I recently had a discussion with Jacques Van Niekerk, the Supply Chain Director of Holcim (Vietnam) Ltd., a leading producer of cement and ready-mix concrete.
TN: Can you give us an overview of your company in Vietnam?
JvN: Holcim (Vietnam) Ltd. is a leading producer of cement and ready-mix concrete. The company was registered in February 1994 as a join-venture company between Holcim Ltd. and Vietnam Cement Industry Corporation (VICEM), a state owned enterprise of Vietnam. Holcim Vietnam employs around 1,500 people at its five main sites. Our current focus is in South Vietnam and in particular Ho Chi Minh City and the Mekong Delta.
TN: With the current economic climate and with new capacity coming online, experts have warned of an oversupply in the Vietnam market. How do you think oversupply will affect you?
There is a concern about oversupply. However, globally there is an oversupply and the situation is not unique to Vietnam. Countries like the US used to be net importers of cement but are now net exporters. In Vietnam there is more capacity being built and this will put more pressure on prices. However, we are very positive about Vietnam’s economic prospects and continued foreign direct investment. The future of infrastructure projects is bright and this will have a positive impact on our business.
TN: Can you tell us more about your distribution strategy?
We currently have direct control over our bulk delivery. We operate a fleet of bulk vehicles that we schedule and control to ensure improved efficiency and improved value for customers. Currently, bulk sales volumes represent about 35% of our total sales with bagged cement being the balance. The level of bulk sales is often used as an indicator of relative sophistication of a market. In Vietnam this ratio is steadily growing as the market develops. Compared with some other markets we have a lot of scope for growth. In the USA or Europe for example bulk sales represent 95% of volumes in many sub markets. We expect to see a growth in bulk sales and bulk delivery will form a key part of our distribution strategy in the future. For our bag business, customers are collecting directly from our facilities and it is definitely a part of our supply chain that we want to improve on. With better control and scheduling, we can reduce the bottlenecks at our facilities to improve cycle times and so improve customer service.
TN: How important are distributors to your business?
JvN: Distributors form an important part of our supply chain strategy. At the same time we have a need to get closer to our end consumer to better understand how we could add further value and our distributor network is one area we would like to focus on to help deliver improvement. We have several distributor programs and the key is to find distributors that know the market and add value to our business. This can sometimes be challenging. The market in Vietnam is highly fragmented and competitive and exclusive distributors are rare. It is not uncommon in Vietnam for a distributor to sell three different brands of cement.
TN: Can you give us an overview of the technology you are using in your supply chain?
JvN: Holcim uses SAP in all of the more than seventy countries where we operate. We are currently not integrated up to distributor level and it is definitely something we will address in the not too distant future.
TN: Transportation overloading is a big problem in Vietnam. How are you addressing this as a company?
JvN: Overloading is a huge problem in Vietnam and it is something that Holcim take very seriously. We also want to move away from old technology tankers and we see a big potential for aluminum tankers with a bigger capacity.