Recommendations to improve materials inspection process and returning excess fabrics into offset stock and stock balancing at mascot international viet nam

MINISTRY OF TRANSPORTATION

MINISTRY OF EDUCATION & TRAINING

VIETNAM MARITIME UNIVERSITY

STUDENT NAME: TRAN THI THUY DUONG

DISSERTATION
GLOBAL STUDIES AND MARITIME AFFAIRS

RECOMMENDATIONS TO IMPROVEMATERIALS
INSPECTION PROCESSAND RETURNING EXCESS
FABRICS INTO OFFSET STOCK AND STOCK
BALANCING AT MASCOT INTERNATIONAL VIETNAM

HAI PHONG – 2015


MINISTRY OF TRANSPORTATION

MINISTRY OF EDUCATION & TRAINING

VIETNAM MARITIME UNIVERSITY

STUDENT NAME: TRAN THI THUY DUONG
CLASS:

GMA 02

DISSERTATION

GLOBAL STUDIES AND MARITIME AFFAIRS

RECOMMENDATIONS TO IMPROVE MATERIALS
INSPECTION PROCESSAND RETURNING EXCESS
FABRICS INTO OFFSET STOCK AND STOCK
BALANCING AT MASCOT INTERNATIONAL VIETNAM

Supervisor:

Vu Thi Thu Hang

Division:

Global Studies and Maritime Affairs

Faculty:

Economics

HAI PHONG – 2015


Recommendations to improve materials inspection process and returning excess fabrics into offset
stock and stock balancing at Mascot International Vietnam

PREFACE
In the integrated environment, there are numerous companies decided to
invest and create their branches oversea. Nevertheless, this is a big challenge for the
parent companies to control all of their subcontractors because of time, distance and
scale. This is also a problem of Mascot International A/S which is the Danish

family-owned company. When managers have tried to improve Mascot’s branch in
Vietnam they realized several difficulties within fabrics flowthat required to be
handled. This research will concentrate on analyze the drawbacks existing in
inspection process and returning excess fabrics into offset stock and stock balancing
which are two major steps of fabrics flow. As expected result, this researchwill help
managers have full vision including aspects that they have not noticed yet.
Furthermore, recommendations also will be conducted in this research.
I declare that this report is my own unaided work. It has not been
submitted before.
If violated, I am solely responsible for and bear the punishments of the
Institution and University.

Student Name and
Signature

Tran ThiThuy Duong

i.

Tran ThiThuy Duong-GMA 02

Page i


Recommendations to improve materials inspection process and returning excess fabrics into offset
stock and stock balancing at Mascot International Vietnam

ACKNOWLEDGEMENT
Firstly, I would like to express my sincere gratitude to my advisor Ms. Vu
Thi Thu Hang and Mr. Vu Le Huy for the continuous support of my graduated

dissertation.They helped me to have the most suitable outline and corrected errors
for my assignment. Admittedly, their guidance is very important to do this
dissertation.
It would be big mistake if not to mention that Mr. Lars SpangKjeldsen–a
director of IT and Logistics of Mascot International A/S gave me the first idea for
this dissertation’s topic and supported me all the time regardless of distance. He
also read and gave me several precious comments on it. I could not image how I
could do this task without his support. I am very appreciated about that.
In addition, I also received help from all managers at Mascot International
Vietnam during the internship time at related departments in this company. I did not
only have great opportunities to listen but also participated into the real job for
intensive understanding.

i.

Tran ThiThuy Duong-GMA 02

Page ii


Recommendations to improve materials inspection process and returning excess fabrics into offset
stock and stock balancing at Mascot International Vietnam

TABLE OF CONTENTS
PREFACE ...............................................................................................................................................i
ACKNOWLEDGEMENT .............................................................................................................. ii
TABLE OF CONTENTS ............................................................................................................... iii
LIST OF ABBREVIATIONS.........................................................................................................v
LIST OF TABLES............................................................................................................................ vi
LIST OF FIGURES .............................................................................................. vii

INTRODUCTION ............................................................................................................................. 1
1.1

Supply chain management.................................................................................................. 3

1.1.1. Supply chain ............................................................................................................................ 4
1.1.2. Conflict in traditional system ............................................................................................ 5
1.2

