Professional Documents
Culture Documents
This report dedicates to Pulppy, a brand of New Toyo Pulppy (Vietnam) Corporation a general outlook of toilette tissues supply chain in Vietnam. By discussing and analysing widely current logistic aspects of the industry, the researchers objective assists them in term of enhancing their distribution network in Vietnam market. In overview, Vietnams distribution channels are quite diverse, includes many kinds of channel, such as super market, traditional markets, specialists, small retailing shops channel. However, the distribution channels are still insufficient due to shortage of effective supply chains in the rural areas. In content of this report, researchers are going to sketch out five main existed issues in toilette tissue supply chains in Vietnam: Low performance among parties in the distribution channel. Limited number of retailers in rural areas or promoted areas. Inefficient inventory management due to the lack of computer software. Rudimentary Customer Relationship System (CRM). One centralized warehouse. Hence, researchers would like to introduce five strategies which are designed to solve current struggles and efficiently improve the indicated
Page 1
companys supply chains activities. For instant, those solutions are enhancing the collaboration between players of distribution channel with CPFR and supporting technology, improving inventory management by applying modern supporting computer software, decentralized warehousing, using 3PLs and optimizing the carriers. Based on the current situation of Pulppy for toilette tissue and the impact on supply chain management and customer service of each strategy, applying CPFR with Extranet will be applied as long-term plan, using inventory management supporting software and 3PLs will be implemented simultaneously as short-term plan.
Page 2
requires many kinds of raw material depended on particular type of toilette tissue. Here are some raw material suppliers that toilette tissue manufacturers in Vietnam use including that international and domestic suppliers:
Supplier 1: Bai Bang Company (domestic company) which is leading
in Vietnam market not only long historical established but key player in applying technology and R&D.
Supplier 2: Thanh Hoa company was established in 2009, one of
major pulp manufacturer and supplier, its capacity is over 150,000 tons/year
Supplier 3: Pulp Donghae company is Korean company has invested
a modern production line in 2010, producing 430,000-450,000 ton/year to supply for international and domestic market.
Supplier 4: Phuong Nam company is young company, recently it has
established, however, it has achievement and Award for consumers voting, supply capacity is 100,000 ton/year.
Supplier 5: Lee and Man is Hongkong company, also international
player and experience in matching customers requirement. All above are highly evaluated for cooperating in long term development. It depends on the level of operation; Pulppy will choose the supplier who matches specific demand of raw material.
Page 3
However, the geographic distance or delivery conditions are taken into consideration. Because the logistic system of each supplier is difference, further more on time factor is the most important.
Manufacturers: there are many firms, which manufacture toilette tissues
throughout Vietnam as well as they are Pulppys competitors. Both of them are personal care product manufacturers. They are Procter & Gamble Vietnam Ltd with Pampers brand, Diana Co Ltd with Bobby Fresh and Bobby Dry brands, New Toyo Pulppy (Vietnam) Vietnam Co Ltd with Huggies Nappies brand, Ky Vy Co Ltd with Bino and BinBin brands, Taisun Vietnam Ltd with Uni Dry and Wingo brands, Summit Co (M) Sdn Bhd with Basic Nappies brand, Everbeauty Corp with Prokids brand.
Wholesalers: after being produced toilette tissue have to be delivered throughout
Vietnam through distribution channels. In order to reduce the transportation costs due to the long distance from manufacturers to customers, toilette tissue producers have to find the at least one wholesaler at each region Northern, Middle and Southern. Modern wholesalers include Northern with DiethemPhuThai and Metro in Hanoi, Middle with Metro in Da Nang and Nha Trang, and Southern with Metro in Saigon and Dong Nai. Moreover, toilette tissue can be delivered through traditional wholesale channel, specifically Cholon Market or Binh Tan Market are located in Chinese communities. They are really big wholesale channel, however their customers are mainly Western areas in where the traditional market or shops are existing and consider as marketplace to exchange.
Retailers: retailers will be responsible to deliver toilette tissue to end consumers
with the small scales. Retailers can be considered as mean of wholesalers to keep in touch with end consumers with close distance. Retail channels of toilette tissue in Vietnam include supermarkets, department stores, discounters, specialist and traditional outdoor market. Supermarkets include Co-opMart, Intimex, Maximart, Fivimart, Big C and so on. Convenient stores include G7 Mart, 24 Seven and potentially is big chains of Seven Eleven. Department stores
Page 4
include Diamond, Parkson and An Dong. Specialists include some Maternity & Children hospitals.
