Nâng cao hiệu quả tổ chức xây dựng dự toán hàng tồn kho tại các doanh nghiệp sản xuất Việt Nam trong thời kỳ hội nhập

ENHANCING THE EFFICIENCY OF ORGANIZING INVENTORY 
BUDGETS FOR THE VIETNAMESE MANUFACTURING 
ENTERPRISES IN THE INTEGRATION PERIOD
NÂNG CAO HIỆU QUẢ TỔ CHỨC XÂY DỰNG DỰ TOÁN 
HÀNG TỒN KHO TẠI CÁC DOANH NGHIỆP SẢN XUẤT VIỆT NAM
TRONG THỜI KỲ HỘI NHẬP
PhD, Huong Thao Phan - Thuongmai University
thaoktcb@gmail.com
Abstract
The research has truly reflected the actual implementation of organizing inventory budget
which is used as a basis to provide a system of solutions associated with the needs of management.
These include building assessment systems, estimating inventory, organizing information and
controlling activities of management accounting for inventory, and especially optimizing infor-
mation to help managements in the decision-making process. On the other hand, a manufacturer
size with suitable inventory plans, information needs for different levels of management, and
qualifications of accountants in the Vietnamese manufacturing enterprises are determined by ap-
plying qualitative, quantiative methods and analyzing relevant data and level of influence on the
implementation of organizing inventory budgets. The findings of the study revealed that employees
lack proper training and education and that there is poor inventory control planning, lack of staff
communication. Respondents also indicated that there are no common strategies in place to con-
trol inventories.
Keywords: budget, manufacturing enterprise, inventory, management accounting, 
organize.
Tóm tắt
Tổ chức xây dựng dự toán hàng tồn kho là một công cụ quan trọng của nhà quản trị trong
thực hiện chức năng hoạch định và kiểm soát hoạt động của doanh nghiệp. Lập dự toán hàng
tồn kho là hoạt động cần thiết và quan trọng nhằm phác thảo tương lai, giúp doanh nghiệp phát
triển đúng hướng và đưa ra kế hoạch thực hiện phù hợp để đạt được mục tiêu chiến lược. Bài
viết tập trung làm rõ vai trò của tổ chức xây dựng dự toán hàng tồn kho trong các doanh nghiệp
sản xuất, thực trạng xây dựng dự toán hàng tồn kho trong các doanh nghiệp sản xuất ở Việt Nam
hiện nay. Trên cơ sở đó, tác giả đưa ra một số đề xuất hoàn thiện tổ chức xây dựng dự toán hàng
tồn kho nhằm nâng cao hiệu quả quản lý hàng tồn kho của nhà quản trị trong doanh nghiệp.
Từ khóa: dự toán, doanh nghiệp sản xuất, hàng tồn kho, kế toán quản trị, tổ chức.
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1. The role of organizing inventory budget in manufacturing enterprises
Inventories can account for 40% -50% of a business’s total capital; up to 33% of company
assets and 90% of working capital (N.T.P.Dung, 2013). Inventory helps businesses achieve eco-
nomic efficiency of large output; balance supply and demand; support production specialization;
cope with fluctuations of demand, order cycle and above all, they act as a “stepping stone” be-
tween stages in the supply chain... Therefore, good control of inventory is always a very important
and an essential issue in enterprises. To achieve the above goal, it is necessary to have an effective
combination between functional departments in the enterprise, in which accounting is an indis-
pensable important management tool for the administrators (Naidoo et al, 2011). Organizing man-
agement accounting for inventory, especially for inventory budget in a scientific and reasonable
way will help enterprises promote the process of rotation inventory; improve the efficiency of
inventory management. The role of organizing inventory budget in manufacturing businesses is
demonstrated in the following aspects:
- Organizing inventory budget provides information to support the control of production
and business activities of enterprises. The arising economic transactions related to the inventory
are recorded in the reports and compared with the budgets of inventory that were made earlier.
The inventory budget information helps administrators of all levels to control and evaluate ac-
tivities in a diverse, detailed, timely manner and are suitable to the needs of users (Nzuza, 2014).
In addition, the inventory budget system will have to collect and provide information about dif-
ferent situations with different options so that the administrator can consider and make the best
and most effective decision.
- Organizing inventory budget (IB) provides information to support management control.
