BUSM1784 – Supply Chain Management

Assignment 1: Supply Chain Process in Small or

Macro Enterprises

Research Report

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 SUPPLY CHAIN PROCESS OF PNJ

Lecture time: Friday, 8A.M – 11A.M

Lecture-in-charge: Rajkishore Nayak

Name: Phuong Tran (S3836428)

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Executive Summary

This report aims to analyze the supply chain as well as some important information such

as PNJ's history and finance. This report consists of 4 parts namely introduction,

content, conclusion, and reference. All information in this report is taken from sources

on PNJ's website and some other sites like SSI and VCBS. With the content section, 3

flows are discussed with specific information such as raw materials, design process,

fabrication, modes of transportation, and distribution channel. In terms of raw material,

all of them are listed in detail with major domestic and foreign suppliers. With the

establishment of the factory, the stages such as design and manufacture are all made

at the factory and by PNJ's workers. Furthermore, the means of transporting goods are

also mentioned from the information sources on the website. PNJ always focuses on

materials for packaging to bring the most sophisticated and unique products to

consumers. In order to have success today, PNJ's distribution channel is not only the

most important thing to control the revenue as well as the position of the brand, but also

the largest contributor to the brand's influence on consumers.

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Table of Contents

1.Introduction 5-8

2. Content: 3 Flows

I. Product Flow 8 - 15

A. Raw Materials 8 – 10

 Gold 9

 Silver 10

 Gemstones 10

 Diamond 10

B. Design 10 - 11

C. Fabrication 11 - 12

 Factory 12

D. Modes of Transportation 12

E. Distribution Channel 12 - 15

 Direct Distribution Channel (B2C) 13 - 14

 Indirect Distribution Channel (B2B) 14 - 15

I. Information Flow 15 - 16

II. Finance Flow 16

3. Conclusion 16 - 17

4. Referencing 17 - 20

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1.Introduction

Phu Nhuan Jewelry (abbreviation: PNJ), which is a joint-stock company of Vietnam,

specializing in manufacturing and exchanging adornments with gold, silver, gemstones,

fashion accessories, and keepsakes; is additionally exchanging watches and

purchasing bars of gold. Apart from these two main aspects, they also have facilities for

inspection of gems, precious stones and valuable metals, and land business (PNJ

website, 2017). The jewelry market of Vietnam officially welcomed Phu Nhuan Jewelry

Trading Store on 28th April 1988. According to the PNJ’s website (2017), the beginning

of the policy to extend branches across Vietnam is the opening of a store in Hanoi in

1994, the next is the establishment of PNJ Da Nang in 1998 and PNJ opened a branch

in Can Tho in the last year of 1990. In 2004, PNJ turned into a fresh out of the box new

type of business: joint-stock company, under the complete name Phu Nhuan Jewelry

Joint Stock Company.

Established in 2012, the factory of PNJ which is notable as PNJ Jewelry Production and

Trading Company Limited – PNJP and also accredited ISO 9001 and ISO 14001 (PNJ

website, 2015).

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 19 88 200 1 2005 200 9 20 12

Figure 1. 5 brand branches of PNJ

So as to address all the issues of clients as well as to bring a variety of products, PNJ

now has 5 brand branches specializing in buying and selling jewelry. In 1988, with the

introduction of PNJ Gold Jewelry Brand, PNJ continued to welcome PNJ Silver in 2001

and to 2005, CAO fine jewelry to make a difference for high-class products. After 4

years, PNJ welcomed JEMMA as a new member and finally the appearance of PNJ

Watch in 2012 (PNJ website, 2019).

