Introduction

To keep production lines running, it is essential to procure every component, even a screw weighing just a few grams, reliably and at the right time. However, on the actual factory floor, numerous challenges arise daily, including setting order lots for screw procurement, managing transport lead times, and securing inventory space. This article provides a practical approach to achieving lead time reduction, logistics efficiency, and cost reduction by taking a comprehensive look at the entire supply chain, starting with screw procurement.

First, for our target audience—purchasing, production control, and management personnel in high-mix, low-volume manufacturing—we will re-examine the impact of screw procurement on the supply chain and clarify how its efficiency directly contributes to company-wide profits. Next, we will introduce strategic methods such as inventory optimization based on demand forecasting, and supplier consolidation/multi-sourcing, linking them with the latest trends in Asian manufacturing hubs, including Vietnam.

Furthermore, we will explain specific measures step-by-step, such as real-time visualization through the implementation of WMS (Warehouse Management System) and TMS (Transport Management System), automation of screw standard management like ISO/JIS, and optimization of warehousing and transportation with an eye toward decarbonized logistics. By the end of this article, you will have a checklist and a roadmap that you can immediately apply to your company’s supply chain.

This article explains the key points of supply chain optimization, starting from the perspective of screw procurement.

The Impact of Screw Procurement on Logistics Costs

Fastening components such as screws and bolts account for a low percentage of the total product cost, around 1-3%. However, they are “high-risk, low-cost” elements that can dramatically increase total costs if they trigger a line stoppage or quality defects. This is where the perspective of TCO (Total Cost of Ownership) becomes crucial. By quantifying not only the unit price but also storage fees from order lots, transportation costs, inspection and sorting labor, re-procurement costs for non-conforming parts, and even opportunity loss from line downtime, we can visualize the impact of screw procurement on overall logistics costs.

TCO = Purchase Price + Transportation Cost + Inventory Holding Cost + Quality Risk Cost + Line Stoppage Loss

For example, if you bulk-purchase a three-month supply of screws used at a rate of 5,000 pieces per month at a unit price of 5 yen, the order amount is 75,000 yen. However, when you add inventory holding costs (warehouse space efficiency, interest equivalent), stocktaking work, and labor costs, it is not uncommon for the actual cost to be about 1.3 times higher. Identifying these hidden costs is the first step in procurement strategy.

Measuring Logistics Efficiency with KPIs

The following three indicators are effective for quantitatively evaluating progress in logistics efficiency.

Indicator	Definition	Target Guideline
Inventory Turnover Rate	Annual Sales Revenue ÷ Average Inventory Value	12 times/year or more (less than 1 month of inventory)
Lead Time	Total days from order to receiving	For Japan: within 14 days; Within Vietnam: within 5 days
OTD (On-Time Delivery)	Percentage of deliveries made on the scheduled date	98% or higher

• A low Inventory Turnover Rate often indicates issues with excessive safety stock settings or large lot sizes.
• To shorten Lead Time, contracts for EDI (Electronic Data Interchange) or VMI (Vendor-Managed Inventory) with suppliers are effective.
• OTD serves as a “health check” indicator, reflecting not only logistics but also the supplier’s production planning and quality control levels.

By constantly monitoring these KPIs on a dashboard and rapidly running the PDCA cycle to identify bottlenecks, supply chain optimization originating from screw procurement will become established at the operational level.

Shortening Lead Times with Demand Forecasting and Inventory Optimization

Even in the Vietnamese market, which is said to have fewer seasonal fluctuations than Japan, the demand for screws fluctuates significantly in cycles, such as the surge in demand before and after the Lunar New Year (Tet) and during the equipment inspection periods of foreign-affiliated suppliers. The key to minimizing inventory while absorbing these fluctuations is the combination of data-driven demand forecasting and inventory optimization.

Prioritizing with ABC Analysis

1. A-Rank (High in both importance and consumption): High risk of stockouts, so demand is forecasted daily and automatically replenished promptly using a reorder point system.
2. B-Rank (Medium): Use a combination of weekly forecasting and periodic ordering to maintain inventory turnover.
3. C-Rank (Infrequent): Although the unit price is low, the procurement cost is relatively high, so lot ordering + supplier inventory (VMI) is used to outsource the storage location.

Visualizing the ABC ranks allows you to concentrate resources on the most impactful A-rank items.

Dynamic Safety Stock Setting

In Vietnam, it is not uncommon for lead times to be delayed by +2 to 3 days from the schedule due to port congestion and road infrastructure issues. Therefore, adopting a dynamic safety stock model using the coefficient of variation (CV) allows for the automatic increase or decrease of buffers during periods of high demand volatility.

