215 local firms part of Samsung’s supply chain

Samsung Viet Nam’s survey trip led by its president Shim Won Hwan at HTMP Mechanical Co. Ltd. -VNS Photo

This includes 25 tier-1 vendors and 190 tier-2 vendors, all of whom supply to Samsung’s various factories such as Samsung Electronics Viet Nam (SEV), Samsung Electronics Viet Nam Thai Nguyen (SEVT), Samsung Electronics HCM City Complex (SEHC), Samsung Display Viet Nam, Samsung SDI Viet Nam and Samsung Electro-Mechanics Viet Nam.

It is expected that Samsung’s tier-1 vendors will increase to 29 in 2017.

Samsung Viet Nam has also recorded breakthrough figures in raising the localisation rate of its products, from 35 per cent in 2014 to 57 per cent now.

The information was released on Tuesday during a survey visit made by Samsung Viet Nam’s board of directors at three enterprises - Thanh Long Electronic Production JSC, Hanel Plastics JSC, and Viet Nam HTMP Mechanical Co . Ltd . - that are participating in their consultation programme by experts from Samsung South Korea. The assessment is part of a 12-week programme designed to strengthen the capacity of Vietnamese businesses that are part of Samsung’s components and accessories supply chain.

During the first two weeks, the experts survey and assess these enterprises and then for the next 10 weeks, they work interview and work directly with these businesses to improve their production processes and ensure they fulfil Samsung’s products and components standards.

The programme feedback has been positive, helping businesses improve production and capacity as well as become more well-rounded.

Take the case of Thanh Long Electronic Production JSC, which is SEHC’s tier-2 vendor and the only local enterprise in the Samsung ecosystem in Viet Nam to supply electronic PCB boards, a sophisticated, hi-tech electronic component. After three months of the consultation programme, its Final Quality Control rate has dropped 68.5 per cent, equipment operating rate has increased 23.8 per cent and inventory cost has fallen by 28.6 per cent.

The consultation programme is Samsung’s response to the Vietnamese Government’s call to increase localisation rate and the involvement of local businesses in Samsung’s component supply chain.

In 2017, Samsung is expected to offer consultation to 12 local supply enterprises, increasing the total number of businesses that have undergone the programme to 26 since 2015. The priority is on supporting businesses in the technical sector, and expanding the scope of consultation to domestic partner companies.

“Samsung’s consultation model is not only for its supply vendors, but also aimed for the development of potential support industry enterprises in Viet Nam in general. We hope to help Viet Nam’s support industry develop further,” Hwan said. “To make it effective, we expect to work more closely with associations and relevant departments of the Vietnamese government.”

After completing the consultation programme for the three businesses in the north, Samsung Viet Nam will take the programme to HCM City on Thursday for three enterprises: Viet Nhat PTE (wire harness), Viettronics Binh Hoa JSC (transformer), and Tien Thinh Co . Ltd . (copper-made wire).