Supply Chain Analysis for Rural Sanitation Products and Services in Lao pdr



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Supply chain study


This supply chain study is a diagnostic of the rural sanitation supply and value chain in distinct physical and market environments. It focuses on the commonly found or most preferred products and services for improved sanitation in rural Lao PDR.

Two hundred structured interviews were conducted with supply chain actors in seven provinces, including construction material suppliers, producers of prefabricated concrete products and masons. Local finance organizations were also interviewed. Also, over 100 people participated in 17 focus group discussions.


The supply chain


Supply Chain Map (conceptual)

Different regions and districts have different supply chains, with different sources of products. The supply chain for sanitation is influenced by the nearest neighboring countries as well as by the presence of international check points. Raw materials (e.g. latrine pan, cement, steel and zinc sheets) often begin in Thailand, but China and Vietnam play an important role as well. Many construction material suppliers act as importers, wholesalers and retailers (some are just importer and retailer).



Construction materials – Country of origin

Region – Province

Latrine Pan

Cement

Steel

PVC pipe

Zinc sheet

Northern

Thailand (100%)

China (16%), Thailand (84%)

China (67%), Thailand (33%)

China (8%), Thailand (92%)

China (9%), Thailand (91%)

Bokeo

Thailand (100%)

Thailand (100%)

Thailand (100%)

Thailand (100%)

Thailand (100%)

Luangnamtha

Thailand (100%)

China (25%), Thailand (75%)

China (100%)

China (11%), Thailand (89%)

China (16%), Thailand (84%)

Central

Thailand (64%), Vietnam (36%)

Laos (44%), Vietnam (56%)

Thailand (67%), Vietnam (33%)

Thailand (71%), Vietnam (39%)

Thailand (47%), Vietnam (53%)

Bolikhamxay

Thailand (8%), Vietnam (92%)

Vietnam (100%)

Vietnam (100%)

Thailand (63%), Vietnam (37%)

Vietnam (100%)

Savannakhet

Thailand (100%)

Laos (78%), Vietnam (22%)

Thailand (100%)

Thailand (78%), Vietnam (22%)

Thailand (88%), Vietnam (12%)

Southern

Thailand (98%), Vietnam (2%)

Laos (76%), Thailand (14%), Vietnam (10%)

Thailand (47%), Vietnam (53%)

Thailand (83%), Vietnam (17%)

Thailand (63%), Vietnam (37%)

Attapeu

Thailand (100%)

Laos (88%), Thailand (12%)

Thailand (43%), Vietnam (57%)

Thailand (100%)

Thailand (83%), Vietnam (17%)

Salavan

Thailand (95%), Vietnam (5%)

Laos (57%), Thailand (14%), Vietnam (29%)

Thailand (8%), Vietnam (92%)

Thailand (65%), Vietnam (35%)

Thailand (28%), Vietnam (72%)

Sekong

Thailand (100%)

Laos (83%), Thailand (17%)

Thailand (100%)

Thailand (100%)

Thailand (86%), Vietnam (14%)

Note: other products such as tiles have a similar source as zinc sheet

Margins are higher on some products and in some areas than others but they range from 3% up to 45% on certain products. These margins are not unreasonable given the high costs of distribution in rural areas. Gross margins of 25% to 35% are not unusual for products successfully reaching the bottom of the pyramid. In the focus groups, supply chain actors indicated that margins for latrine products and services are less than their other activities.

For all building material suppliers interviewed, latrines are a small part of their overall business – but estimating how small is not possible. Many of them do not know how important latrines are to their business (since they do not always know for what purpose materials are bought). Latrine pans alone are likely to account for less than 5% of revenues for most suppliers.

Concrete producers estimate that the percentage of their businesses related to latrines (for example, concrete rings for the pit) is on average 36% but there is wide variation across the provinces

The masons interviewed estimate that they built 6.4 latrines per mason during last year. On average, masons stated that 69% of the latrines they build are as part of a new house.

Around 43% of the concrete producers surveyed have other business activities; along with 52% of material suppliers outside district and provincial capitals (and 39% of those in the capitals). Construction materials suppliers and concrete producers on average employ 4 staff.

Overall, there appears to be more competition among material suppliers than concrete producers and masons. One-third of material suppliers (33.8%) reported facing no competition, compared with more than half of concrete producers (about 60%) and masons (52%).

The majority of the owners and the sole traders of material supply businesses were female, 57% and 67% respectively, and women tend to manage the finances of most material supply businesses (58%). Concrete producers are much more likely to be men (70%), and all masons interviewed were men.




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