THE HUMAN RESOURCES IN VIETNAM SUPPLY CHAIN Nguyen Thi Dieu Chi National Economics University Abstract Recently, the industrial revolution 4 0 has been mentioned frequently and it has been impacting m[.]
THE HUMAN RESOURCES IN VIETNAM SUPPLY CHAIN Nguyen Thi Dieu Chi National Economics University Abstract Recently, the industrial revolution 4.0 has been mentioned frequently and it has been impacting much on many fields from systems of production, management, business administration to the whole economy of the country, labor market, … It is like a new wind bringing a lot of opportunities and many challenges for every country in the world In many business activities, supply chain also contributes significantly on the economic development An effective supply chain will help businesses gain many competitive advantages, including cost advantages and increased customer satisfaction However, most Vietnamese enterprises currently not understand the importance of supply chain as well as supply chain management In activities of supply chain, human resources play a key role in all stages This article indicates status of human resource in Vietnam supply chain as well as the role of human factor in the development of the enterprises, from which the article suggests some long-term solutions to improve the quality and quantity of human resources in Vietnam supply chain sector Keywords: Supply chain; Supply chain management; Human resources Introduction Today, Industry 4.0 is considered to deliver exciting developments in automation and process improvement, offering lower production costs, decreased waste, increased flexibility and higher quality throughout the production and distribution cycle The opportunity is that all nations has the same starting point in the 4.0 revolution The challenge is that by the impact of technology, cheap labor is no longer an advantage or the gap between the rich and the poor more and more is getting high So many countries will have to find ways to adapt to this trend Unavoidable from the impact, the logistics industry as well as supply chain is also many advantages and disadvantages caused by industry 4.0 These influences have become the premise for the logistics industry is moving to adapt to the industrial 4.0 Recently, Vietnam Supply chain sector has been receiving more attention Basing on the decision No 2299 / VPCP – KTTH, dated April 6th, 2015 of Vietnam Prime Minister, it indicates plans to develop the supply chain and logistics services with six task groups: (i) 410 formulating and implementing the policies; (ii) building concrete infrastructure; (iii) developing the market; (iv) improving the services; (v) enhancing the quality of human resources; (vi) others The fifth task group relates to the human resource In fact, the human factor is not only important with supply chain but also any fields in the economy Especially with a potential sector likes logistics sector or supply chain, Vietnam is lacking high-quality human resources and skilled labors This study aims to analyze status of human resources in Vietnam supply chain sector as well as its role in development of the enterprises from which the article suggests solutions and recommendations improve the quality and quantity of human resources in the sector Literature Review 2.1 Human resources Human factor is considered as the driver of development In other word, human plays the role in connecting other resources to implement any activity According to Joanna Awoniyi (2009), human resources reflect individual’s capacity in the form of academic knowledge, experience as well as potential capacity that a citizen can use to dedicate to his community This definition is analyzed in view of the evaluation of human resources ‘quality or the paper acknowledges human potential as the capacity In a recent study, Henry (2016) noted that human resources are elements of organizations (with varied sizes and various functions) that have the potential and ability to involve in the development of the organization as well as the socio-economic development of the country, region and the world Or, human resources are the combination of internal and external elements of individual, with an aim to ensure the success and the goal achievement of organization (George T Milkovich and John W Boudreau,1997) In Vietnam, the research of Tran Xuan Cau and Mai Quoc Chanh (2008) also indicates that human resources can create material and spiritual wealth for the society manifested as quantity and quality specific at a given time Opinions about human resources is much when considered in different point of views, however, we consider that human resource is the backbone of any society as well as development of enterprises Because, Human beings, as the basic and permanent constituent of productive forces, may not be considered solely in terms of quantity or quality, but the combination of both And not only the working-age population but also other individuals with potentiality and capacity can be contributors to the socio-economic growth 411 2.2 Supply chain A supply chain is a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer Or, supply chain activities involve the transformation of natural resources, raw