The problem for Vietnamese enterprises to penetrate deeper into the global supply chain

A quality breakthrough to participate deeply in the global supply chain is what Vietnam really wants at this time. According to experts, Vietnam's position in the global supply chain is still limited. Most Vietnamese enterprises are only in the intermediate stage, have low added value, and use mostly assembly. In the coming time, the wave of foreign investment in Vietnam is forecast to be very large, so the opportunity to participate in supplying components, deeper stages of the supply chain, and the chain head of FDI enterprises is potential.

Build a sustainable supply chain strategy early

The big question now is "How can Vietnamese enterprises go deeper into the global supply chain?" In an interview with Lao Dong Newspaper, Ms. Tran Thi Thuy Ngoc, Permanent Deputy General Director of Deloitte Vietnam, said: "Although it is inevitable that there will be difficulties and challenges in terms of financial resources, human resources and systems in the process of building a green supply chain, especially in the early stages, Vietnamese enterprises still need to improve core competitiveness, good governance, build a foundation of human resources and digital infrastructure to promote a sustainable supply chain. Building a sustainable supply chain strategy early will not only help Vietnamese enterprises have the opportunity to participate more deeply in the global supply chain, but also increase the resilience of enterprises in the context of many market fluctuations and challenges."

Global investors and fund managers have increasing expectations for supply chain sustainability.

According to the report, 89% of investors discuss ESG standards in the supply chain with the companies they invest in. 85% of investment managers believe that companies that do not implement sustainable supply chain initiatives will see their stock prices decline.

In addition, 84% of investors believe that issues related to supply chain sustainability and ESG standards are risks to their investments. With Vietnam’s foreign investment reaching a record high in 2022 at US$22.4 billion, and its geopolitical position as an important manufacturing hub and supply market in Asia, building a sustainable supply chain is important for Vietnam to maintain its competitiveness, mitigate risks and ensure a resilient economy in the future.

At the national level, Vietnam has many initiatives to strengthen sustainable development efforts, including Decision No. 687/QD-TTg of the Prime Minister approving the Circular Economy Development Project in Vietnam. By 2025, circular economy projects are expected to contribute to resource recovery, reduce energy consumption and increase waste recycling rates. Circular economy solutions play an important role in promoting supply chain resilience, especially in reducing other indirect emissions from businesses’ value chains. Such initiatives will play a key role in realizing Vietnam’s commitment to achieving net zero emissions by 2050.

Lessons for Vietnam

Ms. Tran Thi Thuy Ngoc said that Deloitte's survey on supply chain management showed that 73% of experts participating in the survey said that their organizations are planning to transform the way they manage their supply chains and procurement processes after COVID-19. Among them, there are many good practices and best practices that Vietnamese businesses can refer to.

Consistency: Develop a framework with suppliers that clearly outlines expectations for a sustainable supply chain and ensures that all stakeholders are informed. Setting consistent goals is important for sourcing decisions and supplier management.

Build a transparent system: Establish a transparent system that enables monitoring of supply chain sustainability metrics so stakeholders can easily track progress and work with suppliers to identify areas for improvement.

Life Cycle Assessment: Conduct a life cycle assessment to understand the environmental impact of your product, which will help you understand which links in the supply chain have the greatest impact and provide a basis for reducing carbon emissions.

Technology Integration: Leverage technology such as supply chain management software and data analytics to accurately forecast demand to optimize inventory levels and reduce excess inventory.

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