Microsoft Word Thesis (ban chinh sua theo comment hoi dong) docx UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Vo Thi My INEFFICIENT SALES PLAN AT AMANN VIETNAM CO , LTD MA[.]
COMPANY BACKGROUND
Company introduction
Amann Group, established in 1854 by Alois Amann and Immanuel Bühringer in Bünnigheim, Germany, is a global leader in manufacturing and distributing sewing and embroidery threads The company serves diverse industries, including clothing, underwear, footwear, leather goods, home textiles, and technical applications With a presence in over 100 countries and more than 2,300 employees worldwide, Amann Group emphasizes customer proximity and operational flexibility through its production facilities in Europe and Asia.
Picture 1: Amann headquarter in Bửnnigheim
1.1.2 Overview about Amann Vietnam Co., Ltd
Amann Vietnam Representative Office was established in June 2011 and has operated as a trading company since August 2012 Its sales office now is located at
1 st Floor, Aloha Building, 68 Hong Ha Street, Ward 12, Tan Binh District, Hochiminh City
Picture 2: Amann Vietnam Sales office in Hochiminh City Amann Group organized a groundbreaking ceremony for its Vietnam factory covering 45,000 square meters at Tam Thang Industrial Park (Quang Nam) on July 27,
The new facility is set to produce high-quality sewing threads for the garment, leather, and footwear industries, with an annual capacity of 2,300 tons in 2023 The initial phase, costing US$13.8 million, will become operational in June 2019, producing 1,000 tons annually To expand production, a second phase is planned starting in 2023, with an additional US$6.2 million investment, increasing the total capital investment to US$20 million.
Amann's Vietnam factory will manufacture high-quality sewing threads that meet rigorous European standards, ensuring consistent product quality across all Amann production facilities worldwide This commitment guarantees that customers can trust in the uniform excellence of Amann’s products, regardless of location.
Amann Vietnam (AVN)’s major customers are famous brands such as Adidas, Puma, Nike, Hugo Boss, Prada, Coach, etc
Organizational structure of Amann Vietnam
AVN is under the progress of setting up new factory in Tam Thang, Quang Nam Its current Hochiminh office will operate as sales office right after factory construction complementation
To strengthen human resources for AVN's local product manufacturing, the company has recruited highly qualified and experienced sales team members specializing in the thread manufacturing industry.
Amann Vietnam's Ho Chi Minh office is organized into five key departments to ensure efficient operations: a sales and marketing department comprising the Global Key Account Team, Industrial Sales Team, Technical Advisory Services Team, and Customer Services Team; an HR department dedicated to human resources management; a Finance and Accounting department responsible for financial planning and reporting; a Production Department overseeing manufacturing processes; and a Project Department focused on project planning and execution.
Diagram 1: Organizational structure of AVN in 2019
AVN has established a functional organizational structure that clearly delineates roles and responsibilities by department, facilitating effective communication across teams This traditional setup enhances collaboration, ensuring all departments understand the company's mission and strategic objectives, ultimately supporting cohesive and aligned operations.
Sales turnover of AVN has continuously increased for the last 4 years from
2015 to 2018 with the average growth rate at 150% as the figure below:
Figure 1: Sales turnover of AVN from 2015 - 2018
AVN expects when it has local production in Tam Ky, its turnover will achieve the figure as 5-year sales plan below:
Figure 2: 5-year sales plan 2018-2022 of Amann Vietnam
Because Amann Vietnam will officially have local production from June 2019, it sales forecast increases significantly from June 2019 and in 2020, then the growth will be slow down in 2021 and 2022
Amann specializes in manufacturing and supplying high-quality polyester and nylon threads primarily for the garment, textile, footwear, and leather industries These sectors are among Vietnam's largest, ranking second and fourth in importance, and collectively contribute approximately 23% of the country's total export revenue.
Figure 3: Vietnam export structure of goods in 2016
Threads account for approximately 1% of the total FOB price of garments and shoes in Vietnam This indicates a potential demand of US$240 million for threads within the garment sector and US$160 million for footwear, resulting in an overall thread market demand of US$400 million in Vietnam.
Jumping into Vietnam market quite late after Coats, Amann as well as other companies enjoy a small market share in both apparel and footwear sector
Table 1: Export Turnover of Vietnam by Commodity Group in 2016
Telephones, mobile phones and parts thereof Textiles and garments
Computers, electrical products, spare-parts & components thereof Footwear Machineries Wood & wooden product Sea food
Telephones, mobile phones and parts thereof 34.32
Computers, electrical products, spare-parts & components thereof 18.96
Figure 4: Segmentation and value proposition
Symptoms
In the 2018 financial year, the company's business performance was disappointing, with a net profit after tax of negative 3,714,477,737 VND, marking a significant loss This decline contrasts sharply with the previous year's results, which showed a positive net profit of 2,604,318,251 VND, indicating challenges in profitability and financial stability.
Figure 5: Income statement of AVN in financial year 2018
2.2 Decrease in gross profit margin
The financial report 2018 also recorded that profit margin of the firm had fall down 8% to 26% from 34% previous year
Net Sales (VND) 22,277,483,578 34,922,963,518 COGS (VND) 14,766,095,499 25,887,504,047
Table 2: Gross profit margin of AVN in 2017 and 2018
Figure 6: Gross profit margin of AVN in 2017 and 2018
The company's gross profit margin began declining in May 2018, experiencing a significant drop to just 16% in August 2018 Throughout the first half of the year, the average gross profit margin was approximately 31%, but this decreased to an average of 21% in the second half, indicating a notable decline in profitability over the year.
Figure 7: Gross profit margin of AVN phasing by month 2018
Table 3: Gross profit margin of AVN by month 2018
In 2018, Amann Vietnam’s gross profit margin was only 26%, falling significantly short of the company's target and the industry average for thread manufacturing The minimum expected profit margin for Amann is 30%, whereas other Amann Group production sites report margins ranging from 30% to 35% In contrast, industry leader Coats Phong Phu outperforms with an impressive profit margin of 40% to 42%, highlighting the competitive gap within the sector.
Breakdown to products, the company has suffered extremely low profit from SabaTEX, Isamet, especially Universal with negative profit margin of -13%
Table 4: Gross profit margin of AVN by product type in 2018
Breakdown to customer, in top 20 customers, the company has lost when supplying products to Maxport and very low profit margin at Theu DJ and Bodynits
Table 5: Gross profit margin of AVN by customer in 2018
CONG TY TNHH ECCO (VIETNAM)
CONG TY TNHH DINH VANG
CONG TY TNHH MASTER SOFA INTERNATIONAL
CONG TY TNHH MTV THEU DJ
CÔNG TY TNHH MTV LONG HƯNG
CN CTY TNHH NGUON A CHAU – XUONG MAY XUAT KHAU BEN TRE
CONG TY TNHH THUONG MAI VIET VUONG
Cong ty TNHH BL Leatherbank
CONG TY TNHH SAO VANG
CONG TY TNHHCN ORIENTAL SPORTS VIET NAM
CONG TY CO PHAN KET NOI CHAU AU
CONG TY TNHH DUC THANH
CONG TY TNHH MAXPORT LIMITED (VN)
CONG TY TNHH SHINTS BVT
CONG TY TNHH HSE VIET NAM
CONG TY TNHH TAN DAI HUNG
CONG TY TNHH LOGISTIK UNICORP VIET NAM
CONG TY TNHH OKTAVA VIET NAM
As table 2 in page 8, COGS has increased 75% in 2018 to 25.89 billion VND from 14.77 billion VND in 2017 while sales turnover increases by 58% only, which makes profit margin decrease
Key symptoms indicating issues within the business are closely interconnected and significantly impact overall performance, warranting the attention of the Board of Directors The most critical indicator is the decline in gross profit margin observed in 2018, primarily driven by rising costs of goods sold Addressing this issue requires thorough investigation to identify underlying causes and implement effective solutions.
