OPERATIONAL STRATEGY OF HIGH-END PACKAGING AND CONTAINER PRINTING SERVICE AT VIETTEL VENTURE I INTRODUCTION OF THE COMPANY Company History: Viettel’s company developing new services (Viettel Venture) belongs to Viettel Group and was established on November rd, 2009 Its main business activities are: smart card manufacturing, modern retail, high-end printing, etc The company owns a 12,000 m2 printing factory in Nam Thang Long Industrial Zone, Tu Liem, Hanoi with total investment of 700 billion VND The plant is largely and modernly infrastructured with new and synchronic machinery system imported from Europe which was rated the most modern in Southeast Asia After two years of operation, Viettel printing plant which employs 70 employees has soon dominated the market In 2011 its revenue increased 27% to 250 billion VND, which makes the company among Top packaging businesses in Vietnam The company provides printing services on all types of materials: Printing packaging, containers, labels, scratch cards, publications, calendars-cards, etc Company Strategy of Printing Service Quản trị hoạt động dich vụ in bao bì, vỏ hộp cao cấp Page With the foundation of modern and synchronic technology, Viettel Venture aims to become the leading supplier in Vietnam in the fields of printing and producing packaging in 2015 In 2012 the company applies business strategy “retain the background, expand the market” to optimistically exploit its existing customers’ needs and promotes the search for new customers and new products Besides, the company is striving to be among Top highest-sales printing company with sales growth above 20% II MARKET ANALYSIS AND SELECTION OF COMPETITIVE STRATEGY Overview and Trends of the Printing Industry According to the Association of Printing, Vietnam is considered the most attractive location for foreign investors in the field of printing production and outworking Currently, the present of international corporations such as Diageo, Procter & Gamble, Kimberly Clark, Unilever, Colgate Palmolive, Carlsberg, etc has drag on the demand for packaging printing dramatically Printing and packaging industry of Vietnam has average growth rate of 15-20%/year According to data from the General Statistics Office in 2011, revenue of the sector of printing on paper was more than 30,240 billion VND, reaching an average growth of 12% Market share from packaging, containers and labels tends to increase, accounting for over 60%, while that from magazines, newspapers, and advertising levels off Securitized printing products have been produced domestically; then foreign companies are looking for partners in Vietnam for reducing costs The South of Vietnam is still the printing center of our country with more than 60% market share; the North follows with more than 34%; the Central accounts for only nearly 4% Identifying target customers Viettel Printing Plant groups its customers by product lines which is suitable with its capacity in current investment stage Data from Association of Printing and Publishing Department determining sales structure by target product lines is presented as following Quản trị hoạt động dich vụ in bao bì, vỏ hộp cao cấp Page Table 1: Division of the target market by the product groups of customers Area I Target market’s demand (billion VND) Containers Cardboard containers Labels Cards Trong nước 5,800 3,588 1,326 396 490 Tỷ lệ 100% 60% 23% 6% 11% (Source: Association of Printing, Publishing Department) Container – Cardboard container are still the product line with the highest proportion of customers in the target market (over 80%) The line has an average growth rate of 11.2% Targets of Viettel printing plant’s advanced packaging and containter printing service: To satisfy the most (at least 80%) the total demand of its customer groups who collaborated with the plant in 2010 and 2011, including main guests: Kinh Do, Huu Nghi, Hai Ha, Cai Lan in the North, Alpha, VTC; To focus on developing new customers and new product groups of glazing calendering containers and metalized containers with a total estimated revenue of 30 billion VND Table 2: Target revenue of Viettel printing plant by products in 2012 Target market’s Products Exploitin Exploited g Target rate 5,777 273 5% demand (billion VND) I Common Products Common containers 3,191 101 3% Cardboard containers 1,326 35 3% Labels 380 21 6% Cards 880 113 13% II Differentiated Products 513 30 6% Calendering container 227 20 9% Metalized container 286 10 3% 6,290 300 5% Total Quản trị hoạt động dich vụ in bao bì, vỏ hộp cao cấp Page Analysis of competitors The plant’s main competitors are defined as printing units with the same modern machinery system with sales in 2011 reaching over 200 billion VND Table 3: Ranking of printing businesses by sales Province Business name Liksin packaging Sales in Sales in Estimated 2010 2011 Growt sales in 2012 (billion (billion h rate (billion VND) VND) VND) 300 330 10% 372 HCM City Ha Noi Golsun packaging 210 300 42.8% 339 Ha Noi Viettel printing plant 206 262 27% 300 Ha Noi Agriculture printing 172 230 33% 260 Đong Nai Starprint 195 227 16% 256 (container + label) a Duplex Container Category: Among five top printing companies, Liksin Packaging Company leads the highclass packaging paper market thanks to its synchronous equipments and its capability of meeting almost the demands of various products in the market Some typical customers of Liksin are Masan, Colagte, Rotoh, Calofic, Kinh Do, P&G, etc Among the above-mentioned five leading printing enterprises, Agricultural Printing and Packaging JSC (APP) and Startprint Vietnam Co Ltd (Startprint) are Liksin’s two strong competitors APP’s growth rate of 33% is high This indicates its ability to fully develop its workforce’s experience and focus on the differentiation of such high value products as laminated boxes namely Calendering and Metalize which no enterprise in the Northern Region can produce and supply Startprint also obtained high growth rate of 16% thanks to its modern printer system and synchronic post-print processing machine system