Inventory management ........................................................................................................ 7

1.2.1. Type of inventory according to flow of materials ...................................................... 8
1.2.2. Function of inventories ........................................................................................................ 8
1.3. MRP (Materials requirement planning) ............................................................................. 9
1.3.1. Definition ................................................................................................................................10
1.3.2. Process .....................................................................................................................................10
1.3.3. Advantages and disadvantages ........................................................................................12
1.4. Inspection ...................................................................................................................................12
CHAPTER 2: Material inspection process and returning excess fabrics into offset
and stock balancing at Mascot International Vietnam ........................................................14
2.1 Mascot introduction .................................................................................................................14
2.1.1 Mascot International A/S....................................................................................................14
2.1.2. Mascot Vietnam ...................................................................................................................17
2.2. Introduction of materials inspection process and returning excess fabrics into
offset stock and stock balancing at Mascot International Vietnam ................................21
2.2.1. Introduction of fabrics flow at Mascot International Vietnam ............................21
2.2.2. Inspection process at Mascot International Vietnam ..............................................25
2.2.3. Return excess fabrics into offset stock and stock balancing process at Mascot
International Vietnam .....................................................................................................................28
i.

Tran ThiThuy Duong-GMA 02

Page iii


Recommendations to improve materials inspection process and returning excess fabrics into offset
stock and stock balancing at Mascot International Vietnam

2.3. Evaluation and justification .................................................................................................32
2.3.1. Evaluation of Materials Inspection process at Mascot International Vietnam
................................................................................................................................................................32
2.3.2. Evaluation of returning excess fabrics to offset stock and stock balancing
process at Mascot International Vietnam.................................................................................36
CHAPTER 3:

RECOMMENDATIONS ON MATERIALS INSPECTION

PROCESS AND RETURNING EXCESS FABRICS INTO OFFSET STOCK AND
STOCK BALANCING ..................................................................................................................38
3.1 Recommendations on material inspection process at Mascot International
Vietnam ...............................................................................................................................................38
3.1.1. Human recruitment and training .....................................................................................38
3.1.2. Automated process ..............................................................................................................39
3.2 Recommendation on returning excess fabrics to offset stock and stock balancing
step at Mascot International Vietnam .......................................................................................39
3.2.1. Human reassigning ..............................................................................................................39
3.2.2. Creating new transaction on SAP system....................................................................40
CONCLUSION .................................................................................................................................42
Bibliography ......................................................................................................................................43

i.

Tran ThiThuy Duong-GMA 02

Page iv


Recommendations to improve materials inspection process and returning excess fabrics into offset
stock and stock balancing at Mascot International Vietnam

LIST OF ABBREVIATIONS

i.

BWH

Bonded warehouse

GR

Goods receipt

GI

Goods issue

PO

Purchasing order

DO

Delivery order

TO

Transferring order

LAB

Laboratory

Tran ThiThuy Duong-GMA 02

Page v


Recommendations to improve materials inspection process and returning excess fabrics into offset
stock and stock balancing at Mascot International Vietnam

LIST OF TABLES
Table 1.1: Fabrics inspection standard .................................................................13
Table 2.1: Consumption of fabrics in week 38 (on September) .............................. 23
Table 2.2: fabrics types with popular defects ......................................................... 28
Table 2.3: cutting’s list .......................................................................................... 29
Table 2.4: An example of SAP system relating to balancing ................................... 32

i.

Tran ThiThuy Duong-GMA 02

Page vi


Recommendations to improve materials inspection process and returning excess fabrics into offset
stock and stock balancing at Mascot International Vietnam

LIST OF FIGURES
Figure 0.1: Percentage of errors in inspection step from 2013 to 2015

2

Figure 1.1: Ultimate supply chain ...........................................................................5
Figure 1.2: conflict objectives ..................................................................................7
Figure 1.3: Simplify bill of materials ..................................................................... 11
Figure 2.1: Mascot’s shareholders ........................................................................ 14
Figure 2.2: Production .......................................................................................... 15
Figure 2.3: Mascot slogan ..................................................................................... 16
Figure 2.4: Mascot INT. Vietnam’s Infrastructure

18

Figure 2.5: SA 8000 certificate .............................................................................. 19
Figure 2.6: Mascot International Vietnam structure .............................................. 20
Figure 2.7: Fabrics flow ........................................................................................ 21
Figure 2.8: Light table ........................................................................................... 26
Figure 2.9: Return excess fabrics to offset stock process........................................ 28
Figure 2.10: Inspection’s errors from 2013 to 2015............................................... 33
Figure 2.11: Quantity of error at light table according to experience from 2013 to

2015....................................................................................................................... 35

i.