materials, and components into a finished product that is delivered to the end customer (Anna Nagurney, 2006) To simplify, we can understand a supply chain is the network of all the individuals, organizations, resources, activities and technology involved in the creation and sale of a product from the first sellers to the final customer Or in different point of view, supply chain includes all participating businesses, directly or indirectly, with an aim to meeting customer needs This means, not only manufacturers and suppliers involve in the supply chain process flow but also transport companies, warehouses, retailers and customers Basing on concepts about supply chain, some authors indicate views about supply chain management (SCM) SCM is about designing and managing of cross-cutting processes that create value for organizations to meet the real needs of end-customers The accompanying of human resources and technology is the key to successful supply chain integration Moreover, supply chain management as the integration of activities taking place at the basis of networks to create materials, move them into intermediate products and then to final finished product and product distribution to the customer through the distribution system (H.L Lee and C Billington 1995) Besides, some point of views argues that, SCM includes all the planning and administration which relate to supply and logistics management Additionally, it comprises coordination with partners such as vendors, intermediaries, third-party service providers and customers Essentially, supply chain management integrates supply and demand management within and outside the company Or supply chain management is an integrated function, of which the primary responsibility is to connect major business functions and business processes within companies into a cohesive and high-performance business model It covers all logistics management activities as well as manufacturing activities, and it promotes collaborative processes and activities with marketing, sales, product design, finance and information technology Some other views suggest that SCM is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer, and to consumer The three main flows of the supply chain are the product flow, the information flow and the finances flow, and SCM involves coordinating and integrating these flows both within and among enterprises 412 With the customers, the goal of any supply chain is to maximize the overall value of the chain The value of a chain is generated from the difference and transformation between the final product that the customer received, and the cost covered to meet the customer demand With the suppliers, the objective of the supply chain is that the total cost of the entire system from transportation, distribution to inventory storage is always minimized, and its profit is calculated as gross profit shared throughout the chain The success of the supply chain should be measured in terms of the profitability of the whole chain rather than of each individual stage It means that the importance of supply chain management is: (i) reduce costs, optimize profits; (ii) improve competitiveness in the market due to the availability of goods/services at the right time and in the right place; and (iii) optimize inventory, improve order turnaround Current situation of human resources in Vietnam supply chain 3.1 General situation of Vietnam supply chain According to the StoxPlus (2017), Vietnam's supply chain costs are around 20.8% of GDP and may be up to 25% in the coming years These are considerably high number compared to those of other countries Large supply chain costs also increase the payment for industrial production and reduce the competitiveness of Vietnamese goods compared with products of other countries in the region as well as in the world Figure Logistics costs as a percentage of GDP, 2016 Source: StoxPlus, 2017 There are two main reasons that could explain that high logistics or supply chain costs over GDP of Vietnam First, it is underdevelopment infrastructures (road, seaports) results in traffic jams and low productivity, in turn leading to high logistics cost Second, the reason is delay of transportation/delivery due to traffic jam and clearance time in port inspection 413 According to Ministry of Industry and Trade, 2017, only 36% of Vietnamese enterprises has involved in global supply chains, of which are mostly large-scale enterprises This rate is low compared to that of other countries in the region (the rate of Thailand is 60%) In addition to large-scale enterprises, only 21% of SMEs enter the global supply chain while the ratios in Thailand and Malaysia are 30% and 46% respectively As a result, Vietnamese enterprises have not truly benefited from the spillover effect of foreign investment, from technology transfer and productivity enhancement in the supply chain 3.2 Current situation of human resources in Vietnam supply chain Supply chain or logistics is one of fast growing industries And Vietnamese enterprises have gradually acknowledged the role of SCM to the competitiveness of their business in the market Businesses are now trying their best to streamline the supply chain and that means they need qualified labors for the department However, there are not many skilled employees with formal qualifications in this sector Although, Vietnam has the advantage of being located on the international maritime transport axis, as well as Vietnam has enough conditions to become the center of logistics in the region and the world However, one of problems of Vietnam is the lack of human resources Figure Survey results on limitations of Vietnam Logistics human resouces 21.58 24.21 18.95 35.26 Lack of high quality human resource Lack of professionalism Lacking training facilities Lack of titles of Logistics staff in enterprises Source: Dang Dinh Dao et al.