The initial cause-effect map
In order to explore the problem and the cause of problem, the depth interview has been conducted with related people in AVN
The sales department's key team includes five dedicated professionals: Mr Chuong Vu, the Sales Director, leads the team with strategic vision; Mr Duc Le and Mr Duy Vo serve as Deputy Sales Managers, supporting sales operations and client relationships; Mr Luan Dao, the GKA Manager, oversees regional sales activities; and Ms Hang Nguyen, a versatile Sales Support and Marketing Executive, contributes to customer engagement and marketing initiatives, ensuring the department's overall success.
- The second group of 2 people from Customer Service Department including Ms
Diep Huynh – Customer Service Manager and Ms Hien Nguyen – Customer Service Executive
- The third group of 2 people from HR & Admin Department including Ms Vy Nguyen – General Manager (left the company from 30 March 2019) and Mr
In 2018, Mr Chuong Vu, Sales Director, reported that the company's sales turnover reached US$1.5 million, marking a 25% increase over the initial target of US$1.2 million Despite this growth, profits remained modest compared to other production facilities like Bangladesh and the leading competitor, Coats Phong Phu, which boasts profit margins of 40% to 42% This profit disparity presents a significant challenge for Amann Vietnam from 2019 to 2022 He also identified several probable reasons for the decline in gross profit margin and the occurrence of negative profits in 2018, which need to be addressed to sustain future growth.
- Transportation cost: especially air shipment for urgent orders and urgent samples
The cost of shipment increased much in the last months of 2018 which impacts gross profit margin significantly
Recent increases in sales expenditure are primarily due to higher costs associated with customer visits This surge is attributed to the sales team's ineffective and inefficient visit planning, which results in underutilization of company vehicles during customer visits Improving visit scheduling and optimizing travel routes can help reduce these costs and enhance overall sales efficiency.
The employee has frequently signed overtime proposals related to customer service and admin tasks, raising concerns about the company's time management and system efficiency He questions whether staff or management practices effectively support employees in completing their work within regular working hours He believes this issue warrants thorough investigation and expects employees to finish their tasks within standard hours without the need for additional overtime approvals.
OT He wants them to be able to balance among work, family and individual
- Taking about work efficiency, he shared that the sales forecast is not accurate due to sales people’s lack of forecast experience
The sales plan did not meet expectations due to insufficient selling skills and poor time management There was a significant discrepancy between the planned sales phases by month and the actual sales recorded, particularly in the North region Despite these issues, no action plans have been implemented by the sales team in the North area to address the gaps Achieving sales targets requires proactive sales efforts rather than relying on chance.
The customer service department often works overtime due to unclear employee competencies and poorly defined job descriptions This confusion leads to employees not fully understanding their roles, responsibilities, or the company's systems and Standard Operating Procedures (SOPs), ultimately impacting service quality and operational efficiency Clearly outlining job requirements and providing comprehensive training on systems and SOPs can enhance employee performance and reduce the need for overtime.
- Finally, he is wondering about recruitment process of AVN Is it really the reason for underperformance results
Expanding your apparel business in Vietnam requires establishing local production to effectively compete with domestic suppliers With changing customer behaviors, consumers now prioritize speed to market, making lead time a critical factor for success Additionally, manufacturers highly value quick delivery services to meet tight deadlines and maintain a competitive edge in the fast-paced fashion industry.
AVN currently does not have a manufacturing facility in Vietnam, relying instead on importing threads from Yancheng, China, and Germany This supply chain approach impacts the company's competitiveness in terms of pricing and lead times, making it challenging to meet the demands of the Vietnamese market efficiently.
Ms Hang Nguyen – Sales Support & Marketing Executive who is in charge of care arrangement for sales team replied that:
1/ The cost of renting car is different depending on the time and the location of customers that sales people visit
2/ Regarding cost increase in using car, she said that only one case happened in the North Salesmen requested car urgently without plan in advance so the company has to accept high cost for that visit Later on, there are always car visit booking in advance
Interviewing Deputy Sales Managers, both Mr Duy Vo and Mr Duc Le have similar comments on product range, thread sizes, price approval process as well as segmentation positioning
1/ Product range: Amann does not have enough product ranges to compete with competitors in Vietnam market, especially closed competitors such as Coats Phong Phu, A&E, Gunzetal and other local competitors such as Phong Viet, Toung Loong, Gitai, Khoi Chi Hung, Hung Long, Chin Shin, etc
2/ Thread sizes: There is no the middle sizes from the thinner to the coarser ones
Major product types as below table are lack of thread sizes needed
- SabaC: no middle size between Tex 105 and Tex 200 such as Tex 120, Tex 150, Tex 180 for jeans/denim
- Rasant: no coarser sizes from Tex 105 to Tex 240 for jeans/denim
- Universal: no middle size between Tex 150 and Tex 170 such as Tex 180 for jeans/denim or heavy garments
- SabaTEX and SabaSOFT: no sizes Tex 21 or Tex 24 which is very popular in Vietnam market for overlock and cover seams
Table 6: Amann available thread sizes 3/ Price proposal
When approaching a new customer, the Vietnam sales team must first confirm with Global Key Account Management (GKAM) whether any global offers apply to the customer If a global offer exists, the team must adhere to it; if not, GKAM will recommend a selling price based on local sales proposals or their own calculations, which can take several days Discrepancies between local sales and GKAM's pricing expectations sometimes prevent the team from securing business To ensure consistency across countries, GKAM at headquarters sets the price for Vietnam, often resulting in less competitive pricing for Vietnam sales and smaller profit margins, especially due to global agreements and high transportation costs from China or Germany.
Amann Group's new business development strategy emphasizes high segmentation with flagship products like Serafil and specialized items such as SabaSOFT, SabaFLEX, and IsaMET However, demand for these premium products remains limited in Vietnam To expand market share, the company should consider shifting towards middle segmentation by promoting more popular products like SabaC, Universal, and SabaTEX, which have broader market appeal.
The competitive pricing of popular threads in Vietnam is driven by numerous suppliers in the market, resulting in lower average selling prices for AVN To remain competitive, Amann imports threads from China and Germany, which allows them to offer low prices that challenge local suppliers Consequently, AVN often sustains minimal or even negative profits in order to acquire new business and maintain market share.
