Optimizing the supply chain to eliminate the situation of "good season, loss of value"

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It is necessary to build an effective supply chain for the products of the Mekong Delta in order to escape the situation of "good season, loss of value".

Linking development is an urgent need

Since 2012, Ho Chi Minh City and other provinces and cities in the Mekong Delta have implemented a program to connect supply and demand of goods to stabilize the market. However, the severe disruption of the supply chain during the pandemic has shown that the connection of goods consumption still has many unstable problems.

Tran Anh Thu, Vice Chairman of An Giang Provincial People's Committee, said the relationship between Ho Chi Minh City and the Mekong Delta is a symbiotic relationship. When the supply chain is broken, the Mekong Delta cannot consume agricultural products, while Ho Chi Minh City has no supply, people have to buy goods at a high price. Similarly, when hundreds of thousands of workers leave Ho Chi Minh City, localities face the burden of social security because they cannot find jobs, while factories in Ho Chi Minh City fall into serious labor shortages.

From the perspective of goods distribution enterprises, Nguyen Anh Duc, General Director of Saigon Co.op, pointed out two broken chains during the pandemic. That is the break in the chain between localities and the fault in the product value chain, namely the inability to supply input materials for the production chain.

Vo Van Hoan, Vice Chairman of Ho Chi Minh City People's Committee, said that linkage and development is an urgent need for Ho Chi Minh City and other provinces and cities in the Mekong Delta in regional economic development in the current period of economic recovery.

Accordingly, Ho Chi Minh City has assigned departments and agencies to coordinate with provinces and cities in the Mekong Delta to regularly exchange information, in order to coordinate closely. In which, the Department of Planning and Investment of Ho Chi Minh City is responsible for coordinating in implementing solutions to link and develop economic recovery in the new normal period; Ho Chi Minh City Department of Industry and Trade is responsible for coordinating and implementing solutions to ensure the production, supply and circulation of goods for the whole region; the Department of Agriculture and Rural Development of Ho Chi Minh City is responsible for coordinating the implementation of solutions on training agricultural human resources for the Mekong Delta region.

Solving the problem of agricultural product prices

The Mekong Delta is currently the largest agricultural production region in the country, providing over 50% of rice production to maintain domestic food security, 65% of aquaculture production, and 70% of fruit production. For export activities, this sector also contributes 95% of the rice and 60% of the country's seafood exports. However, farmers here always face low and precarious incomes due to the risk of "good season, loss of value". According to experts, the key to this problem lies in the very high cost of transportation and circulation of goods, which increases the cost of the product.

According to Do Hoa, General Director of Elite Management Consulting Company, the supply chain is the foundation to create a sustainable link between the Mekong Delta and Ho Chi Minh City. With 10 years of experience in charge of regional markets including 10 ASEAN countries, Australia and New Zealand, Do Hoa said, for foreign corporations to successfully do business and connect with many countries, besides the branding element, the secret lies in the supply chain itself. If the supply chain is not efficient, it is impossible to organize distribution, sales and competition in the global market. Because quality can be adjusted in the factory by changing the recipe or changing the processing process, but to have a truly competitive price in the market, it is the contribution of each stage in the entire supply chain. "When there is a competitive price, the problem of output for the product is no longer a concern," said Do Hoa.

According to Hoa, there are currently three supply chain models: buy-out - sell-part, supply chain control and strategic linkage. In particular, the model of buying and selling outright is a common model today, however, this method is not sustainable and easily leads to a situation of "good season, loss of value".

The supply chain control model used by large corporations is very common, but it is difficult to apply to Vietnamese enterprises because it requires large investment. The most appropriate model today is strategic linkage, i.e. supply chain components invest in each other to bind and create trust.

This model will help links in the supply chain flexibly improvise when unexpected situations such as the pandemic occur. In addition, the feedback from the market will also be quickly updated throughout the chain to make appropriate and timely adjustments.

Meanwhile, Pham Thien Nghia, Chairman of Dong Thap Provincial People's Committee, raised the issue of establishing an agricultural product trading floor to reduce intermediaries and reduce costs. Accordingly, with the strength of rice, seafood and fruit, the Mekong Delta can form processing centers to supply Ho Chi Minh City and the Southeast provinces based on cooperation and association.

This opinion of Pham Thien Nghia received agreement of Nguyen Anh Duc, General Director of Saigon Co.op with the affirmation that he is ready to participate and will chair the agricultural product trading floor in the Mekong Delta. However, the current difficulty is that there is no place to concentrate agricultural products, and the storage conditions of localities are not good. Therefore, localities in the Mekong Delta need to proactively work with each other to reach a consensus. In addition, large retailers also need to sit together in the spirit of mutual development, instead of competing with each other as before.