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EXECUTIVE SUMMARY

This report dedicates to Pulppy, a brand of New Toyo Pulppy (Vietnam)

Corporation a general outlook of toilette tissues supply chain in Vietnam. By

discussing and analysing widely current logistic aspects of the industry, the

researchers objective assists them in term of enhancing their distribution

network in Vietnam market. In overview, Vietnams distribution channels are quite

diverse, includes many kinds of channel, such as super market, traditional

markets, specialists, small retailing shops channel. However, the distribution

channels are still insufficient due to shortage of effective supply chains in the

rural areas. In content of this report, researchers are going to sketch out five

main existed issues in toilette tissue supply chains in Vietnam:

Low performance among parties in the distribution channel.

Limited number of retailers in rural areas or promoted areas.

Inefficient inventory management due to the lack of computer software.

Rudimentary Customer Relationship System (CRM).

One centralized warehouse.

Hence, researchers would like to introduce five strategies which are

designed to solve current struggles and efficiently improve the indicated

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companys supply chains activities. For instant, those solutions are enhancing

the collaboration between players of distribution channel with CPFR and

supporting technology, improving inventory management by applying modern

supporting computer software, decentralized warehousing, using 3PLs and

optimizing the carriers. Based on the current situation of Pulppy for toilette tissue

and the impact on supply chain management and customer service of each

strategy, applying CPFR with Extranet will be applied as long-term plan, using

inventory management supporting software and 3PLs will be implemented

simultaneously as short-term plan.

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RESEARCH & ANALYSIS

CHANNEL MAPPING, ILLUSTRATION, PLAYERS, AND 3PLS ON THECHANNELS OF DISTRIBUTION OF TOILETTE TISSUE

Suppliers:including many types of raw materials suppliers as toilette tissue

requires many kinds of raw material depended on particular type of toilette tissue.

Here are some raw material suppliers that toilette tissue manufacturers in

Vietnam use including that international and domestic suppliers:

Supplier 1: Bai Bang Company (domestic company) which is leading

in Vietnam market not only long historical established but key

player in applying technology and R&D.

Supplier 2: Thanh Hoa company was established in 2009, one of

major pulp manufacturer and supplier, its capacity is over 150,000

tons/year

Supplier 3: Pulp Donghae company is Korean company has invested

a modern production line in 2010, producing 430,000-450,000ton/year to supply for international and domestic market.

Supplier 4: Phuong Nam company is young company, recently it has

established, however, it has achievement and Award for

consumers voting, supply capacity is 100,000 ton/year.

Supplier 5: Lee and Man is Hongkong company, also international

player and experience in matching customers requirement.

All above are highly evaluated for cooperating in long term development. It

depends on the level of operation; Pulppy will choose the supplier who matches

specific demand of raw material.

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However, the geographic distance or delivery conditions are taken into

consideration. Because the logistic system of each supplier is difference, further

more on time factor is the most important.

Manufacturers:there are many firms, which manufacture toilette tissues

throughout Vietnam as well as they are Pulppys competitors. Both of them are

personal care product manufacturers. They are Procter & Gamble Vietnam Ltd

with Pampers brand, Diana Co Ltd with Bobby Fresh and Bobby Dry brands,

New Toyo Pulppy (Vietnam) Vietnam Co Ltd with Huggies Nappies brand, Ky Vy

Co Ltd with Bino and BinBin brands, Taisun Vietnam Ltd with Uni Dry and Wingo

brands, Summit Co (M) Sdn Bhd with Basic Nappies brand, Everbeauty Corp

with Prokids brand.

Wholesalers:after being produced toilette tissue have to be delivered throughout

Vietnam through distribution channels. In order to reduce the transportation costs

due to the long distance from manufacturers to customers, toilette tissue

producers have to find the at least one wholesaler at each region Northern,

Middle and Southern. Modern wholesalers include Northern with Diethem-

PhuThai and Metro in Hanoi, Middle with Metro in Da Nang and Nha Trang, and

Southern with Metro in Saigon and Dong Nai. Moreover, toilette tissue can be

delivered through traditional wholesale channel, specifically Cholon Market or

Binh Tan Market are located in Chinese communities. They are really big

wholesale channel, however their customers are mainly Western areas in where

the traditional market or shops are existing and consider as marketplace to

exchange.