Ms Diep Huynh – Customer Service Manager said that:
1/ Transportation: there are 3 methods of transportation: ship by sea from Germany or China, ship by truck from China to the Northern of Vietnam, ship by air for urgent cases Ship by air has increased recently because sales requested urgent delivery to maintain key customers and to develop new business
2/ Regarding overtime, she said that there is no system and her team members have to work manually It takes a lot of time for CS to monitor and follow up the order The late feedback from Amann China and Amann Germany is also a reason causing so many pending things in the process of handling order
Updated cause-effect map
In 2018, Amann had not yet established a factory in Vietnam, relying instead on importing threads from China and Germany, which made transportation costs a significant factor influencing the cost of goods sold and profit margins Vidal et al highlighted key shortage factors and opportunities within global logistics systems, emphasizing the importance of strategic and tactical methodologies Critical international considerations, such as transportation method selection, transportation cost allocation, and inventory costs, play a vital role in decision-making processes for global supply chain management.
In the era of globalization and market integration, companies must expand their supply chains to reach distant international markets The rapid growth of information technology has revolutionized go-to-market strategies, with e-commerce providing new avenues for product distribution This technological advancement has significantly increased the movement and accessibility of goods worldwide, enhancing global trade opportunities.
Distribution logistics is a critical factor in determining the competitive advantages of industrial firms, with its importance significantly increasing due to evolving markets and production systems The shift from traditional make-to-stock manufacturing to JIT and quick response models emphasizes the need for continuous, efficient material flow within the global supply chain Additionally, the trend of relocating production to low-cost labor countries has enhanced the mobility of goods, increasing supply chain complexity Rising customer expectations for shorter delivery lead-times further intensify the pressure on supply chains, making transportation costs a vital component for maintaining competitive advantage.
In 2018, Amann Vietnam imported threads from China and Germany via sea, truck, and air, with total transportation costs increasing by 18% to US$40,000 from US$34,000 the previous year The first half of 2018 saw a significant rise in air shipments, primarily to serve new clients such as Viet Vuong (Hugo Boss), Maxport (Hugo Boss, Helly Hansen), while maintaining key accounts like Bodynits (Puma), Ecco, and Greenland However, from August to December 2018, following directives from the new Sales Director, the Customer Service Manager combined urgent bulk orders and samples for air shipping to reduce costs, resulting in a notable decline in air shipments and related expenses in the latter months of the year.
4.2 Recruitment process is not good
Amann Vietnam functions as a small trading office with a team of only four members, including a General Manager, Customer Service Manager, Customer Service representative, and Logistics Officer Due to its limited staff, the company lacks a formal recruitment process that aligns with industry standards typically required for a minimum-size factory with at least 200 workers.
Luftman et al identified recruitment as the most critical challenge for management, emphasizing its overall importance The recruitment process is resource-intensive, requiring significant time and financial investment, particularly in small and medium-sized enterprises (SMEs) According to Kim et al., SMEs face unique obstacles in both recruiting and retaining qualified employees, which can impact their growth and competitiveness.
In his initial interview, Mr Chuong, the Sales Director, expressed concern about the rising selling expenses, which he attributed to an ineffective sales visit plan He questioned whether some sales team members were sufficiently qualified to contribute to the company's sales goals, highlighting the need to evaluate staff efficiency and optimize the sales strategy.
Effective management of selling expenses is crucial for businesses, as highlighted by Nordin (7, p.210), who emphasizes the importance of allocating budgets for advertising and sales personnel strategically Oliver (8, p.112) defines selling expenses as variable costs that fluctuate with sales activity To gain deeper insights, interviewers often inquire about advertising expenditures, sales compensation, and how selling expenses influence product pricing, ensuring a comprehensive understanding of cost management strategies.
Enterprise system software packages play a critical role in business development by providing essential information that enhances operational efficiency These software solutions are utilized not only for managing documents and administrative tasks but also for addressing key issues through improved and preventive actions As customer expectations rise regarding product quality, delivery times, and aftersales services, and market competition intensifies, implementing effective and integrated management systems becomes increasingly vital for business success.
AVN currently uses the HOSTrade system for inputting customer purchase orders; however, this system lacks essential functionalities such as estimated delivery dates, back order calculations, credit limit checks, and payment status tracking, which hampers the Customer Service (CS) team’s efficiency As a result, CS staff must manually monitor orders, leading to daily work overload and late working hours, typically leaving between 6:00 and 7:00 PM During peak seasons, especially in Q2 (March) and Q4 (December) around Lunar New Year, overtime becomes more frequent, with staff working until 9:00 or 10:00 PM to handle increased administrative tasks.
Daniel 12 demonstrated that overtime is assumed to be additional working hours that employees work more than standard or normal hours Overtime is paid at a higher rate than regular hours However, the limitation on hours leads to some questions in the second round of interview relevant to the influence of overtime on cost, price and profit 13
Table 7: Overtime payment for employee in 2018
Date Overtime hours Payment 8-Dec 15-Dec 22-Dec 29-Dec
Setting clear company objectives is among the top priorities for the Board of Management (BOM), serving as a foundational responsibility (Henry et al., 14) Developing effective plans to achieve these objectives is crucial, typically spanning a period of one to five years For manufacturing enterprises, the sales plan plays a vital role, as it provides essential demand forecasts that enable the production team to build appropriate capacity and align production efforts accordingly (Jan et al., 15).
A comprehensive sales plan serves as a crucial planning input that guides production and financial strategies to achieve organizational profit objectives It is typically subdivided by product line, distribution network, research requirements, sales quotas, market research, and advertising efforts An effective sales plan provides essential market and product information, helping to establish a robust distribution network that ensures timely delivery to customers Sales quotas act as primary targets for sales teams, integrated with advertising plans to accomplish the organization’s overall sales goals.
Amann Vietnam has set a strategic sales plan for the period of five years from
From 2019 to 2023, the sales plan primarily outlines target figures in sales value (USD), sales volume (units and kilograms), and net revenue per kilogram It details the focus on specific brands, customers, and product types, along with strategies to achieve these sales targets However, there is a significant gap between the planned sales projections and actual results Two critical issues require attention: firstly, the Amann Vietnam factory project timeline is delayed beyond the original deadline, which was set for April 2019, but the completion has been pushed back to August or September 2019.
In response to the simultaneous establishment of factories by competitors A&E and Gunzetal in Vietnam alongside Amann, Coats Phong Phu acted swiftly to counter these moves The Vietnamese market primarily features staple spun polyester and texturized filament polyester threads, which are not core products for Amann, resulting in higher prices for these items To compete effectively with local suppliers, Amann has accepted low or negative profit margins to secure new orders and maintain market presence despite challenging pricing pressures.
A discussion to eliminate some potential central problems and focus on a
5.1 A discussion to eliminate some potential central problems 5.1.1 Expanding local business by import goods
In June 2019, Vietnam’s factory is set to begin local thread production, following the plan outlined by Mr Chuong To prepare for this, the company proactively sought additional customers throughout 2018 to secure enough orders for the new factory’s capacity Although expanding the local business by importing goods resulted in some short-term losses, this approach served as a temporary solution spanning approximately one and a half years Once the factory begins producing threads locally in June 2019, the dependency on imported goods and the associated challenges are expected to be resolved.
5.1.2 Recruitment process is not good
Amann Vietnam operated as a small trading company with fewer than 20 employees until the end of 2018 Prior to June 2018, the team comprised just five members, including a General Manager, a Customer Service Manager, and a Customer Service Officer.
