Improving the management process to optimize spare part costs at bosch vietnam co ,ltd

GRADUATION THESIS INDUSTRIAL MANAGEMENT IMPROVING THE MANAGEMENT PROCESS TO OPTIMIZE SPARE PART COSTS AT BOSCH VIETNAM CO., LTD Lecturer: Ph... HCMC UNIVERSITY OF TECHNOLOGY AND EDUCAT

GRADUATION THESIS INDUSTRIAL MANAGEMENT

IMPROVING THE MANAGEMENT PROCESS TO

OPTIMIZE SPARE PART COSTS

AT BOSCH VIETNAM CO., LTD

Lecturer: Ph D NGUYEN KHAC HIEU Student Name : NGUYEN THI NGOC HAN

ID student No : 15124017

S KL0 0 5 5 7 3

THÀNH PHỐ HỒ CHÍ MINH

BỘ GIÁO DỤC VÀ ĐÀO TẠO

TRƯỜNG ĐẠI HỌC SƯ PHẠM KỸ THUẬT

HCMC UNIVERSITY OF TECHNOLOGY AND EDUCATION

FACULTY FOR HIGH QUALITY TRAINING

INDUSTRIAL MANAGEMENT

GRADUATION THESIS

IMPROVING THE MANAGEMENT PROCESS

TO OPTIMIZE SPARE PART COSTS

AT BOSCH VIETNAM CO., LTD

Student Name : NGUYEN THI NGOC HAN

ID student No : 15124017 School year : 2015 Major :

Lecturer : Ph D NGUYEN KHAC HIEU

Ho Chi Minh City, July 2019

HCMC UNIVERSITY OF TECHNOLOGY AND EDUCATION

FACULTY FOR HIGH QUALITY TRAINING

H QUALITY TRAINING

HCMC UNIVERSITY OF TECHNOLOGY AND EDUCATION

FACULTY FOR HIGH QUALITY TRAINING

GRADUATION THESIS

IMPROVING THE MANAGEMENT PROCESS

TO OPTIMIZE SPARE PART COSTS

AT BOSCH VIETNAM CO., LTD

Student Name : NGUYEN THI NGOC HAN

ID student No : 15124017 School year : 2015 Major : INDUSTRIAL MANAGEMENT Lecturer : Ph D NGUYEN KHAC HIEU

Ho Chi Minh City, July 2019

Ho Chi Minh City, July 2019

GRADUATION THESIS OBJECTIVES

1 Subject:Improve the management process to optimize

spare part costs at Bosch Vietnam Co., Ltd

2 Initial data and documents: From TEF 4.2 department,

LOG, Purchasing and website of Bosch Vietnam HcP -

Plant

3 Content: Find out about the current spare part

management procedures applied at Bosch HcP Plant, based

on actual work during the internship and make suggestions

to improve management activities spare part

ACKNOWLEDGEMENTS

First, I would like to express my deep gratitude to all teachers from the faculty of High quality training and Economics at Ho Chi Minh City university of Technology and Education who have devotedly taught us over the past 4 years The knowledge as well

as the skills that I have learned over the years will be a strong foundation for me to build

my career path

I would like to express my deep gratitude to Mr Nguyen Khac Hieu - Lecturer of Ho Chi Minh City University of Technical Education He has made good orientations and contributions to help me improve the topic in the best possible way

Furthermore, I would like to thanks Bosch Vietnam - HcP Plant, TEF4 department - for facilitating me to complete my internship at this company In particular, I would like to express my sincere thank you Ms Le Cam Tien for enthusiastically guiding me and helping me quickly integrate into the new environment In addition, I would also like to thanks Mr Nguyen Phuc Tam, my buddy at Intel for his kindness to guide me to access more new software to support my work, give me some ideas to accomplish the thesis Their knowledge supported me a lot to complete this essay

Once again, I would like to thank you all teachers and all alumni so much I wish everyone succeeds in life, wish Bosch Vietnam - HcP Plant and Bosch global will grow

up

Student Name Nguyen Thi Ngoc Han

DEFINITIONS AND ABBREVIATIONS

 LOG: Logistic department

 TEF: Technical function department

 ETC: Engineering Testing Current Product department

 FCM : Facility management department

 CTG: Account controlling department

 CP/PIR-VN : Purchasing department

 LOG-VN: Logistic department at RBVN office

 QMM: Quality department

 MFG: Manufacture department

 PM04: Maintain planning module in SAP of TEF

 PM: Plant manager

 HoD: Head of department

 T-code : Transaction code in SAP

 MRP: Material Requirement Planning

 RFQ: Request For Quotation

 R.O.P: Re-order Point

 MAZE: Maschinenersatzteile (machinery spare parts)