Besides, Startprint specializes in the product line of high value – Hologram laminated boxes Quản trị hoạt động dich vụ in bao bì, vỏ hộp cao cấp Page b Cardboard container category: Goldsun Packaging and Printing JSC (Goldsun) has attained the highest growth rate of 42% thanks to its modern printing system - Offset Rolan 900, its wave generator and product quality checker system, etc that can meet nearly all the customers’ requirements of big volume and high technique Its customers include electronic companies such as Samsung, LG and Panasonic and food enteprises such as Heneiken Beer, Viet Ha Beer & Beverage JSC, Hanoi Brewery Ltd, Coca, Pepsi, Asia Food, etc Several rivals of Goldsun – VietHung Printing Co Ltd, APP, Startprint and Visingpack also own a synchronic machinery system for producing the cardboard container line However, their capability of producing big volume of products and “exploiting” customers is inferior to Goldsun Conclusion: In the high-class package and container market, enterprises, in order to create competitive advantages, have developed unique product lines and invested in modern synchronic machinery system including printers, wave generators and checkers Selecting the core competitive capability and competitive priority In 2011, on the purpose of producing cake’s high – class containers and labels, Viettel Printing Factory (under Viettel Venture) comprehensively cooperated with a number of such big customers as Kinh Do Food, Huu Nghi High Quality Confectionery JSC (Huu Nghi Food), Orion Food Vina Co., Ltd, Hai Ha Co., Hai Ha Kotobuki, Anpha Ltd Co., Nestle Vietnam Ltd., Cai Lan Oil & Fat Industries Co Ltd, Tuong An Vegetable Oil JSC, VTC Game, etc Given the production practices and based on its strength of infrastructure, technologies, resources, etc, Viettel defined the core competitive elements as follow: “Highest Product Quality – Shortest Production Duration – Best Packaging Service – Fairest Prices” Customers’ satisfaction and credibility play the role as the foundation for Viettel Venture’s sustainable development III MAKING DECISION ON LONG -TERM OPERATION STRATEGY Quản trị hoạt động dich vụ in bao bì, vỏ hộp cao cấp Page Production and technology line management Owning a modern machinery line, Hanoi Printing Factory is scheduled to continue to invest in such machines as glass rinser, glazing calendaring machine and dumping paper system (namely Investment Phase 2, to be completed in Quarter II of 2012) so that it can meet strict requirements, make its products unique and create the competitive advantage of price Print-out technology: Viettel Printing Factory has applied the synchronic automatic machinery system produced by a European supplier The system is operated and managed by advanced specialized softwares of processing image and print-out technology Thanks to using the system, Viettel can meet every customer’s demand for product specifications and film quality, minimize defects and errors, lower expenses and shorten the production duration Offset Printing Technology: Applying Offset printer system imported from Federal Republic of Germany, Viettel Printing Factory can produce products of international standards namely Offset In the factory, all the production stages including print-out, engraving, trial printing, mass printing are standardized that facilitates the coordination among stages and eliminates defects for the best and stable printing quality Besides, the factory has the printing system for dynamic data and laser printing system of high speed These systems consist of the most modern printers that can process changeable data The printers’ suppliers are IBM, USA and Hitachi, Japan The printing capacity is up to billion pages/day of high quality Post-printing processing technology: adhering to strict and various requirements of customers, post-printing processing service is supported by high technological system including post-printing processing line of which label making, bending, cutting and packaging machines mixing and folding envelopes automatically These machines are the most modern in the world and can process – print – mix and fold printed products of dynamic and static data The capacity of mixing envelopes is up to 50,000 envelopes /hour and the system is managed by advanced softwares Quality management Quản trị hoạt động dich vụ in bao bì, vỏ hộp cao cấp Page The factory has taken the initiative in applying softwares in quality management and using modern controlling machines in order to control even every small production stage and minimize defects and errors Moreover, the factory maintains strict working disciplines, resolutely manage and supervise production activities and strictly adhere to military traditions Capacity Management At this time the printing market still has good growth rate, especially the highquality packaging and containers market Based on the existing production lines, the ability of Viettel printing plant in Hanoi to meet its customers’ time and large volume requirements will sometimes be difficult To ensure the capacity for targets of developing new customers, diversifying traditional customers’ products especially those in southern area, and increasing its competitiveness The company will accelerate the speed of production lines construction and installation in Ho Chi Minh City The new production lines have capacity of 1.2 times larger than that of the plant in Hanoi (to be completed in quarter 4, 2012) Locating production Viettel printing plant in Hanoi is now located in Nam Thang Long Industrial Zone, Tu Liem, Hanoi; Viettel printing plant in Ho Chi Minh City is 17.000 m2 in Tan Phu Trung Industrial Zone – Cu Chi – Ho Chi Minh Industrial parks often have good infrastructure amd convenient transportation This is an advantage for the company to meet customers’ requirements of high-quality of services, at high volume, and in short duration As the Central region has the market share of just over 4%, the company will not place its production there but trading offices only Layout of Manufacturing and Operating Space