Increase in cost of goods sold
Apply price centralized decision- making structure
Decrease in average selling price Local sales people do not decide price offer
Unreasonable selling price compared with local cost
Trade-offs (high-end products vs low-end products)
Diagram 4: The updated cause and effect map
Shorten lead- time by air shipment
Lack of middle thread sizes
In June 2018, the company focused on high-end segmentation, resulting in the departure of one Secretary, one Logistics Officer, and three sales members To strengthen the sales team, the company recruited a Sales Director in June 2018, and began building the team from September onwards.
From 2018 to April 2019, the Sales Department comprised nine members, including 1 Sales Director, 3 GKA Managers, 3 Deputy Sales Managers, 1 TAS Manager, and 1 Sales Support Officer In July 2018, a new Managing Director, Shafiq Zaman from Bangladesh, arrived in Vietnam to lead the factory construction project, bringing significant changes to the organization Under his leadership, Amann established a branch of Amann Vietnam Co., Ltd in Tam Ky, Quang Nam, and began recruiting additional staff By early 2019, the company organized into five departments, as illustrated in Diagram 1 (page 4).
According to Mr Shafiq Zaman, recruiting qualified professionals in central and sales roles with extensive experience in thread manufacturing is challenging To address this, the company hires young, dynamic individuals and provides comprehensive training and coaching to develop their expertise This issue is not limited to Vietnam but is also prevalent in countries like China and Bangladesh.
During an interview with Ms Hang, the Sales Support specialist responsible for managing selling expenses, she highlighted a recent case involving a North-region salesperson who urgently purchased a used car without prior planning This unplanned purchase resulted in an additional expense of 2 million VND, underscoring the importance of proper expense control and strategic planning within the sales team.
The high cost spending for recruitment in the central is higher than selling expenses including:
• Sales team: training cost for three people of sales team in China
• Production department: training cost for one Dyeing House Manager in Bangladesh and house re-arrangement package from Hochiminh to Quang Nam for him
• HR department: Travelling between Danang and Hochiminh and accommodation for HR Manager for handover from General Manager in Hochiminh sales office
However, any company in the first stage of setting up business has to pay for these costs
Currently, AVN utilizes the HOSTrade system to manage customer data, primarily using it for inputting purchase orders and generating sales and credit reports However, the system's limited functionality restricts its use across the sales, customer service, and finance teams, forcing employees to perform manual tasks to obtain necessary reports This reliance on manual work results in low employee productivity and unavoidable overtime during peak seasons Despite these challenges, the overtime costs are relatively low and do not significantly impact overall profits To address these issues, AVN plans to implement a new SAP system in June 2019, which is expected to enhance operational efficiency by providing integrated end-to-end solutions that facilitate seamless information sharing across departments such as finance, production, logistics, and distribution.
5.2 A discussion to focus on a central problem
After considering all the potential problems, “inefficient sales plan” has been selected as the central problem The reasons for this selection are explained as following:
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Figure 8: Key garment types of Vietnam Textyle & Garment export 2017
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Table 9: GKA forecast of AVN from 2020 to 2024
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In the B2B industry, renting a booth at exhibitions can effectively increase brand visibility when entering a new market However, this strategy is most beneficial during initial market entry and does not significantly drive additional orders in the long term Building relationships through traditional approaches with key industry contacts often yields better results than relying solely on exhibition presence To achieve sustainable growth, it is more effective to analyze market data and develop a tailored customer outreach plan rather than relying exclusively on exhibition marketing.
PROBLEM JUSTIFICATION
Problem definition
“A sales plan is a strategy that sets out sales targets and tactics for your business, and identifies the steps you will take to meet your targets” 16
Cravens et al highlight that the rapidly changing international business environment requires continuous adjustments in sales management and sales area arrangements to maintain competitiveness In a highly competitive landscape, companies seek to reduce costs and boost profits through effective sales strategies The sales plan plays a crucial role in manufacturing firms by closely linking demand forecasting with capacity management and operational planning According to Jan et al., the sales plan provides essential input for production planning, enabling companies to align their operations with projected demand.
Based on that, both sales plan and operations plan have relative relationship for the long-term production within the framework of production plan and control system
To evaluate process performance, scholars and practitioners commonly utilize the Balanced Scorecard or Neely’s performance measurement framework Neely’s approach assesses performance through two key perspectives: effectiveness, which measures how well customer requirements are met, and efficiency, which evaluates how economically resources are utilized to achieve a certain level of customer satisfaction According to the Cambridge English Dictionary, “inefficient” means “not achieving maximum productivity; wasting or failing to make the best use of time or resources.” Consequently, an “inefficient sales plan” refers to a sales strategy that fails to deliver the desired results or goals.
1.2 Measurement to measure the degree of the problem in the organization
An effective sales plan is ultimately one that maximizes bottom-line revenues To ensure success, utilize various tools to assess how your sales strategy adapts to changing market conditions Additionally, these tools help identify and leverage the most strategic sales approaches, ensuring your plan remains competitive and profitable in dynamic markets.
Sam 22 found “an obvious tool for measuring the effectiveness of a sales plan is to set goals, then track them during the year” Normally we use historical selling record data combined with the analysis of current market trends to establish realistic goals that we think we can reach by products, prices, distribution channel, and sales forecast
• Products: specific products or products mixed
• Price: measure sales by price to deliver a “more optimal marketing strategy”
• Distribution: where your goods are sold to define the best place delivering the
• Sales forecast: forecast the market demand to support operation planning.
Problem existence
To determine the reasons lead to the main problem of inefficient sales plan, I conducted several surveys for all staff of Sales Department and analyzed collected data
Amann's delayed entry into the Vietnam market poses significant challenges amid intense competition Launching a sales plan during this competitive period, especially with major rivals A&E and Gunzetal entering the market simultaneously, creates numerous obstacles to achieving business objectives.
While almost thread suppliers have local production for years, Amann is too late to set up the factory in Vietnam compared with its competitors
Name Capacity Factory location Year of factory operation
HCM factory: 1989 Hung Yen factory:
2 Toung Loong 1 factory in Binh Duong 1998
3 Dung Dong 1 factory in Hanoi 2001
4 Trung Dung 1 factory in Hanoi 2003
5 Chin Hsin 1 factory in Binh Duong 2004
Haram 1 factory in Hung Yen 2005
7 Silsarang Vina 1 factory in Hoc Mon,
8 Khoi Chi Hung 1 factory in Dist 9, HCM 2010
9 Hung Long 1 factory in Thu Duc, HCM 2010
10 Phong Viet 1 factory in Thu Duc, HCM 2012
12 Amann 4 tons/day 1 factory in Quang Nam 2019
13 Gunzetal 50 tons/day 1 factory in VISIP 2 Binh
14 A&E 20 - 30 tons/day 1 factory in Nhon Trach,
Table 10: Competitor list of Amann Vietnam
Sales Director has begun to make detail sales plan 2019 and 5-year sales plan
Since June 2018, the sales figures have been revised continuously, with a total of 19 updates from 2019 to 2023, indicating frequent adjustments over time However, these revisions lack realistic data or thorough market analysis to support their credibility According to feedback from GKA Managers and Deputy Sales Managers, they are compelled to create sales plans by adjusting target customer segments, product types, and pricing strategies to align with the imposed sales targets, often under pressure to meet unrealistic goals.