 PR: Purchasing Requisition

 PO: Purchase Order

 ZD: The defected part

 ZN: The repaired part

 ZI: The new part

 Active part : The part has been consumed for recent 01 year

 Slow moving part : The part hasn’t been consumed for recent 01 year

 UC4 Job : Automatic Creation of purchase orders from Requisitions

 IFAO: List of non-mover items on Excel spare part analyze software

 Non-mover part : the part hasn’t been consumed for recent 4 year

 MIGO: update the status of part on system

LIST OF TABLES

Table 1.1 The function for department 12

Table 2.1 Some misconceptions in spare part management 27

Table 3.1 Statistical safety level for spare part 47

Table 3.2 Classifying spare part based on the usage level within 12 months 48

Table 3.3 Flow chart for transfer over stock to overhaul purpose 50

LIST OF FIGURES

Figure 1.1: Shareholding and Voting Rights of shareholders in Robert Bosch GmbH 5

Figure 1.2: Business sectors in Bosch Group 7

Figure 1.3: Facts and figures about Bosch in Vietnam 2017 8

Figure 1.4: HcP Plant in Long Thanh-Dong Nai 10

Figure 1.5: Push belt - a product in HcP 15

Figure 1.6: Element 16

Figure 3.1: Flow chart of creation new part process 38

Figure 3.2: Flow chart of Order Process 42

Figure 3.3: Order process for Overhaul and End-user 44

Figure 3.4: Process flow chart for non-mover control 49

Figure 3.5: Process for New part return at Bosch 55

Figure 3.6: Reasons for returning spare parts from PM team 57

Figure 3.7: Spare part cannot found information in system compare to new parts request return (1 Jan to 13 Mar, 2019) 59

Figure 3.8: Quantity and Cost of parts lost 60

Figure 3.9: Fish bone diagram to find out reasons for parts lost 61

Figure 4.1: The return area of spare part staff 67

Figure 4.2: Sample of new part return label in system (up to date 3/2019) 67

Figure 4.3: Labels in real which were filled information by technicians 68

Figure 4.4: No label was stuck as the process 69

Figure 4.5: Interface of WH app (Available spare parts) 70

Figure 4.6: Operation principles for update part by using WH parts app 71

Figure 4.7: Interface for WH app (Set up new part) 72

Figure 4.8: The return area of spare part staff after improvement 73

Figure 4.9: Interface for History Data App 74

Figure 4.10: Procedure recording spare part history status 75 Figure 4.11: Procedure order spare part from History Data App 77 Figure 4.12: Procedure return spare part from History Data App 78

