When the supply chain is threatened by the pandemic, businesses that are independent in this crucial step can benefit greatly when manufacturing resumes.
Near-term interruption risk
All organizations struggle with maintaining the supply chain and distribution, in addition to sustaining production and business, and assuring employee safety.
The Research and Development Board of the Private Economy recently released a report titled "The Situation of Businesses and Employees in the Context of the Covid-19 Pandemic," which states that the domestic supply chain disruption is to blame for 35.4% of the temporary closures of businesses.
The pandemic situation in Vietnam has returned since the beginning of May 2021, posing numerous challenges for businesses' day-to-day operations: transportation is challenging and constantly under pressure, interrupting the supply chain; logistics costs have increased; and production capacity has decreased.
Despite significant efforts by the municipal governments and transportation industry, maintaining a seamless transportation system still presents several challenges. Source: Vetnam News Agency.
According to Mr. Truong Dinh Hoe, General Secretary of the Vietnam Association of Seafood Exporters and Producers, the local level, not the government, is where logistics issues for manufacturing firms should be resolved. According to Mr. Pham Ngoc Hung, Vice Chairman of the Ho Chi Minh City Business Association, logistics is currently the most challenging issue for businesses. This is because local government policies are not coordinated, which makes it difficult and time-consuming to deliver raw materials to manufacturing facilities as well as ship finished goods to customers or distributors.
As the government's policy to support enterprises is clear, provinces and towns must actively focus on restoring production for their communities through adaptable solutions to encourage firms to recover business and begin production.
When global shipping is stressed, the effects on exported goods are considerably more severe (congestion at ports, scarcity of containers). In response to inquiries from the media, Mr. Than Duc Viet, General Director of Garment 10 Corporation, stated that other manufacturing companies would be subject to the possibility of supply chain disruption, missed delivery dates, or contract violation fines.
Lợi thế từ việc tự chủ chuỗi logistics
There are still companies who take advantage of early investment to pro-actively transport and distribute in the challenging environment indicated above.
As in the case of Kim Tin Group, a major company that manufactures and trades welding materials (rods, welding wires, welding equipment, etc.) and has a greater than 45% domestic market share in addition to being a significant exporter in this industry.
Currently, Kim Tin has established a reputation in Vietnam for other basic materials including plywood and plywood-related items. With over 6,000 agents and over 950 corporate clients nationwide, Kim Tin has created a multi-channel distribution strategy over the past 20 years.
Businesses that are independent in logistics can benefit greatly when manufacturing resumes. Source: nPL.
Customers can readily purchase Kim Tin's items at any area in Vietnam after just five minutes of motorbike trip. Kim Tin Group has long concentrated on the growth of this logistics system.
Through nPL Logistics Joint Stock Company, Kim Tin Group has also developed its own logistics system to suit transportation needs and ambitions to expand market share.
Since its establishment in 2015, nPL Logistics Joint Stock Company has offered solutions for transportation, loading and unloading, cargo storage, and vehicle rental. In 2021, nPL has 6 dispatch centers, a fleet of more than 150 tractor-trailers and container trucks.
Additionally, nPL is making use of a warehouse system with a total area of more than 540,000 m2 that satisfies standards in provinces and cities in the important economic regions of the North, such as Hung Yen, Bac Ninh, Thai Nguyen, and Hai Phong, as well as the South, such as Ho Chi Minh City, Long An, Dong Nai, Binh Duong, and Binh Phuoc.
As of right now, the nPL Company is able to essentially satisfy the parent company's needs for logistical autonomy in every situation and is also prepared to provide external partners cost-effective solutions.
Along with internal services, nPL also broadens the market by offering domestic road transport services to other businesses in the industrial and construction sectors. The business wants to attract more clients for e-commerce in the future.
In general, the ability of companies like Kim Tin to create its own internal logistics model is a huge benefit in manufacturing and commercial operations, aiding itself in reducing operational expenses.
The independence of logistical operations enables the Group to plan production and distribution processes in advance, reducing the impact of the pandemic on the supply chain. Based on this current framework, the Group also stands a higher chance of recovering after the outbreak.
By Securities Investment