Problem importance
Amann Vietnam's new factory in the central region marks a significant milestone, emphasizing the importance of a robust sales plan to support operational success Developing an effective sales strategy with accurate demand forecasting is crucial, as it provides essential input data that ensures the supply plan aligns perfectly with market needs This strategic approach enhances overall efficiency, enabling the company to meet customer demands promptly and optimize production processes.
Figure 9: Sales-Operation-Planning Framework
An inaccurate sales and demand plan can significantly disrupt a company's supply chain, leading to higher inventory costs and decreased productivity This misalignment also causes increased operational expenses and a decline in customer service quality Ultimately, these issues can undermine the company's competitive position in the market, as highlighted by Javier Therefore, developing a proper sales plan is essential to optimize supply functions and maintain a strong market presence.
The local production schedule is delayed to September 2019 instead of April
2019 significantly impacted the company's sales performance this year and will continue to influence next year's results Amann's main competitors, A&E and Gunzetal, entered the Vietnam market simultaneously, offering popular threads at very attractive prices, which poses increased challenges for AVN's business expansion Without proactive strategic actions, such as price adjustments or innovative product offerings, the company risks facing severe consequences, including price wars that could harm profitability and market stability.
Amann China is one of outstanding example for the worst situation due to the production site of garment manufacturers and just focusing on high-end segmentation
The company adopts a strategy of heavily discounting low-end products to maximize order volume, which significantly undermines Amann's global brand positioning This approach involves scaling down quality and offering very low prices, ultimately damaging the brand's perceived value and market reputation.
CAUSES VALIDATION AND SOLUTIONS
List of real causes
Several factors significantly influence the effectiveness of a sales plan, including competition, industry dynamics, economic and legal outside factors, and customer-related considerations Mark 24 identified nine key elements affecting sales performance: competitors, industry context, external economic and legal influences, timing, your customers, your customers’ customers, your customers’ competitors, the products or services offered, and your own efforts Additionally, Henry et al highlight essential sales plan activities such as conducting market research, developing products, creating sales forecasts, and implementing effective promotion and pricing strategies.
In summary, from the theory of the literature review, the consolidated reasons are showed as following:
- External causes: market, competitor, customer
- Internal causes: capcity, product, price, service
1.2 List of the new caused obtained from the company (via interviews)
From the interview with all sales members in sales department, there are 4 reasons that make sales plan inefficient:
- Lack of middle thread sizes
- Applying price centralized decision-making structure
- No local production in Vietnam These causes also mentioned in the theory of sales and marketing so it can be applied for further study
1.3 A full list of real causes of the central problem
Based on the theory review and the informationed collected from the company via interviews, there are a full list of real causes of the central problem showing as follows:
- Market: Lack of market orientation
- Product: Lack of middle thread sizes
- Price: applying price centralized decision-making structure
- Capacity: no factory in Vietnam
1.4 The relative importance of the real causes 1.4.1 Lack of market orientation
The lack of market orientation leads to an inefficient sales strategy, primarily due to poor target segmentation, inappropriate product focus, and unrealistic pricing strategies Focusing solely on high-end segments, as seen in the German market, does not align with the current developments within Vietnam’s textile and garment industry Meanwhile, top management is divided: the CEO aims to maintain the brand's premium positioning, the Global Key Account Director prioritizes increasing sales figures, and the Managing Director desires to produce product types similar to those in Bangladesh This inconsistency in business priorities creates confusion at the operational level, hampering effective execution of the sales plan.
While the fundamental concept of marketing provides the basis for marketing principles, its practical application often receives limited attention Barksdale et al emphasize that the marketing concept is essential for shaping company policy and influencing all organizational activities Market orientation serves as the core foundation for successful implementation plans within a business According to Ajay’s research, key pillars of market orientation include customer focus, coordinated marketing, and profitability, with customer focus being the most crucial element that drives company actions based on customer needs and preferences.
Market intelligence plays a crucial role in understanding key market elements such as competition and regulation, which influence customer needs, preferences, and future demands Coordinated marketing emphasizes that market orientation is a collective responsibility across all departments, driven by marketing intelligence to accurately identify and meet customer needs Profitability is viewed as a result of effective market orientation, not as an inherent component, highlighting the importance of aligning organizational efforts with market insights to achieve sustainable business success.
Therefore, market orientation requests marketing and other departments collaborating understanding among departments, and designing execution plans to meet selected customers’ needs to deliver profitability
Sales and marketing department can conduct the further study on the market conditions and customers’ demands as well to have a full report for market orientation
1.4.2 Lack of middle thread sizes
Firms have long used product variety to boost their performance, as providing more product options allows companies to attract a broader customer base Ho et al (27) highlight that increasing product selections can help a company gain a larger market share by appealing to diverse consumer preferences In marketing literature, high product variety is recognized as an effective strategy to satisfy the needs of different customer segments, thereby accelerating sales performance through targeted customer segmentation and attraction (28).
The interview results indicate that AVN offers a diverse range of products suitable for the Vietnam market, spanning from lower to higher segments However, AVN's product lineup lacks middle-sized threads, such as Tex 21 and Tex 24, which hampers its ability to meet customer needs effectively, especially when competing brands offer a full spectrum of sizes According to Ms Liana Tran, Technical Advisory Manager of AVN, this gap in middle thread sizes poses significant challenges in convincing customers to switch from familiar thread sizes like Tex 18, as these are optimized for overlock and flat seams and enable higher sewing machine productivity at speeds of 3500-4000 stitches per minute Switching to Tex 18 requires reducing machine speed to 2500-3000 stitches per minute, decreasing efficiency While offering thicker threads like Tex 35 could resolve this issue, customers typically resist higher prices, forcing AVN to accept potential business losses or reduced margins when providing thick thread options at the same price as smaller sizes.
The issue was consistently brought to top management's attention, highlighting concerns about expanding thread size options However, adding more thread sizes could lead to trade-offs that negatively affect the company's product variety strategy As emphasized by Xiang et al., these trade-offs are critical decisions that can significantly impact the overall success and benefits of the business strategy.
1.4.3 Applying price centralized decision-making structure
Research indicates that while most studies suggest centralized decision-making is dominant, some findings, such as those by Anderson et al., reveal that under specific conditions, decentralized decision-making can yield higher profits Pelin et al also agree that in scenarios with tight lead-time requirements, decentralized strategies may not generate greater profits but can serve as effective equilibrium strategies Additionally, decentralized approaches may avoid negative impacts like lower prices or longer lead times As fast fashion brands like Zara lead the industry, other retailers like H&M, M&S, adidas, and Gap are striving to shorten lead times to remain competitive Today, lead-time has become a critical factor in differentiation across many industries, particularly in "make-to-order" companies, especially in garment manufacturing, where consumers now demand "see now, buy now" behavior instead of waiting 60 days from fashion shows to product delivery.
Research by Anderson et al indicates that a decentralized strategy can yield higher profits compared to vertical integration Pekgün et al found that while centralized decisions on price and lead-time typically outperform decentralized ones, in highly competitive markets, decentralized decision-making can be more profitable Additionally, decentralized companies often have greater flexibility to set higher prices or offer shorter lead-times than centralized firms Therefore, leveraging a global perspective and coordinating decisions on price and lead-time can significantly enhance a company's profitability.
