Proposed solutions for Vietnamese garment export enterprises, for State management agencies and associations focus on this orientation.
3.2.1. Business Solutions
With the above strengths, weaknesses, opportunities and challenges, garment export enterprises must review their own conditions and development capabilities. To ensure proactiveness and export efficiency, Vietnamese garment export enterprises need to innovate in management organization. Specifically, these enterprises need to focus on the following issues:
3.2.1.1. Maintain position in the value chain: Maintain traditional markets and proactively seek new export markets
First of all, it must be affirmed that although the export processing production method presented in detail above reveals many disadvantages for Vietnamese garment export enterprises, in the current context, when the conditions for developing the garment industry are still limited, especially the initiative in input materials, export processing is still a production method that needs to be maintained. The task of garment export enterprises in the coming time is to maintain traditional markets such as the US, EU, Japan, Canada... and on the other hand, to proactively seek new export markets. To be able to do so, garment export enterprises need to focus on the following issues.
First, improve product quality and focus on exploiting high-quality items.
Currently, Vietnam is known to the world as a major garment manufacturing factory in the world. In order to gain the trust of customers and build prestige for businesses in the international market, Vietnamese garment export businesses have no choice but to ensure the quality of their products. Vietnam's main markets are all markets with strict quality requirements. Therefore, attention to ensuring quality must be paid to
is put first for garment export enterprises.
To ensure quality according to customer requirements, in addition to building quality-oriented strategies and goals, businesses need to focus on raising awareness of the importance of producing high-quality products for members of the production chain, and at the same time focus on improving management methods to make management more professional. Quality assurance management during the production process also needs to be given more attention. Export garment enterprises can do this by appointing a team of quality specialists responsible for control and reporting. These staff need to perform at least the following tasks:
- Build and complete the description of product creation processes: complete the job description of positions in the product creation process. All main processes in export garment enterprises such as design (living, dead, according to ideas), purchasing raw materials, organizing production, warehousing, distributing to customers need to be clearly and specifically defined to each department's tasks. Garment enterprises also need to build and complete supporting processes such as customer search process, training process, product quality inspection process... This is an important job because this description is the basis for evaluating the effectiveness of work implementation, which is especially complicated when going deep into sewing lines.
- Arrange quality control responsibilities in functional departments;
- Training on quality and quality management for managers in departments;
- Identify and guide quality requirements for products at each stage, work operations at each position, especially foreign customers' requirements on types and quality of raw materials, production technology processes, technical specifications, labels, packaging;
- Establish control forms and build methods to collect data for control purposes, using statistical tools such as Pareto charts, density distribution charts, control charts, and cause-and-effect diagrams that are very suitable for controlling products and work in the processes of export garment companies;
- Improve the professional level and sense of responsibility of workers in the product manufacturing process. Train employees directly performing the work on how to comply with the process and achieve quality criteria;
- Perform quality control well from the first stage to the last stage. Collect data, analyze, report, and keep records of product quality and work performance;
- Propose appropriate measures to adjust production and overcome;
- Building and applying advanced management systems in garment export enterprises such as quality management system according to ISO 9000 standard, environmental management system ISO 14000, social responsibility standard system SA 8000, occupational standard system, safety and health OHSAS 18000, global responsibility program WRAP,...
- Periodically review and evaluate work.
The advantage of many garment export enterprises in Vietnam is that due to pressure from customers, many enterprises have applied the quality management system according to ISO 9000 standards, so the description of processes and quality control in theory is no longer a strange issue. However, most of these enterprises apply the ISO 9000 management standards mechanically and formally, so the management efficiency is still very modest. Therefore, enterprises need to focus on implementing this measure.
Second, actively participate in trade promotion activities.
Trade promotion is a meaningful activity for garment export enterprises because through these activities, it is easier to approach customers. In recent times, Vietnamese garment export companies have made many efforts in trade promotion and have achieved certain results. However, the increasingly fierce competitive environment and potential risks of the garment export industry, especially risks to the current operations of garment export enterprises, require participation in trade promotion activities to be carried out more professionally. To do this, garment export enterprises need to focus on the following activities:
- Participate in industry events to increase opportunities for information exchange and access to customers and suppliers such as participating in fairs and exhibitions of garment supporting industries, consumer goods industries, national, regional and international fashion exhibitions, collaborating with fashion design units to participate in fashion shows...
- Make full use of the internet to bring high efficiency in trade promotion. Garment export companies need to build their own website, or a group of companies together on a website, for example, a website for companies in the same province or an industrial cluster, industrial park, export processing zone... Information about production capacity, key products, customers... is indispensable on these websites, in which, at least the main pages need to be translated into English to facilitate customers' information search. This is an opportunity for companies to promote their image on the internet.
- Large garment export companies can promote cooperation with foreign partners through trade counselors in the host country, while small companies can implement this measure through associations. Through trade counselors, companies have the opportunity to contact large customers in the host country.
