Introduction

Procuring parts in the Asian region, including Vietnam, is attractive for its ability to build a flexible supply chain while mitigating the effects of currency exchange and geopolitical risks. However, no matter how much costs are reduced, if delivery times are delayed, market opportunities can be missed, and brand value can be damaged. This article explains the benefits of increasing procurement speed and concrete measures to achieve short delivery times. The keywords are “procurement speed” and “Vietnam procurement.”

Overview: What is Procurement Speed?

Procurement speed refers to the total lead time from placing an order until the parts arrive at the factory and are put into the production line. By analyzing it in three parts—order lead time, transportation lead time, and customs clearance/inspection lead time—bottleneck processes can be visualized.

Improving procurement speed yields the following three effects:

• Shorter Delivery Times: Enables response to customer-required lead times with a comfortable margin.
• Inventory Compression: Reduces safety stock and improves cash flow.
• Flexible Response to Market Fluctuations: Allows for immediate response to demand shifts, preventing lost opportunities.

Factors Holding the Key to Shorter Delivery Times

Supply Chain Redesign

The background for the focus on Vietnam procurement lies in its proximity to manufacturing bases and its cost competitiveness. By having the production and procurement countries be the same or adjacent, it is possible to shorten the typical 14-day sea transport to as little as 5 days by utilizing land or air transport. Furthermore, by selecting Incoterms DAP (Delivered at Place) / DDP (Delivered Duty Paid) and entrusting customs clearance to a local forwarder, an additional reduction of 1-2 days can be expected.

Visualization through IoT and Digitalization

“Visualization” is essential for improving procurement speed. By attaching RFID tags to screws and fastening parts and implementing a system that automatically scans them upon warehouse departure, inventory levels and locations are reflected in the cloud in real-time. At OHTA Vietnam, we link IoT sensor-equipped stockers with our production management system to realize automated ordering in response to demand fluctuations. As a result, we have shortened procurement lead times by an average of 18%.

Integration of Quality Assurance Systems and Primary Inspections

Quality trouble is the biggest factor in delivery delays. By completing primary inspections locally, you can prevent re-transportation and rework when defects occur. At the articulated robot automated inspection line provided by Ohta, we perform 100% automated inspection for thread defects and dimensional tolerances, issuing PPAP reports on the same day. The post-shipment claim rate is maintained at 0.01% or less.

Procurement Lead Time Calculation Formula and Improvement Tools

The number of days for safety stock is calculated as:

(Max Demand × Max LT) – (Average Demand × Average LT)

If the LT (Lead Time) can be shortened by 3 days, the safety stock can theoretically be reduced by 3 days’ worth. There are also cases where using Gantt charts and Value Stream Mapping (VSM) together visually identified waiting times between processes, resulting in a 25% reduction in wasted time.

Practical Application: Steps to Achieve Results in Vietnam Procurement

Supplier Evaluation and Partnership Building

There are approximately 2,000 machining and fastening parts manufacturers in Vietnam. When selecting, it is effective to compare them based on QCDT: Quality, Cost, Delivery, and Technical proposal capability. In addition, conducting on-site audits twice a year to check the process capability index (Cpk) and 5S status, and sharing requests for improvement, will increase the speed of collaboration.

Screw Procurement Model for High-Mix, Low-Volume

In high-mix, low-volume production, the trade-off between MOQ (Minimum Order Quantity) and lead time is a challenge. The OHTA Screw Solution standardizes over 90% of parts by clustering common materials and dimensions. By custom-producing only the remaining 10% in short cycles, we have reduced the average lead time by 60% (from 4 weeks to 1.5 weeks) compared to conventional methods, while also reducing inventory value by 30%.

Strategy for Balancing Cost and Speed

Improving procurement speed can lead to increased transportation costs and emergency order costs. By fixing costs with forward exchange contracts and long-term price agreements, and adopting a hybrid transportation model that combines regular shipping with express services, it is possible to shorten lead times by 50% with an average transportation cost increase of 10%. Furthermore, by utilizing the Vietnamese government’s tax incentives (0% tariff for export processing enterprises), the increased total procurement cost, including the additional transportation fees, can be offset.

Summary

• Improving procurement speed yields the three major benefits of shorter delivery times, inventory compression, and prevention of lost opportunities.
• Vietnam procurement is an opportunity to redesign the supply chain by leveraging geographical advantages and cost competitiveness.
• There are case studies of lead time reductions of 25-60% on average through IoT visualization, in-housing of primary inspections, and waste elimination with VSM.
• The key to success is having shared KPIs with suppliers. Strengthen partnerships through QCDT evaluation and regular audits.

As a next step, start by breaking down your company’s current lead times and quantitatively identifying the most time-consuming elements. Once the potential for improvement is visualized, you should be able to select the optimal measures for improving procurement speed.