In recent years, the expansion of manufacturing bases in Vietnam has been accelerating as a leading destination for the China Plus One strategy. However, “local procurement of parts” constantly emerges as a management issue when collaborating with companies entering the market or local partners. In particular, the procurement of “screws and fastening parts,” which are the smallest units determining product safety and quality, is not merely a means of cost reduction but a strategic element that determines supply chain resilience.

Many Japanese companies face variations in the quality management capabilities of local suppliers, a lack of ability to handle small-lot products, and risks of delivery delays. There are countless examples where a shortage or defect of just a single screw leads to a production line stoppage for the entire factory. In this article, while unraveling current data on the manufacturing industry in Vietnam, we will explain optimization strategies for “Quality, Cost, and Delivery (QCD)” that Japanese companies should pursue, from the perspectives of specific procurement methods and partner selection. We hope that the knowledge cultivated by us at Ohta Vietnam on the ground will be of assistance to your procurement strategy.

For Japanese companies expanding into Vietnam, improving the local procurement rate is an urgent issue. According to a survey by the Japan External Trade Organization (JETRO), although the local procurement rate of Japanese companies in Vietnam is on an upward trend year by year, it remains at a low level compared to Thailand and China. In particular, in addition to raw materials and electronic parts, the reality is that local suppliers who fully meet the quality standards (such as JIS standards) required by Japanese companies for high-precision “fastening parts” are limited.

Vietnam’s supporting industries are in the process of growth, and while technological improvements can be seen in fields such as press processing and resin molding, challenges remain regarding quality stability in fastener (screw) manufacturing that involves “special processes” such as heat treatment and plating. As a result, many companies are forced to choose between depending on imports from Japan or neighboring countries, knowing costs will increase, or conducting local procurement while bearing quality risks.

Even with domestic procurement in Vietnam where physical distance is close, delivery delays can occur depending on logistics infrastructure and supplier management capabilities. In particular, building a “local production for local consumption” supply chain, which is less susceptible to recent geopolitical risks and container shortages, is becoming increasingly important from the perspective of Business Continuity Planning (BCP).

However, holding excess inventory in-house puts pressure on cash flow. To realize “Just-In-Time (JIT)” procurement obtaining only what is needed when it is needed suppliers are also required to have advanced inventory management capabilities and flexible delivery systems.

Screw defects are broadly classified into three categories: “dimensional defects,” “insufficient strength,” and “surface treatment defects.” Especially in Vietnam’s climate (high temperature and humidity), the quality of plating treatment related to rust prevention performance is extremely important. There are not a few cases where adopting inexpensive local products results in rust occurring during transport or storage, leading to the disposal of the entire lot.

Also, particular caution is required regarding “delayed fracture (hydrogen embrittlement)” in high-strength bolts. This is a phenomenon where hydrogen that has entered the steel during the manufacturing process destroys the bolt from the inside over time, and it is difficult to detect through visual inspection alone. When selecting a reliable procurement partner, it is necessary to understand these specialized risks and confirm whether they have a management system for appropriate heat treatment and baking processes (such as ISO9001 compliance).

We at Ohta Vietnam have Ohta Co., Ltd. in Japan as our parent company and deploy the know-how as “procurement professionals” accumulated over nearly half a century since 1972 in Vietnam. A major feature is that we possess not only trading company functions but also manufacturing functions through our own factory for precision machining and inspection capabilities.

We have established a strict inspection system based on ISO9001 (Quality Management System), and we fulfill the role of a quality gatekeeper in-house even for procured goods from partner companies. This enables us to stably supply “Japan Quality,” which Japanese corporate customers require, locally in Vietnam.

Source: JETRO “2022 Survey on Business Conditions of Japanese Companies Overseas”, General Statistics Office of Vietnam

In the modern manufacturing industry, along with the shortening of product lifecycles, the ability to respond to “high-mix low-volume production” has become a source of competitiveness. However, many major bolt manufacturers specialize in mass production and face issues such as being unable to respond unless orders are in units of thousands or tens of thousands, or costs skyrocketing.

What becomes important here is the existence of a partner who can flexibly respond to small-lot procurement of custom screws and prototype production. At Ohta Vietnam, in addition to producing custom parts utilizing our own cutting equipment, we have established a system to provide “what you need, in the quantity you need” by making full use of our extensive network. This enables customers to procure seamlessly, from prototypes in the R&D stage to maintenance parts for mass production lines.

Procurement of not only production parts (direct materials) such as screws and bolts but also indirect materials (MRO) necessary for factory operation, such as tools, gloves, and safety shoes, holds the key to operational efficiency. Placing orders with and managing multiple vendors becomes a heavy burden (invisible cost) for purchasing managers.

Ohta Vietnam is an authorized distributor for TRUSCO Nakayama Corporation (TRUSCO), Japan’s largest wholesaler of industrial auxiliary materials. We can supply a vast number of professional tools listed in the “Orange Book” together with screws in a one-stop manner. This consolidates ordering tasks, simplifies billing processing, and realizes efficient delivery, contributing to the reduction of total costs for our customers.

Screw procurement strategy in Vietnam is shifting from the phase of simply “buying cheap parts” to “building a reliable supply chain.” Improving the local procurement rate leads directly to cost reduction, but quality risks always lurk there. For Japanese companies to survive and win in this region, collaboration with a partner who possesses both Japanese-level quality management capabilities and local Vietnamese agility is essential.

Leveraging our strategic location near Dong Nai Province and Ho Chi Minh City, Ohta Vietnam comprehensively solves customers’ “procurement worries,” ranging from in-house manufacturing of precision machined parts to the supply of high-mix low-volume materials including TRUSCO products. When considering the optimization of local procurement, please by all means utilize our solutions.

Conclusion

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At Ohta Vietnam, we not only provide ready-made products such as screws and bolts, but also support activities in the manufacturing field such as cutting, inspection, assembly, packaging…
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