Third, diversify processing partners in the markets, exploit new markets in the Middle East, South Africa, Russia...
In the relationship between processing partners, both the ordering party and the processing party have an interactive and dependent relationship, but the processing party (Vietnamese garment enterprises) is often more dependent. The dependence is reflected in the fact that the foreign party determines all production tasks of Vietnamese enterprises, from product types, output, quality, delivery time to the system of economic and technical standards. The jobs, income and life of workers also depend on the production and business tasks of the enterprise. This is a reality that Vietnamese enterprises must accept when the production and management level is still low.
One of the potential risks of garment export enterprises in Vietnam is that the cost of switching suppliers is very low, so customers can change suppliers at any time with reasonable reasons. For example, not using a garment processing enterprise in Vietnam but using a business in Cambodia or Bangladesh is an easy decision for many customers. On the other hand, even if customers are loyal to Vietnamese garment export enterprises, because of reduced purchasing power, this loyalty is meaningless. For example, in 2009, many traditional customers reduced or even canceled orders due to the low purchasing power of the market as a result of the economic recession. As a result, after the efforts of garment enterprises in both maintaining traditional markets and seeking new markets, the new export turnover is approximately equal to that of 2008. Therefore, to avoid risks, in addition to traditional customers, these enterprises need to diversify their processing partners.
In that condition, diversifying processing partners and garment processing markets brings certain benefits to garment enterprises in Vietnam such as: increasing the initiative of Vietnamese garment enterprises, minimizing risks when foreign partners terminate contracts, in many cases, enterprises
With the industry underutilized, diversifying with foreign processing partners allows the company to make more full use of existing machinery and equipment and increase employment.
However, the expansion of processing partners also causes disadvantages for enterprises. That is the complexity in management, production organization to simultaneously fulfill many orders well, the fragmentation of orders reduces production efficiency. Therefore, the problem is to solve the relationship between diversification and centralization of foreign partners placing processing orders for enterprises. In general, Vietnamese textile and garment enterprises should aim to stabilize foreign partners placing processing orders. This stability creates advantages in negotiating and implementing processing contracts, and at the same time helps Vietnamese enterprises take advantage of technical and financial assistance from foreign partners to invest in technological innovation, improve production techniques and train workers.
Fourth, do a good job of customer care.
An export garment enterprise usually has many customers, each customer has different needs. Because garment products are fashion items, customer needs often change over time. Therefore, understanding customer needs is extremely important and not a simple matter. Product quality is not only assessed through internal quality indicators but also through customer service. And regardless of which characteristics product quality is assessed through, building good relationships with customers to best serve their needs is also important. Export garment enterprises need to focus on the following tasks:
- Build a system of management indicators for customers. Management indicators for customers can be determined as in the following table.
Table 3.3- Customer management indicators
General management indicators
- Customer name - Contact address, phone number, fax number - Unit leader - Contact person when needed - The person signing the contract - The person whose decision influences the choice of supplier - Type of product purchased - Number of days to complete order - Number of orders signed each year | |
Management indicators specific to each customer | - Vietnam's network of goods purchasing and garment export enterprises may only know part of this information. - Main fields of operation - Working mode - Supplier policy - Customer compliments and complaints during the cooperation period - Other special needs |
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- Improve the information system to manage customers more effectively. Collect and regularly update customer information.
- Attract customers to participate and maintain customer relationships such as customer clubs, membership programs, VIP customer programs, customer interactions, customer conferences, and periodically visit customers on occasions such as holidays, New Year, and the anniversary of the customer's company. This visit will make customers feel cared for, cared for, and friendly. At the same time,
These activities also help companies obtain timely customer information to exploit business opportunities or improve themselves.
3.2.1.2. Strengthening production policies to extend the length of the chain
value
Being at the bottom of the value chain makes Vietnamese garment export companies only generate a modest profit and always worry about the instability of their business. To escape this situation, the only way is for Vietnamese enterprises to expand the length of the value chain to the front, that is, to the design stage, or to the back, that is, to penetrate the marketing and product distribution system. It can be said that this is a strategic solution for Vietnamese garment export enterprises and is also a solution that requires a lot of time and effort. To do this, Vietnamese enterprises need to focus on the following measures:
Firstly, the strategic orientation is to shift from export processing to direct export according to the three-stage roadmap of OEM - ODM - OBM.
Currently, Vietnamese garment export enterprises are at the end of the first stage, which means producing according to customer standards, but more than 30% of orders are for Vietnamese garment export enterprises to find raw materials themselves. In the immediate future, Vietnamese garment export enterprises need to expand their activities to the front of the value chain, that is, manufacturing with their own designs (ODM). If the design stage is strong enough, Vietnamese garment export enterprises can produce according to their own designs and rely on regional companies or distribution brokerage organizations.
Thus, in the long run, direct export will become the main export method of Vietnamese garment export enterprises. It is important to prepare the necessary conditions right now to effectively implement direct export. In particular, the important conditions are: