Ineffective value chain in the cost structure at the BDCC business unit of COM Vietnam company

Abstract

COM Vietnam is an US company; COM has been market leader in Vietnam for more than ten years. Currently, we are facing with the revenue in downtrend in last three years, it is at the same time of Covid-19 pandemic. The issue was identified as the impact of Covid-19 in the first two years, and we just accepted it since the pandemic is out of our control. However, in this project, by an overall analysis for both external and internal approach. We identified another issue that our competitiveness in project sales is dropping to very low position by this time also, we have been losing many big and important projects. By using extensive research and analysis, based on our internal historical and Distributors’ data, interview related stakeholders, and the guidance of theory in literatures, three problems has been identified as (1) Ineffective Value Chain in Cost Structure (2) Not successful in Value Proposition (3) Supply Chain Issue in Key Resource, that is causing our Low Competitiveness in Project Sales, and dropping revenue is the consequence. Through the validation process, Ineffective Value Chain in Cost Structure was identified as our main problem. After that, by applying the theory of Value Chain Interventions, we proceeded deeply analysis, assessment along our current value chain, we diagnosed four causes of the problem, included (1) Using inappropriate delivery term in the sales order of COM Singapore to COM's manufacture plants in China, for the PO of Vietnam market (2) Missing a communication flow between COM Vietnam and Manufacture plants in China (3) COM Vietnam is using inappropriate quotation validities, and we have high %share of product from outside China. Finally, the “Using inappropriate delivery term in the sales order of COM Singapore to COM's manufacture plants in China, for the PO of Vietnam market” was validated as our main cause. Two solution options have been developed to solve the causes, however the second option is selected to implement as the most effective one, it supports our business efficiency as well, by using zero warehousing, just-in-time and consolidating strategies, in supply chain management theories. One detail change plan, with clear timeline was confirmed to implement the new business model as soon as possible, in July 2022.