Letter from Vietnam: What to consider when sourcing

Henrik Pontoppidan, Director of S2U Design, talks about what to consider when sourcing furniture from Vietnam.

When I, for 15 years, ran OAKEA, my ecommerce-based furniture retail company in Hereford, UK, my business model was based on these principles, relating to sourcing:

I did my own designs, only sourced own designs direct from factories, cut out the middleman, visited my Vietnamese suppliers 4-6 times per year and kept my catalogue lean and narrow to always have every SKU in stock.

That is not to say this is the only right business model – arguably this model makes sense, but it also presents a lot of challenges. However, this was my chosen strategy in the quest for competitive advantage.

Now, that I work ‘on the other side of the counter’, being the guy, I was constantly searching for on the ground in Vietnam, but never found, during my OAKEA venture, I realise how many different sourcing methods are practiced by importers from all over the world. And often, I wish I could step in and quickly help the foreign buyer achieve a lot more and do away with – to me – glaringly obvious and costly inefficiencies and problems, immediately addressable for me in my situation, but seemingly ‘black magic’ to the buyer.

Here in Vietnam, there are many foreign owned sourcing/trading/QC companies – a market sector which has grown large, diverse, and professional over the last few decades. So, it is not as difficult as it once was, for an importer to find and engage good sourcing practice. Many importers have their own sourcing offices on the ground, but either way, sourcing costs money!

For any cost-heavy activity, every importer is undoubtedly working to optimise value for money – also for the sourcing cost.

Whatever the method applied, I see and learn on a regular basis in factories, how results for foreign buyers leave a lot to be desired. Here are 3 common causes for this – all rooted in cultural differences:

1) Lack of understanding – Although Vietnamese professionals are refreshingly ambitious, lovely to work with, and nowadays well educated – this does not do away with a lack of full understanding of the foreign importer’s operation and needs in their country, no matter how skilled the Vietnamese staff. Nor does it do away with things getting ‘lost in translation’ – for both linguistic and cultural reasons.

2) Vietnamese culture – It is often misunderstood for ‘corrupt activity’ or entirely overlooked, that in Vietnamese culture, desire to help the community is a strong driver. Decisions made relating to choice of supplier – or subcontractor – are often clouded by an eager to help local friends or family members getting more business. This is a lovely philosophy, but it rarely results in the best possible results for the final products and can significantly affect both quality and cost. 

3) Lack of critical thinking – Vietnamese business practice is still very much based on hierarchical structures, and while there is usually no problem getting simple, specific, repetitive task done, it is difficult to achieve well thought through, creative long-term solutions – particularly in design and efficient production methods, requiring a degree of analytical skills. In addition, decision making power is usually concentrated at the top, but communication with the buyers is typically undertaken by assistants. This makes decisions and implementation of them rather inefficient.

In conclusion, Importers who have their suppliers’ CEOs ‘on speed dial’ are many steps ahead of competition.

My mission through my work with manufacturers on the ground in Vietnam is to bridge the gap, and help buyers around the world improving their competitive advantage, make their buying more transparent and efficient and develop both better designs, and better practices to remain ahead of competition. One very important ingredient in this is to – on behalf of my clients – work direct with the senior management or CEOs of the manufacturers, face-to-face, in Vietnamese and on demand, to ensure that we achieve the best possible results.

Wishing all brothers and sisters in our exciting Furniture Family a Merry Christmas and a Happy and prosperous New Year from Vietnam.



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