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 Figure 2. Retail outlets across Vietnam

With over 300 retail outlets nationwide (PNJ website, 2015), PNJ has not only gotten

one of the main jewelers in Asia but also the headmost jewelry manufacturer and

retailer in Vietnam. Intending to meet the demands of consumers of all ages, PNJ

always tries to maximize domestic raw materials both domestically and internationally to

create a variety of designs. Because of the preciousness of the product, PNJ often

makes connections with leading companies in third-party logistics such as FedEx

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Corporation (PNJ website, 2015) and dispatches specialized transportation specialists

to transport (Trinh Khanh Linh, 2019). According to the Report of Board of Management

(2018), understanding the crucial significance of distribution channels to the endurance

of the retail framework, PNJ has consistently centered around creating and growing its

retail organization for about 30 years.

2. Content

3 FLOWS

I. Production Flow

Figure 3. Supply Chain Process

A. Raw Materials

Figure 4. Raw materials of PNJ

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According to the PNJ’s report board of management in 2018, gold, silver, diamond,

gemstones, CZ stones, and other mineral resources are cautiously picked from over

100 credible domestic and international distributors including Italy, Japan, Hong Kong,

Thailand, etc before being marketed.

 Gold:

According to the SSI website (2019), for a long time, the State Bank has unauthorized

any ventures to import gold crude, PNJ often makes the most of the available gold

material in the country. Based on the VCBS Research (2017), PNJ annually consume 4

tons of gold.

 Silver:

Due to the absence of legal restrictions as well as the freedom to import, PNJ mainly

imports silver raw material through several supply partners in Belgium (Trinh Khanh

Linh, 2019).

 Gemstones:

Due to the high value of the items, gemstones must be carefully selected before being

put into the production line. According to Trinh Khanh Linh (2019), most gemstones are

picked primarily from Thailand and Hong Kong because these two countries have high-

quality gemstone grinding technology that Vietnam cannot do yet. Also, PNJ uses

gemstones imported from Austria and associate with leading reputable gem companies

such as Swarovski Gemstone in Austria, RMC Gems in Hong Kong, and BKK Gems in

Thailand.

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  Diamond:

PNJ not only takes advantage of domestic diamonds but also imports from foreign

countries to create products with unique designs. In terms of the oversea market,

Yakubov and Forte in Hong Kong with Fischler in Belgium are always the supplier

choices of PNJ (Trinh Khanh Linh, 2019).

B. Design

According to Trinh Khanh Linh (2019), PNJ now has a design room specializing in

creating new jewelry and accessories according to the current fashion trends. PNJ said

that on average, the design apartment will sketch 224 samples per month with all kinds

of jewelry products. Here, the PNJ’s design stage has shown professionalism with a

design team, starting from the idea, then use that as a guide for inspiration for creating

product samples (Nguyen Vu Thanh Dat, 2018).

In the next stage of the design line, a series of hand-drawn sketches will be re-painted

by talented designers on digital applications before being put into the fabrication

process.

C. Fabrication

 Factory:

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 Figure 5. PNJ Manufacturing facilities

According to the PNJ website (2015), the PNJ jewelry factory covers an area of over

12,500 square meters and is located in Ward 5, Go Vap District of Ho Chi Minh City.

Along with a series of advanced machines imported directly from Italy and Germany,

PNJ produces more than 4 million products each year to meet customer needs (SSI

website, 2019).

From designs, enterprises print 3D models and create plastic billets for the product.

Embryos are the basis for making plaster molds before the plastic is melted to make

hollow molds to cast jewelry products (Nguyen Vu Thanh Dat, 2018).

D. Modes of Transportation

According to Trinh Khanh Linh (2019), PNJ currently has 4 warehouses in Ho Chi Minh

City, Can Tho, Da Nang, and Hanoi with a strict level of security due to its high value

and small size. To transport to remote branches such as Da Nang, and Hanoi, PNJ has

a specialized transportation specialist by air and specialized cars. Moreover, to ensure

safety in the process of transporting and forwarding goods, PNJ has cooperated with

leading companies in third-party logistics such as FedEx (PNJ website, 2015).

