In This Episode…
Renaud interviews Greg Fleming, an experienced merchandising and manufacturing operations manager who went from New Zealand to Australia to China and finally is now based in Ho Chi Minh City in South Vietnam.
Greg’s background is mainly in the apparel trade, from fabric production to retail. Due to his experience in both Vietnam and China, he is well-placed to give us some really interesting insight into manufacturing in both countries.
Since Vietnam is a very popular China-alternative for many importers, let’s hear more about it from Greg here!
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✅ Introducing the episode, Greg, and his experience
✅ What’s the COVID-19 situation in Vietnam? – Greg explains the stringent measures Vietnam is taking to control Covid, including thorough contact tracing, isolation, and the population’s ready acceptance of restrictions, such as mask-wearing.
✅ What are the main differences between working with Chinese or Vietnamese manufacturers? – Greg makes the point that manufacturing in Vietnam seems to have evolved to be more accomodating than China which can be more regimented, although this varies per region, so Vietnamese suppliers will do what they can to become a partner if you’re showing them similar flexibility. He suggests that honesty, openness, and clarity are the cultural differences between Vietnamese and (many) Chinese suppliers. For example, Chinese suppliers will often accept a contract even if they’re going to struggle to fulfill it, whereas those in Vietnam would usually apologize and walk away rather than disappoint you later.
✅ What have been the main obstacles that have prevented Vietnamese manufacturers from digitizing their processes? – 99% of multinationals in Vietnam have brought in some kind of IT systems (such as ERP, MES for managing the shop floor, PLM for new product development, etc), but on the factory floor, its use is probably at around only 5% because management and middle-management don’t understand it or see the value. This could be cultural as Vietnamese people are proud and don’t like new things forced on them, so when implementing it think about what the cultural and process change is that is going to relate to the uptake of IT.
✅ Is there a particular software Greg suggests for apparel based on his experience? – IT in apparel (soft goods) is very different from that used in hard goods because there are so many variations of SKUs that most ERPs don’t get. There are few apparel-specific ERPs, but the best at the moment is probably Coats Digital. Greg endorses it because they have a really good apparel PLM (product lifecycle management), raw material libraries allowing you to create a BOM for multiple styles, the ability to create garment designs in 3D (remotely, which is helpful these days).
✅ How software can save on costs of getting a new apparel product from concept to production (example) – an example of a study that found that it took 4.8 prototypes to go from concept to production-approved, so that’s around $20,000 to get everything sent between Asia and the USA, for example. This can be done using IT if the prototype designs are made and shared digitally in 3D, saving manufacturers a lot of money by doing everything in-country.
✅ How software can save on costs of getting a piece of new furniture from concept to production (example) – centric PLM software is good for furniture as, in Greg’s opinion, it’s as complicated as garments. This is due to its size and shape, so the dimensions need to be precise when considering shipping them in containers, for example. But as well as the need to get dimensions exact, there are also numerous safety considerations and laws for furniture to comply with, such as bookshelves having a mechanism that allows them to be attached to walls so as to not tip over and harm children. Key takeaway: select what’s right for you when starting out on a digital transformation.
✅ When starting the digital transformation on a factory, where to begin? – The focus is on using IT to reduce wasted time and costs. A Vietnamese factory doesn’t want to receive emails from customers asking what is going on. Developing a digital tech pack providing detailed information and specifications about a product is a key task, as is deciding on what’s acceptable or not in new products, such as colors. On color and pre-production samples, Greg gives the example of brands in the West spending around $500 per time to send color swatches between Vietnam and the West for checking which is an avoidable cost. Datacolor color management software can be used to create the pre-production garment sample in the right color and is a far cheaper workaround to sending swatches between countries each time (as long as the final sample is within an acceptable delta of the agreed color). In his experience machines have proven to be more reliable in recognizing the right colors than humans anyway, for example. Eventually, a pre-production sample should be made, but only after the product is 95-98% agreed and ready in its digital form. Then this can be modeled in the factory and demonstrated to the customer via video conference rather than spending hundreds of dollars to ship it. This is a more efficient way to evolve how the garment trade operates.
✅ Summarising Greg’s approach of implementing IT – the goal is to reduce the cost of doing business at the product development stage that allows a factory to implement mass-customization in order to facilitate what a merchandise financial planner needs today, that is to say, to be flexible on styles and order amounts. IT gives you the ability to order in smaller quantities, but there are many components that require quite complex software which can’t be handled in excel, email, or by sending packages back and forth.
✅ Is there a risk that some importing countries will start to demand more proof that products are truly made in the country claimed, materials are not from certain contentious areas, they are sustainable, etc? What is the solution to this? – EU laws are coming in soon that will require exporters to prove the country of origin of their products. In the case of Vietnamese garments where 80+% of materials used come from outside of Vietnam (mainly China), this leaves them in a difficult situation. Customs may no longer accept invoices for materials etc as proof of origin due to fears over counterfeiting. Therefore, Greg suggests that blockchain-based IT software (which is already being invested in by the largest players) is the best way to mitigate the risks of counterfeiting in this situation and be able to comply.
- What Does Manufacturing In Vietnam Look Like Today In 2021?
- Setting up Manufacturing in Vietnam vs China: Focus on Vietnam
- Renaud has written a number of posts regarding Vietnam on QualityInspection.org
- Manufacture in China, Vietnam, India, or Elsewhere in 2021? (Podcast episode)
Remember, our company Sofeast provides most of our solutions in Vietnam, too, such as product inspections and factory audits, so if you are importing from Vietnam and need assistance, we can help. Visit our website at Sofeast.com.
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