TABLE OF CONTENTS

ACKNOWLEDGEMENTS iv

DEFINITIONS AND ABBREVIATIONS v

LIST OF TABLES vii

LIST OF FIGURES viii

INTRODUCTION 1

1 Reason to choose the topic 1

2 Some objectives in this research 1

3 Research scope 2

4 Research Methods 2

5 The meaning of the topic 3

6 Thesis structure 3

CHAPTER 1: OVERVIEW OF BOSCH VIETNAM LIMITED COMPANY – HCP PLANT 4

1.1 Bosch Group 4

1.1.1 The process of formation and development 4

1.1.2 Milestones in company history 5

1.1.3 Bosch business section: 7

1.2 Bosch Vietnam 7

1.2.1 The process of formation and development 7

1.2.2 Organizational chart 10

1.3 Product and consumer market at HcP 15

1.3.1 Product: 15

1.3.2 Consumer market: 17

CHAPTER 2: THEORETICAL FRAMEWORK 18

2.1 Inventory management 18

2.1.1 General about inventory management 18

2.1.2 Inventory management type 18

2.1.3 Inventory management control 19

2.2 Spare part management 20

2.2.1 Type of spare part 20

2.2.2 Classification of maintenance spares 21

2.2.2.1 Classification of maintenance spares based on the nature of the spare 21

2.2.2.2 Classification of maintenance spares according to their consumption 22

2.2.3 Life cycle of spare part 23

2.2.4 Spare part inventory 26

2.2.5 Myths about spare parts management program 27

2.2.6 Spare part management and other system 28

2.2.7 Benefits of spare part management 30

2.2.8 Cost control for spare part: role of maintenance 32

2.2.9 Three ways to improve maintenance spare part management 32

2.3 Barcode 33

2.3.1 What is barcode? 33

2.3.2 What is the function of barcode scanning? 34

2.3.3 How barcode works? 34

2.4 SQL 34

2.4.1 What is SQL? 34

2.4.2 What is the main role of SQL? 35

CHAPTER 3: THE SPARE PARTS MANAGEMENT PROCEDURE AT BOSCH VIETNAM 37

3.1 The responsibilities of spare parts management procedure 37

3.2 Some processes related to tasks in internship period 37

3.2.1 Creation of a New Spare Part 37

3.2.1.1 Purpose: 37

3.2.1.2 Figure Part Creation Flow Chart 38

3.2.1.3 General comments on the process from actual observation: 40

3.2.1.4 Some good points: 40

3.2.1.5 Limitations: 40

3.2.2 Order process 41

3.2.2.1 Purposes: 41

3.2.2.2 Figure Part Creation Flow Chart 42

3.2.2.3 General comments on the process based on actual observation: 44

3.2.2.4 Good points: 45

3.2.2.5 Limitations: 45

3.2.3 Optimization and Modification of MRP spare part details 46

3.2.3.1 Purposes 46

3.2.3.2 Procedure 46

3.2.3.3 General comments on the process based on actual observation 51

3.2.3.4 Good points: 52

3.2.3.5 Limitations: 52

3.3 Status of daily internship related to processes 52

CHAPTER 4: EVALUATIONS AND RECOMMENDATIONS 64

4.1 Some evaluations from practical observation 64

4.2 Recommendations 65

4.2.1 Objective recommendations 65

4.2.2 Some suggested solutions 65

4.2.2.1 Redistributing resources 65

4.2.2.2 Improve the management procedure base on available resources 66

4.2.2.3 Develop management application 66

CONCLUSION 80

APPENDIX 85

BIBLIOGRAPHY 82

INTRODUCTION

1 Reason to choose the topic

With the orientation of industrialization, modernization and trade agreements that Vietnam has signed, there are countless opportunities as well as attracting many foreign investors to Vietnam Many multinational corporations open branches with representative offices in Vietnam or invest billions of euros in Vietnam In which, Bosch Group has built the largest factory of CVT belts (continuously variable transmission) in Long Thanh Industrial Park, Dong Nai with the name HcP (Ho Chi Minh Plant), and another factory is located in Tilburg, Netherlands In addition to technology transfer as well as product creation process, in Vietnam, HcP has built the management process by itself due to the positioning of enterprises and the economic environment of Vietnam, HcP There are always improvements to optimize resources With technology characteristics, HcP products are undergoing a series of complicated processes as well

as many different types of machines are able to produce push belts that meet the standards committed to customers However, in order to be able to run the machine smoothly, effectively, preventive maintenance or corrective maintenance requires both maintenance engineers, spare parts management teams and stakeholders to cooperate closely, so there are the need of improvements in the management process to meet the right time, sufficient spare parts for machines, make sure to follow the maintenance plan, avoid stopping machines to affect the production plan

Recognizing the importance of spare parts management which influence the operation of the machines in particular and the efficiency of the whole plant in general,

I implemented the topic of internship “Improving the management process to optimize

spare part costs at Bosch Vietnam Co., Ltd”

2 Some objectives in this research

General objective:

- Evaluation and analysis of processes related to spare parts management

- Based on practical observations and knowledge to provide solutions that help limit purchase order late and minimize the amount of spare part lost

Detail objectives:

- Systematizing knowledge related to inventory management

- Synthesizing, analyzing, evaluating factors affecting ordering decisions, managing inventory

- Determining the causes of difficulties in managing spare parts in stock

-Through the actual situation, come up with innovative solutions to minimize the problems that the factory is facing

- Building spare part management apps basically base on Visual Studio 2017 platform

3 Research scope

Research subjects:

- Processes and activities related to managing spare parts at Bosch Vietnam

- Order and return spare part process among of stakeholders

Data collection method

- Secondary information source:

+ Consult documents (books, newspapers and Internet) to find out about products and orientation of the company

+ Refer to information, essays on the Internet as well as in HCMUTE’s library + Refer to documents related to spare parts management process of HcP

- Primary information source:

+ Observe the actual situation at enterprises through internship activities

Methods of data analysis

- Sampling method, synthesizing, descriptive statistics the amount of parts required

5 The meaning of the topic

The topic was designed to help readers understand the processes related to managing spare parts at HcP and especially the process related to my tasks during 3 months internship

Through the analysis of the process and the actual observations, from my point of view, I will propose some solutions to optimize the resources of the factory for the operation of spare parts management through activities which implemented in small steps in the management process

6 Thesis structure

Dissertation includes 4 chapters:

Chapter 1: Overview of Bosch Vietnam limited company – HcP Plant

Chapter 2: Theoretical framework

Chapter 3: The spare parts management procedure at Bosch Vietnam

Chapter 4: Evaluations and recommendations

CHAPTER 1: OVERVIEW OF BOSCH VIETNAM LIMITED

COMPANY – HCP PLANT 1.1 Bosch Group

1.1.1 The process of formation and development

Overview:

The Bosch Group is a leading global supplier of technology and services It employs roughly 410,000 associates worldwide (as of December 31, 2018) The company generated sales of 77.9 billion euros in 2018 Its operations are divided into four business sectors: Mobility Solutions, Industrial Technology, Consumer Goods, and Energy and Building Technology As a leading IoT company, Bosch offers innovative solutions for smart homes, smart cities, connected mobility, and connected manufacturing It uses its expertise in sensor technology, software, and services, as well as its own IoT cloud, to offer its customers connected, cross domain solutions from a single source The Bosch Group’s strategic objective is to deliver innovations for a connected life Bosch improves quality of life worldwide with products and services that are innovative and spark enthusiasm In short, Bosch creates technology that is “Invented for life” The Bosch Group comprises Robert Bosch GmbH and its roughly 440 subsidiaries and regional companies in 60 countries Including sales and service partners, Bosch’s global manufacturing, engineering, and sales network covers nearly every country in the world The basis for the company’s future growth is its innovative strength At 125 locations across the globe, Bosch employs roughly 64,500 associates in research and development The company was set up in Stuttgart in 1886 by Robert Bosch (1861–1942) as “Workshop for Precision Mechanics and Electrical Engineering.” The special ownership structure of Robert Bosch GmbH guarantees the entrepreneurial freedom of the Bosch Group, making it possible for the company to plan over the long term and to undertake significant upfront investments in the safeguarding of its future Ninety-two percent of the share capital of Robert Bosch GmbH is held by Robert Bosch Stiftung