Third party logistics: they deal with transport and store products until they are sold
to end costumers. By using third party logistics firms can enhance place and time utilization. These logistics company will offer firms professional work manner with abundant experience in logistics field. The poor infrastructure and traffic conditions are current concerns of government and Logistic companies particularly. Nonetheless, by practical experiences many domestic players have satisfied the requirements of being on time and handling sudden demand with big border. Those are considering including Nam Trung Bac shipping company, Hoang Ha logistic, VINASHIP, Vietranstimex company. For their prestige has been built in relationship for long term strategies.
Raw material suppliers Tissue Manufacturer s in Vietnam Warehous e Distribution center Imported Tissue Manufacturers (from Hongkong, Thailand or Singapore) Imported companies
Wholesalers at each region Supermarket s/ hypermarket Departme nt stores Outdoor markets End(Tradition Costumers Page 5 al markets) Discounte rs Specialists (Maternity , Pharmacie s,&
INTRODUCTION OF CURRENT SITUATION IN TOILETTE TISSUE SUPPLY CHAINS IN VIETNAM: According to Euromonitor International (2007), the growth of toilette tissue products is relatively low when comparing to other developed countries due to the restricted distribution channel which have not reached to rural areas completely tissue can be distributed with the various types of channel which include supermarkets, department stores and outdoor markets. However, customers tend to shift their consumption from tradition channel to modern channel such as supermarket and department stores because of their better service (Euromonitor International, 2007). Moreover, the supermarket channel is becoming more convenient due to the continuous expand through the whole country. Customers can find the brand or kind of toilette tissue they want easily due to the high availability if this kind of products. In addition, the increasing specialist care outlet is becoming the key distribution channel of care products including toilette tissue as they give young parents with professional advices before they decide to purchase a particular brand or kind of toilette tissue (Euromonitor International, 2007).
Page 6
SWOT ANALYSIS
Page 7
Page 8
IDENTIFICATION OF 5 LOGISTICS & SCM ISSUES IN TOILETTE TISSUE SUPPLY CHAINS IN VIETNAM
Page 9
Page 10
STRATEGY
5 FEASIBLE LOGISTICS & SCM STRATEGIES THAT COULD ADDRESS THE ISSUES
Strategy 1: Enhancing the collaboration between players of distribution channel with CPFR and supporting technology
Page 11
In order to enhance the collaboration among players in the distribution channel, Pulppy has to improve the information flow. For instant, the information flow can be increased by adapting computer-based systems, for example: Extranet and EDI. Hence players in the distribution channel are able to share their data of demand and supply to others simply and timely. Furthermore, EDI/ Extranet assists the company to optimal stability of low inventory levels and speed up the systems responsiveness to customers (Daft, 2004). In order word, EDI or extranet ensure flawless information connection flows from raw material suppliers to end consumer (Daft, 2004). For example, once a customer confirms to purchase a particular brand or kind of toilette tissue at a retailer, then retailers Point of Sale system will be immediately recorded in the purchase information, which is about to transfer to the manufacturers database. Hence, the data provide to manufacture an exact provision of sales and performance of a particular
Page 12
product. Moreover, Pulppy is able to forecast the market demand which help the company to distribute timely and accurately quantity of products to the right place.
MANUFACTURER
CUSTOMERS
A PULL STRATEGY SYSTEM As Pulppy toilette tissues are considered as Fast Moving Consume Product (FMCG), the JIT approach which adopts a pull system (Fernndez, 2004) is an appropriate inventory management to them. As a pull system processes, customers are expected to send their demands to resellers (wholesalers and retailers), then information will be flown back to the manufacturers, which will enable them forecast and storage a minimum inventory reaches to feasible level. The most advanced aspect of just-in-time (JIT) inventory principles is assisting the New Toyo Pulppy to establish an efficient producing operation, minimize cost and
Page 13
eliminate responsive delay to customers orders. Practicing JIT allows the company achieve the ideal amount of inventory of raw materials or finished goods, which satisfy the demands of customers. The lower allowance of inventory point the company accesses, the less capital of operating warehouse, raw materials, finished goods inventory, transportation and logistics operations. Moreover, the system will also enable the company monitoring historical purchases of toilette tissues and its products cost, which provide the manager an accurate overview of proficient inventory level and future budget upon analysing the data of products prices, costs and sales. In addition, the system also assists manager to allocate suitable raw material suppliers.