Retailers:retailers will be responsible to deliver toilette tissue to end consumers

with the small scales. Retailers can be considered as mean of wholesalers tokeep in touch with end consumers with close distance. Retail channels of toilette

tissue in Vietnam include supermarkets, department stores, discounters,

specialist and traditional outdoor market. Supermarkets include Co-opMart,

Intimex, Maximart, Fivimart, Big C and so on. Convenient stores include G7 Mart,

24 Seven and potentially is big chains of Seven Eleven. Department stores

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include Diamond, Parkson and An Dong. Specialists include some Maternity &

Children hospitals.

Third party logistics:they deal with transport and store products until they are sold

to end costumers. By using third party logistics firms can enhance place and time

utilization. These logistics company will offer firms professional work manner with

abundant experience in logistics field.

The poor infrastructure and traffic conditions are current concerns of government

and Logistic companies particularly. Nonetheless, by practical experiences many

domestic players have satisfied the requirements of being on time and handling

sudden demand with big border. Those are considering including Nam Trung

Bac shipping company, Hoang Ha logistic, VINASHIP, Vietranstimex company.

For their prestige has been built in relationship for long term strategies.

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TissueManufacturers in Vietnam

NorthernAgent

Hanoi

SouthernAgent

(Hochiminh

Imported TissueManufacturers

(from Hongkong,Thailand or

Distributioncenter

Importedcompanies

Middle Agent(Danang city)

Wholesalersat eachre ion

Supermarkets/

h ermarket

Department stores

Discounters

Specialists(Maternity

,Pharmacie

Outdoormarkets

(Traditional

End Costumers

Warehouse

Raw materialsuppliers


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INTRODUCTION OF CURRENT SITUATION IN TOILETTE TISSUE

SUPPLY CHAINS IN VIETNAM:

According to Euromonitor International (2007), the growth of toilette tissue

products is relatively low when comparing to other developed countries due to

the restricted distribution channel which have not reached to rural areas

completely tissue can be distributed with the various types of channel which

include supermarkets, department stores and outdoor markets. However,

customers tend to shift their consumption from tradition channel to modern

channel such as supermarket and department stores because of their better

service (Euromonitor International, 2007). Moreover, the supermarket channel is

becoming more convenient due to the continuous expand through the whole

country. Customers can find the brand or kind of toilette tissue they want easily

due to the high availability if this kind of products. In addition, the increasing

specialist care outlet is becoming the key distribution channel of care products

including toilette tissue as they give young parents with professional advices

before they decide to purchase a particular brand or kind of toilette tissue

(Euromonitor International, 2007).

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SWOT ANALYSIS

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IDENTIFICATION OF 5 LOGISTICS & SCM ISSUES IN TOILETTE TISSUE

SUPPLY CHAINS IN VIETNAM

Issue 1: The poor connection among players in distribution channel

There are many players in toilette tissue distribution channel; however they do

not communicate well to each other. As a result, they cannot understand the

requirement of other players. Such as, the manufacturer cannot know how many toilette

tissue the wholesalers or retailers want to replenish in order to avoid stock outs. The

lack of communication between players in distribution channel lead to the bullwhip

effect. It means the supply and demand of toilette tissue mismatch. Hence it leads to the

poor customer service due to the stock outs. Each participant in the supply chain needs

relevant information to make effective forecasts and operational decisions. This lack of

communication leads obviously to a mismatch of needs of the different agents; they

cannot know precisely the requirements and need of the others agents. For example, if

they do not communicate properly, the manufacturer cannot supply certainty the exact

number of products wanted by the wholesaler and that will echo on all the retail chain.

Then, that leads either a surplus of stocks, consequently extra costs, or either a poor

customer service due to the stock outs. This effect of mismatch between the supply and

the demand is called bullwhip effect.