GmbH, a charitable foundation The majority of voting rights are held by Robert Bosch

Industrietreuhand KG, an industrial trust The entrepreneurial ownership functions are

carried out by the trust The remaining shares are held by the Bosch family and by Robert

Bosch GmbH

Figure 1.1: Shareholding and Voting Rights of shareholders in Robert Bosch

GmbH

Source: Company website

Powertrain solutions:

As of January 1st, 2018, the strengths of Gasoline Systems (GS) and Diesel Systems

(DS) have been merged in Powertrain Solutions (PS)

Bosch’s goal is to become the number 1 provider of diversified powertrain products and

solutions in our three market segments Electric Vehicles (EL), Passenger Cars (PC), and

Commercial Vehicles / Off-Road (CV/OR) – from gasoline and diesel injection to

electric drives with battery and fuel cell technologies Around 90,000 associates in 27

countries and more than 90 locations worldwide are playing their part in the success of

Powertrain Solutions

1.1.2 Milestones in company history

1886: Establishment of the company: opening of the Workshop for Precision

Mechanics and Electrical Engineering in Stuttgart on November 15

1897: First successful installation of the Bosch low-voltage magneto ignition device

in a motor vehicle

1898: First Bosch sales office outside Germany opens in the United Kingdom 1902: Delivery of the first high-voltage magneto ignition system with Bosch spark

plugs

1905: First Bosch manufacturing site outside Germany opens in Paris

1912: Start of production in Bosch’s first U.S plant, in Springfield, MA

1913: At the main plant in Stuttgart, establishment of an apprentice training

department with a dedicated workshop Market launch of the Bosch automotive lighting system

1921: The first Bosch Service repair shop is opened in Hamburg

1932: Acquisition of heating systems business of Junkers & Co GmbH in Dessau

Market launch of the first mass-produced car radio in Europe

1967: Establishment of Bosch-Siemens Hausgeräte GmbH (known after 1998 as

BSH Bosch und Siemens Hausgeräte GmbH and since 2015 as BSH Hausgeräte GmbH Start of production of the Jetronic electronically controlled gasoline injection system

1978: Start of production of ABS, the electronically controlled antilock braking

system

1979: Start of production of the Motronic electronic engine management system 1995: Start of large-scale production of MEMS sensors (micro-electro-mechanical

systems) Start of production of ESP®, the world’s first electronic stability program

2008: Acquisition of Innovations Software Technology GmbH in Immenstaad,

Germany (from January 1, 2011: Bosch Software Innovations GmbH)

2010: Full parallel hybrid powertrain for passenger cars goes into production Start

of production of the predictive emergency braking system

2015: Bosch opens new research campus in Renningen, Germany

2017: Bosch launches the e-axle This compact new drive unit for electric vehicles

comprises motor, power electronics, and transmission

1.1.3 Bosch business section:

- Mobility Solutions

- Industrial technology

- Consumer Goods

- Energy and Building Technology

Figure 1.2: Business sectors in Bosch Group

Source: Company website

1.2 Bosch Vietnam

1.2.1 The process of formation and development

About Bosch Vietnam:

Bosch first started in Vietnam with a representative office in 1994 and registered a wholly-owned subsidiary in 2008 According to the business strategy of Bosch in Vietnam, from 1st July 2014 on all business entities were merged into Bosch Vietnam Co., Ltd with its head office at Ho Chi Minh Plant (HcP) in Dong Nai Province

Bosch has its main office in Ho Chi Minh City, with branch offices in Hanoi and Da Nang, and a Powertrain Solutions plant in the Dong Nai province to manufacture pushbelts for continuously variable transmissions (CVT) in automobiles In addition, Bosch operates a software and engineering R&D center (Robert Bosch Engineering and Business Solutions Vietnam Co., Ltd), as well as an automotive R&D center for mobility solutions in Ho Chi Minh City In fiscal 2017, Bosch recorded consolidated sales of about USD 114 million (101 million euros) in Vietnam, achieving a year-on-year growth

of more than 17 percent Total net sales, including sales of non-consolidated companies and internal deliveries to affiliated companies, stood at USD 328 million (290 million euros) As of 31 December 2017, Bosch employed roughly 3,700 associates in Vietnam Bosch has diversified businesses in Vietnam including Automotive Aftermarket, Automotive Electronics, Drive and Control Technology, Packaging Technology, Power Tools, and Building Technologies

Figure 1.3: Facts and figures about Bosch in Vietnam 2017

Source: Company website

About Ho Chi Minh City Plant:

HcP has started its belt assembly in a rented building on 1st August 2008 as the assembly plant of Tilburg Plant (TbP)

On 14th April 2011, HcP celebrated the inauguration of the new plant (Lth101 with 17,000 sqm), which did not only allow to increase the production depth, but also to facilitate the push belt assembly of this high-tech product

On 3rd July 2012 HcP marked a big milestone by starting to produce the second component (loop-set) for its push belt

