Overview of the value chain
A value chain is a series of activities that add value at each step (link) in the process, including the design, production and delivery of products to the user. A value chain is a collection of all activities focused on creating or adding value to a product.
The value chain begins with the intention to increase customer enjoyment or from customer requirements and ends with the finished product being created, along with the values that customers are willing to pay for it. Thus, the purpose of the value chain is to increase the value of enjoyment, higher customer satisfaction and thereby better benefits for the links in the chain.
Analyzing the value chain of shrimp is very important to find out the strengths and weaknesses of the links, to improve the internal links of each link. Photo: VASEP
The concept of the value chain was first introduced by Michael Porter in 1985. According to him, there are 5 key operational steps to create value and complementary activities for the main activities.
The 5 key operating steps include:
1. Design: All products are formed on the basis of surveying and outlining an overall program, including specific activities such as product designs.
2. Logistics inputs: Including the receipt of goods, storage and distribution of inputs such as raw materials, other supplies
3. Production activities: Converting the inputs into finished products.
4. Logistics output: Relating to the collection, storage and distribution of products and services to customers.
5. Marketing and sales: Related to activities that raise public awareness about the product.
Supporting activities: Includes all activities to add value to products and services.
Although described as a vertical chain, the links within the chain are often two-dimensional, interacting in nature. Value chains can be international when their chains are implemented in many countries. For example, the shirt is designed in France, accessories in India, finished shirts in Vietnam, consumed in the EU
Above is the simple value chain concept. In 2001, two authors Kaplinski and Morri introduced the concept of expanded value chains, which is a more complex model, taking into account the upstream and downstream links of simple value chains. This means considering vertical linkages of inputs from origins until the final product reaches consumers.
For example, a wood processing enterprise (DN). The consideration of sawn timber will only be considered from a simple value chain perspective. If we consider the upstream of sawn timber is cutting down trees or deeper is planting stage with the inputs as seedlings, fertilizer, care Similarly, our shrimp, Mostly shrimp farming, when considering the value chain, it should be considered from an extended perspective (more shrimp farming links) will be sufficient information to more accurately assess which links are strong, which links need pay attention to support and overcome weaknesses to improve the best value chain.
Value chain analysis is of great benefit to businesses in terms of improving value chains or seeking opportunities to penetrate the value chain. This will bring about benefits that identify competitive advantages; reevaluate capacity and improve operations; income distribution is more reasonable … From a global perspective, value chain analysis is even more important for businesses: (1) Upgrade processes such as increasing productivity, increasing rotation, reducing defective products ; (2) Upgrade products such as creating new, better points in the product; (3) Functional upgrades based on a comparative advantage can reduce the function to the outside to take on a lighter charge; (4) Upgrading the value chain based on the analysis that forms a new value chain. At the same time, through which businesses understand the impact factors in the whole value chain, so that businesses have more opportunities to understand internal resources and successfully penetrate into the global market. Our shrimp, in a broad perspective, has joined the global value chain, although at a very low level, has joined the global supply chain quite strongly.
Shrimp value chain
Analyzing the value chain of shrimp should be considered from the perspective of extended value chain, with input from the shrimp farming link. This link is essentially a simple chain with inputs such as seed, food and nutrition, chemicals, minerals and other tools. The remaining links of the shrimp value chain are in the simple value chain with the central link being shrimp processing.
Through these links, practical review to find the strengths and weaknesses of the industry.
+ The shrimp farming chain has strong points such as large farming area, high output in the world, supply almost year round The bad point is the low success rate, resulting in high price; Most of the farming is small, making it difficult to control the quality.
+ Sewing logistics is quite good. However, the traffic conditions in the Mekong Delta are still low, the effect of increasing transportation costs and prolonging time affecting product quality.
+ Sewing processing, mainly processing frozen. There is also an amount of dry processing or consumption of ice form. Our level of processing frozen shrimp is at a high level of the world. However, internally developed unevenly. Only about one third of processing enterprises are in higher level.
+ Sewing logistics output: Capacity of cold storage enterprises is quite large. Not heard about stagnant shrimp stagnant. The system of ships and seaports of Vietnam is quite complete and comprehensive. However, the cost is still high compared to the world level.
