food at the same level that the inventories fall to r because each time a number of the same numbers should be called, the system is called a fixed order system (fixed order size - foss) or' the number of economic orders'” ( economic order.

People also call the periodic review system' how the order system is” ( fixed order interval systems –, or' economic order systems spacing” ( economic interval interval systems.

1.5.2. ABC standard

In stock, a few items usually have value measured by the currency account for most of the total inventory So we can focus actively on testing some of these types of items In the inventory, people are distributing goods to three categories: a, b and c.

The analysis of abc is the total number of inventory to 3 groups: a, b, c, based

on their annual value.

This year' s value is determined by collecting 2 components: annual demand for inventory and cost per inventory unit and each type of inventory.

Specific standards of each inventory group shall be determined as follows:

- group a: including the highest - value inventory, they have a value of 70 – 80% compared to the total inventory, but the number of items they account for is total inventory.

group b: include inventory that has annual value at average, they have 15% 25% value compared to the total inventory, but the output is about 30%.

-C - group c: including the ones with a small annual value, the annual value accounts for only about 5% total inventory value, but the number of them accounted for about 55%.

In the graph we can represent the standards of the inventory groups in the analysis of abc as follows:

Figure 1.2 – Description of the ABC standard

Note: The vertical axis is the value of Inventory Management The horizontal axis is the output Inventory Management

In addition to their annual value for classification, other criteria are also

considered, such as:

- Changes in prediction techniques

- Supply problem

- Quality of inventory

- Prices of different types of inventory

ABC analysis technique has the following effects in inventory management:

- The potential resources used to purchase group A products need to be much

higher than that of group C, so there should be appropriate investment priorities.

- Group A goods need a strict inventory control in kind, the establishment of

accurate reports on group A inventory must be done regularly to ensure product safety export.

- In forecasting material demand, we can apply different forecasting methods for different groups of goods Group A needs to be forecasted more carefully than

other groups.

- Thanks to ABC analysis technique, the level of warehouse staff will be

continuously improved, because they regularly perform audit cycles of each group

of goods.

In short, ABC analysis techniques will give them better results in forecasting,

controlling artifacts, ensuring the feasibility of sourcing, and optimizing inventory levels.

Group A

Group B

Group C

CHAPTER 2 SITUATION OF INVENTORY MANAGEMENT AT PHARUSA

VIETNAM JOINT STOCK COMPANY

2.1 Overview of Vietnam Pharusa Joint Stock Company

2.1.1 About Pharusa Vietnam Joint Stock Company

Company Name: VietNam Pharusa Join Stock Company

Short name: PHARUSA.,JSC

Address: Room 808 Phap Van Urban Area - Tu Hiep, Hoang Liet Ward, Hoang Mai District, Hanoi, Vietnam

Phone: (84) 043.681.4971

Fax: (84) 043.681.4971

Tax code: 0102369678

Business registration date: April 16, 2009

Charter capital: 5,000,000,000 VND (data in 2013)

Legal Representative: Do Dinh Huy Managing Director: Do Dinh Huy

The history of company's foundation:

Established and put into operation from the beginning of the second quarter of

2009, Vietnam Pharusa Joint Stock Company is one of the leading enterprises in the field

of trading and distributing functional food products

In the early days of establishment, the company only had more than 20 officers and employees, the office was rented on an area of 45 m2 in Thanh Tri district (now moved to the office in Hoang Liet ward, Hoang Mai district)

In 2009, 2010 and 2011, the company signed cooperation contracts with many pharmaceutical manufacturers such as FUCOIDAN Vietnam Joint Stock Company, TCPharma Pharmaceutical Company, Ha Tinh Pharmaceutical Joint Stock Company HADIPHAR, JSC DANAPHAR pharmaceutical part, Vietnam Food and Vegetable Oil Processing Company VNPOFOOD, OPC Pharmaceutical Joint Stock Company and Golden Health Company

Vietnam Pharusa Joint Stock Company has been interested in marketing since the early days of its establishment, with various forms of promotion, effectively contributing

to the introduction of the company's image as well as the product lines that the company offers distributed to consumers from urban to rural areas across the country

2.2.The situation of management of inventory at the vietnam joint stock

business activities of enterprises and must be consistent with the fiscal year

Two methods of accounting for inventory of enterprises:

cards, records of materials and goods for accounting of fluctuations of inventory The content of the method as follows:

+ Regular monitoring, continuous, systematic;