Page 14
According to Duncan (2001), on the physical distribution aspect of a companys supply chains, quantity of distribution warehouses, which storage inventories bases on numerous variables. These are:
The distance from the manufacturing mill to warehouse. What type of goods transportation? The expired days of goods. Physical characteristics of the goods, i.e: liquid or solid goods. The distance from the warehouse to consumption area (wholesalers, retailers). In horizontal centralization, determining optimal number of warehouse to
minimize logistics costs takes a crucial role. A warehouses revenue of goods is upon to a wider network of warehouses. Therefore, decentralized warehousing is a solution to minimize high cost of transportation, due to the company obtains one centralized warehouse in the distribution channel (Stock & Lambert, 2001). To reform the supply chains, Pulppy should construct a wide network of warehouses in its distributed areas by setting up a major local warehouse in every main region. As the result, the company is able to save transportation cost of delivering products from distributing centres to consuming areas, minimize delay time of responses to customers demand and enhance its customers information collective system through those new local centres. Moreover, the company should hire public warehouse because they do not require much space decision within a very rational operating cost (Coyle, Bardi and Langley, 2009). When the new distribution channel is implemented, Pulppys high transportation cost expects to reduce and decentralized warehousing is partly able to assist local distributers to access the rural customers issue by reallocating local warehouse at the optimal locations where are near to rural areas.
Page 15
inefficient connecting and performance among players in Pulppys distribution channel. In order to reduce transportation costs, service level, strategic flexibility, distribution channel members connectivity, customer service levels and enhancing focus on core competence, researchers suggest the company obtains Third Party Logistics (3PLs) in transportation and warehousing. By obtaining professional 3PLs transportation providers and warehouses, Pulppy will probably attain numerous benefits.
Professional transportation providers are totally able to provide Pulppy a wellperformed working manner with satisfied deliver service such as deliver right product to right customer at the right time and place with the right quantity, condition and cost (Coyle, Bardi and Langley, 2009). Moreover, by signing contract with 3Pls warehouses, the company can use existing local resources, such as labours, equipments and spaces of warehouse more efficiently (Coyle, Bardi and Langley, 2009). In addition, Pulppy can acquire increasing of sales with a less cost, due to apply 3Plss diverse experience of Vietnamese market and consumers preference.
Page 16
An idealistic supply chains is an optimal system which both enhances its customer service quality within a rational cost of transportation (Taylor, Tseng & Yue, 2005). Therefore, Pulppy should optimise and monitor companys carriers (adding new type of land carriers, adjacent to trucks and minivans) by improving their efficiency and productivity while cutting down the number of existent carriers. For instant, there is a model of selecting a workable carriers system which is based on six main criteria: accessibility, capability, cost, time, reliability, and safety (Coyle, Bardi and Langley, 2009). Applying to Vietnams traffic system, motorbikes are able to be an idealistic carrier which dues to the highest accessibility and reliability (Coyle, Bardi and Langley, 2009). Motorbikes are a very possible option to enhance the companys supply chains performance because of those reasons; firstly, they are cheap and easy to purchase in large quantity with a very short training to riders crews. Secondly, motorbikes can carry a quite large amount of products through to narrow pathways in small valleys of Vietnam, so the response to customers demands especially in rural areas will be possibly increased. In addition, Pulppy should also optimize the freight volume and revenue per carrier. Thus, the firm can reduce the number of carrier but still maintain the level of freight volume and revenue. ADVANTAGES AND DISADVANTAGES OF EACH STRATEGY
Strategy 1:
Page 17
Advantages Enhance collaboration between players of distribution channel with the smoother information flow. Reduce costs due to bullwhip effect, stock outs and lost sales.
Disadvantages Very expensive to establish EDI system Very time consuming for training employees to get familiar with the new system
Strategy 2: Advantages Allow firm keep the optimal level of stocks in inventory as giving the good purchase schedule Increase customer service due to the high availability of product Disadvantages Expensive cost of purchase and establish the software. Have to hire some IT expert to maintain the software due to the high complexity of the software
Strategy 3: Advantages Allow firm keep the optimal level of stocks in inventory as giving the good purchase schedule Increase customer service due to the high availability of product Disadvantages Expensive cost of purchase and establish the software. Have to hire some IT expert to maintain the software due to the high complexity of the software
Strategy 4: Advantages Improve customer service due to the highly professional working style Disadvantages Cannot take control over the performance of 3PLs Difficult to modify them terms
Page 18
Strategy 5: Advantages Reduce transportation costs due to the less number of carrier and more efficient carriers Enhance customer service as enable JIT Disadvantages High risk due to the heavy dependence on the selected carriers because when these carriers have problems, firms cannot find the substitutions easily Time consuming to analyze and select the best carrier and decide which carrier need to be removed
IMPLEMENTATION
FORMULATION OF THE ASSOCIATED LOGISTICS & SCM OPERATIONAL PLAN FOR SHORT-TERM & LONG-TERM TIME LINES:
Short-term plan: (See appendix 3) Long-term plan: (See appendix 4)
Page 19
RECOMMENDATION
The downside of JIT is that it is a continuum; the closer you get to it, the more beneficial it is to your business. But go too far and reduce inventories too far, the less beneficial it is for your business. Too much or too little inventory leaves you at a competitive (or cost) disadvantage to your competitors. But if you can do it right, JIT can be a strategic source of competitive advantage.
