Introduction

In recent years, the manufacturing industry has faced diverse risks such as unpredictable natural disasters, geopolitical tensions, and global pandemics. These factors have caused severe disruptions to globally extended supply chains, posing a major challenge that threatens companies’ Business Continuity Plans (BCP). The 2023 World Economic Forum report listed supply chain disruptions as one of the top five global risks, highlighting their significant impact.

Particularly in manufacturing sites, delays or stoppages in parts supply directly lead to production line shutdowns, resulting in delayed deliveries, loss of customer trust, and even enormous economic losses. In such emergencies, the ability to procure necessary parts quickly and reliably – “emergency procurement” capability – becomes a critical factor determining a company’s resilience.

Although approximately 70% of Japanese companies have formulated BCPs, survey results indicate that their effectiveness remains a challenge, demanding more practical measures beyond mere plan formulation. Especially for Japanese companies with manufacturing bases in rapidly growing Vietnam, ensuring supply chain stability is key to business success, with about 80% of companies prioritizing this.

This article will delve into the risks of supply chain disruption faced by the manufacturing industry, explain specific strategies and practical approaches for building a robust emergency procurement system. Furthermore, we will introduce how Ohta Vietnam can support Japanese companies in overcoming Vietnam’s unique challenges and building a resilient supply chain.

Supply Chain Disruption Risks and Impacts in Manufacturing

Supply chain disruptions have a wide range of severe impacts on the manufacturing industry. The most direct impact is the complete shutdown of production lines due to the cessation of parts supply. For example, it is estimated that a mere one-day stoppage in parts supply in the automotive industry can result in losses of several hundred million yen. Approximately 60% of manufacturers have experienced supply chain disruptions in the past three years, indicating that this is no longer a rare event but a risk that must always be prepared for.

Production stoppages lead to delayed deliveries to customers, increasing the risk of customer trust erosion and contract breaches. Moreover, unexpected costs, such as emergency transportation fees and additional expenses for procuring alternative parts, often increase significantly. These costs can squeeze profit margins and make business operations difficult.

The stoppage of supply for fastening components (bolts, nuts, screws, etc.), which are essential for product function yet relatively inexpensive and versatile, poses a serious problem that is often overlooked. Cases have been reported where a final product, 90% assembled, cannot be shipped due to the lack of a single fastening component, demonstrating the immense impact.

Manufacturing in Vietnam, along with its growth potential, also faces unique challenges. Underdeveloped infrastructure, complex logistics networks, and cumbersome customs procedures can threaten supply chain stability. For instance, Vietnam’s logistics costs are said to account for approximately 20% of its GDP, making efficiency improvement an urgent issue. Understanding and appropriately responding to these region-specific risks is essential for ensuring business continuity in Vietnam.

Strategies for Building a Robust Emergency Procurement System

To strengthen emergency procurement capabilities as part of Business Continuity Plan (BCP) measures for manufacturing sites, a multifaceted and practical approach is required.

Supplier Diversification and Risk Assessment

Relying on a single supplier increases supply risk. It is crucial to secure multiple alternative suppliers, both domestically and internationally, and actively utilize local Vietnamese suppliers to diversify risk. According to survey results, companies that diversify their suppliers to three or more recover 20% faster from supply chain disruptions. Establish a system for regular supplier risk assessment, comprehensively evaluating quality, delivery times, costs, and BCP measures.

Strategic Inventory Management

Securing safety stock for emergencies is indispensable, but excessive inventory leads to increased costs. For versatile parts like fastening components, standard items are easier to find alternatives for, while specialized items can have lead times of three months or more. Therefore, strategic inventory management tailored to the characteristics of each part is required. Consider implementing VMI (Vendor Managed Inventory) to optimize inventory levels in collaboration with suppliers, with reported cases showing a 15% reduction in inventory costs while decreasing stock-out risk by 5%.

Information Sharing and Digitalization

Visibility across the entire supply chain is essential for rapid decision-making. Implement real-time information sharing systems to centrally monitor part production status, inventory levels, and transportation status. Reports indicate that the introduction of digital tools has improved supply chain visibility by 30% and shortened response times during emergencies. The digitalization rate in Vietnam’s manufacturing industry is still low, at approximately 30%, so investment in this area can provide a significant competitive advantage.

