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How are supplier networks formed?

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Value Chain Overview
Sep 29, 2021
Edited By
Seujin Jang
Sep 29, 2021
Edited By
Seujin Jang
Vietnamese suppliers buy cashew kernels from other suppliers. Every factory has its own grade specialty and buys lower or premium grades from other suppliers.

Suppliers usually buy cashew kernels from other suppliers to have enough quantity and grades to provide. Since every factory has its own specialty on grades, so when a buyer asks for lower grades or premium grades, the factory has to buy from other suppliers. On top of this, Suppliers know each other very well because they have worked in cashew kernel for many years. In Vietnam, people cooperate based on reputation. 


Big-sized suppliers 

  • Big suppliers are export oriented and have vertically integrated operation
  • Because they are vertically integrated, it takes longer time for them to fulfill the order (1-2 months)
  • Quality is tested to be higher than SME’s
  • It is hard to do time-constraint spot deals with them as they are usually fully booked
  • Big suppliers usually have BRC
  • Price difference between w/BRC and w/o BRC would be 5-6%
  • Big companies try to get the best quality RCN because it takes too much labor to sort the under-qualified ones after. There is intense competition for best quality RCN


Small & Medium suppliers 

  • There are a lot of small and medium processors/suppliers in the industry
  • Medium suppliers sometimes buy cashew kernels from small suppliers to fulfill buyer orders faster
  • Most of the orders are done through spot deals
  • The offer price is cheaper than big sized suppliers but the quality could be an issue
  • SMEs have a hard time getting high quality RCNs because big suppliers have already bought the high quality ones

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