Since November 2012, HcP doubled the production floor space up to 56,000 m2, and have successfully increased its production capacity and realized a lot of new line SOP’s

In November 2013, Bosch established a new legal entity – Bosch Vietnam limited liability company

On July 1st, 2014, Robert Bosch Vietnam was incorporated into Bosch Vietnam and is located in Dong Nai The previous industry production company was called Gasoline Systems (GS) and Diesel Systems (DS) but on January 1st, 2018 they have been merged

in Powertrain Solutions (PS)

Today, HcP has become the main factory for continuously variable transmission in the Asia-Pacific region HcP has continuously expanded its production area, the production line has become more and more modern and in early February, 2019 there will be two production buildings as well as the office area will come into operation

Figure 1.4: HcP Plant in Long Thanh-Dong Nai

Source: Company website

Some information about the company:

Name Plant: Bosch Vietnam Co., Ltd

Address: Road 8, Long Thanh Industrial Zone, Tam An Commune, Long Thanh District, Dong Nai Province, Vietnam

Website: www.bosch.com.vn

Phone: 0251 6280 340

Fax: 0251 620 350

Company Logo:

Slogan: Invented for life

Manufacturing industry: Powertrain Solutions (PS) (Gasoline Systems (GS) and Diesel Systems (DS)

Factory area: about 17,000 m2

Personnel: more than 2,000 associates

1.2.2 Organizational chart

HcP/PM Ryosuke Masumitsu

Plant Manager

PS/QMM-HcP Greg Lewandowski

HcP/PJM Sylvain Le Roux

HcP/MFG Andreas Birnesser

HcP/TEF Tatsuru Nawata

HcP/PRS

Vo Thanh Lam

HcP/FCM Luong The Tho

HcP/HSE Truong Quang Hung

PS-CT/ETC-VN Han Dekkers

Source: Internal documents

Organizational chart of the department:

Source: Internal documents

The function for department:

Table 1.1: The function for department

No Position Function

1 Plant manager - Manage and operate, responsible to the corporation for all

production and business activities of the factory

- Review and approve production programs and projects and business strategies

- Establish quality policies and objectives

- Assign responsibilities for each department

2 QMM - HcP / QMM1: Have discussion with customers

- HcP / QMM3: Quality control process quantity

- HcP / QMM6: Method of measurement and characterization analysis

- HcP / QMM7: Quality system and determining methods

- HcP / PQA: Check the quality of the input

3 PJM Take responsibility for controlling projects of the factory such as:

- HcP / PJM1: Set up and run the project

Mr Nguyen Thanh Huy

MAZE

Mr Dao Thanh Binh

Spare part Planner

Loop Line

GU Line

Mr Nguyen Nhat Truong Spare part Planner Element Line Assembly Line

Ms Le Cam Tien Purchase request Spare part Admin

Ms Bui Thi Ngoc Mai Spare part planner Overhaul

- HcP / PJM1.1: Bring new products into existing production lines

- HcP / PJM2: Manage investment money for the project and the cost to run the project

- HcP / COS: Create a sample product

4 MFG - Control the production process

- Make schedule for manufacturing

- Implementation of production projects: organization of assignment

- Coordination of resources to participate in production

- Conduct statistics, making table of results, and making production improvement projects,

- HcP / MFG1: Manufacturing elements

- HcP / MFG2: Manufacturing loops

- HcP / MFG3: Element assembly and loop set form push-belt

- HcP / MFG9: Support for production systems

5 TEF - HcP / TEF1: Production engineering system

- HcP / TEF2: Technology process

- HcP / TEF4: Maintain production

- HcP / TEF6: BPS (Bosch Production System) and industrial engineering

6 PRS - Implement safety protection work including information safety

and security, security and order of the whole plant

- Control the rules of entry and exit of agencies and authorities to carry out activities related to securing information as well as property of the plant

7 FCM - HcP / FCM1: Operation and maintenance

- HcP / FCM2: Management of technical equipment

- HcP / FCM3: Building and managing the area

- HcP / FCM4: Infrastructure services, document management and control

8 HSE - Inspect the labor safety performance of all factory employees

- Monitor plant safety and hygiene, regularly report on labor safety, occupational accidents and labor hygiene

- Check and reporting on the status of safety equipment, fire protection equipment on vehicles, production facilities and offices according to regulations

9 LOG - Satisfy customer requirements through value-added supply chain

- Provide directly and indirectly finished products / semi-finished products at the right time, place and specification within budget

- LOI: Improve logistics

- LOP1: Plan production

- LOP2: Buy input materials constituting the product

- LOM: Move material

- LOW: Warehouse

10 HRL - HcP / HRL1: Recruitment

- HcP / HRL2: Salary and benefits

- HcP / HRL3: Training and development

- HcP / HR-IT: Human resource management system

11 CTG - Advise the plant manager in the field of financial management

and organizing accounting

- Monitor the company’s production and business activities in accordance with current accounting standards and laws