+ Reflecting the situation of import, export, beginning of the period and end of thegoods;

+ The formula for calculating total inventory value at the end of period:

Total inventory value = Inventory value + Inventory value - Value of inventory

of ending inventory in the period in the period

Periodic inventory method: use documents such as the periodic inventory

method At the end of the period, accounting vouchers shall receive vouchers of import goods from the warehouse, examine and classify documents in each

category, group of goods and record accounting prices for each document The content of the method as follows:

+ not tracking, frequent, continuous;

+ only reflects the beginning and end of the period, not reflecting input - output in the period;

2.2.2.Classification of inventory of vietnamese joint stock companies

The inventory of the vietnamese joint stock company is classified according

to the criteria for use and use of products Using ABC standard, the companydivided the inventory into three main groups and reflected in the followingimage:

Diagram 2.3 ABC Classification of inventory

Vitamin C(Sources: Business Department)

2.2.3 Characteristics of inventory of Vietnam Pharusa Joint Stock Company

Inventories of Vietnam Pharusa Joint Stock Company are medicines and

functional foods The general characteristics of this product are:

- Store in a cool, dry environment, away from direct light;

- Use time from 6 months to 2 years depending on the type of product;

- Products may lose quality or change properties if the packaging is torn or openedduring transportation, loading and unloading, etc

- The company may be liable if users of the company's products have health problems related to drug reactions;

- If a product is found to have a damaged or reduced quality part, the entire

product unit (box, blister, ) will be discarded

2.2.4 Inventory management process at Vietnam Pharusa Joint Stock

Company

The inventory management process starts from the moment the supplier delivers the goods to the Company's warehouse until the time the product is sold The inventory management process at Vietnam Pharusa Joint Stock Company includes 3 sub-processes:

- Process of warehousing: when the company imports goods from drug

manufacturers that the company cooperates with, the pre-sales warehousing process is as follows:

Diagram 2.4 The process of warehousing Vietnam Pharusa Joint Stock Company

Purchasing department (1) Make a test record

Total amount of grn

(3) Enter the actualquantity and the dateentered into the goodsreceived note

Accounting entries

Specifications, designs and quality of goods stated in the voucher must match

match reality; If there is a deviation, the Storekeeper requests to make a record and canrefuse to import goods when there are big deviations

- Depot process: when the company ships goods from the warehouse to sell to customers, the process of discharging the warehouse is as follows:

Diagram 2.5 The process of stock out Vietnam Pharusa Joint Stock Company

(2) Transfer the goods

(1) Make a goods

delivery note

Transfer the goods delivery note

Storekeeper checks the reasonableness of the documents (export order, export note ) asmust be signed by the Director (or the person authorized to sign the export order),accountant, consignee check specifications, The goods samples are correct with theexport slip, then they will sign and release the goods from the warehouse

At the same time, based on the Import-Export slip, the storekeeper must immediatelyrecord it in the warehouse card for monitoring and reporting to the accounting

-Inventory inventory and adjustment process: monthly, the company conducts inventoryand adjustment of goods in the warehouse That process goes like this:

+ List the goods in stock at the time of inventory;

+ Enter actual data after the inventory is completed;

+ Prepare minutes and vouchers to correct accounting data with actual data If there is

an excess or shortage caused by human causes, the inventory person makes a record toask for the opinion of the Director or the direct manager

2.2.5 Advantages and limitations in inventory management of Vietnam Pharusa Joint Stock Company

2.2.5.1 Advantages of inventory management

- Enterprise managers focus on inventory management;

- Inventory management at the enterprise is assigned to individuals, each individual is in charge of a separate and related job, which is convenient for assigning tasks and finding responsibility when there is an incident happen;

- The individuals in charge of warehouse management have a sense of responsibility and work productively;

- The leader of the warehouse management team always receives the comments of employees to make the management more effective

2.2.5.2 Limitations in inventory management

- Due to the limited infrastructure and techniques at the enterprise's warehouse, a few goods in the process of loading and unloading, storage, and packaging are torn, denatured, etc

- The professional level and ability to assess the quality of inventory of

employees are still at an average level, leading to errors in a few inventory

reports

- The optimal order quantity has not been determined, leading to unnecessary costs (the order quantity is too large compared to the inventory level, delaying thedelivery time or the order being canceled because the company does not have supply capacity; order quantity is too low compared to inventory level, causing risks of denaturation, quality reduction, shortage, loss during loading and

unloading, storage)