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 E. Distribution Channel

Although PNJ has the advantage of market share and credibility, other domestic

enterprises such as SJC and DOJI have also started to “encroach” on gold, silver

jewelry business. Not only that, foreign rivals, especially ASEAN countries, gradually

penetrate the Vietnamese market, with a better price advantage. To be able to stand

firm in the industry, the distribution channel is the main tool that helps PNJ to gradually

develop and compete with new brands. PNJ’s distribution channel system is divided into

2 different forms namely direct distribution and indirect distribution.

 Direct Distribution Channel (B2C)

PNJ has 2 types of stores: PNJ stores and e-commerce.

 The intention of building PNJ’s store network:

- Expand market share from market gaps.

- Overwhelm the opponent.

- Maximize customers’ experience, entertainment, and creativity needs.

 The intention of e-commerce:

According to the SSI website (2019), envisioning innovation 4.0, PNJ is putting

resources into extending the online business to adjust to a domain where client

shopping conduct is slowly evolving. Online is the future consumer trend as information

technology develops and the number of smartphone users is forecast to continue to

grow. Moreover, to bring customers the leading online jewelry shopping experience,

from October 2017, PNJ's online shopping channel officially launched a new online

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shopping page, with many attractive gadgets, more satisfying customer shopping needs

as well as bringing the world of jewelry to the hands of customers fully and quickly than

ever before. After a successful order, PNJ will contact you to confirm and complete the

procedure, the order will be delivered within 2-7 working days and free shipping.

 Indirect Distribution (B2B)

Although not benefiting as much as the direct distribution channel, PNJ's Wholesale and

export channels are still invested and built carefully. With a widespread and extensive

framework, PNJ continually reaches customers on a larger scale more fluently,

demonstrating the rapid response of progressive procedures, as well as deserving to be

the driver in the jewelry field in Vietnam.

Shipping commodities’ processes from the factory to retailers such as supermarkets,

shopping centers namely Coopmart, Vincom, and Takashimaya, then to consumers

(PNJ website, 2018).

Figure 6. PNJ’s export markets

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According to the PNJ website (2015), not only success in domestic, PNJ additionally

confirmed its name within the international market once changing into the sole whole

representing the Vietnamese jewelry business to be honored at the large and

prestigious awards in the region. PNJ is happy to be able to satisfy its difficult foreign

partners, thus becoming the only Vietnamese company to export jewelry. Thanks to

these factors, PNJ currently owns a world marketing with thirteen countries on four

continents appreciates Russia, UK, Germany, etc. Currently, the export channel

abundant targeted on the elegant product lines with high process costs rather than

spreading several product lines as before, particularly gold jewelry.

II. Information Flow

Intending to become the leading jewelry brand in Vietnam as well as the number one in

Asia, PNJ not only provides customers with sophisticated and outstanding jewelry

products but also tries to focus on the thoughts and customers’ wishes. To bring

customers the best experience, in October 2014 (PNJ website, 2017), Call center -

PNJ's customer advisory center was officially launched, and it was also one of the

headforemost call centers of Vietnam in the trinket industry. With the achievements of

26 years of operation, PNJ has implemented many activities and customer care policies

with a very large scale and professionalism. The establishment of a central team is one

in all PNJ's revolutions to farther boost the criterion of after-sales service, thence rising

the reputation and expanding of the PNJ brand. Moreover, PNJ's omnichannel access

model was also launched to increase interaction with customers and rise the success

rate of sales.

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III. Finance Flow

In 2019, PNJ aims to increase revenue by 25% to 18,207 billion dongs; in which retail

jewelry revenue increased by 29% to 10,785 billion dongs. Profit before tax target of

2019 is 1.480 trillion dongs, up 23% contrasted with a year ago (Thanh Lon, n.d). With

the goal of bringing the best experience to customers, PNJ always creates favorable

conditions for payment including payment at stores and via delivery. For delivery via

delivers, the customer will pick up and pay directly with the delivery staff or may transfer

but the transfer fee will be paid by the customer. What's more, in-store payment

methods are diverse and easier such as cash, credit cards, and debit cards (PNJ

website, 2017).

