MINISTRY OF EDUCATION AND TRAINING
THUONGMAI UNIVERSITY
-------------------------
VŨ TH NH QU NHỊ Ư Ỳ
MANAGEMENT OF PURCHASING RAW MATERIALS FOR
GARMENT COMPANIES UNDER VINATEX
Major : Trade Business
Code : 934.01.21
SUMMARY OF ECONOMIC DOCTORAL THESIS
Hanoi - 2019
The work was completed at: Thuongmai University
Science instructor:
1. A/Prof.Dr. Bui Huu Duc
2. Dr. L c Th Thu H ngụ ị ườ
Review 1: A/Prof.Dr. Le Thai Phong
Review 2: A/Prof.Dr. Đinh Van Thanh
Review 3: A/Prof.Dr. Nguyen Xuan Quang
Thesis will be protected before the thesis review board meeting at
……………………………………………………………………………………
The dissertation can be found at:
National Library
Thuongmai University library
1
INTRODUCTION
1.Rationale of the study
Firstly, in his value chain framework, M. Porter particularly emphasizes the supply
of inputs especially raw materials and identifies this as the first step of primary value chain
activities. Purchasing of raw materials management is considered as an activity related to
the purchasing and managing of raw materials from input to storage before such raw
materials are put into production. Purchasing of raw materials management is an important
task for manufacturing companies because it can allow these companies to ensure the
rhythm and continuity of their operations.
Secondly, in addition to other factors which are market demands, competitors
activities and overall price indexes, raw material management also make great contributions
to the company's performance, revenue and final profit.
Thirdly, raw material management includes all activities which are involved in
purchasing raw materials, delivering finished products through manufacture and distribution
to customers. For these functional activities, it is necessary for companies to perform
management tasks, namely, identifying production demands, having schedules for
production and raw material procurement, sorting, distributing and evaluating raw materials.
Effectively coordinating the above said functional activities will allow companies to
increase their business results.
Fourthly, in order to develop an industry that produces finished products for markets,
it is essential for all the end consumers and/or equipment suppliers and economic
organizations to pay their attention to the development of supporting industries to provide
"inputs" and semi-finished details for the manufacturing process of finished products on
principle.
Fifthly, it is the fact that Vinatex's garment companies are still dependent on foreign
suppliers and industrial importers in terms of 70% - 75% of the "input" raw materials. This
is really difficult for many garment companies to comply with the “yarn forward rule of
origin” under the provisions of Trade Agreements.
For the above said reasons, that the author selects the topic " Management of
purchasing raw materials for garment companies under VINATEX " as a doctoral
dissertation topic will really have both theoretical and practical significance and will
contribute an important part in the orientational growth of raw material resources for the
garment industry of Vietnam in general and Vinatex in particular.
2. Overview of research contents
2.1. Studies on Procurement/Purchasing
Procurement/Purchasing is considered as a common content that have been studied
by a lot of scientists for a long time. For example, Compton & Jessop (1995) defines
'Procurement' as the acquisition of supplies or services by many different methods. Van
2
Weele and Rozemeijer (1996) define "procurement" as including all activities required in
order to obtain the product from the supplier and get it to the place it is consumed.
According to An Thi Thanh Nhan (2018), ‘Procurement’ is defined as an activity done by
companies to create inputs. Procurement is also known as sourcing, drafting supply
contracts as well as conducting inventory management.
Regarding purchasing strategies, according to Janda & Seshadri (2001), a purchasing
strategy has a great influence on the performance of companies. In order to ensure their
performance, it is essential for companies to first assess the current supply and then to
develop a strategy for obtaining resources.
Regarding organizational structures within purchasing, Peter Baily et al. (2005) argue
that there is no ideal structure that can be applied by companies forever. In case of any
arising change in the business environment and in case where companies grow more and
more, it is required to re-evaluate and change the organisational structures within
purchasing. Once organizational strategies are correctly formulated, the roles and objectives
of procurement/purchasing will be clearly defined..
2.2. Studies on supply management
Supply management has been considered an important factor for a long time because
it allows companies to increase their revenue and reduce their costs. David Burt et al. (2010)
identify that supply management has the following roles: (1) Creativity which means
creating new design ideas for products through research and development, (2) Finance
which means supply management, including: managing, making financial plans and
controlling financial aspects of a company, (3) Human resource which means the
management of labor supply and relationships with employees, (4) Raw materials supply
which means the management of procurement of raw materials, services and necessary
equipment, (5) Production which means the management of producing products and
services with economic value from purchased raw materials, (6) Distribution which means
the management of marketing and selling products and services to the market.
After identifying how supply management can affect company profits, Waters and
Donal (2011) consider supply chain management to be a difficult task because it contains a
lot of risks, from small risks which can result in delays to big risks which can disrupt the
entire supply chain.
2.3. Studies on raw materials management
Raw materials management can be defined as the function of business that is
responsible for the coordination of planning, sourcing, purchasing, moving, storing and
controlling raw materials in an optimum manner so as to provide services to customers at a
minimum cost. Raw materials management enables companies to coordinate raw materials-
related activities and control total raw materials costs through integrated systems. The raw