Issue 2: The lack of retailers in rural areas or promoted areas

Although, many firms are starting to build up distribution in rural areas as their

awareness about the potential profit from rural, there are still very few retailers in rural

or promote areas. It means the modern disposable toilette tissue have not reached the

consumers in those areas yet (Euromonitor International, 2007). However, rural market

is very potential as the rural population is 70% of total Vietnamese population.

Therefore, if the toilette tissue manufacturer can reach these areas; it can increase the

sales revenue significantly.

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Issue 3: Inefficient inventory management due to the lack of computer

software

Although each wholesaler and retailer stock a particular amount of inventory based on

their market experience, there still have stock outs and lost sales in some unexpectedsituations due to the lack of supporting computer software. It reduces the availability of

toilette tissue and thus decreases the customer service.

Issue 4: Low professionalism in most of retailers and wholesalers

The low professionalism in most of retailers leads the inhomogeneous price and quality

in different retailers. The unprofessional retailers manage their transportation means,

place and time inefficiently. It increases the cost of labors and management. (So Cong

nghiep Thanh pho Ho Chi Minh, 2006)

Issue 5: One centralized warehouse

Pupply has one centralized warehouse but that leads increased inbound transport

costs. Moreover a centralized facility may need to be larger and more sophisticated in

order to handle the needs of multiple countries. The logic behind decentralized

warehousing is often that distribution is very closely tied to the marketing function, and

marketing is usually nationally focused in order to cope with things as differences in

taste and language. The advantage to have several warehouse and not one centralized

is that the company can install warehouse close to the target market and consequently

avoid extra costs of transportation from warehouse to potential customers.

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STRATEGY

5 FEASIBLE LOGISTICS & SCM STRATEGIES THAT COULD ADDRESS THE

ISSUES

Strategy 1: Enhancing the collaboration between players of

distribution channel with CPFR and supporting technology

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In order to enhance the collaboration among players in the distribution channel,

Pulppy has to improve the information flow. For instant, the information flow can be

increased by adapting computer-based systems, for example: Extranet and EDI. Hence

players in the distribution channel are able to share their data of demand and supply to

others simply and timely. Furthermore, EDI/ Extranet assists the company to optimal

stability of low inventory levels and speed up the systems responsiveness to customers

(Daft, 2004). In order word, EDI or extranet ensure flawless information connectionflows from raw material suppliers to end consumer (Daft, 2004). For example, once a

customer confirms to purchase a particular brand or kind of toilette tissue at a retailer,

then retailers Point of Sale system will be immediately recorded in the purchase

information, which is about to transfer to the manufacturers database. Hence, the data

provide to manufacture an exact provision of sales and performance of a particular

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product. Moreover, Pulppy is able to forecast the market demand which help the

company to distribute timely and accurately quantity of products to the right place.

Strategy 2: Improving Inventory Management By Applying Modern

Supporting Computer Software

JIT (Just In Time) is a production strategy, which dedicates to a method of

minimizing inventory level by creating an efficiency responsive system upon lower

stages information in the supply chains during a purchasing process and enhancing

mutual understanding between suppliers and costumers (Coyle & et al, 2009).

According to Coyle & et al (2009), the majority of JIT approach refers to indicating,

selecting and then developing mutual relations of suppliers, wholesalers, retailers and

customers. In addition, the buyers and the supplier should commit mutual dependences,

achieving long term contracts which result to reduction of time and resources.

A PULL STRATEGY SYSTEM

As Pulppy toilette tissues are considered as Fast Moving Consume Product

(FMCG), the JIT approach which adopts a pull system (Fernndez, 2004) is an

appropriate inventory management to them. As a pull system processes, customers areexpected to send their demands to resellers (wholesalers and retailers), then

information will be flown back to the manufacturers, which will enable them forecast and

storage a minimum inventory reaches to feasible level.