3. Conclusion

In conclusion, PNJ's supply chain may be a sustainable circle, during which each

component plays an equally important role in providing consumers with the very best

quality and highest quality products. PNJ's supply chain consists of three flows, each of

which holds different goals but the most important contribution is from the production

flow. PNJ applies the foremost advanced international standards at every stage of the

provision chain. From raw materials imported from leading global suppliers to PNJ

Jewelry Factory with many skilled artisans, working day and night to provide and

distribute the ultimate products to PNJ stores nationwide. All products are certified and

recognized worldwide, helps to build customer confidence about the quality of colored

gemstones within the golden age and make achievements and reputation for PNJ.

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4. Refererencing

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FIGURE

CAO FINE JEWELRY’s logo, n.d. photograph, viewed 17th July 2020. Available at:

<https://www.google.com/search?

q=cao+jewelry&client=safari&source=lnms&tbm=isch&sa=X&ved=2ahUKEwjGi7KRktfqAhWGHqYKHVkP

A08Q_AUoAXoECAsQAw&biw=1680&bih=987&dpr=2#imgrc=L-

gzDU5Em53IPM&imgdii=ROpRqUnheI8lLM>

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Gold, n.d. photograph, viewed 15th July 2020. Available at: <https://www.baogiaothong.vn/lai-kien-nghi-

cho-nhap-vang-nguyen-lieu-d175070.html>
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Gemstones in Vietnam, n.d. photograph, viewed 15th July 2020. Available at: <https://ancu.me/phong-

thuy/nhan-biet-cac-loai-da-quy-trang-suc-phong-thuy-theo-tuoi-menh.html>

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q=jemma+pnj&client=safari&source=lnms&tbm=isch&sa=X&ved=2ahUKEwjy__S4mdfqAhVFUd4KHeFp

BKcQ_AUoAXoECAsQAw&biw=1680&bih=987#imgrc=AO9DKqfMUtK32M>

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Available at: <https://www.google.com/search?

q=PNJ+factory&client=safari&source=lnms&tbm=isch&sa=X&ved=2ahUKEwih4PiZ6tbqAhXF63MBHTuw

A54Q_AUoAXoECAwQAw&biw=1100&bih=441&dpr=2#imgrc=HQRAfTtjFiRxPM&imgdii=IAxjCRio4965c

M>

PNJ gold’s logo, n.d. photograph, viewed 17th July 2020. Available at: <https://www.vn-cs.com/BAO-

CAO-PHAN-TICH-CO-HOI-DAU-TU-CTCP-VANG-BAC-DA-QUY-PHU-NHUAN-PNJ---HSX_31702.html?

lang=vn>

PNJSilver’s logo, n.d. photograph, viewed 17th July 2020. Available at:

<https://www.brandsvietnam.com/2938-PNJSilver-Thay-doi-mot-dien-mao-moi>

PNJ Watch’s logo, n.d. photograph, viewed 17th July 2020. Available at:

<https://www.google.com/search?

q=pnj+watch&client=safari&source=lnms&tbm=isch&sa=X&ved=2ahUKEwi6g5HfntfqAhVHyYsBHRLrBY

MQ_AUoAXoECBEQAw&biw=1680&bih=987#imgrc=ev2-fxmZKdj1wM&imgdii=tYU-xUrfm5RbCM>

PNJ’s export markets, n.d. photograph, viewed 20th July 2020. Available at:

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PNJ’s logo, n.d. photograph, viewed 15th July 2020. Available at:

<http://image.laodong.com.vn/Uploaded/dangngocvu/2017_01_08/6da38b8c-d4d8-11e6-b8d1-

56c566ee3692_HMGY.jpg?width=660>

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Silver, n.d. photograph, viewed 15th July 2020. Available at:

<https://www.pinterest.com/pin/427560558344006820/>

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