Safety Stock = Z-score × √(Demand Variation² × Lead Time + Supply Variation²)

• Z-score: Stockout tolerance rate (e.g., 1.65 for a 95% service level)

By collecting actual screw usage data online with IoT sensors and recalculating demand variation daily, you can suppress both “overstocking” and “shortages.”

Optimization Without Warehouse Expansion through VMI (Vendor-Managed Inventory)

For items with unpredictable demand fluctuations, a VMI scheme, where the supplier manages the inventory, is powerful. At GIS OHTA VIETNAM, we have established micro-depots in Ho Chi Minh City in collaboration with major screw suppliers, realizing operations such as:

• Order by 3 PM today → Arrives at the factory by 8 AM tomorrow
• Inventory data is shared in real-time via EDI

This has resulted in significant improvements in both lead time and cost:

	Before Implementation	After Implementation
Safety Stock Days	10 days	4 days (▲60%)
Emergency Air Freight Costs	1.2 million JPY/month	150,000 JPY/month (▲87%)
Stockout Incidents	8 cases/month	0 cases

Application Points for Vietnamese Factories

• Scenario Planning for Peak Demand (Pre-Tet / Black Friday): Share production plans for each product and forecast demand for A-rank items 2-3 months in advance.
• KPI for Redundancy Days due to Port Congestion and Road Traffic: Calculate a ‘Port Congestion Risk Index’ based on past data and reflect it as a coefficient in the lead time.
• Standardize Quality Gates for Local Suppliers: When increasing the local procurement ratio, apply ISO 2859-1 sampling inspection to local products as well to suppress quality variations.

By combining these measures, it is possible to minimize lead time extensions due to demand “peaks and valleys” and prevent line stoppages without holding excess inventory.

Risk Diversification through Supplier Consolidation and Multi-Sourcing

In today’s globalized world, suppliers for screw procurement have diversified to include Japanese, local, and Chinese companies. As the number of suppliers increases, management load and costs grow at an accelerating rate. On the other hand, reliance on a single supplier can be fatal in the event of geopolitical risks or quality problems. This section explores how to balance the conflicting themes of “consolidation and diversification” to find the optimal balance between cost and risk.

Cost Benefits of Supplier Consolidation

1. Unit Price Reduction through Economies of Scale: Consolidating order volumes increases purchasing power, with an expected unit price reduction of up to 10-15%.
2. Simplification of Ordering and Inspection Processes: Reducing the number of purchase orders (P/O) from 50 to 20 per month can lead to cost cuts of around 1 million JPY annually just from administrative labor and bank transfer fees.
3. Reduction of Inspection and Logistics Costs: By consolidating screws with common specifications into the same lot, you can reduce the number of witness inspections and increase the ratio of full container load (FCL) shipments.

	Before Consolidation	After Consolidation	Reduction Rate
Number of Suppliers	25 companies	12 companies	52%
Annual Purchase Orders	600	240	60%
Average Unit Price	5.5 JPY	4.9 JPY	11%
Annual Transaction Cost*	9.2 million JPY	6.4 million JPY	30%

*Transaction Cost = Sum of ordering/inspection admin + international/domestic transport + receiving inspection costs (internal estimate)

As shown, consolidating non-core item suppliers to gain economies of scale leads to direct cost improvements.

Geopolitical Risk and Supply Chain Resilience

However, relying on a single source even for critical safety components carries the risk of procurement disruption from external shocks, such as:

• Navigation restrictions in the South China Sea
• Additional tariffs due to US-China trade friction
• Sudden spikes in raw material nickel prices

Therefore, the following multi-sourcing strategy is recommended:

• Dual Sourcing for Critical Parts: Secure at least two certified suppliers (1 domestic / 1 overseas) for A-rank items, with a 60:40 order distribution during normal times. Include contract clauses that allow switching to a backup supplier within 24 hours in an emergency.
• Regional Diversification Model: Form a network of suppliers with manufacturing bases in the ASEAN region, such as Thailand and Indonesia, and select the optimal port considering transport lead times and tariff policies.
• Cross-Docking and Milk Run Delivery: Consolidate products from multiple suppliers at a hub warehouse and deliver just-in-time to each factory. This compresses transport costs through “consolidated shipping” while maintaining risk diversification.