Tran ThiThuy Duong-GMA 02

Page vii


Recommendations to improve materials inspection process and returning excess fabrics into offset
stock and stock balancing at Mascot International Vietnam

INTRODUCTION
1. Necessity
Mascot International Vietnam is an indispensable part belonging to Mascot
International A/S or Mascot Denmark. However it is not an easy task to control this
branch because ofits own large scale, time difference and long distance between
Mascot Denmark and Mascot Vietnam. Managers in Mascot Denmark have tried for
many years to find justification for current problem which is high lead time of
fabrics flow andsolutions for it in order to improve Mascot Vietnam’s productivity
but the results were not as good as expectation. “I have tried for several years
coming up with a solution, but have never succeeded 100%. I don’t know if it is
lack of time from my side when I’m in Vietnam, misunderstandings or others, but I
hope when you allocate your time that we can get better outcome”,said Director of
IT & Logistics in Mascot International A/S.
Nevertheless, this topic has ever written by anyone yet. It is likely that by
concentrating into two major steps of fabrics flowoccurring the most serious
problems will make this assignment become more useful for company.
2. Research scope

-

Space of research
This research has been done after being trained and observed in all related
departments such as supply chain, LAB, production and so on in Mascot Vietnam.

-

Time for research
Most of the information and figures are collected in 2015. It is obvious that,
company always updates to adopt the newest trend so it is necessary for this
research to use the newest process procedures of this year. However, in order to
make this research become persuasive there are some figures came from 2 years ago
also used.
3. Research objects
There are two objects that this research aims to describe, analyse and give
recommendations: materials inspection process and returning excess fabrics to
offset and stock balancing.

ii.

Tran ThiThuy Duong-GMA 02

Page 1


Recommendations to improve materials inspection process and returning excess fabrics into offset
stock and stock balancing at Mascot International Vietnam

These two stages belong to fabrics flow which is considered as supply chain

of Mascot Vietnam and plays a very important role in company’s development.
Fabrics flow includes 12 steps but there are only 4 steps occurring problems.
Meanwhile 2 stages are related to customs which is objective factor that out of
Mascot’s control. The only 2 phrases that Mascot can change to improve will be
mention on this research.

Quantity of error
45.000
40.000
35.000
30.000
25.000
20.000
15.000
10.000
5.000
.000
2013

2014

2015

Figure 0.1: Percentage of errors in inspection step from 2013 to 2015
<Source: Created by researcher from Mascot’s information>

According to the statistics has collected from company’s resource since
2013, it is obvious that percentage of errors in inspection step has increased
significantly with the passing of time. This is the reason why researcher chose this
step to analysis.

In addition, this research also works on the other object which plays a crucial
role in fabrics flow. If there are so many mistakes in this step the whole fabric flow
will be affected seriously. So it is necessary to pay attention on this step either.
4. Research finding
This research does not only mention again in detail about two major stages in
fabrics flow but also reveals both advantages and disadvantages of them.
Furthermore, researcher analyzed all the collected information to figure out
justifications for those drawbacks. By this way, research will come up with some
recommendations that may be valuable to company.
ii.

Tran ThiThuy Duong-GMA 02

Page 2


Recommendations to improve materials inspection process and returning excess fabrics into offset
stock and stock balancing at Mascot International Vietnam