With the information in the IB, the administrator considers the mobilization and uses of the unit’s
resources effectively to meet the goals of the management of IB. With the information on the re-
port of performance fluctuations, the administrator will recognize the implementation status of
the criteria on the inventory at the management levels; fluctuations in performance compared to
plan goals. On the other hand, proper IB can lead to an increse in competitiveness and market
share of small producers (Akcali, 2008). Well-organized IB are also the foundation for an orga-
nizat ... terial price is determined by the Purchasing department. The Supply department
needs to choose high quality raw material suppliers with the most reasonable prices. On the basis
of combining information between past analysis and research on future price volatility trends
provided by management accounting, the administrator will choose a reasonable expected price
for the raw materials used by businesses.
Regarding the method of building the standard of raw materials: Enterprises can organize
to build the standards according to one of three methods: experience statistics, technical econo-
mics or direct testing. Depending on their specific conditions, enterprises choose to apply the ap-
propriate methods to build the raw material standards in accordance with the reality.
* Organizing inventory budget
The IB is understood as the detailed, meticulous and comprehensive calculations, budget,
and coordination of the inventory, how to mobilize and use the inventory to perform a certain
volume of work in a given period of time which is represented by a system of quantity and value
indicators (Doan Ngoc Que, 2015). Organizing IB will help businesses be proactive in production
and business, anticipate difficulties in implementing their goals, limit the costs of backlog, wa-
rehouse costs, and management costs ... IB is one of the production and business budget of a
business and is dominated by the consumption budget to determine the amount of inventory at
the end of the period to serve decisions on production and consumption. At the same time, IB
also dominates and is inversely related to production budget. The MEs can apply the general pro-
cess for IB in 3 stages in table 4 as follows:
Table 4: General process for making inventory budget 
in manufacturing businesses
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Budget stages Processes
Stage 1: Preparing
inventory budget
Step 1: Determine the target of consupmtion of the whole business
Based on the forecast of domestic and international market demand, the
regulations on import and export that were actually Achieved in the pre-
vious period, the potentials and goals of their enterprises in the next period,
the business department will anticipate production by each type that the
business can achieve in the planning period. On the basis of the target of
the expected consumption and the ability to store a product, management
reviews and approves the target.
Step 2: Prepare personnel for inventory budget
On the basis of the approved production and business goals, the Board of
Directors needs to set up a separate department specializing in making
budget for the enterprise. These staff members are in the Management Ac-
counting Department and are controlled and managed by the Accounting
Department.
Source: Author (2019)
Enterprises can produce and trade many products, using many types of raw materials, so
making a detailed budget for quantity and price for each item and each type of raw material is
complicated and difficult to do. Therefore, it is possible to organize the budget for the main items
or groups of business goods, important raw materials with great demand or make a detailed budget
of both quantity and price for each main inventory item.
Regarding the organization of information bases to make IBs: In order to organize inventory
budget system, enterprises must establish an unified process for receiving input information. In-
formation for budget can be obtained from many different departments, divided into 2 sources:
- Internal information source: is available information reflecting the business activities of
enterprises through business plans, documents and accounting numbers about inventory, infor-
mation predicting the future provided by related departments such as the planning department,
the sales department, the manufacturing department ...
- External information sources: is unavailable information requiring enterprises to spend
time and money to collect through the processes of investigation, interviews, document research,
including information related to market, suppliers, competitors, the State’s policies ...
Regarding the application of inventory budget model: organizing the budget in the enter-
prise must base on the organizational structure of management, knowledge of the staff to choose
the appropriate model according to one of the three following models: top-down information mo-
dels, bottom-up information models, or feedback models.
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Step 3: Prepare the budget
The specialized department, after being assigned the task of drafting the
forms and content necessary for the preparation of IB, reviews and eval-
uates the preparation work to ensure that it will provide useful budget in-
formation.
Stage 2: Organiz-
ing inventory
budget
Step 1: Collecting relevant information
Employees performing IB need to collect information related to the inen-
tory from internal and external sources of the enterprise. Other depart-
ments in the enterprise need to coordinate to provide information for IB
Step 2: Organizing inventory budget
On the basis of the forms prepared in phase 1, the collected information,
management accounting staff will process, analyze the information, spec-
ify the consumption output targets into budget of purchasing materials,
raw material budget, finished products, reservation budget.
Stage 3: Approving
and implementing
budgets
After completing, the IBs will be submitted to the board of directors to
review the appropriateness of the budget with the general goals. The budg-
ets are approved, they will be transferred to the relevant departments in
the enterprise to implement, monitor and control.