Case Study: Semiconductor Equipment Manufacturer (Vietnam Factory)

• Procured A-rank high-strength screws from two companies in China and Vietnam. Normal period: 70% China, 30% Vietnam.
• In early 2025, container delays occurred on the South China Sea route, delaying transport between China and Vietnam by +10 days.
• Immediately switched the Vietnam supplier ratio to 90%. Line stoppage was avoided as a two-week supply was secured in VMI stock.
• As a result, no additional transport costs were incurred, and an OTD of 99.2% was maintained.

As this case shows, by incorporating backup production capacity and inventory buffers into contracts, risks can be minimized even when geopolitical events occur.

Tips for Balancing Consolidation and Diversification

• Portfolio Analysis: Plot suppliers by unit price, quality, and risk score to classify candidates for consolidation and those to be maintained for diversification.
• Frame Agreement + Spot Orders: Fix prices with an annual frame agreement while leaving room for spot orders to respond flexibly to supply and demand fluctuations.
• Continuous Improvement Program (CIP): Operate QC circles across suppliers to share process improvements, achieving both cost reduction and quality improvement.

Based on these measures, let’s build a system that enhances supply chain resilience while maximizing cost benefits.

Real-Time Visualization through Warehouse and Transport Digitization

The bottleneck in parts logistics, including screws, stems from the inability to know “where what is, and how many” at any given moment. Paper slips and Excel management lead to delayed information updates, causing picking errors and delivery delays. This is where the combination of WMS (Warehouse Management System), TMS (Transport Management System), and IoT is gaining attention.

Traceability with WMS/TMS/IoT

Technology	Main Functions	Expected Effects
WMS	Real-time management of receiving/shipping, inventory, and locations	▲70% in stocktaking labor, 99.9% inventory accuracy
TMS	Visualization of vehicle dispatch plans and transport progress, cost analysis	+15pt in loading rate, ▲10% in transport costs
IoT Sensors/RFID	Automatic acquisition of temperature, humidity, impact, and location data per screw box	Early detection of quality issues, ▲90% in tracking time

Since screws are often mixed in various sizes and lot numbers, attaching RFID tags (UHF band) to each box and using gate antennas to automatically recognize inbound and outbound shipments is effective. When linked with a TMS, the status can be updated to “shipped” the moment a truck passes through the gate, and the estimated time of arrival can be automatically recalculated based on the delivery route and traffic information.

Implementation Effects (Automotive Parts Manufacturer, Hanoi)

• Monthly Picking Errors: 150 cases → 12 cases (▲92%)
• Delivery Delays: 20 cases/month → 3 cases/month (▲85%)
• Traceability Response Time: Average 4 hours → 15 minutes

Seamless Integration of Factory-Logistics-Supplier via API

Even if multiple systems are introduced, true real-time visualization cannot be achieved if they are siloed. Therefore, data flows like the following are constructed using RESTful APIs or EDI (ANSI X12/EDIFACT).

1. Supplier → WMS: Advance Shipping Notices (ASN) are automatically registered via API.
2. WMS ↔ TMS: Shipping instructions and delivery statuses are synchronized bidirectionally. In case of rescheduling, the warehouse picking order is automatically updated.
3. TMS → Production Management System: The Estimated Time of Arrival (ETA) is fed back to the production plan to optimize lineside inventory.
4. BI Dashboard: Data is streamed to Power BI/Tableau via API to display OTD/inventory turnover in real-time.

TIP for Vietnam’s Local Communication Conditions: In areas with unstable mobile communication, a design that temporarily stores data with the MQTT protocol + local cache and sends it in bulk upon reconnection is recommended.

Step-by-Step Implementation Roadmap

1. Visualize Current Business Flow: Map the value stream from receiving/shipping to vehicle dispatch and goods receipt to identify information delay points.
2. Select Digitization Use Cases: Start with areas with high ROI, such as RFID implementation or automated vehicle dispatch.
3. Conduct PoC (Proof of Concept): Perform a small-scale verification on 1-2 lines and 1 warehouse, measuring KPIs (picking accuracy, on-time delivery rate).
4. Company-wide Rollout and API Integration: Horizontally deploy the successful model and gradually integrate API links with ERP and production management systems.
5. Continuous Improvement (CI): Accelerate the improvement cycle by running the PDCA cycle based on real-time data from the dashboard.

The goal of digital technology is not the implementation itself; the ROI is maximized only when a data-driven decision-making culture takes root. The key to success is to start small, confirm results quickly, and expand incrementally.