Contract Review and Emergency Clauses

Regularly review contract terms with suppliers and include clear agreements regarding procurement conditions, delivery times, and prices during emergencies. Consider clauses that ensure alternative supply sources or prioritize supply in unforeseen circumstances. This establishes a foundation for continuing smooth procurement activities even when unexpected situations arise.

Strengthening Internal Systems and Training

Training BCP personnel and conducting regular simulation drills are essential for improving emergency response capabilities. Data shows that companies conducting drills at least once a year, simulating disaster or supply stoppage scenarios, have 1.5 times higher business continuity than those that do not. This ensures that each employee understands their role and can act quickly and accurately.

Emergency Procurement Challenges in Vietnam and Ohta Vietnam’s Contribution

While Vietnam attracts many manufacturers due to its economic growth and investment environment, its supply chain also presents unique challenges. Underdeveloped infrastructure, variability in quality and delivery management among local suppliers, and language and business practice barriers can make emergency procurement difficult. The local procurement rate in Vietnam’s manufacturing industry averages only about 30-40%, indicating a continued reliance on imported parts.

In this context, Ohta Vietnam offers the following strengths to help Japanese companies strengthen their emergency procurement systems:

• Extensive Local Network and Diverse Supplier Partnerships: Ohta Vietnam collaborates with over 100 suppliers within Vietnam, enabling the procurement of a wide range of fastening components. This extensive network helps avoid single-supplier risks and quickly secures alternative supply sources even in emergencies.
• Japanese-Standard Quality Control System and Inspection Capabilities: The quality of locally procured parts is a major concern for Japanese companies. Ohta Vietnam has established a strict quality control system based on Japanese standards and conducts thorough inspections. With a quality standard aiming for a defect rate of 0.1% or less, customers can use parts with confidence.
• Rapid Procurement and Delivery Capabilities with Proven Emergency Response: In emergencies, speed is paramount. Ohta Vietnam’s efficient logistics system and abundant local inventory (over 2,000 types of fastening components in stock at all times) have a proven track record of reducing emergency lead times by 50% compared to normal. Over the past five years, we have responded to over 95% of emergency procurement requests successfully, earning a strong reputation for responsiveness.
• Specialized Expertise in Fastening Components and Japanese Language Support: Fastening components vary widely in type and application, requiring specialized knowledge. Ohta Vietnam’s staff, with deep expertise in fastening components, provides smooth communication support in Japanese. This allows customers to proceed with accurate and rapid procurement without feeling a language barrier.

Ohta Vietnam is not merely a parts supplier but a strategic partner supporting the strengthening of your supply chain resilience, contributing to stable business continuity in Vietnam.

Summary

In modern manufacturing, the risk of supply chain disruption is an unavoidable reality, and building a robust emergency procurement system is now an indispensable management strategy. Data shows that companies that formulate and regularly review their Business Continuity Plans (BCPs) have twice the business recovery rate during a crisis, demonstrating that preparedness dictates a company’s survival and growth.

Especially for ensuring business continuity in Vietnam, understanding regional characteristics, coupled with supplier diversification, strategic inventory management, digitalization of information sharing, and strong partnerships, are key. Analysis indicates that companies investing in supply chain resilience gain an average return of three times their investment, suggesting that this is not merely a cost but a crucial investment in the future.

Ohta Vietnam strongly supports the strengthening of Japanese companies’ supply chains through deep-rooted local expertise, an extensive local network, and a Japanese-standard quality control system. From solving emergency procurement challenges to building long-term supply chain strategies, please consult Ohta Vietnam. We provide optimal solutions to help our customers confidently continue their operations in Vietnam.

Conclusion

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At Ohta Vietnam, we not only provide ready-made products such as screws and bolts, but also support activities in the manufacturing field such as cutting, inspection, assembly, packaging…
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As a “specialized support” for the manufacturing industry in Asia. If you have any related questions, feel free to contact Ohta Vietnam for detailed support!
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