A Successful Partnership     Journey in Sourcing and     Outsourcing    Prepared for:    Vietnam Supply Chain Congress 201...
Agenda               Topic                                        Page        i.     Vietnam Facts & Figures              ...
Vietnam Fact and Figures (1)                                Rising Export Trends Across Key Product Categories            ...
Vietnam Fact and Figures (2)                               Manufacturing Sector Continues To be Strong 2012-2015          ...
What Are the Key & Upcoming Industries?                                Six Key Industries To Source, Make and Enter  Joint...
Case Studies: Semiconductor                               Semiconductor Industry Sourcing in Vietnam                      ...
The Ups and Downs             Factoring Opportunities & Challenges Into Your Sourcing Decision         Fastest-growing eco...
The Sourcing Journey of    Partnerships & AlliancesPrepared for: Vietnam Supply Chain Congress 2012   Date: 1 October 2012...
The Sourcing Journey                     With The Ultimate Goal: Strategic Partnerships & Alliances                   “Sou...
The Sourcing Journey                    Do It Right From The Beginning, with Four Stage Approach           Systematic Proc...
The Goal is To Source                                       Business Partners Selection Process                           ...
The Goal is To Make (Your Own)                               Take a Holistic and Well-Rounded Approach           Large ski...
How Would You Like Your Journey?                          A Successful Journey Begin With 5 Basic Foundation              ...
Last Words                                    Spire Wishes You A Successful Journey                                       ...
Visit:        www.spireresearch.com                              Email:        vn.info@spireresearch.com                  ...
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121001_Vietnam Supply Chain Congress 2012_A Successful Partnership Journey in Sourcing and Outsourcing

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Vietnam Supply Chain Congress 2012” was a platform for supply chain industry marketers and retailers to network, share insights and discuss best practices in the sourcing, manufacturing, distribution and retail disciplines. Spire was honored to be invited to speak on ‘A Successful Partnership Journey in Sourcing and Outsourcing’ at the event.

Jeffery Bahar, Deputy CEO of Spire Research and Consulting, was one of the invited speakers at “Vietnam Supply Chain Congress 2012”. At the event, he presented his views on how to locate the right partners and alliances in Emerging Markets, and shared the factors that would make sourcing and outsourcing a success.

Read more about the event coverage here:
http://www.spireresearch.com/newsroom/events/spire-lends-its-expertise-to-the-vietnam-supply-chain-congress-2012/

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121001_Vietnam Supply Chain Congress 2012_A Successful Partnership Journey in Sourcing and Outsourcing