CHAPTER 1: LITERATURE REVIEW
1.1 Supply chain management
Supply chain is a very complex process so managing it is a very difficult task
but crucial in all industrial fields. That is the reason why there are so many
researchers worked on supply chain management and gave numerous definitions
about it. In “Purchasing and Supply chain management” Monczka, Trent and
Handfield believed that “whole primary objective is to integrate and manage the
sourcing, flow and control of materials using a total systems perspective across
multiple functions and multiple tiers of suppliers” (1998). On the other hand, with
the similar idea but Jones and Riley gave the simpler definition: “Supply chain
management deals with the total flow of materials from suppliers through end

users” (1985).
In our contemporary life, companies believe that the supply chain activities
should be managed according to flow of materials, flow of the information and fund
transfers. According to the new trend, in order to implement supply chain
management based on flow of materials it is important to manage the recovery,
recycling and reuse of materials. This is the major method of SCM. On the other
hand, “To manage a supply chain, one must not only understand the network of
suppliers and customers along the chain but must also try to efficiently plan material
and information flows along each chain to maximize cost efficiency, effectiveness,
delivery, and flexibility”(J.R. Tony Arnold, Stephen N. Chapman and Lloyd M.
Clive).
However according to this research, supply chain management should be
classified into 3 categories: management philosophy, implementation of a
management philosophy and a set of management processes(John T. Mentzer,
William DeWitt, James S. Keebler, Soonhong Min, Nancy W. Nix, Carlo D. Smith,
and Zach G. Zacharia, 2001). First of all, Supply chain management is considered
as a “management philosophy”. It is likely that supply chain management as a
management philosophy has the following features: The supply chain under the
view of philosophy should be a single entity instead of the set of many separated
parts with dissimilar functions (Ellram, Lisa M. and Martha C. Cooper, 1990). In
addition, it also needs to have a strategy to cooperate and “synchronize” not only

ii.

Tran ThiThuy Duong-GMA 02

Page 3


Recommendations to improve materials inspection process and returning excess fabrics into offset

stock and stock balancing at Mascot International Vietnam

departments within company but also among different ones. Moreover,
concentrating on customization is necessary to satisfy customers.
Secondary, supply chain management is a “set of activities to implement a
management philosophy”. There are some activities that companies should apply in
order to establish management practices allowing them to behave consistently with
the philosophy. It should be first noted that, companies should expand their
integrated behavior to cooperate customers and suppliers. “This set of activities is a
coordinated effort called supply chain management between the supply chain
partners, such as suppliers, carriers, and manufacturers, to dynamically respond to
the needs of the end customer” (Greene, 1991). The other activity related to
integrate behavior is “mutually sharing information”. Supply chain members must
share the information, especially in planning and monitoring processes. If the
information is updated and shared in time among companies in the chain supply
chain management will be very efficient (Cooper, Martha C., Douglas M. Lambert,
and Janus D. Pagh, 1997). Furthermore, “mutually sharing risks and rewards” is
also a requirement of managing supply chain and plays an important role in the
long-term cooperation among the supply chain members(Cooper, Martha C. and
Lisa M. Ellram, 1993).
Instead of focusing on the activities that build up the supply chain, there are
some people paying attention on management processes.
1.1.1. Supply chain
This is the network of several activities from the beginning until delivering
to customers. This process is involved and contributed by many companies or
organizations such as suppliers, manufacturers and distributors with a particular
product. Supply chain is different concept with logistics because meanwhile
logistics is nearly considered as a distribution process within the firm, supply chain
is bigger one with many participated companies(Supply Chain, n.d.).
For instance, in order to produce trousers it is needed many companies to

supply materials for factories to produce it. After fulfilling the final products, there
are some shipping companies that also involve in delivering to distribution centers
or retailers before selling them to customers. That is the simplest and basic process
of supply chain.

ii.

Tran ThiThuy Duong-GMA 02

Page 4


Recommendations to improve materials inspection process and returning excess fabrics into offset
stock and stock balancing at Mascot International Vietnam

There are 3 major types of supply chain which are “direct supply chain,
“extended supply chain” and “ultimate supply chain” with increasingly complicated
scale. The direct supply chain is the simplest process of supply chain with
containing only supplier, organization and customer. Meanwhile the “extended
supply chain” is bigger with more involved firms such as supplier’s supplier and
customer’s customer. Finally, the “ultimate supply chain” is full and the most
similar process to the real one containing ultimate supplier, supplier, organization,
financial provider, third party logistics supplier (3PL), market research firm
customer and ultimate customer(John T. Mentzer, William DeWitt, James S.
Keebler, Soonhong Min, Nancy W. Nix, Carlo D. Smith, and Zach G. Zacharia,
2001).