The evolving market landscape favors decentralization, with many brands shifting sourcing and development functions from headquarters or sourcing hubs like Hong Kong and Korea to Vietnam Centralized pricing decisions made at Amann's headquarters are increasingly ineffective for production countries, as each market's unique characteristics require localized understanding Decentralizing price decisions allows individual markets to adapt more effectively to their specific conditions, making this approach more beneficial than Amann's previous centralized pricing strategy.
AVN has been operating as a trading company since 2011, and its Vietnam factory is currently under construction with completion expected by September 2019 Recognizing the strategic importance of local manufacturing, Amann plans to utilize the Vietnam facility to expand its presence and business opportunities in the Vietnamese market.
From all the above analysis, the final cause-effect map is shown as below:
The set of solutions
The primary issues affecting the situation are the lack of clear market orientation and the reliance on a centralized pricing decision-making structure Addressing these key causes is essential for resolving the core problems and driving overall improvement Implementing targeted strategies to enhance market focus and decentralize pricing decisions can significantly boost operational efficiency and competitiveness Understanding the importance of these factors is crucial for developing effective solutions and achieving sustainable growth.
Solution 1: Narrow the gap between what top managers say and what they do
Inconsistent leadership among top managers, including the Chief Executive, Global Sales Director, and Managing Director, leads to confusion and disruptions in the execution of strategic plans, highlighting the need for clearer communication and aligned management roles.
Diagram 5: The final cause and effect map
Applying price centralized decision-making structure
AVN's lack of market orientation does not mean the company poorly understands market conditions or customer needs; rather, it highlights a gap in aligning their sales strategies with current market trends The sales team, composed of experienced professionals with 10 to 20 years in the textile and garment industry, possesses deep product knowledge and extensive customer networks Consequently, their sales plans are detailed, covering brands, customers, and products However, these plans frequently require revisions to align with the updated figures provided by top management, indicating challenges in maintaining strategic consistency.
According to Ajay et al (2025), organizational factors such as senior management, interdepartmental dynamics, and organizational systems are key antecedents to a market orientation Among these, senior management plays the most crucial role in driving and enhancing a company's market-oriented approach Understanding these organizational influences is essential for fostering a strong market orientation within a business.
Top management plays a crucial role in driving market orientation, as highlighted by Webster, who emphasized that market orientation begins with top managers responsible for instilling customer-oriented values and beliefs Similarly, Felton stressed that the key to successful market orientation is cultivating the right "state of mind," which is only attainable when the board of directors and top management fully embrace a marketing-focused mindset Therefore, the commitment of top managers is a necessary prerequisite for establishing a strong market-oriented organization.
To foster effective market orientation, top managers must provide clear signals emphasizing the company's commitment to customer focus Webster emphasizes that CEOs should communicate clear values and beliefs centered on serving the customer, ensuring the entire organization aligns with the market concept This leadership clarity is essential for cultivating a customer-centric corporate culture and driving business success.
Therefore, the researchers agreed that besides commitment to market orientation, the top managers must communicate their commitment to all other related departments in the organization
Further investigation aims to uncover more intriguing insights into organizational behavior Argyris (37) emphasized that “the gap between what top managers say and what they do” significantly influences lower-level managers, often leading to inconsistencies such as advocating for market orientation while reducing budgets for market research or discouraging innovation This disconnect between rhetoric and action creates uncertainty for lower managers regarding the resources and efforts needed for market orientation activities, ultimately resulting in diminished market orientation within the organization.
Figure 11: Senior management factors and market orientation
Top managers play a crucial role in demonstrating a strong commitment to market orientation by aligning their communication and actions consistently To strengthen this alignment, managers should prioritize clear internal communication that emphasizes customer needs and market insights Additionally, fostering a company culture that values transparency and accountability can ensure that strategic actions reflect the communicated market focus Implementing regular training programs and performance metrics linked to market-oriented objectives can further reinforce managers' commitment Ultimately, leadership dedication to aligning messaging with tangible actions is essential for achieving sustainable market success.
The top management team, including the CEO, CFO, COO, Global Sales Director, and Managing Director of AVN, convened to discuss a unified business strategy focused on adopting a market-oriented approach specifically tailored to the Vietnam market.
• Second, Global Sales Director and Managing Director communicate the solid message to entire departments in AVN about the business strategy based on market orientation.
• Third, sales team revise sales plan in details and propose set of execution plan to achieve sales target.
Top management is introducing new solutions to align AVN’s market strategy, involving a comprehensive revision of sales and production plans, which may face resistance from staff These changes will include adjusting supply and demand, capacity arrangements, and the overall business plan to better meet market demands It is crucial for the organization to adopt a market-oriented approach, offering the right products at appropriate prices to target customers with sufficient capacity Consensus among chief executives is essential for smooth implementation, as this unified approach will minimize political conflicts and ensure benefits across all functions.
These suggested solutions is likely to brings some benefits and costs described as follows:
- Enhance communication among chief executives, junior managers and staff
- Strengthen the consistency in communication and action of the top managers
- Erase ambiguity of junior managers and other departments in business strategy of the organization
- Promote the solidarity between departments within the company for a common goal of the organization ỉ Quantitative
- Improve gross profit margin from 26% to 30% in 2020
- Increase the number of customers from 150 to 200 in 2020 and to 300 in
- Achieve CAGR at 38.5% for the period of 2019 and 2024
No Types of costs Estimated costs Note
Organize meeting for chief executives USD 4,500
Including flight ticket, accommodation, transportation, visit fee, lunch, dinner
Organize meeting between top managers and junior managers USD 4,000
Including flight ticket, accommodation, transportation, visit fee, lunch, dinner
Revise sales plan and propose execution plan USD 2,500
Table 11: Estimated costs for organizing meetings among top managers and junior managers
Solution 2: Propose price decentralized decision-making structure
The company's current centralized price decision-making structure is negatively impacting its profitability and service quality This approach leads to low profit margins and increased customer waiting times, ultimately harming overall customer satisfaction and operational efficiency Transitioning to a more decentralized pricing strategy could improve profit outcomes and enhance service delivery.
Decentralization is essential for quick response to ongoing technological and environmental changes, especially in the context of Industry 4.0's rise and expansion While centralization can promote beneficial collaboration, decentralization enables organizations to adapt swiftly in the face of rapid globalization and integration Adopting a decentralized approach is crucial for maintaining agility and competitiveness in today’s dynamic business environment.
AVN is in the final stages of establishing a manufacturing facility in the central region, enabling it to produce both global products like SabaC, Serafil, and SabaTEX, as well as local brands such as Universal, Crown, and Synton to meet regional market demands This development exemplifies how diverse market conditions encourage decentralized decision-making within organizations, allowing for tailored local product offerings Market challenges stemming from varying local demand patterns have prompted multinational companies to adopt a rapid response strategy by centralizing certain decision-making processes at the country level, ensuring agility and responsiveness to local needs.
