Connecting supporting industries to the global supply chain

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The linkage of enterprises will form chains, produce parts with higher added value, and easily participate in supply chains. Photo: N.H

Meeting point for manufacturers and suppliers

Participating in a conference on the Sourcing Fair Supporting Industries 2023 (SFS 2023) last weekend, Mr. Kazutomi Miura, Chief Representative, Takara Industry Company Representative Office in Ho Chi Minh City, expected to find more mechanical processing and laminating products suppliers. Previously, since 2015, the company has connected with 3 supporting industry suppliers in Vietnam, providing aluminium casting, laminating and mechanical products. Mr. Kazutomi Miura assessed that Vietnam's supporting industrial products had good quality, met the company's strict standards, and had a very good price.

In fact, through 6 times of organization, SFS has become a meeting point for Vietnamese supporting industrial enterprises to find output and a place for FDI enterprises and end-to-end manufacturing enterprises to connect with domestic suppliers to diversify supply in the future.

Mr. Tran Ba Linh, Production Director of Dien Quang High Technology Company Limited, assessed that SFS was a very effective connection channel for enterprises by gathering many industrial manufacturers and supporting industrial enterprises. Because without this event, the company would waste a lot of time and money finding and meeting potential suppliers. Accordingly, during the 2022 event, Dien Quang connected 10 suppliers and one buyer in Europe. Accordingly, Dien Quang also hoped to expand its list of suppliers and customers this year.

Ms. Sabrina Anh Tran, Purchasing Director of Techtronic Industries (TTI) Vietnam Company, also said that the company was looking for suppliers for metal components, lathing and milling, metal stamping, shape casting, engine parts... to prepare for production expansion.

Connection to improve capacity

Although Vietnamese supporting industrial enterprises are participating in the supply chains of global enterprises, in general, the lack of connection is still a weakness in reaching customers. Ms. Truong Thi Thu Tram, Deputy General Director of Minh Man Printing Co., Ltd., said that the supply capacity of Vietnamese supporting industrial enterprises in the global supply chain was not a worrying problem. However, enterprises still lacked the connection to form multi-component chains and part-clusters to meet new order trends for foreign enterprises.

Ms. Tram cited that when Hoa Phat Group first started planning to invest in a container shell production project, foreign enterprises proactively approached and offered solutions to provide a complete package of raw materials for finished production. Accordingly, metal supply enterprises cooperate with paint, label, and printing enterprises when approaching Hoa Phat. This created a huge advantage compared to a single approach for Vietnamese enterprises.

Ms. Sabrina Anh Tran also pointed out that foreign enterprises currently tend to shorten production processes and reduce product tolerances, so they prioritize choosing multi-detailed products. Therefore, domestic enterprises needed a connection to improve their supply capacity. It was necessary to establish a corresponding multi-detailed supply chain of supporting industrial products for level 1 and 2 suppliers. This would help enterprises improve their competitiveness, maintain orders, and penetrate deeper into the global supply chain.

Mr. Kazutomi Miura also said that the company's wish was that Vietnamese enterprises could complete the assembly stage, but currently, the 3 Vietnamese suppliers for Takara only stopped providing raw materials due to limited capacity.

Recognizing the above reality, the Vietnam Association of Supporting Industries (VASI) proposed the "learn together, buy together, sell together" solution for its members. This solution brought results when VASI in the Northern region successfully connected a "sell together" project to an FDI enterprise. Specifically, enterprises in each block, shape block, plastic block, and mechanical block work together to create finished products, send customer quotes, and have them accepted.

However, Mr. Duong Huu Phuc, a member of the VASI Executive Committee, said that implementing this solution also faced many difficulties due to the unequal capacity of enterprises, not enough orders for all of them and lack of understanding among enterprises when working together. In addition, the currently incomplete supply chain connection was also a major barrier. For example, at VASI in the Southern region, connections such as plating, heat treatment, and casting were currently lacking. In addition, investment members did not have an orientation or deep specialization.

To overcome these problems, VASI is offering solutions such as increased support, training, exchange and sharing to make the more uniform capacity of enterprises. All members work together to get many new orders and orders for the project team.

Approaching manufacturers' confidence is also one of the weaknesses of Vietnamese enterprises. Ms. Le Nguyen Duy Oanh, Deputy Director of Ho Chi Minh City Supporting Industry Development Centre, said that many enterprises previously had not met the criteria for purchasing, but after 2-3 years, they had innovated and participated in some supply chains. However, they were not confident to offer again to buyers they had contacted.