Automation of ISO/JIS Screw Standard Management and Quality Assurance

Screws that look identical can have different detailed specifications, such as thread angle, pitch, and plating thickness, with multiple standards like JIS B1180 and ISO 898-1 coexisting. If the wrong standard is used and sent to the assembly line, it can cause component interference or fastening failures, with reports of re-procurement costs + line stoppage losses increasing the original cost by 2-5 times.

Process Design to Approach Zero Standard-Related Errors

Measure	Description	Effect
Integrated Standard Master DB	Centralize screw standard information scattered across ERP and PLM, linking ISO/JIS codes to each part number.	▲90% in incorrect ordering rate
2D Code Labeling	Print a DataMatrix on shipping boxes containing JIS/ISO codes + torque settings.	▲95% in picking errors
Electronic Approval Workflow	The quality assurance department electronically signs off on standard changes, which are then automatically notified to suppliers.	▲80% in standard change lead time

Quality Stabilization with Automated Measurement and AI Inspection

Traditional inspection with ring gauges and pitch gauges depended on operator skill, and sampling inspection was limited to 1-3%. In recent years, by combining cameras × AI and non-contact 3D scanners, it is possible to maintain tact time even with 100% inspection.

Implementation Case: OHTA VIETNAM × Japanese Automotive OEM

1. Measured screw heads and threads with 0.01mm accuracy using a 3D line sensor (0.6 seconds per screw).
2. An AI model compared dimensions against JIS/ISO tolerances and made a real-time OK/NG judgment.
3. NG products were automatically ejected, and image and dimensional data were saved to the cloud.

Results:

• Quality Claim Rate: 0.35% → 0.02% (▲94%)
• Annual reduction of 12 million JPY in re-procurement and re-assembly costs.
• Reassigned 3 inspectors to process improvement roles.

Implementation Points for Vietnamese Factories

• Countermeasures for Unstable Voltage: 3D scanners can tolerate voltage fluctuations of ±10% with a UPS + private generator.
• AI Model Training Data: Added 1,000 samples from local suppliers for additional training to handle local standard deviations.
• Cloud × On-premise Hybrid: Image data is cached on a local NAS for 24 hours and then synchronized to the cloud at night to reduce network load.

Automation of Audits and Feedback Loops

1. SPC (Statistical Process Control) Dashboard: Automatically imports AI inspection data and monitors Cp/Cpk in real-time.
2. Supplier Quality Portal: Shares defect trends online and creates tickets for corrective and preventive actions (CAPA).
3. Automatic Alerts: Sends immediate notifications via email and LINE Works if the non-conforming rate exceeds 0.1%.

Through these mechanisms, by preventing standard-related errors before they occur and quantitatively improving quality, the reliability of screw procurement and the stability of the entire supply chain can be achieved simultaneously.

Measures to Achieve Both Decarbonized Logistics and Cost Optimization

The global trend of carbon neutrality is, without exception, affecting the logistics of small parts, including screws. When transporting from a base in Vietnam to Japan or the United States, international transport typically accounts for 75-80% of CO₂ emissions. Here, we will discuss modal shift and returnable packaging as concrete measures to promote decarbonization without increasing costs, and organize their KPIs and ROI.

Simultaneous Reduction of CO₂ and Transport Costs with Modal Shift

By switching from air and truck-based screw transport to sea containers, railways, and coastal shipping, CO₂ emissions can be reduced to 1/6 to 1/20. At OHTA VIETNAM, we switched 20% of our North American shipments from air to express sea freight (OCX service) and achieved the following results:

Indicator	Air Freight	Express Sea Freight	Improvement Rate
CO₂ Emissions per kg	1.2 kg	0.15 kg	▲87%
Transport Cost (USD/kg)	6.80	2.20	▲68%
Lead Time	5 days	11 days	+6 days

To absorb the extended lead time, we use the aforementioned dynamic safety stock model, resolving the supply risk by adding a “3-day inventory buffer.”

Towards Zero Waste with Returnable Packaging

Screws are typically packaged in cardboard boxes and plastic bags, but at a scale of tens of thousands of pieces per month, packaging waste alone can generate tens of tons of CO₂ annually. By adopting foldable returnable plastic containers (RPCs) and metal mesh pallets, we achieved:

• ▲95% in cardboard and cushioning material waste.
• ▲40% in packaging work time (by eliminating taping and waste sorting processes).
• Initial Investment: Approx. 12 million JPY (2,000 RPCs + 100 mesh pallets).

Effects were recognized in both environmental and cost aspects. The return trips utilize backhaul space, maintaining a round-trip loading rate of 85%.