  1. 1. A Successful Partnership Journey in Sourcing and Outsourcing Prepared for: Vietnam Supply Chain Congress 2012 Source.Make.Deliver Prepared by: Spire Research & Consulting Date: 1 October 2012Prepared for: Vietnam Supply Chain Congress 2012 Date: 1 October 2012 Page 1
  2. 2. Agenda Topic Page i. Vietnam Facts & Figures 3 ii Key Industries, Case Studies, 5 Opportunities and Challenges iii. The Sourcing Journey for 8 Partnership & Alliances iv. Two Scenarios: 11 To Source To Make v. Concluding for Successful 13 Sourcing JourneyPrepared for: Vietnam Supply Chain Congress 2012 Date: 1 October 2012 Page 2
  3. 3. Vietnam Fact and Figures (1) Rising Export Trends Across Key Product Categories Total Export-Import Export Breakdown By Category Imports Export 40 Wood 2007 62.8 48.6 35 Products 30 Electronics & 80.7 62.7 Electricals Billion. USD 2008 25 Billion. USD 20 Fishery 2009 69.9 57.1 products 15 Footwear 10 2010 84.8 72.2 5 Textile 2011 105.7 96.2 0 products 2007 2008 2009 2010 2011* Exports and Imports increased by 33% and 25% respectively in 2011 The highest growth in the last 14 years Trade deficit at the lowest level in the last five years Source: General Statistics Office of Vietnam, 2012; Vietnam balance of trade, Vietnam Report, Spire AnalysisPrepared for: Vietnam Supply Chain Congress 2012 Date: 1 October 2012 Page 3
  4. 4. Vietnam Fact and Figures (2) Manufacturing Sector Continues To be Strong 2012-2015 Gross Manufacturing Output Breakdown by Sub Sectors 70 400 350 60 300 50 250 40 Billion USD Bill. USD 200 30 150 20 100 10 50 0 0 2007 2008 2009 2010* 2011* Food Non-metallic mineral Fabricated metal Transport equipment Gross output of manufacturing Industry Wearing apparel Industrial Production Index (IPI) 2011 increased 6.8% Manufacturing increased by 9.5%, the food sector is still the largest Power, gas, water supply increased by 10% Mining and quarrying reduced by 0.1% Source: General Statistics Office of Vietnam, 2012; * Spire analysis and forecastPrepared for: Vietnam Supply Chain Congress 2012 Date: 1 October 2012 Page 4
  5. 5. What Are the Key & Upcoming Industries? Six Key Industries To Source, Make and Enter Joint development between Vietnam and Japan recently announced in electricity- Manufacturing & Food retail About 531 electronics, shipbuilding, Equipment supermarkets and 89 trade centers in 2011, agricultural machinery with increasing foreign players Japan, Korea and Taiwan are the major investors particularly in textiles and heavy industries Healthcare Agri-food 76 FDI 20% of projects worth GDP USD1.1 2010 billion Vietnamese IT Software 20 food processing Food Processing Vietnam IT market to grow at a companies 16% from Japan and South CAGR 2011-2015 Korea have presence Source: Asias Investment and market hotspot, Spire Research and Consulting, 2012Prepared for: Vietnam Supply Chain Congress 2012 Date: 1 October 2012 Page 5
  6. 6. Case Studies: Semiconductor Semiconductor Industry Sourcing in Vietnam Human resource-related strength, investor-friendly policy attracts many foreign investors Semiconductor The Quang Trung Software City Industry (QTSC) and the Saigon Hi- tech Park (SHTP) are the main Assembly, testing & packaging Semiconductor and Tech centers in Ho Chi Minh City Precision parts: precision motor fans for computer, hard drives QTSC: HP, IBM, Luxsoft, Printed circuit boards, printers Global Cybersoft, GHP and R&D centres, software development others have setup centers SHTP: 53 projects with USD2 billion total investments, five semiconductor projects USD1.1 billion investment Source: Semiconductor Industry Offers Great Potential, 2011, from Vietnam Economic News The Rising Tiger in the Semiconductor Industry 2008Prepared for: Vietnam Supply Chain Congress 2012 Date: 1 October 2012 Page 6
  7. 7. The Ups and Downs Factoring Opportunities & Challenges Into Your Sourcing Decision Fastest-growing economy Deficits, Workforce weakening currency, inflation Location Weak infrastructure Foreign Investments Corruption Strength Weakness Threat Opportunity WTO membership Labor unrest Economic Prolonged reforms macro economic instability Infrastructure Natural disasters UrbanizationPrepared for: Vietnam Supply Chain Congress 2012 Date: 1 October 2012 Page 7
  8. 8. The Sourcing Journey of Partnerships & AlliancesPrepared for: Vietnam Supply Chain Congress 2012 Date: 1 October 2012 Page 8
  9. 9. The Sourcing Journey With The Ultimate Goal: Strategic Partnerships & Alliances “Sourcing is the process of finding and subsequently managing a source for the input of production”1 Cost Management Supply Stability Risk Management Reduce COGS Help build stable Identify and resolve Maintain the ability supply partnerships potential problems to price products Lead to quality quickly competitively improvements Develop alternatives over time for unforeseen The Sourcing Journey Reconfigure specifications Leveraging: cross-departments, cross-business units, cross-regions Rationalizing supplier base Develop strategic partnerships & alliances Source: 1 Mol, , Outsourcing, supplier relations and internationalization 2001.Prepared for: Vietnam Supply Chain Congress 2012 Date: 1 October 2012 Page 9
  10. 10. The Sourcing Journey Do It Right From The Beginning, with Four Stage Approach Systematic Processes for Strategic Partners & Alliances Sourcing Strategic Supplier Needs Partner Sourcing Selection Quality Analysis Development Management Analyze Develop detail Spire’s Implement past, current sourcing plan four-stage new supply and projected for strategic approach, include: structure spending partners: Partner profiling Track results patterns Objectives Systematic analysis, and restart Business Operational score cards assessment; Requirement information Evaluation Audit continuous Analysis Time-frame cycle Short listing, Supply Cost goals negotiating for Further improvement Market partnership AnalysisPrepared for: Vietnam Supply Chain Congress 2012 Date: 1 October 2012 Page 10
  11. 11. The Goal is To Source Business Partners Selection Process Set the specific requirements for your business partners Selection Criteria Scan comprehensively, exhaust all the sources: Secondary sources, listing, directories Experts, players, relevant parties Identify On the ground observation Partners Complete data & profiles Interviews potential partners, their clients Qualify Evaluation audit Partners Score card system on initial criteria set Go direct, multiple phases Contacting Use 3rd party facilitator, with strong local knowledge Partners and language capability Work With Develop reasonable objectives Business Technology, capability and delivery enhancement programs Partners Share supply chain management toolsPrepared for: Vietnam Supply Chain Congress 2012 Date: 1 October 2012 Page 11
  12. 12. The Goal is To Make (Your Own) Take a Holistic and Well-Rounded Approach Large skilled & low-cost workforce Working population, 50% under age of 25 LABOR cost Competitive rental and availability, Political quality COST tax holiday for foreign investors (e.g. up to Social of 4 years I n SHTP), stability Business Proximity to China & SE Asia, CONNECT Location Market-oriented good connectivity as export base Sea & air connectivity, Choice GOVT reforms Privatization Regulations Impediments to logistics, & charges of SOE’s foreign logistics rates Liberalizing firms by 2014. sectors INFRA STRUCTURE IT, Financial SPEED Services, Business Weak infrastructure: Transport, Efficiency roads, railways, ports UtilityPrepared for: Vietnam Supply Chain Congress 2012 Date: 1 October 2012 Page 12
  13. 13. How Would You Like Your Journey? A Successful Journey Begin With 5 Basic Foundation A Successful Sourcing or To Make Journey PRE-DEFINED QUALITY Product quality must be defined. Include performance measures, follow-through Align strategic goals with partners RIGHT PARTNERS, RIGHT JOB Communicate Select the right sourcing partners Clarify objectives, or alliances, to do the job is key. clear expectations Addressing cultural issues is also important Time to market is a very critical factor in sourcing decisions Source: 1Innovative Sourcing Strategies, Arthur D. Little, Spire’s Works and Consulting Experience With Our ClientsPrepared for: Vietnam Supply Chain Congress 2012 Date: 1 October 2012 Page 13
  14. 14. Last Words Spire Wishes You A Successful Journey To Source….. Four-stage approach for business partner selection To Make…… Holistic, well-rounded approach Always Be The First Timing is critical, do-it-right at firstPrepared for: Vietnam Supply Chain Congress 2012 Date: 1 October 2012 Page 14
  15. 15. Visit: www.spireresearch.com Email: vn.info@spireresearch.com 6th Floor, Phuong Tower, 31 Ly Tu Trong, Ben Nghe Ward, District 1, HCMC, VietnamPrepared for: Vietnam Supply Chain Congress 2012 Date: 1 October 2012 Page 15

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