Figure 1.1: Ultimate supply chain No.2, 2011>

1.1.2. Conflict in traditional system
It is no denial that supply chain is a network, a system including many
companies and organizations with dissimilar functions. That is the major reason
why there could be many conflicts occurring in this chain.
In fact, three major components of supply chain such as supply, production
and distribution used to have separated functions and work with dissimilar
company’s departments. However, those three components are always related each
other so by working in separate ways will create disputes among them because they
just made the best decision for themselves not for the whole supply chain. It is
obvious that the more quantity of the cargoes transported the lower shipping costs
are. Nevertheless, this situation may increase inventory- carrying costs. So overall,
company still gets lost and maybe even more than expectation. It is crucial to find
appropriated solution for this problem. Companies should pay attention on at least 4
ii.

Tran ThiThuy Duong-GMA 02

Page 5


Recommendations to improve materials inspection process and returning excess fabrics into offset
stock and stock balancing at Mascot International Vietnam

major goals such as providing the best customer services, lower production costs,
lower inventory investment and lower distribution costs.
Nonetheless, those goals also create conflicts among the marketing,
production and finance department because each of them has its own objectives.
First of all, marketing department always aims to maintain and increase income so
customers’ service is the most important thing that they want to care about. There
are several activities helping them to achieve their purpose such as maintaining high

level of inventory to implement just-in-time delivery; produce non-inventoried
quickly; investing money to build an advance distribution center for easy delivery in
the short time.
On the other hand, financial department always expect to minimize the
investment as well as the costs as much as possible. They can implement their job
by cooperating with planning and related departments to reduce inventory level as
much as possible; decrease the number of plants and warehouses; produce large
quantity that use long production runs and just produce according to customers’
orders.
Meanwhile, the others cares more about the operating costs so they will try
to produce few products with long time of production process and specialized
equipment so that reducing the cost of making product. In addition, high level of
raw materials and work-in-process inventory is always maintained to avoid being
disrupted by shortages.

ii.

Tran ThiThuy Duong-GMA 02

Page 6


Recommendations to improve materials inspection process and returning excess fabrics into offset
stock and stock balancing at Mascot International Vietnam

Figure 1.2: conflict objectives management”>

There is a solution addressing this problem is to create and improve the
cooperation among functions of supply, production and distribution instead of

controlling them separately(J.R. Tony Arnold, Stephen N. Chapman and Lloyd M.
Clive).
1.2 Inventory management
Inventory plays an important role in companies. According to statistics,
inventory may present from 20 up to 60 percent of total asset. It is obvious that it
just can be converted into cash when inventories are used. It is expensive to
maintain high inventory level but may cause some problems when inventory level is
always low. That is the reason why managing inventory is crucial. Inventory
management is a difficult task when responsible people have to control materials
flow from the beginning until the end. In fact, inventory is the rest of materials used
and also the needed ones for production so it is necessary to manage them
together.In order to get the best result, inventory needs to be manage in every single
planning level and consider from three sources such as production planning, master
production scheduling and materials requirement planning. Meanwhile materials
requirements planning supports company buy revealing the needed materials or
ii.

Tran ThiThuy Duong-GMA 02

Page 7


Recommendations to improve materials inspection process and returning excess fabrics into offset
stock and stock balancing at Mascot International Vietnam

component parts for production, master planning deal with the end items and
production planning with overall inventory(J.R. Tony Arnold, Stephen N. Chapman
and Lloyd M. Clive).
1.2.1. Type of inventory according to flow of materials
One of the ways to classify inventory is basing on flow of materials running