The most advanced aspect of just-in-time (JIT) inventory principles is assisting

the New Toyo Pulppy to establish an efficient producing operation, minimize cost and

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MANUFACTURER RESELLERS

(WHOLESALERS

AND RETAILERS)

CUSTOMERS


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eliminate responsive delay to customers orders. Practicing JIT allows the company

achieve the ideal amount of inventory of raw materials or finished goods, which satisfy

the demands of customers. The lower allowance of inventory point the company

accesses, the less capital of operating warehouse, raw materials, finished goods

inventory, transportation and logistics operations. Moreover, the system will also enable

the company monitoring historical purchases of toilette tissues and its products cost,

which provide the manager an accurate overview of proficient inventory level and future

budget upon analysing the data of products prices, costs and sales. In addition, the

system also assists manager to allocate suitable raw material suppliers.

Strategy 3: Decentralized warehousing

Relationship of Warehousing Cost and Other Logistics Expenses

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According to Duncan (2001), on the physical distribution aspect of a companyssupply chains, quantity of distribution warehouses, which storage inventories bases onnumerous variables.

These are:

The distance from the manufacturing mill to warehouse.

What type of goods transportation?

The expired days of goods.

Physical characteristics of the goods, i.e: liquid or solid goods.

The distance from the warehouse to consumption area (wholesalers, retailers).

In horizontal centralization, determining optimal number of warehouse to

minimize logistics costs takes a crucial role. A warehouses revenue of goods is upon to

a wider network of warehouses. Therefore, decentralized warehousing is a solution to

minimize high cost of transportation, due to the company obtains one centralized

warehouse in the distribution channel (Stock & Lambert, 2001). To reform the supply

chains, Pulppy should construct a wide network of warehouses in its distributed areas

by setting up a major local warehouse in every main region. As the result, the company

is able to save transportation cost of delivering products from distributing centres to

consuming areas, minimize delay time of responses to customers demand and enhance

its customers information collective system through those new local centres. Moreover,

the company should hire public warehouse because they do not require much space

decision within a very rational operating cost (Coyle, Bardi and Langley, 2009). When

the new distribution channel is implemented, Pulppys high transportation cost expects

to reduce and decentralized warehousing is partly able to assist local distributers to

access the rural customers issue by reallocating local warehouse at the optimal

locations where are near to rural areas.

Strategy 4: Using 3PLs

As previous mentions, Pulppy is operating both inbound and outbound logistics

itself. In another words, the company has to invest a huge capital and waste large

factorys space capacity to maintain its own transportation, warehouses, human

resources and management staffs with gaining a very limited efficiency and lead to the

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inefficient connecting and performance among players in Pulppys distribution channel.

In order to reduce transportation costs, service level, strategic flexibility, distribution

channel members connectivity, customer service levels and enhancing focus on core

competence, researchers suggest the company obtains Third Party Logistics (3PLs) in

transportation and warehousing. By obtaining professional 3PLs transportation

providers and warehouses, Pulppy will probably attain numerous benefits.

Professional transportation providers are totally able to provide Pulppy a well-

performed working manner with satisfied deliver service such as deliver right product to

right customer at the right time and place with the right quantity, condition and cost(Coyle, Bardi and Langley, 2009). Moreover, by signing contract with 3Pls warehouses,

the company can use existing local resources, such as labours, equipments and spaces

of warehouse more efficiently (Coyle, Bardi and Langley, 2009). In addition, Pulppy can

acquire increasing of sales with a less cost, due to apply 3Plss diverse experience of

Vietnamese market and consumers preference.

Strategy 5: Optimizing the carriers

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An idealistic supply chains is an optimal system which both enhances its

customer service quality within a rational cost of transportation (Taylor, Tseng & Yue,

2005). Therefore, Pulppy should optimise and monitor companys carriers (adding new

type of land carriers, adjacent to trucks and minivans) by improving their efficiency and

productivity while cutting down the number of existent carriers. For instant, there is a

model of selecting a workable carriers system which is based on six main criteria:

accessibility, capability, cost, time, reliability, and safety (Coyle, Bardi and Langley,

2009). Applying to Vietnams traffic system, motorbikes are able to be an idealistic

carrier which dues to the highest accessibility and reliability (Coyle, Bardi and Langley,

2009). Motorbikes are a very possible option to enhance the companys supply chains

performance because of those reasons; firstly, they are cheap and easy to purchase in

large quantity with a very short training to riders crews. Secondly, motorbikes can carry

a quite large amount of products through to narrow pathways in small valleys of

Vietnam, so the response to customers demands especially in rural areas will be

possibly increased. In addition, Pulppy should also optimize the freight volume and

revenue per carrier. Thus, the firm can reduce the number of carrier but still maintainthe level of freight volume and revenue.