- Enterprises are always in a passive state due to the inability to predict customer orders in advance, so the ability to react promptly to changes in market demand isstill low;

- Goods incur invisible wear and tear (costs for obsolete products that can no longer be sold at their original price because they are not sold out and imported new products of the same type have more superior features) Therefore,

enterprises can only choose one of two options: accept to sell at a low price to recover capital or throw it away VINAGA gac frui

CHAPTER 3 : LEAN SIX SIGMA

1 Define :

The company is suffering from two types of waste:

-Transportation: Because the optimal order quantity has not been determined, resulting inunnecessary costs Business is always in a passive state, unable to predict in advance the amount of customer orders Leads to huge waste in terms of transportation Improper organization of transportation stages

-Inventory: Partially affected by shipping waste When the optimal order quantity has not been determined, the goods are prone to wear and tear Obsolete products cannot be resold at original price Enterprises must accept to sell at low prices to recover capital or sell off

In these 3 years, we see that the rate of feasible orders (to fully meet customers' needs)

is only average, the average of 3 years is 82.30% However, this rate shows that thereare still an average of 17.70% uncompleted orders, equivalent to 17.70% of unmetcustomer needs From 2011 to 2013, the percentage of viable orders decreased slightlybecause the growth rate of the number of uncompleted orders was greater than thegrowth rate of total orders The company needs to focus on overcoming the subjectivecauses that increase the number of unfulfilled orders related to transportation, loadingand unloading, preservation and inventory management

-Criteria to evaluate investment level for inventory: is determined through 2 parameters,which are the ratio of the value of inventory assets and the proportion of inventory incurrent assets

2013 2012 2011

Value of inventory 1.211.551.483 1.511.496.918 2.118.378.995

Tota Current assets 6.143.671.536 5.383.534.362 4.810.377.139total assets 6.348.203.197 5.548.101.810 4.929.656.892

Proportion of inventory in current

- Criteria for assessing the accuracy of inventory reports: determined through twoparameters, the number of inaccurate reports and the total number of reports in the year

Accuracy of inventory reports 87,50% 79,17% 83,33%

In general, in the years from 2011 to 2013, the reports on inventory status at enterprises were not too high in accuracy Administrators and management levels need to further improve the sense of responsibility of warehouse staff, enhance professional knowledge

to minimize the number of erroneous reports, help managers make decisions practical, correct the problem

3 Analyze

The sale is the main revenue-generating activity, as well as the value-added activity forthe business However, the failure to optimize the annual volume of goods is bringing ahuge waste of transportation costs Despite the large amount of shipping costs, theuncompleted order index is still high (17.7%)

Using 5 whys :

Why is transport waste so high? Because businesses still have to place orderswithout a plan a lot of times

Why do business still have to order unplanned so many times? Because theoptimal quantity has not been determined

Why hasn't the optimal quantity been determined yet? Because the business doesnot have a plan in advance about the quantity of goods to be imported

Why do businesses not have a plan in advance about the quantity of goods to bewarehoused? Because economic order quantity optimization methods have not beenapplied yet

Why have not applied economic order quantity optimization methods yet?Because managers still only manage according to traditional methods Out of stock, re-import, if there is an unexpected order, then import immediately, regardless of thequantity, without prior planning

Solution :

-Open training courses for employees in the company on warehouse management to

improve their professional skills and ability to react quickly to situations that may occur related to inventory such as equipment inventory service has problems, the surrounding area is affected by natural disasters, detecting people entering the warehouse with indecent purposes such as damaging goods or any equipment in the warehouse, stealing goods, mixing poor quality goods in order to reduce the company's reputation, etc

- Regularly send supervisors down to the warehouse to check the warehouse situation;

- Pay attention to the material and spiritual life of company employees in general and employees in the warehouse in particular to improve their loyalty to the company, increase the self-discipline of employees in the company ;

- Apply available economic models such as EOQ model to determine the optimal order quantity to reduce unnecessary costs such as inventory costs, ordering costs

4 Improve

Applying inventory models to calculate the optimal order quantity of Vietnam Pharusa Joint Stock Company in 2011, 2012, 2013

When applying these models, managers accept several assumptions:

- One-year demand is stable, predictable;

- Delivery time does not change, must be determined in advance;

- All orders are received by the enterprise at the same time;

In order to accurately determine the optimal order quantity, we provide the data related

to a selected product from among the products that the company distributes Theproduct specifications are presented in the following table:

Table Product information Golden Health Royal Jelly