through manufacturing organization. Nevertheless, it is necessary to care about
production environment because, for example, fabric is the finished products of a
company but at the same time fabric is a work-in-process products of the others.
There are five major types of inventory such as inventory for raw materials,
work-in-process, finished goods, distribution center and “maintenance, repair and
operational supplies (MROs)”. In the first type of inventory, the components or
materials that are purchased will not entered into any production process.
Meanwhile, the second one stores all the inputs of production process. For example,
fabrics and accessories which will be used to produce clothes. On the other hand,
finished goods inventory is used for completed products before launching or selling
to customers and not yet located in the distribution centers. Another type of
inventory is distribution inventory where the final products are stored and wait for
selling to the market. The last one has responsibility for storing the items
contributing in production without being a part of completed products, for instance,
“hand tools, spare parts, lubricants, and cleaning supplies.” (J.R. Tony Arnold,
Stephen N. Chapman and Lloyd M. Clive)
1.2.2. Function of inventories
It is obvious that supply and demand are never exactly similar to each other.
That is the major justification for inventory’s existence. There are several functions
that inventories could support for companies. It should be first noted that
inventories can be used for storing the products for future plans. For instance,
company producing work wear products need to prepare or produce winter products
for upcoming cold season because the customers’ demands will appear so every
preparation is indispensable. On the other hand, customers’ demands are
unpredictable and fluctuated. In some case demands may increase much more than
expectation while lead time is suddenly longer causing out of stock. Inventory is
solution for this unforeseen problem. In addition, to take advantage of economy of
scale in the other processes such as purchasing inputs, production and
ii.

Tran ThiThuy Duong-GMA 02

Page 8


Recommendations to improve materials inspection process and returning excess fabrics into offset
stock and stock balancing at Mascot International Vietnam

transportation, company needs to produce in big quantity of products which is even
greater than temporary demands, sometimes. In this situation, inventory is
unavoidable. Moreover, when products are waiting before being sold to customers,
inventory also appears. Last but not least, in the ever-changing world price of some
products may fluctuate day by day or within the short period of time so if customers
believe that the price will increase in the future they will buy and store it to save
money. In this case, inventory is also necessary. There is no doubt that although
companies must pay huge amount of money for inventory there are so many reasons
for its maintenance. (J.R. Tony Arnold, Stephen N. Chapman and Lloyd M. Clive)
1.2.3. Goal of inventory management
There are some objectives that company needs to achieve for getting profits
such as improve customer service, reducing factories’ operational costs and
inventory investment as much as possible buy managing inventory efficiently.
In term of customer service, inventory is a tool to support for this task
because it helps to reduce problem related to demands fluctuation. In fact,
customers’ desires always change so in order to satisfy customers and avoid running
out of stock inventory needs to be managed.
On the other hand, inventories also support for operation of companies by
several ways such as avoiding interruption of production process in case of raw
materials shortage. (J.R. Tony Arnold, Stephen N. Chapman and Lloyd M. Clive)
1.3. MRP (Materials requirement planning)
There are two types of demand which are independent and dependent

demands. For instance, ten T-shirts ordering from customer is an independent
demand because it does not depend on anything. Nevertheless, in order to make
those 10 T-shirts manufacturer must order fabrics and accessories which are
independent ones. It is obvious that quantity of fabrics and accessories totally
depends on number of T-shirts. In fact that companies always need to forecast the
number of independent demands to arrange production but depended one cannot be
forecasted but calculated. MRP is a very efficient tool to do this task (J.R. Tony
Arnold, Stephen N. Chapman and Lloyd M. Clive).

ii.

Tran ThiThuy Duong-GMA 02

Page 9


Recommendations to improve materials inspection process and returning excess fabrics into offset
stock and stock balancing at Mascot International Vietnam

1.3.1. Definition
This is a computer-based inventory management system supporting
production manager with two functions which are “determine requirement” and
“keep priorities current”. To start with the first function, materials requirement
planning is able to determine type, quantity of needed components and base on lead
time to calculate when the components must be available for producing (J.R. Tony
Arnold, Stephen N. Chapman and Lloyd M. Clive). It is giving the right quantity in
the right time.
On the other hand, MRP also can adapt and reorganize with the changings in
customers’ orders such as delete or add, delay and so on to keep following the
previous plans and avoid unexpected problems. This is very important function of

MRP(J.R. Tony Arnold, Stephen N. Chapman and Lloyd M. Clive).
1.3.2. Process
In general, the process of MRP is started with taking all the information from
bill of materials, master schedule and inventory records. After that, MRP will
determine the total needed materials for production. MRP also automatically look at
the inventory and calculate the net materials (Material Requirements Planning
(MRP), n.d.).
The inputs for MRP system to do this process are from three major resources
such as “bill of materials”, “a master schedule”, and “an inventory records file”. In
fact when chef makes a dish he must need different ingredients to cook. That is bill
of material. Bill of materials illustrating all the needed components for making the
final products. Each component is identified by a unique number and can appear on
several bill of materials (J.R. Tony Arnold, Stephen N. Chapman and Lloyd M.
Clive).

ii.

