'Reduce shock' therapy works for Vietnamese beverage maker

By Nam Anh   April 29, 2020 | 01:00 am PT
A calm mindset and rapid response are important factors helping beverage maker Tan Hiep Phat deal effectively with the Covid-19 crisis, says Deputy CEO and board member Tran Uyen Phuong.

Phuong told VnExpress that effective management of cash flow and expenses as well as ensuring employee well-being have helped maintain stability in the group’s operations amid the coronavirus pandemic.

How has your group been affected by the Covid-19?

The food and beverage industry, especially soft drinks, has been severely impacted by Covid-19, and Tan Hiep Phat is not an exception. At the beginning of the Covid-19 outbreak, we were very confused, especially when lacking clear information about the illness.

At the same time, we noticed signs of disruption in both raw materials supply and consumption. The double pressure of ensuring health and safety for thousands of employees and maintaining manufacturing prompted us to come up very quickly with a "reduce shock" strategy.

Can you elaborate on that?

In February and March, goods was delayed as foreign suppliers also suffered from the Covid-19 crisis. Identifying the biggest problem, which was to maintain manufacturing and business operations, we came up with alternative plans for different scenarios. Any break in the "chain" had to be addressed immediately with an alternative solution to prevent supply disruption.

That also led to a change in inventory management. The provision for raw material reserves was immediately pumped up - to ensure that Tan Hiep Phat would not run out of goods, especially heath and immunity-boosting products, for at least seven months.

We assumed that purchasing power would diminish, especially as the country experienced three weeks of social distancing. In Hanoi and Ho Chi Minh City, which account for the highest proportion of our revenue, half the shops and agents closed. Traditional channels in other provinces and cities remained stable. In particularly, our Zero Degree Green Tea with Lemon experienced good sales thanks to its function of boosting resistance.

To minimize loss, we simultaneously implemented a series of solutions in the spirit of "quick response without haste" on "all fronts", from cash flow management, upgrading employees’ capacity, optimizing costs to ensuring a stable employee mentality, boosting morale and motivation of thousands of people who all are parts of Tan Hiep Phat.

Tran Uyen Phuong, Deputy CEO and board member of Tan Hiep Phat.

Tran Uyen Phuong, Deputy CEO and board member of Tan Hiep Phat.

What were the practical steps in deploying this strategy?

I think the crux of the issue in responding to the crisis is mentality. The actual impact on revenue is not as disturbing as what we had feared. As soon as the Covid-19 broke out, we set up a quick response committee, working fast every morning or whenever necessary. Each day, division heads had to report in as much detail as possible their team’s performance, problems and possible solutions that we could discuss and and align to a plan.

There are two psychological issues at play: fear of coronavirus infection and fear of income decline. To resolve these, I requested that all information, even rumors, has to be verified and corrected if false. Meanwhile, we promoted official information from the Ministry of Health, updates on the situation of the pandemic and recommendations on prevention while fully and thoroughly applying measures to ensure the health of employees. The company also invited doctors to talk and answer questions in dealing with employees' anxiety.

After two weeks, we were pleasantly surprised that the staff became familiar with the "new normal," wearing masks, using sanitizers and adopting other preventive measures. Everyone became more comfortable. Information processing and internal interaction became more effective than before. The strengthening of communication contributed to increased motivation and performance from the whole team.

In terms of income, at Tan Hiep Phat, any intervention in the employee's salary fund will be the last step after optimizing other expenses. Thousands of employees are close to us like a family, with us through success and hardship. Therefore, it is our principle that optimizing costs must come together with employment guarantee.

What about Tan Hiep Phat's digital response during the pandemic, with consumers preferring to shop online?

Online selling is not a "magic wand" for all businesses, especially in the beverage industry. For low-cost products, large weights can boost logistics costs to exceed the product price itself.

In addition, consumers do not have the habit of buying soft drinks online, but mainly at traditional shops and channels. Therefore, we prioritize solutions to promote consumption, such as marketing on TV and promoting products at points of sale, while pushing traditional channels and optimizing costs by reducing marketing costs in ineffective channels in the short term, such as big events and campaigns.

How has internal governance been changed by the crisis? How will it continue to affect the company in the future?

As I remarked earlier, our motto is "quick response without hurry". A standard crisis-handling process will be ready to be activated for situations like Covid-19. This pandemic has negative impacts, but it also presents opportunities to reaffirm our right development strategy towards healthy products.

For instance, we organized an internal contest for employees to learn the uses of different types of products, thereby better understanding the strategic direction of the company and feel more connected to our "big family".

This is also an opportunity for Tan Hiep Phat to "sharpen its knives and scissors", improving our contingent, fine-tuning management processes and reviewing our entire development plan.

What would you say is the most important quality of an entrepreneur in times of such a crisis?

In any crisis, calmness and confidence of the leader are important. If the leader is bewildered and confused, the team will have no one to rely on. What you need to do is stay calm, collect enough data and information, identify key issues and find solutions.

I think it is the attitude as well as the courage and resilience of the Vietnamese people that have helped us control the epidemic well. In our weekly online interactions, foreign entrepreneurs, have praised the effectiveness of disease prevention in Vietnam, and the way Vietnamese businesses have dealt calmly with difficulties. I tell them funny stories about "1001 ways to fight the epidemic" of Vietnamese people. Perhaps the optimistic spirit is the very weapon that will help us defeat the pandemic.

What is the lesson you have personally drawn from this pandemic?

I still keep my fundamental viewpoint: "Nothing is impossible". Not many businesses that have gone through upheavals in 25 years, are still able to withstand and even grow tremendously. Starting with empty hands, Tan Hiep Phat has grown thousands of times and restructured itself 4-5 times, counting just large-scale adjustments. Each restructuring is a completely different challenge, and each time we have proved nothing is impossible. Every time we go through a crisis, we become stronger, addressing weaknesses and continuing towards more sustainable development.

Therefore, Covid-19 is just a new challenge, and an opportunity to help businesses "uncover" the holes that need to be "patched" and find ways to continue renewing themselves. That way, we can gradually achieve our aim to become a global corporation with a strong position in the international market.

I believe that, once an enterprise has identified a long-term development strategy with a long-term vision and developed good basic values, a pandemic will only be a short-term difficulty. If we believe "nothing is impossible", all problems will have solutions. With courage and steadfastness, we will certainly overcome the pandemic, even witness more dramatic changes for the better.

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