ADVANTAGES AND DISADVANTAGES OF EACH STRATEGY

Strategy 1:

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Advantages- Enhance collaboration between

players of distribution channelwith the smoother information

flow.- Reduce costs due to bullwhip

effect, stock outs and lostsales.

Disadvantages- Very expensive to establish EDI

system- Very time consuming for

training employees to get

familiar with the new system

Strategy 2:

Advantages- Allow firm keep the optimal

level of stocks in inventory as

giving the good purchaseschedule

- Increase customer service due

to the high availability of

product

Disadvantages- Expensive cost of purchase

and establish the software.- Have to hire some IT expert to

maintain the software due to

the high complexity of the

software

Strategy 3:

Advantages- Allow firm keep the optimal

level of stocks in inventory asgiving the good purchase

schedule- Increase customer service due

to the high availability ofproduct

Disadvantages- Expensive cost of purchase

and establish the software.- Have to hire some IT expert to

maintain the software due to

the high complexity of the

software

Strategy 4:

Advantages- Improve customer service due

to the highly professional

working style

Disadvantages- Cannot take control over the

performance of 3PLs- Difficult to modify them terms

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- 3PLs give firms multi-solutions

and value added service:

& conditions of contract once it

is signed

Strategy 5:

Advantages- Reduce transportation costs

due to the less number of

carrier and more efficient

carriers

- Enhance customer service as

enable JIT

Disadvantages- High risk due to the heavy

dependence on the selected

carriers because when these

carriers have problems, firms

cannot find the substitutionseasily

- Time consuming to analyze

and select the best carrier anddecide which carrier need to be

removed

IMPLEMENTATION

FORMULATION OF THE ASSOCIATED LOGISTICS & SCM OPERATIONAL

PLAN FOR SHORT-TERM & LONG-TERM TIME LINES:

Short-term plan: (See appendix 3)

Long-term plan: (See appendix 4)

PROPOSAL OF KEY PERFORMANCE INDICATORS & A PROJECTION OF THE

OVERALL COST/BENEFIT

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RECOMMENDATION

The downside of JIT is that it is a continuum; the closer you get to it, the more

beneficial it is to your business. But go too far and reduce inventories too far, the

less beneficial it is for your business. Too much or too little inventory leaves you

at a competitive (or cost) disadvantage to your competitors. But if you can do it

right, JIT can be a strategic source of competitive advantage.

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REFERENCE

Coyle, Langley, Gibson, Novack and Bardi (2009) Supply Chain

Management, 8th Edition, Cengage Learning Australia.

Chopra, S. & Meindl, P., 2001, Determining optimal level of product

availability, in Supply Chain Management Strategy, Planning and Operations,

Prentice Hall, pp.222-225.

Daft, R, L, 2004, Organization Theory and Design, 8th edn, South

Western Thomson, Ohio.

Duncan, G., 2001 ,Centralisation vs Decentralisation of the Supply

Management Function, Articles of Interest, News & Events, Duncorp Pty Ltd,

view 17th May 2011,

Euromonitor International 2007, Cosmetics and Toiletries-Vietnam,

viewed on January 2 2008

Euromonitor International 2007, Nappies/Toilette tissue/Pants-Vietnam,

viewed on January 2 2008

Fernndez, J.L, 2004, Just In Time (JIT), IE Business School, Mara de

Molina 13, 28006 Madrid, Spain.