Tran ThiThuy Duong-GMA 02

Page 10


Recommendations to improve materials inspection process and returning excess fabrics into offset
stock and stock balancing at Mascot International Vietnam

Figure 1.3: Simplify bill of materials
<Source: (J.R. Tony Arnold, Stephen N. Chapman and Lloyd M. Clive)>

“MRP uses the bill of materials to determine the quantity of each component
that is needed to produce a certain number of finished products. From this quantity,

the system subtracts the quantity of that item already in inventory to determine
order requirements.”(Material Requirements Planning (MRP), n.d.)
Master production schedule (MPS) is also an input of MRP. “The material
requirements planning system plans the schedule for these components based on the
needs of the MPS. Thus the MPS drives the material requirements plan”(Material
Requirements Planning (MRP), n.d.).
When customers’ demands are recorded and company’s forecasting is made
MPS will be formed. It will arrange and balance between the production plan and
available resources for producing. MPS is also concerned with quantity and quality
of final products and deadline for production(J.R. Tony Arnold, Stephen N.
Chapman and Lloyd M. Clive)
In general, this process follows a backward trend from the plan for
completed products to needed materials or components. This is not a simple process
but very complex one because there would be some changes from customers about
product design or quantity. For instance, in Mascot production must produce some
special products following customers’ demands. In addition, production schedule
also may changes by some justification such as delaying in the other previous
stages.

ii.

Tran ThiThuy Duong-GMA 02

Page 11


Recommendations to improve materials inspection process and returning excess fabrics into offset
stock and stock balancing at Mascot International Vietnam

Changing in the customers’ orders leading to changing of product design,

quantity or schedule will create complex issues which require a powerful computer
system (Material Requirements Planning (MRP), n.d.)
1.3.3. Advantages and disadvantages

-

Advantages:
MRP plays an important role in companies because of several strong points.

MRP with the function as counting the necessary components for final products
with the suitable order time could help to “minimize inventory levels”, set up
production time, plan for the needed component in the future and so on. That is the
major reason why there are so many people and departments involved in using this
system. First of all, production planners to balance workloads across departments
and make schedule for production.“Plant foremen, also must use MRP output in
order to implement his job as “issuing work orders and maintaining production
schedules”. “Other users include customer service representatives, who need to be
able to provide projected delivery dates, purchasing managers, and inventory
managers.”(Material Requirements Planning (MRP), n.d.)

-

Disadvantage:
It could be big mistake if not to mention that in order to get needed outputs

MRP must have correct inputs. That is the major reason why inventory records and
bills of materials have to be updated and address correctly unless there will be some
consequences occurring such as shortage or excessing of quantity in orders. It
would lead to delaying in schedule of production and delivery. On the other hand, if
companies want to use MRP they will need to invest huge amount of money and

time for it.
In order to take advantage of MRP and have useful information, company
needs to have an accurate master production schedule, good lead-time estimates and
current inventory records (Material Requirements Planning (MRP), n.d.).
1.4. Inspection
Inspection is one of the most important stage to ensure the quantity of fabrics.
There is a standard created only for fabrics inspecting and under ASTM D5430 –
07(2011). It is Four-Point system. This system includes all the methods applying for
visually inspecting and grading. There are some principles in order to count the
number of failures on fabrics.
ii.

Tran ThiThuy Duong-GMA 02

Page 12


Recommendations to improve materials inspection process and returning excess fabrics into offset
stock and stock balancing at Mascot International Vietnam

Grate

Defects’ length

1 point

Defects up to 3″

2 points

Defects > 3″ ≤ 6″

3 points

Defects > 6″ ≤ 9″

4 points

Defects > 9″

Table 1.1: Fabrics inspection standard <Source: />
Any defect of a continuous nature shall be assigned four points for each yard
in which it occurs.” Although there are serious defects they are just counted no
more than four points. For instance, the hole on fabric is grated 4 points no matter
how big it is. In addition, some failures such as side center side shading, roll to roll
shading, narrow or irregular width and so on will be counted four points in every
yard within the roll.
The highest grade for each yard will be four.
The first quality of fabrics shipment should not have any roll containing over
four defects per one hundred linear yards.
The second quality of fabrics is the rolls which have higher number of
defects compared to the standard inspection.
Otherwise fabrics roll will be rejected. For example, rolls having defects
repeating through more than ten continuous yards no matter how many faults
occurring on the fabrics. In addition, if there is even a big defect being equal
approximately 4 point defect (FABRIC INSPECTION STANDARD ( 4-Point
System ), n.d.)

ii.