Managing Sustainability KPIs and ROI with Numbers

Decarbonization measures should not end with just “doing good.” It is important to set the following KPIs and visualize the return on investment.

KPI	Definition	Example Target
CO₂ Emissions / Shipping Weight	CO₂ emissions from Scope 3 Category 9 (Downstream transport) ÷ Annual shipping weight	0.3 kg/kg or less
Transport Cost / Sales	Annual transport cost ÷ Annual sales	2.0% or less
Returnable Packaging Recovery Rate	Number of recovered boxes ÷ Number of shipped boxes	95% or higher

ROI is calculated with the following formula, with a recovery within 3 years as the investment criterion.

ROI(%) = ((Annual Cost Savings + Carbon Tax Avoidance) ÷ Initial Investment) × 100

• Annual Cost Savings: ▲200,000 USD from switching air to sea, ▲300,000 JPY in packaging disposal costs.
• Carbon Tax Avoidance: 150t CO₂ reduction × 50 USD/t = 7,500 USD.
• Initial Investment: 150,000 USD.

→ ROI = 137% (payback in approx. 0.73 years)

Decarbonization and cost optimization are not a trade-off. By designing a system of “transport mode + inventory model + packaging solution,” the benefits of both can be maximized. In the future, automated vehicle dispatch using multi-criteria optimization algorithms and CO₂ emission traceability certification via blockchain will be the next frontier.

OHTA VIETNAM’s Solutions and Case Studies

Service Overview for High-Mix, Low-Volume, and Short Lead Time Support

OHTA VIETNAM, as a “One-Stop Fastener Platform,” provides integrated services from design to procurement, quality assurance, and local delivery.

• Online Quotes within 24 Hours: Simply upload 3D CAD data to automatically analyze dimensions, materials, and surface treatments, and receive a price quote for MOQs (Minimum Order Quantity) starting from 100 pieces.
• Over 3,000 SKUs in Local Stock: A and B-rank items are always in stock at our micro-depots in Ho Chi Minh City and Bac Ninh Province, allowing for JIT delivery within 24 hours to southern factories and 48 hours to northern factories.
• Custom Kitting: We deliver pre-set torque screw sets or mixed metal/resin kits directly to the production line, reducing assembly labor by ▼20%.
• IoT Traceability: We attach RFID tags to each shipping box and link them with the factory’s WMS via API, enabling real-time verification of lot numbers, torque, and plating lot numbers.

Average Implementation Effects

• Procurement Lead Time ▲50%
• Reordering Labor ▲60% (with automated EDI)
• Unit Price ▲8% (through economies of scale)

Case Study: 40% Lead Time Reduction for an Electronics Manufacturer

Item	Before Implementation	After Implementation	Improvement Rate
Procurement Lead Time	15 days	9 days	▲40%
Emergency Air Freight Cost	800,000 JPY/month	80,000 JPY/month	▲90%
OTD (On-Time Delivery)	92.1%	99.5%	+7.4pt
Quality Claim Rate	0.45%	0.05%	▲89%

• Background: An EMS factory in Hai Phong in the north used a high mix of low-volume smartphone board screws (dia. 1.4-2.0 mm). Frequent design changes resulted in a choice between excess inventory or stockouts.
• Ohta’s Measures:
  1. Identified 17 A-rank items through ABC analysis and stocked them at the depot.
  2. For design changes, provided an online quote → delivered a sample kit within 48 hours.
  3. Concluded a VMI contract and shared demand via EDI to automatically adjust safety stock.
• ROI: The system integration cost of 25,000 USD was recovered in 4 months.

This success story is a prime example of how lead times can be reduced not by inventory decentralization, but by information synchronization, even for high-mix, low-volume production. OHTA VIETNAM will continue to achieve even shorter lead times through micro-depot expansion and AI demand forecasting.

Conclusion

Supply chain optimization starting from screw procurement creates a synergistic effect through TCO visualization, demand forecasting × inventory optimization, supplier consolidation and diversification, real-time visualization via DX, automation of standards and quality, and decarbonized logistics. Execute the following checklist to start making immediate improvements.

• Update the inventory ABC analysis.
• Activate the KPI dashboard.
• Establish a backup supplier contract.
• Start a PoC for RFID/WMS.
• Set up a trial shipment for a modal shift.

By accumulating small improvements, the threefold effect of lead time reduction, cost savings, and decarbonization can be expected. Start with the highest priority A-rank items first and visualize the results.

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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