The area of 12.000 m2 (Viettel printing plant in Hanoi) and 17.000 m (Viettel printing plant in Ho Chi Minh City) allows the company an effective layout of production and operation At each plant, there are two workshops (Flexo printing workshops and Offset printing workshop), an area of operation, a modern Larorator room, showroom introducing products, and warehouse Quản trị hoạt động dich vụ in bao bì, vỏ hộp cao cấp Page Green – Clean – Beauty working environment IV DECISION OF OPERATIONAL STRATEGIES Output Forecasting The company’s growth forecast in revenue from services of printing advanced packaging, containers up to 2015 is 20-25% Year 2011 Revenue from services of printing 130 2012 2013 2014 2015 160 200 250 300 23% 25% 25% 20% high quality packaging and containers (billion VND) Growth 20% General Planning Preparation of floor space and machinery capacities: The company must complete all items in portfolio of the nd phase of the Hanoi Printing Plant at the end of quarter 2, 2012 then HCM City Printing Plant at the end of quarter in order to run the production at quarter 1, 2013 Preparation of human resources: The staff demand for the expansion of the plant in Hanoi must be fully met by quarter 1, 2012 to make sure the company has enough manpower to operate the new machinery systems at the beginning of quarter 3, 2012 For the personnel for its factory in Ho Chi Minh City: Quarter 3, 2012 to complete recruitment, 4/2012 to offer training at the factory in Ha Noi, quarter 1, 2013 to master lines, machinery, equipment, then start production Quản trị hoạt động dich vụ in bao bì, vỏ hộp cao cấp Page Preparation of finance: Including the construction cost of plant, machinery and equipment (600 billion VND); costs of materials, labor, etc Preparation of production process appraisal in the new workshop: Production processes on new machinery and equipments must be designed and handed over by the Research and Quality Assurance Division Preparation of raw materials for production: Main raw materials for production must be carefully prepared to timely meet production schedule Materials Demand Planning Main materials for services of printing high quality packaging and containers are paper and printing ink Domestic suppliers are now satisfying only more than 50% the demand for paper so the rest must be imported In addition, paper prices fluctuate constantly In 2011 the price of paper increased by 13% On the other hand, high-end printing products also require special inks which domestic enterprises are not yet capable of producing Therefore, the plant has to work with both domestic and foreign material suppliers Reserves Management Services of printing high-quality packaging and containers are provided according to orders only The company’s customers are enterprises so products generally transported to customers once completed Inventory need, hence, is small About materials: The company must reserve an amount materials (paper and ink) which is enough (always in excess of limits) to ensure its production schedule to meet the needs of customers Production Control Plans Based on the volume and delivery time of each order, the company will plan the production and there should be flexible solutions such as increasing working shifts, adjusting duties of workshops and factories, etc to consistently meet the customers’ requirements of the progress and quality Quản trị hoạt động dich vụ in bao bì, vỏ hộp cao cấp Page Management of Supply Chain and Distribution System Viettel Venture Materials suppliers Customers Printing Plant Divisions: Sales, Plans, Design, QC, etc Workshops, warehouse, showrooms Seft-transport Outsource Customer Services Customer care is extremely important to businesses operating in the services sector, especially in the printing industry where customers are large enterprises and bring the company high revenue Sales employees create plan for taking care of customers on holidays, birthdays in order to create intimate relationships with them to facilitate their purchase process Transport Chain Management For customers whose locations are near the plant and not require a quick tempo, the company will be transport products by the company’s own vehicles with accessories to arrange and handle the cargo For customers whose locations are far from the plant and require a high tempo, the company can outsource reputable and reliable partners to move the product to them V CONCLUSION Quản trị hoạt động dich vụ in bao bì, vỏ hộp cao cấp Page From now till 2015, Vietnam printing market in general and high-end packaging printing market and containers still have good growth, which creates more favorable opportunities for business expansion However, the competition is increasingly strong So to succeed, printing businesses need to have appropriate operating strategies On the basis of business strategy, analysis market assessments, identified target customers, the core competitive advantages, companies must build suitable and flexible long-, medium-, and short-term operating strategies as well as operation and supply chain management decisions In doing so, the company can increase the products’ competitiveness, occupy and claim the company’s prestigious in the market, then create a fast and sustainable development for the company Viettel Printing Plant REFERENCES http://viettelprinting.com.vn/Desktop.aspx/News-Events/Gia-cong-sauin/Gia_cong_sau_in/ Quản trị hoạt động dich vụ in bao bì, vỏ hộp cao cấp Page ... care is extremely important to businesses operating in the services sector, especially in the printing industry where customers are large enterprises and bring the company high revenue Sales employees... package and container market, enterprises, in order to create competitive advantages, have developed unique product lines and invested in modern synchronic machinery system including printers, wave... management Quản trị hoạt động dich vụ in bao bì, vỏ hộp cao cấp Page The factory has taken the initiative in applying softwares in quality management and using modern controlling machines in order