- Reflect and propose cash collection and payment activities and

other forms of payment; Make domestic and international payments

1.3 Product and consumer market at HcP

1.3.1 Product:

As of March this year, the total number of CVT transmission belts created at the factory in Dong Nai has reached more than 25 million products Push-belt (Continuously Variable Transmission) CVT – is actually one of Bosch’s “hardest” products worldwide At Bosch, the production of this powertrain is so complicated that before Vietnam, only one Netherlands factory could be built successfully Up to now, in addition to the parent company in Tilburg, Bosch Vietnam, in particular HcP

is the second place in the world that can successfully manufacture continuously variable transmission belt products used in automatic transmission for cars called Push-belt

Figure 1.5: Push belt - a product in HcP

Source: Company website

Transmission belts are one of the key components that make up the CVT automatic transmission If there is no transmission belt, or transmission belt is broken, the vehicle will not run The belt allows continuous transmission of power from the engine to the

wheel In this way, the engine maintains its operation in the optimal state, thereby reducing fuel consumption, allowing rapid acceleration, and reducing noise deficiency Created by hundreds of specially designed steel components, tied together along both sides of a high alloy steel ring, the power transmission can be adjusted to suit the power necessary density, by changing the number of rings and the width of the belts

The structure of a push-belt consists of two main parts assembled together: elements and loop-sets

Push belt manufacturing diagram:

Basically, the Element consists of two types:

- Normal element: It is a common element According to the stage, the elements will form a long sequence, the worker will match that element to the loop

- Full fill element: An element to fit into exposed locations after the usual element is inserted into loop set

Figure 1.6: Element

Element

Loop

belt

Push-Loops:

These loops will be produced in a variety of sizes, which will then be assembled together called loop set The number of Loop in each loop set type depends on the type of push belt product that the factory is manufacturing

Currently, the loop production line has two different types:

- Conventional line - regular loop production line: Using technology before 2010, using many standing workers, the accuracy is not high, the product error rate is high

- GU line - a new high-quality loop production line that has just been installed since

2014, uses more high-tech machines, automatic error control systems on computers, uses fewer workers than conventional line Currently, the factory has been running GU line number 10, 11 and GU line number 9

1.3.2 Consumer market:

With the CVT product line, the main consumer market of the factory is Japan and countries in Asia, which are directly the Nissan Group's Jatco in Japan, then the above auto manufacturers in the world like Toyota, Honda, Mercedes Benz, etc In addition, the company is currently expanding its consumer market to some countries in Europe and America

CHAPTER 2: THEORETICAL FRAMEWORK 2.1 Inventory management

2.1.1 General about inventory management

According to Will Kenton (2018), inventory is an accounting term that refers to goods

that are in various stages of being made ready for sale, including:

 Finished goods (that are available to be sold)

 Work-in-progress (meaning in the process of being made)

 Raw materials (to be used to produce more finished goods)

As a part of your supply chain, inventory management includes aspects such as controlling and overseeing purchases - from suppliers as well as customers - maintaining the storage of inventory, controlling the amount of product for sale, and order fulfillment Drury (1996) defined inventory as a stock of goods that is maintained by a business in anticipation of some future demand This definition was also confirmed by Schroeder (2000) who stressed that inventory management has an impact on all business functions that is particularly in marketing, accounting operations and finance

According to Wild (2002), inventory control is the activity which organizes the availability of items to the customers is the activity of inventory control It provides the manufacturing, purchasing and distribution functions to meet the marketing needs The existence of too large inventory leads to increased costs and reduced cash flow and contributes to decreased sales The mentioned aspects show the importance of accurate inventory management in enabling the company’s competiveness Felea (2008)

To sum up, inventory management is a systematic approach to obtaining, storing, and

profiting from non-capital assets (raw materials and finished goods) The right stock, at

the right levels, in the right place, at the right time, and at the right cost

2.1.2 Inventory management type

Typically, inventory types can be grouped into four categories: (1) raw materials, (2) works-in-process, (3) finished goods, and (4) maintenance, repair, and operations (MRO) goods (Okora, Happiness Daniel, 2018)

1 Raw materials are any items used to manufacture components or finished products

These can be items produced directly by your business or purchased from a supplier For example, a candle-making business could purchase raw materials such as wax, wicks, and decorative ribbons

2 Works-in-progress inventory refers to unfinished items moving through production

but not yet ready for sale In the case of a candle-making business, work-in-progress inventory might be candles that are drying and unpackaged

3 Finished goods are products that have completed the production process and are ready

to be sold: the candles themselves

4 Maintenance, repair, and operations (MRO) goods are items used to support and

facilitate the production of finished goods These items are usually consumed as a result of the production process but aren’t a direct part of the finished product For instance, disposable molds used to manufacture candles would be considered MRO inventory

2.1.3 Inventory management control

Inventory management is considered as major concerns of every organization In inventory holding, many steps are taken by managers that result a cost involved in this row This cost may not be constant in nature during time horizon in which perishable stock is held To investigate on such a case, Taygi (2014) proposes an optimization of inventory model where items deteriorate in stock conditions