In this industry, with analyzed information, applying decentralized decision- making is reasonable to flexibly serve the local market and local customers
Decentralized structure, off course, still has the supervision of head quarter but local managers can have the authority to make decisions for local market 40
Some solutions should be taken as following:
• First, analyze comprehensive data on current global price offer, local market price, closed competitors’ price, COGS and profit margin
• Second, make a professional proposal about applying price decentralized decision making
• Third, discuss about this proposal in annual GKAM meeting where all GKAMs meet to discuss about sales strategy
• Forth, get approval for this proposal on as much aspects of local decision making as possible
This set of solutions may cause other potential issues such as people resistance and political conflicts
Local resistance to price decentralization arises when regional teams, such as GKA and sales teams, have the authority to set selling prices, diminishing the influence of global GKAM and Back Office However, centralized price decision-making is inefficient, as evidenced by Amann China and Bangladesh successfully adjusting their prices to meet changing local customer demands Vietnam's implementation of a new local pricing structure demonstrates that decentralization improves responsiveness and competitiveness When GKAM strongly disagrees with local pricing suggestions, a compromise can be reached by consulting the global price list to identify brands or customers eligible for local pricing under GKAM supervision or cross-border oversight.
Political issues may arise but are unlikely to significantly impact the results of our solutions The local team’s reasonable price offers enable swift market response and foster proactive engagement with local customers As a result, these strategies are expected to yield positive outcomes in the near future.
These suggested solutions is likely to brings some benefits and costs described as follows:
- Adapt quickly to the changes at local market
- Increase service level to customers
- Increase work efficiency of sales people
- Improve profit margin and profitability
- Enhance the competitiveness in local market ỉ Quantitative
- Improve gross profit margin from 26% to 30% in 2020
- Increase the number of customers from 150 to 200 in 2020 and to 300 in
- Achieve CAGR at 38.5% for the period of 2019 and 2024
No Types of costs Estimated costs Note
Discuss about this proposal in annual GKAM meeting USD 2,500
Including flight ticket, accommodation, transportation, visit fee, lunch, dinner
4 Get approval for this proposal USD 500
Table 12: Estimated costs for proposal of price decentralized decision making structure
Action plans
Based on the above analysis, Amann Group and AVN needs to take action as follows:
1 Action plans PIC Timeline in 2019
Jul Aug Sep Oct Nov Dec
Top management, including the CEO, CFO, COO, Global Sales Director, and Managing Director of AVN, held a strategic meeting to develop a unified, market-oriented business approach tailored for the Vietnam market.
Analysis VN market industry information about apparel and footwear GKA
Overall information on Vietnam market Sales
Global Sales Director and Managing Director communicate the solid message to entire departments in AVN about the business strategy based on market orientation
Making announcement on top managers’ direction Sales
Send the announcement to all departments Managing
Sales team revise sales plan in details and propose set of execution plan to achieve sales target
Consolidate revised sales plan for AVN GKA
Send consolidated new sales plan for approval Sales
2 Action plans PIC Timeline in 2019
Jul Aug Sep Oct Nov Dec
Running sales report to get current selling price for every brand/ factory/ product item Sales
Support Comparing current selling price to market prices, closed competitors' prices Factory
Sales Comparing global price offers to market prices and closed competitors' prices GKA
Consolidating analyzed information to have an overview of current situation GKA
Making a proposal based on consolidated analyzed information GKA
Revise the proposal if needed GKA
Discuss about this proposal in annual GKAM meeting
Present the proposal in Annual GKAM
Discuss about the proposal: objectives and benefits Sales
Get approval for this proposal
Follow up the proposal GKA
Got approval of this proposal from
Communicate to subordinators for implementation Sales
Applying new decentralized decision- making structure
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I would like to thanks for your time in my interviewing today
Firstly, I would like to talk about present situation of our company Follow the financial report of financial year 2018, you may know that the profit is negative in
2018, gross profit margin decreases and average selling price decreases compared with previous years Therefore, I would like to discuss some questions with you about this situation
The interview will last approximately 10-15 minutes, during which I will record the conversation to ensure all your valuable insights are captured accurately for my subsequent analysis Thank you for your support!
1 Personal information Your job/ responsibility/position within the company?
2 How long have you been working in Amann Vietnam?
1 In your opinion, which reasons lead profit in financial year 2018 negative?
Why does gross margin decrease? Why does average selling price decrease?
And what is the main reason and why?
2 How do you evaluate current staff’s working efficiency?
3 Do you have recruitment process? How do you think about the current recruitment process?
4 What is your company’s value proposition?
5 What are difficulties of the company facing in the current situation of your business field?
6 How is your evaluation of your competitors?
7 What are the product ranges of your company in positioning with your competitors?
8 What are your difficulties in expanding customers?
9 How do you think about the current process?
10 How does the lack of middle thread sizes impact on your business in term of technical point? Do you have any solutions?
1 As feedback from Sales Director, sales expenditure has increased recently
As a person who monitor sales expenditure, how is your though about it?
2 Can you share the specific cases?
3 How is the quotation from supplier?
4 How much transportation costs in 2017 and 2018?
1 Where do your company import threads to supply in Vietnam market?
2 What is the transportation methods you are applying at the moment?
3 How useful the system that you are working on is?
4 How is the workload of CS?
5 Do you usually do overtime? Why?
1 How is the OT payment for staff currently?
2 How often does your staff work OT?
1 What are current difficulties for AVN?
2 What products will be produced in Vietnam?
Personal Question and Answer Note
Can you introduce your name and position?
Mr Shafiq Shafiq Zaman – Managing Director
Mr Chuong Vu Hoang Chuong – Sales Director
Mr Luan Dao Dao Thanh Luan – GKA Manager
Ms Liana Tran Tran Thi Lieu – TAS Manager
Mr Duy Vo Truong Duy – Deputy Sales Manager
Mr Duc Le Quang Duc – Deputy Sales Manager
Ms Hang Nguyen Thi Le Hang – Sales Support
Ms Diep Huynh Ngoc Diep – Customer Service Manager
Ms Vy Nguyen Thuy Thao Vy – General Manager
How long have you been working at Amann Vietnam?
1 In your opinion, which reasons lead profit in financial year 2018 negative? Why does gross margin decrease? Why does average selling price decrease? And what is the main reason and why?
Mr Chuong Sales turnover in 2018 reached USD 1.5mil, an increase of
25% compared with sales target 2018 of USD 1.2mil
Amann Vietnam faces significant challenges due to its relatively small profit margins compared to other production sites such as Bangladesh Additionally, its profit margin of approximately 40% to 42% rivals that of competitors like Coats Phong Phu, which operates within this profitable range This competitive landscape presents a critical hurdle for Amann Vietnam’s growth and sustainability over the next four years (2019–2022).
There are some probable reasons of the decrease in gross profit margin and negative profit in 2018
- Transportation cost, especially air shipment for urgent orders and urgent samples The cost of shipment increased much in the last months of 2018 which impacts gross profit margin significantly
In recent months, I have signed several customer visitation proposals, but there are concerns about the sales team’s planning and time management skills It appears that some team members may lack effective visit planning strategies, which can impact customer engagement Additionally, urgent car requests for customer visits have increased in the North region, highlighting the need for improved scheduling and coordination within the sales team to meet customer demands efficiently.