+ Marketing and sales: Pretty good even though we don’t have many excellent individuals.
+ Services like after sales. This point is incomplete. It is necessary to improve business ethics in dealing with all disputes, in addition to disputes of quality errors, including disputes related to contract performance such as improper delivery, insufficient or invalid cancellation when prices fluctuate greatly.
After analyzing the shrimp value chain with the input from the shrimp farming link, and through these links, we can look in practice to find the strengths and weaknesses of the industry.
From that situation, it is also possible to draw some important points to promote the Vietnamese shrimp value chain:
Regarding guidelines and policies
– Need to focus on quality control of shrimp seed, invest more in irrigation systems to raise shrimp to improve the success rate for farmers. This will lead to low farming costs, increase our shrimp competitiveness in the world market. Currently, there are more than 2,000 seed suppliers. It is difficult for the authorities to have enough manpower to control them all.
– Credit is more favorable for the links in the chain, especially shrimp farming.
– Improve the quality of the road transport system, reducing transportation costs. Invest in electrical systems to encourage high-tech shrimp farming.
– Promote the advocacy to participate in cooperative farming to create a uniform quality, easier to control and a better supply of output. Will lead to brand reputation of our shrimp is maintained and improved, consumption prices improved.
– Control port service costs and related costs.
– Stepping up the quality of trade promotion programs.
Internal links in the chain
– Farmers strive to improve farming knowledge and experience. Especially in the current context, the disease on shrimp farming is quite stressful. However, many farms with clean and intensive farming models have had very good results. But this model is difficult to replicate due to high capital requirements, knowledge
– Processing enterprises have many things that can be done better. Currently, there are about 50 shrimp enterprises operating. Each enterprise may have several processing facilities. Processing facility is also available, the remaining is a separate technique of each enterprise and facility.
(1) First, you need to pay attention to the selection of qualified materials, not because cheap ham will affect long term. If all processors are aware, bad shrimp will not exist.
(2) It is necessary to improve processing techniques at each stage with its own “know-how”, obtained through the process of searching and researching. Shrimp sold to Japan and Korea account for the highest market share, although customs clearance in Japan is difficult compared to shrimp from Thailand and Indonesia. It is thanks to beautiful, fresh design, is the common strength of our shrimp businesses. But besides that, only some businesses consume a lot of breaded shrimp and fried shrimp. The reason, these items need small “know how” but not all businesses can do. Know how this is very necessary, the Japanese do not like hard dry products (must be due to weak teeth ?!), fried shrimp must be soft, no hard points to persuade, attract buyers.
(3) Arranging processing to complete each order, the fastest export, shortest rotation time is also difficult. But in fact many customers complained about the delivery or delay from our shrimp businesses.
Currently, there are about 500 focal points involved in shrimp export, proving a very large sales and marketing team. At this very important link, luckily there is support from the Vietnam Association of Seafood Exporters and Producers (VASEP). Over the past 20 years, VASEP has been a bridge between businesses and markets, customers through many times organized to attend the world’s largest seafood fairs every year.
On the other hand, the information on the situation of price, global supply and demand for shrimp is also updated weekly by VASEP through weekly newsletters and on its website. All this content in the long run has contributed significantly to create the current shrimp industry. Therefore, businesses participating in shrimp business should be very interested in learning information about shrimp from VASEP, especially small businesses, new businesses entering the industry still have many things to worry at the beginning.
At the same time, to facilitate marketing and sales, businesses also need to focus on branding for their businesses. This is a difficult task that requires perseverance and costs a lot of money, manpower and time. Especially to build a sustainable successful brand requires a great synchronization from awareness to action such as building a corporate culture as a foundation to look in the same direction, attaching importance to business ethics, and implementing social responsibility, enforce the sustainable development of enterprises When improving business ethics, some matters related to disputes with partners and consumers, if any, will be resolved sooner and more smoothly. .
In summary, shrimp value chain analysis is essential to find out the strengths and weaknesses of the links, to improve the internal links of each link. Thereby improving efficiency, competitiveness; Join global value chain, global supply chain more and more extensive. This effort of each enterprise will contribute to the wind storm, which will turn our shrimp industry into a strong economic industry, worthy of the expectation that millions of people are working hard day and night to participate in chain activities.