Page 20
REFERENCE
Coyle, Langley, Gibson, Novack and Bardi (2009) Supply Chain Management, 8th Edition, Cengage Learning Australia. Chopra, S. & Meindl, P., 2001, Determining optimal level of product
availability, in Supply Chain Management Strategy, Planning and Operations, Prentice Hall, pp.222-225. Daft, R, L, 2004, Organization Theory and Design, 8th edn, South
Western Thomson, Ohio. Duncan, G., 2001 ,Centralisation vs Decentralisation of the Supply
Management Function, Articles of Interest, News & Events, Duncorp Pty Ltd, view 17th May 2011, <http://www.procurenet.com.au/page.asp? parentid=65&parent2id=36&parent3id=50> Euromonitor International 2007, Cosmetics and Toiletries-Vietnam,
viewed on January 2 2008 Fernndez, J.L, 2004, Just In Time (JIT), IE Business School, Mara de
Molina 13, 28006 Madrid, Spain. Richer Investment Consulting Service 2007, Toilette tissue Raw material
Suppliers, viewed on January 3 2008, <http://www.disposabletoilette tissue.net/content.asp?14> Stock,J. & Lambert, D. 2001, Strategic Logistics Management, 4th ed, Mc
Page 21
In Logistics Chain, Eastern Asia Society for Transportation Studies, Vol. 5, pp. 1657 1672.
Page 22
Page 23
Action Get ready for change Research the most suitable 3PLs and most workable software
Target Analyze the current company and market industrys situation Search on Internet or industrial magazine for inventory management supporting software. Search on 3PLs Website, trade magazine or even competitors to get general awareness of suitable 3PLs Analyze cost & benefit of each kind of software including how it enhance SCM and customer service Analyze the 3PLs based on their situation in the industry and their capability compare with the cost of hiring them. Then choose the best one Having the meetings with the chosen 3PLs to discuss about the conditions and terms of contract Signing the contract if its conditions & terms are agreed Purchase the most workable supporting software Set up the software Hire IT personnel and establish temporary IT department Train employees and managers to get familiar with the new software Evaluate the performance of 3PLs and supporting software rely on the customer service level and sales revenue Maintain and update the software based on the situation
Responsibility Top level managers, logistic managers and market research staffs of firm. Logistics staffs
Second month
Analyze the 3PLs and computer software to choose the best one
Logistics manager
Second month
9th week
Logistics staffs and software service provider Top managers All logistics staffs Top managers and logistics manager IT personnel and logistics manager
9th week
9th week 10th and 11th month End of every quarter End of every quarter
Page 24
Target Analyze the current company and market industrys situation Conduct a survey for the supply chain members opinion about the change Establish technical department from IT department to deal with handling the performance of EDI Establish the congress among supply chain members to discuss about the change Agree about which thing needs to be changed Share the budget among members due to the high cost of carrying the change
Responsibility Top managers, logistic managers and market research staffs of all members in the supply chain.
Third month
Search for EDI transaction software Search for EDI integration provider Review the paper-based data which will be exchanged Search for Network provider Setup the EDI networks or Extranet Test the performance of transaction software with the network connection
IT personnel
Fourth month
Establish a training course for employees and managers to get familiar with the EDI or Extranet network
All member of logistics department and some related departmental managers and logistics managers from supply chain members.
Seventh month
Page 25
Using Extranet or EDI network to support the logistic activities Primary test the performance of Extranet or EDI network to the Pulppys business Evaluate the performance of EDI or extranet and other supporting information systems based on the improvement of CPFR and flow of information compare with cost saving. Update information for Extranet or EDI network. Fix some mistakes of Extranet or EDI network if its performance does not meet the expected requirement
Top managers and logistics managers and staff of all supply chain members Logistics manager and technical department
Page 26