Businesses Join Hands to Reduce Inventory

5:28:07 PM | 9/2/2014

In response to the campaign “The Vietnamese people use Vietnamese goods”, launched in 2012, 27 corporations and companies have signed the “agreement of prioritising using each other’s products”. After two years of implementation, some remarkable effectiveness has been noted. Reality has shown that many businesses have successfully created a complete chain from production to consumption, releasing inventory as well as cutting costs.
Inventories decreased remarkably
According to reports of the corporations and companies, many contracts have been signed with a total value of approximately VND71 trillion (power and fuel purchase agreements not included). Some outstanding results included the consumption of work-wear clothing worth about VND55.6 billion; ram print paper and copy paper VND165 billion, electrical equipment VND4,164.4 billion, construction steel VND5,200 billion. The implementation of memorandums of bilateral cooperation on prioritising using each other’s products amongst a number of groups, corporations and Ministries’ subsidiaries has also produced remarkable results.
Some efficient cooperation agreements within the programme of “prioritising using each other’s products” included the supply of work-wear/uniform from VINATEX with large value to the Vietnam Electricity Group, the Vietnam National Coal and Mineral Industries Group (Vinacomin), the power insurance from the EVN and its member units various large corporations, the Vinacomin and Vietnam National Petroleum Corporation’s fuel purchase contracts of VND12,940 billion; Petrolimex Petrochemical Corporation’s oil selling contract of VND149 billion to Vinacomin.
The implementation of “agreement to prioritise using each other’s products” has shown rippling effect. Besides the signing with the units participating in the agreement, corporations and groups have extended contracts to many domestic companies and production units for fuels and materials in 2012-2014. This was a practical outcome; a big response to the campaign “The Vietnamese people prioritise Vietnamese goods” launched by the Steering Action Committee of the Ministry of Industry and Trade.
Besides, the agreement among groups and corporations also helped reduce inventory for the industry of processing and manufacturing; at the same time expanding domestic market share of products from corporations and corporations under the Ministry. Before the signing of the agreement, as of September 1st 2012, inventories of many products had been high, the inventory index of processing industry had increased 20.4 percent compared to the same period last year. Back to the present, some industries of which groups and corporations have signed the agreement have the inventory increase index lower than the general rate: food processing up 6.1 percent, textiles increased 1.7 percent, manufacture of electrical equipment rose 2.1 percent.
The agreement also helped elevate the value of Vietnamese goods in general and especially the value of the products of groups and corporations under the Ministry in the domestic market.
Limitations remain
Besides the advantages when committing to use domestic products, groups and corporations also faced various difficulties when prioritising each other’s commodity as well as Vietnamese goods in general, mostly due to the procurement law which forbids member units of groups and corporations to participate in tender offers of materials and equipment. Besides, difficulties in the domestic funding arrangements, limitations in the state fund forced some enterprises to turn to overseas borrowing, in some cases with lending institutions requiring contractors or equipment to be supplied from abroad.
Domestic goods remain undiversified in design and variety, while has quality yet to compete with imported goods. The requirement of ensuring quality and quantity of goods as well as delivery schedule at the supply stage also presents a problem for many businesses. Especially, a number of corporations and companies need special kinds of goods with high technical standards which can not be produced domestically yet, resulting in continued dependency on imports.
Guidelines and directions of groups and corporations mostly state policy, but lack specific criteria for the level of priority for using goods, products and services, which makes the deployment ineffective in some aspects.
Some corporations and groups, after signing the agreements, failed to conclude selling contracts or could only sell in small quantities due to geographical distance or products such as raw materials, fuel, machinery or new products on the market, therefore having limited output.
Huong Ly