Inventories are materials and supplies in stock for either sale or for the productions process They act as a buffer against differences in demand and supply and are a part of the planning process (Arnold, 1991) Inventories can be seen as a tool dealing with

uncertainties to achieve high customer service Customer refers to both internal and external customers, such as that next production operation, or purchaser and distributor (Arnold, 1991) The performance measure describes the availability of an item when a customer needs it (Axsater, 1991) A problem faced by decision makers in an organization often comes from management problem Every organization has to take initiative because decision is an essential task Because of the issue of allocating resources is common to all organizations, organizations should acquire, control and allocate the factors of production which are essential for the achievement of the business’s goals In addition, inventory management should be adopted as a key activity

of business logistics that contribute more to the company’s survival and growth

Inventory management or control is a form of administrative control that is particularly essential in all manufacturing, wholesale and retail establishments The essence of all inventory control is to have the right goods in the right quantity at the right time and place Failure to have the right quantity of inventory could cause the loss of valued customers because it results in the failure of the organization to deliver on time The maintenance of optimum inventory levels for the operation of the business reduces the amount of money that would be tied-up in inventory and makes for the advantages that could accrue from large quantity purchases

2.2 Spare part management

2.2.1 Type of spare part

Spare parts, maintenance and operating supplies comprises of all variety of parts and materials essential to uphold the production assets in acceptable operating condition so

as to accomplish desired production results in terms of quality, quantity and time The three basic types of spare parts are:

a) PM spares: Those replaced during preventive or opportunity maintenance

b) Repair Parts (Breakdown spares): Those required to replace parts that fail during

service

c) Overhaul (Shutdown) Parts: Those required during planned overhaul or shutdown of

the plant The quantity and the time of requirement cannot be predicted for the repair parts Only, the chance of their requirement can sometimes be predicted Statistical methods are needed for their inventory control

2.2.2 Classification of maintenance spares

2.2.2.1 Classification of maintenance spares based on the nature of the spare

Maintenance spares generally fall into one of the following three categories (Leonardo Alvarado, 2007):

- Specific parts which are specific to an installation an equipment or a machine

- Standard parts which correspond to internationally recognized standards and which are interchangeable with other makes of the same part

- Consumables and sundries

 Specific parts:

Specific parts of an installation, machine or device are specially manufactured as per design specifications of the Original Equipment Manufacturer (OEM) and are not normally interchangeable with parts of another make Examples are machine frames, the main shafts of all rotating equipment, specialist electrical or electronic parts, cylinder heads, specialized castings, camshafts and levers, special gears, pistons and rings, connecting rods, etc

 Standard parts:

Standard parts are all those parts which possess characteristics defined by the various international standards and which are interchangeable with equivalent parts of another make

A standard part will also have several applications within a machine or a piece of equipment, or within a production area or plant Standard parts are generally listed in manufacturers catalogues according to their dimensional characteristics and according

to their principal specifications Examples of standard parts are screws, nuts and bolts,

pipe fittings, all types of fasteners, O-rings, all types of hoses, lip-seals, bearings, electrical contacts, electrical motor brushes, relays, circuit breakers, vee belts, roller chains, etc

 Consumables and sundries:

Here, in order to avoid confusion with the category of standard parts, it is necessary to keep in mind the consumable aspect of the spares, i.e the spare is used only once and is then considered to have been consumed in the sense that it cannot normally be removed, examined and reused or it is not repairable This is why the following types of spares are included in this category, even though their characteristics may correspond to international standards:

- All types of lubricants and greases;

- Welding rods and welding wire, metal cutting rods;

- Angle iron, bar stock for turning, sheet steel and other general

- Purpose hardware;

- Glass sheets, plywood, chipboard, general-purpose steel wire;

- Electrical insulating materials, cartridge fuses;

- Most types of common building materials, etc

Other articles included in this category are:

- All types of paints;

- Gasket materials, sealing compounds, adhesives, grinding compounds;

- Cleaning materials and cleaning products;

- Adhesives

The term "sundries" refers to all items which are general-purpose items (not specific or standard parts) and which can be found in most maintenance stores In most cases, these are available as off-the-shelf items in any wholesale market or in any shop which stocks industrial items They do not have a specific or standard application

2.2.2.2 Classification of maintenance spares according to their consumption

According to spare parts consumption, they are divided into 2 categories (Leonardo Alvarado, 2007)

 Slow Movers

These are spares with low annual consumptions (i.e an average annual consumption

of less than 3.0) These articles may be specific as well as standard spares Within this category one finds Insurance or Capital or Security spares

 Fast Movers

These are spares with higher annual consumptions (i.e an average annual consumption greater than 3.0) These articles may be specific or standard spares Almost all consumables and sundries fall within this classification

2.2.3 Life cycle of spare part

Spare parts go through the following six stages in their life cycle

1) Design and specifications: The right spare

2) Determination of initial requirements: The right quantity

3) Procurement: The right price

4) Storage and preservation: Minimum custodial and inventory carrying cost

5) Issue and replenishment: Minimum downtime cost through inventory control

6) Disposal of damaged, surplus and obsolete spares: Minimum damage and maximum disposal value