I have signed numerous overtime proposals for the customer service and admin departments, highlighting concerns about the company's time management and system efficiency This issue suggests that current processes do not support employees in completing their tasks within regular working hours, leading to unnecessary overtime It is essential to investigate these inefficiencies and develop solutions that enable employees to finish their work on time, reducing the need for overtime Our goal is to create a work environment where employees can effectively balance their professional responsibilities with family and personal life, fostering better work-life harmony and improving overall productivity.
3/ Local production Amann is building the factory in the central of Vietnam Regarding expanding business in Vietnam in apparel sector, it is a must to have local production to compete with local suppliers Moreover, customers require speed to market due to the change in customer behaviors so leadtime is very important and manufacturers request quick delivery service
2 How do you evaluate current staff’s working efficiency?
Mr Chuong - Sales forecast is not accurate due to sales people’s lack of forecast experience
The sales plan did not meet my expectations, with significant discrepancies between the monthly targets and actual sales, particularly in the North region Despite these variations, I have not observed any actionable strategies implemented by the sales team in the North to address the gaps Achieving sales targets requires proactive sales efforts rather than relying on chance or passive approaches.
- Customer service department usually works overtime
Does it caused because of employee competencies or job description unclear so they do not understand their job requirements or system/SOP of the company
3 Do you have recruitment process? How do you think about the current recruitment process?
Mr Chuong We are recruiting HR Manager and expect to have better recruitment process soon Admin and Customer Service employees were recruited before I join the company
4 What is your company’s value proposition?
Mr Chuong Amann focuses on high segmentation with flagship product Serafil and other special products like SabaSOFT, SabaFLEX and Tech-X products for outdoor, sportswear and technical application
Amann always concentrates on high product quality
5 What are the difficulties of the company facing in the current situation of your business field?
Amann faces limited product range offerings, hindering its ability to compete effectively in the Vietnam market against established closed competitors such as Coats Phong Phu, A&E, Gunzetal, and other local players like Phong Viet, Toung Loong, Gitai, Khoi Chi Hung, Hung Long, and Chin Shin This restricted product portfolio impacts Amann’s competitiveness compared to these key market players.
- There is no the middle sizes from the thinner to the coarser ones Major product types as below table are lack of thread sizes needed
+ SabaC: no middle size between Tex 105 and Tex 200 such as Tex 120, Tex 150, Tex 180 for jeans/denim
+ Rasant: no coarser sizes from Tex 105 to Tex 240 for jeans/denim
+ Universal: no middle size between Tex 150 and Tex
170 such as Tex 180 for jeans/denim or heavy garments
+ SabaTEX and SabaSOFT: no sizes Tex 21 or Tex 24 which is very popular in Vietnam market for overlock and cover seams
6 How is your evaluation of your competitors?
Our direct competitors are Coats, A&E and Gunzetal They also have in nomination or approval list of Brand
Coats is the leader with around 40% market share
A&E supplies thread in VN market through import products
Gunzetal does not have representative office in Vietnam It has joined Vietnam market this year
Both A&E and Gunzetal have local factory the same time with Amann
7 What are the product ranges of your company in positioning with your competitors?
Mr Duc and Mr They have a wide range of products that are popular in
Duy Vietnam market from normal products to high quality products They have enough sizes to apply for a wide range of fabric types and garment types
8 What are your difficulties in expanding customers?
Amann's product range is limited, preventing it from effectively competing in the Vietnamese market against key players like Coats Phong Phu, A&E, Gunzetal, and other local competitors such as Phong Viet, Toung Loong, Gitai, Khoi Chi Hung, Hung Long, and Chin Shin.
2/ Thread sizes: There is no the middle sizes from the thinner to the coarser ones Major product types as below table are lack of thread sizes needed
- Every single case to approach new customer, sales team
Vietnam's sales team must coordinate with Global Key Account Management (GKAM) to determine if a global offer applies to the customer, ensuring adherence to global pricing policies If a global offer exists, it must be followed; otherwise, GKAM will recommend a selling price based on local proposals or their own calculations, which may take several days Discrepancies between local sales and GKAM expectations can prevent securing business, as pricing must be aligned across countries, leading to potentially less competitive prices for Vietnam This global alignment can disadvantage the Vietnam sales team by limiting their competitiveness and resulting in lower profit margins for existing customers, especially considering transportation costs from China or Germany to Vietnam.
- Regarding new business development, Amann Group focus on high segmentation with its flagship product
The company offers specialized products such as Serafil, SabaSOF, SabaFLEX, and IsaMET; however, demand for these items is limited in Vietnam To increase market share, targeting the middle segment with more popular products like SabaC, Universal, and SabaTEX is a practical strategy Nonetheless, the higher prices of Universal and SabaTEX compared to market averages present challenges The main difficulty for the sales team in expanding new business lies in the product sizes and pricing of these popular thread types.
9 How do you think about the current process?
Duy It takes time to wait for approval from GKAM
10 How does the lack of middle thread sizes impact on your business in term of technical point? Do you have any solutions?
Ms Liana Tran The lack of middle thread sizes specially Tex 21,
Tex 24 for SabaTEX and SabaSOFT causes many difficulties for Amann to pursuade customers to change to Tex 18 available size of AVN Customers are familiar with these threas sizes for overlock and flat seams Croaser sizes can deliver higher productivity for the garment manufacturers because sewing machines can operate with high speeed at
3500 – 4000 stitches per minute If they change to Tex 18, they must adjust speed at 2500 – 3000 stitches per minute minute only which decreases machine productivity
Offering higher thread size Tex 35 is a solution to this issue, but customers often prefer to avoid potential business loss caused by the unavailability of middle thread sizes Alternatively, providing thicker sizes at the same price as smaller sizes can lead to lower profit margins.
1 As feedback from Sales Director, sales expenditure has increased recently As a person who monitor sales expenditure, how is your though about it?
The cost of renting car is different depending on the time and the location of customers that sales people visit
Regarding cost increase in using car, there is only one case
Sales requested car urgently without plan in advance so the company have to accept high cost for that visit Later on, there are always car visit booking in advance
2 Can you share the specific cases?
Only one case happened in the North, requested urgent car to visit customer
3 How is the quotation from supplier?
Ms Hang I will share the quotation to you
4 How is the quotation from supplier?
1 Where do your company import threads to supply in Vietnam market?
We are importing thread from Amann China and Germany to supply to customers in Vietnam
2 What are the transportation methods you are applying at the moment?
There are 3 methods of transportation: ship by sea from Germany or China, ship by truck from China to the Northern of Vietnam, ship by air for urgent cases
3 How useful the system that you are working on is?
The system is just used to key in the order to issue invoice It does not really help to follow up and monitor order process
System can not run Back order to know the order situation
Following up the order mainly by manual
4 How is the workload of CS?
The current system is inefficient, leading to prolonged order follow-up times The process is time-consuming because it requires confirming thread availability with Amann China or Amann Germany Additionally, selecting the most cost-effective transportation method to ship orders to Vietnam involves multiple steps, including coordination and decision-making Overall, managing each order involves numerous complex tasks, highlighting the need for a more streamlined process.
5 Do you usually do overtime? Why?
Ms Diep It is not usual Only for peak season
1 How is the OT payment for staff currently?
Overtime cost is small and irregular Therefore OT does not impact operation cost remarkably
2 How often does your staff work OT?
OT only happens in the peak season in quarter 2 and quarter 4
1 What are current difficulties for AVN?