Richer Investment Consulting Service 2007, Toilette tissue Raw material

Suppliers, viewed on January 3 2008,

Stock,J. & Lambert, D. 2001, Strategic Logistics Management, 4th ed, Mc

Graw Hill, Australia, ISBN13: 9780071181228

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http://www.disposablediaper.net/content.asp?14http://www.disposablediaper.net/content.asp?14http://www.mcgraw-hill.com.au/cgi-bin/same_author.pl?author=James+Stockhttp://www.mcgraw-hill.com.au/cgi-bin/same_author.pl?author=Douglas+Lamberthttp://www.mcgraw-hill.com.au/cgi-bin/same_author.pl?author=James+Stockhttp://www.mcgraw-hill.com.au/cgi-bin/same_author.pl?author=Douglas+Lamberthttp://www.disposablediaper.net/content.asp?14http://www.disposablediaper.net/content.asp?14


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Taylor, M. , Tseng, Y. and Yue, W.L., 2005, The Role Of Transportation

In Logistics Chain, Eastern Asia Society for Transportation Studies, Vol. 5, pp.

1657 1672.

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Appendix 3: Short-term plan

Action Target Responsibility Duration

Get ready for

change

Analyze the current company and market

industrys situation

Top level managers,

logistic managers and

market research staffsof firm.

First 2 weeks

Research the most

suitable 3PLs and

most workable

software

Search on Internet or industrial magazine

for inventory management supporting

software.

Logistics staffs 2nd and 3rd

weeks

Search on 3PLs Website, trade magazineor even competitors to get general

awareness of suitable 3PLs

Market research andlogistics staffs

First month

Analyze the 3PLs

and computer

software to choose

the best one

Analyze cost & benefit of each kind ofsoftware including how it enhance SCM

and customer service

Logistics manager Second month

Analyze the 3PLs based on their situation

in the industry and their capabilitycompare with the cost of hiring them.

Then choose the best one

Logistics manager Second month

Start bring the

strategies in

practice

Having the meetings with the chosen 3PLsto discuss about the conditions and terms

of contract

Signing the contract if its conditions &

terms are agreed

Top manager andlogistics manager

9th week

Purchase the most workable supportingsoftwareSet up the software

Logistics staffs andsoftware serviceprovider

9th week

Hire IT personnel and establish temporary

IT department

Top managers 9th week

Training Train employees and managers to getfamiliar with the new software

All logistics staffs 10th and 11thmonth

Test the operation

of strategies

Evaluate the performance of 3PLs and

supporting software rely on the customer

service level and sales revenue

Top managers and

logistics manager

End of every

quarter

Maintain thesupporting

software

Maintain and update the software based onthe situation

IT personnel andlogistics manager

End of everyquarter

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Appendix 4: Long-term plan

Action Target Responsibility Duration

Get ready for

change

Analyze the current company and

market industrys situation

Conduct a survey for the supply chain

members opinion about the change

Establish technical department from IT

department to deal with handling the

performance of EDI

Top managers, logistic

managers and marketresearch staffs of all

members in the supply

chain.

First 2 month

Establish the congress among supply

chain members to discuss about the

change

Agree about which thing needs to be

changed

Share the budget among members due

to the high cost of carrying the change

Top managers of all

members in the supply

chain.

Third month

Search for

necessary

information

Search for EDI transaction software

Search for EDI integration provider

Review the paper-based data which

will be exchanged

Search for Network provider

IT personnel Fourth month

Start bring the

strategies in

practice

Setup the EDI networks or Extranet

Test the performance of transaction

software with the network connection

IT personnel and

technical department

Fifth and sixth

months

Training Establish a training course for employees

and managers to get familiar with the EDI

or Extranet network

All member of logistics

department and some

related departmental

managers and logistics

managers from supply

chain members.

Seventh month

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Implementation

the strategy in

logistics

Using Extranet or EDI network to

support the logistic activities

Primary test the performance of Extranet

or EDI network to the Pulppys business

Top managers and

logistics managers and

staff of all supply chain

members

Eighth, ninth

and tenth

months

Test the operation

of strategies

Evaluate the performance of EDI or

extranet and other supporting information

systems based on the improvement of

CPFR and flow of information compare

with cost saving.

Logistics manager and


End of every

year

Maintain Extranet

or EDI network Update information for Extranet or EDI

network.

Fix some mistakes of Extranet or EDI

network if its performance does not

meet the expected requirement

Logistics manager


End of every

year

-

logistic 2group

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