Tran ThiThuy Duong-GMA 02

Page 13


Recommendations to improve materials inspection process and returning excess fabrics into offset
stock and stock balancing at Mascot International Vietnam

CHAPTER 2: Materials inspection process and returning
excess fabrics into offset and stock balancing at Mascot
International Vietnam
2.1 Mascot introduction
2.1.1 Mascot International A/S
This is a Danish family- owned company with the second generation at the
helm being specialized in producing work wear. Company has founded in 1982 and
after 10 years of development, Mascot became a number one producer work wear in
Denmark and one of the biggest one in Europe.Moreover, Mascot doesn't only
produce work wears but companyalsoinvolves in sourcing, distributing and even
marketing for themselves.This is really profitable company in the world.
2.1.1.1. Share holder
There are 3 shareholders which are Michael Grosbøl own 52,6 percent, Susie
Grosbøl got 37,4 % and ToveGrosbøl with 10 %(Management, n.d.)

Mascot's Shareholders
10%

37%

53%

Michael Grosbøl
Susie Grosbøl
Tove Grosbøl

Figure 2.1: Mascot’s shareholders />
ii.

Tran ThiThuy Duong-GMA 02

Page 14


Recommendations to improve materials inspection process and returning excess fabrics into offset
stock and stock balancing at Mascot International Vietnam

2.1.1.2. Net work

Figure 2.2: Production <source from Mascot International Vietnam’s studio>

The headquarters are located in Denmark. There are factories in Vietnam and
Laos and numerous distributors throughout the world. Mascot International
Vietnam has been playing a crucial role as the partner and branch of Mascot
International A/S. Mascot targeted markets are some big countries such as European
nations, USA, Australia and so on(Pedersen, n.d.).
2.1.1.3. Production
In fact, approximately half of Mascot employees were outsourced from outside
Europe. In Mascot Vietnam, there are approximately 1400 employees producing
products. Huge number of workers allowed Mascot to take many actions for
satisfying customers.

-

Customization: Mascot has a wide range in many sizes but they know that
there may be individual demands that are not covered within the standard
range. That is the major justification why Mascot’s customers could be
satisfied by customized products. For instance, if a customer love having an
extra pocket for being more convenient in their jobs Mascot will do that for
them.

ii.

Numerous color combinations, sizes and lengths: Strength of a wide range
that can dress from head to toes and from inner layer to out. Mascot offers a
Tran ThiThuy Duong-GMA 02

Page 15


Recommendations to improve materials inspection process and returning excess fabrics into offset
stock and stock balancing at Mascot International Vietnam

variety of function and features with over 600 different products in up to 13
dissimilar colors and 63 sizes per product for everyone no matter what their
jobs are or what their requirement are and so on.
2.1.1.4. Achievement
MASCOT has received numerous awards for good and responsible working
conditions. One of the prizes was given during the Danish royal couple’s visit in
2009.
Mascot also got ISO 9001-2008 which was considered a very persuasive

evidence for its development. This company has its own laboratory in Denmark and
Vietnam. By this way, all the fabrics’ quality have been insured before producing.
2.1.1.5. Slogan

Figure 2.3: Mascot slogan <source from company document>

Actually this is not only the slogan of Mascot but is the purpose and value
that company always wants to achieve. The meaning of this slogan could be
understood simply that all fabrics and accessories need to be tested in advance
before producing to assure the quality of products. Mascot set up 2 principles in
order to implement this slogan “first, to do things carefully and correctly based on a
proven understanding and second, to have a strong focus on how the solution is
relevant and easy to apply to the target group”.

ii.

Tran ThiThuy Duong-GMA 02

Page 16