The details of each phase will be discussed below

Stage 1: Design and Specifications

Stringent specifications, high quality of manufacture and careful operation/ maintenance

of the machine reduce consumption and cost due to replacement of spares Ideally, spare parts from the OEM (Original Equipment Manufacturer) should be used Spares have a huge range - each one having several specifications, which are not available to the user Without actual fitting, it is not possible to tell whether apart will fit or not This is clearly

is not practicable as spares are stocked in advance of requirement It will be worth paying

for a certificate or warranty for the spare part from its supplier, at least for critical and expensive parts Only large consumers such as railways, airlines, transport fleets, armed forces etc can assess the life of parts by destructive or accelerated life-testing or from the quality records of the manufacturer Warranties cannot compensate for the loss due short life of a part They only compensate for the cost of the part Spurious, even reconditioned and defective parts or inferior quality parts are often sold at a lower price than that of the OEM One should never buy from unauthorized dealers or unproved suppliers

Stage 2: Determination of Initial Requirements

The machine supplier usually gives a “Recommended List of Spares” to the user This list should be scrutinized for additions that are basically profit - oriented The supplier should be asked to give consumption rate for various spares The maintenance engineer can than better assess the spares to be stocked for a chosen initial period - say, for one to two years based on his experience with similar items, number of machines installed, age

of machines, operating conditions, engineering factors and the inventory control system

in operation Casual selection of spares at this stage will create a large inventory of nonmoving spares In initial stages only a few will need replenishment Spare parts planning begin with the selection of the machine At this stage, weight must be given to the following:

- Complete range of parts serviced by the manufacturer including those from his suppliers to be available, along with illustrated catalogues for applicable models;

sub Assurance of supply for the lifetime of the machine;

- Supply of manufacturing drawings as needed;

- Availability of observed/estimated consumption rates (not sales data) of spare parts;

- Technical data/specifications for assessing failure rate;

- Warranty for quality and for life of supplied spares;

- Guidance in identification, storage (for sensitive items) and preservation;

- Warranty for quality and for life of supplied spares;

- Guidance in identification, storage (for sensitive items) and preservation;

- Warranty for quality and for life of supplied spares;

- Guidance in identification, storage (for sensitive items) and preservation

Using this information and his own experience, the maintenance engineer assesses the initial requirement for a period that will cover one lead-time or one review period (and safety stocks) for spares for all types of maintenance, insurance items and repair pool This is a painstaking and time consuming task but it will reduce consider able difficulties later Prices of spares are usually negotiated at the time of buying the machine but a list

of prices for further procurement should be agreed upon at this stage itself

Stage 3: Procurement

For highly specialized equipment or for that likely go out of production, the user should assess their availability There is not much room for competitive procurement of spares except at the time of buying the machine Machines using standard replacement parts (such as ball/roller bearings and hardware) should be preferred Non-standard parts are always expensive, and often difficult to get The contract for supply of spare parts should take care of the points made earlier

Stage 4: Receipt, Storage and Preservation

On receipt, the spare parts are checked for correctness of quantity and quality before storing them The principles here is “a place for everything in its place” Spare parts are stocked machine-wise Items common to more than one machine are stocked together The location of each spare is marked on the bin card for the spare These bin-cards are also the account cards, which indicate the receipt and issue (and stock balance) and particulars (part number etc) of the spare Mentioning details of interchangeable of substitute spares is a great help in an emergency

Security of spares in custody is the responsibility of the storekeeper Small and expensive spares can be easily pilfered They are kept in a locker Spares are issued only

to authorized maintenance personnel who need them for their work Physical stock of all items should be checked with ledger balance annually and differences reconciled

Errors are investigated to avoid recurrence Different preservatives and methods are needed for different spares Corrosion is the greatest enemy of all spares Ball and roller bearings are easily damaged by dust/ humidity and should be kept in original packing till needed Heat sensitive electronic items like transistors should be kept in cool places Rubber and textile items should not be exposed to direct sunlight or to come in contact with mineral oils Rubber belt sand tubing should not have twists or sharp bends when stored The condition of all spares including the surplus or obsolete ones should be checked regularly such as at the time of annual stocktaking

Stage 5: Issue and Replenishment: The Reorder Level System of Inventory Control

The replenishment of parts withdrawn from stock involves two basic questions, namely,

“How much to order?” and “When to order?” The quantity and especially the time of replenishment has to be determined scientifically as they profoundly affect the cost effectiveness of inventory management

Stage 6: Disposal of Damaged, Surplus and Obsolete Spare Parts

An organization expecting good resale value for its surplus spare parts should ask itself whether it would buy “second hand" spares from another unit as any price other than scrap value One can never be sure as to how long the parts had been in stock and what deterioration had set in during storage Such spares get some value only when they are sold along with the used machine itself Further, it is not wise to dispose off spare parts applicable to existing machines simply because they had not been used Only stock of insurance spares exceeding could be sold off-but not at scrap value It is safer to carry the inventory Possibilities should be explored for alternative uses or as substitutes (even with modifications) for the surplus/obsolete spare parts

2.2.4 Spare part inventory

Spare parts inventories differ from other manufacturing inventories in several ways (W.J Kennedy, 2011)

- First, the functions are different Work-in-process (WIP) inventories exist in order to smooth out irregularities in production flow These irregularities can be caused by