Regarding the application of techniques into inventory budget: To ensure the scienctific
features and feasibility of the budget, enterprises need to prepare on the basis of the supply chain,
starting from raw materials, ending with finished products and inventoy reserve.
* Budget of purchasing raw materials:
Estimating the purchase of raw materials during the supply process is calculating the quan-
tity and value of each type of raw materials that needs to be purchased in the period to meet the
needs of production and business to help businesses do business effectively. During the production
and business process, there may be times when enterprises encounter the situation of inventories
of materials and finished products, causing stagnant business capital, having a negative impact
on enterprises and sometimes there are no materials and goods for production or consumption.
Therefore, making a budget of purchasing raw materials will help businesses to be more active
in their business. 
Budget of purchasing raw materials is only made for key products, it will be difficult to
make a budget for all products. At the beginning of the annual business period, management ac-
counting staff should make a budget of purchase for each type of material that is required for
production and business in the period in terms of both quantity and value, then sum up the value
of purchased goods in the planning period into budget of purchasing raw materials according to
the process in diagram 1.
Source: Author (2019)
Diagram 1: Process of organizing the purchase of raw materials budget
A reliable unit price budget contributes to the foreseen demand for capital, the value of ca-
pital in inventory to have a plan on mobilizing and using capital reasonably, to avoid stagnant
capital in inventory. Furthermore, the unit price budget helps to manage the purchase value (pro-
duction) reasonably, to avoid waste or take advantage of purchasing to make a profit of the pur-
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chasing staff. Therefore, unit price budget can also be considered as a measure of the purchasing
activitites in the period.
* Raw materials budget for production 
Raw materials budget for production is the determination of the amount of raw materials
needed to serve the production plan. If the finished product is an independent inventory serving
external consumption, raw material is the dependent inventory type used to meet the internal pro-
duction needs of the enterprise. Therefore, when the consumption and production needs have
been identified, the raw material demand is predicted quite accurately according to a certain stan-
dard or a certain ratio compared to the number of products to be produced.
* Estimated raw materials at the end of the period: Quantity and value of raw materials
at the end of the period is determined as follows:
In which: The estimated percentage of inventory is determined similar to that of inventory
at the end of the period and is calculated to give a reasonable ratio on the basis of unifying the
goals of the production, business and accounting department.
* Estimated finished products:
Part of the required finished product is already in stock at the beginning of the budget pe-
riod, the remainder needs to be produced during the budget period. The number of finished prod-
ucts is determined by the formula: (Doan Ngoc Que, 2015).
* Estimated finished products consumed: 
Estimated finished products consumed are made to ensure a minimum amount of inventory
at the end of the period, suffcient for the consumption demand of the next period. At the same
time, the determination of a reasonable amount of finished products in stock is also meaningful
to the capital turnover, not causing capital stagnation. The value of finished products in stock at
the end of the period is determined as follows:
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Raw material 
value needed for =
prooduction
Estimated quantity of raw
materials in stock at the =
end of the period
Estimated value of 
raw materials at the end of =
the period
Quantity of finished 
products produced in =
the period 
Quantity of finished 
products consumed in +
the period
Quantity of 
inventory at the -
end of the period
Quantity of inventory 
at the beginining 
of the period
Estimated quantity of raw
materials in stock at the x
end of the period
Estimated 
unit price
Quantity of raw materials 
in stock at the end of the x 
period
Estimated 
percentage 
of inventory
Number 
of products x 
produced
Consumption 
of material for x
each product 
Estimated 
price
* Determine the safe inventory level
The establishment of a safe inventory level will help ME to avoid unexpected demands
that enterprises did not anticipate. For example, the regulation of 10% of the average inventory
for a kind finished product in the same period last year will help businesses promptly respond to
unusual demands for such products. Regulation of inventory level should be based on the fol-
lowing criteria: physical and chemical characteristics of inventory, demand for materials used in
the previous year, expected analysis report of consumption. The safety inventory level is deter-
mined by the following formula:
Organizing inventory budget is a content of management accounting in enterprises in order
to provide information about inventory for each enterprise to perform the function of managing
consumption factors for activities, to help the administrators develop plans, control and evaluate
performance as well as make reasonable decisions. In many MEs in Vietnam, in recent years, al-
though awareness of the importance of IB has been raised, many enterprises still have not really
paid attention to this issue. Therefore, managers in enterprises need to change their perception of
the role of inventory budget in business management soon. Traditional and experienced manage-
ment thinking should be replaced by modern management accounting methods, thus adding and
updating new knowledge to improve the efficiency of inventory management in enterprises.
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