(2017) Basing on survey result in figure 24.12% of aswerers indicated that Vietnam Logistics human resource lack of quality, 35.26% is lacking professionalism; 18.95% is lacking training facilities and 21.58% is lacking titles of Logistics staff in enteprises All of results proved that it is to focus on develop logistics human resources Moreover, there have been different figures about the number of companies operating in logistics field in Vietnam and about the number of people working in the field At least 414 300,000 firms have operated in the logistics sector so far and 1.5 million people work in this field nationwide which HCMC accounts for 40 percent However, most of enterprises are small and weak in ability They meet around 20-25% of requirements only The current human resources accordingly meet the needs of these small-scaled enterprises and thus, training tasks have not been received appropriate attention According to results of investigations by Dang Dinh Dao et al (2017), 80.26% of personnel of logistics enterprises is trained from their daily work; 23.6% takes part in training courses in the country; 6.8% is trained by hired foreign experts; and 3.9% receives training abroad In addition, Vietnam’s logistics human resources mainly come from liners’ agencies, freight forwarding companies and it is used according to their current abilities Human resources with basic knowledge of logistics is already small and thus it is almost impossible to have one with deep knowledge of logistics sector It is estimated that by 2020, Vietnam supply chain management sector needs more than 20000 high-quality staffs with professional qualifications (Moit, 2017) Figure Survey results on quality of Vietnam supply chain human resouces 16.70% 53.30% 30% Enterprises lack high skill employees in supply chain sector Enterprises must retrain employees about supply chain Enterprises satisfy with knowledge about supply chain of employees Source: Ho Chi Minh Research and Development Institute In a different study of Ho Chi Minh Research and Development Institute, over 50% of interviewed enterprises answered that they lack high quality employees in supply chain sector Moreover, 30% of enterprises must retain employees in process of working As results, it affect on the expenses as well as the business efficiency of the enterprises In addition, a very small percentage (16,7%) of enterprises is satisfied with the quality of their employees However, according to the research results, Vietnam supply chain’s human resource is very weak Most of enterprises are not satisfied with the quality of human resources They must retrain the employees to meet the demand of the business activities With the current level and conditions, this is one of the great challenges for Vietnam supply chain’s human 415 resource development 3.3 Difficulties affecting the development of Vietnam supply chain’s human resources in the process of industrial revolution 4.0 In the context of fierce competition towards the trend of international integration, especially, it is the development of industrial revolution 4.0, Vietnam supply chain services requires high quality human resource with skills, professional knowledge and specialized English proficiency However, at present, human resources in Vietnam logistics are weak and lacking in both quality and quantity The reason of this problem is that although, in Vietnam, the content of logistics theory has been approached and integrated in subjects such as Production techniques, Supply management, logistics management, for a long time, only when the economy turns into market mechanism, logistics is officially taught in some universities Full-time training institutions in the trade and transport sectors is mainly responsible for human resources training of the field For example, University of Transports and Communication has specialized transport operation and logistics management majors and University of Transport Technology specializes in Logistics and Multilateral Transport Currently, there are only some Vietnam universities enroll students of Bachelor of Business in logistics, including Vietnam Maritime University, RMIT Vietnam and Ho Chi Minh City University of Transport, National Economics University, Foreign Trade University Besides, there are some training centers providing short courses from days to months Japan-Mekong Regional Logistics Training Center in Vietnam, Logistics Institute under Vietnam Logistics Business Association, Logistics Training Center under Vietnam Aviation Academy The number of training institutes is few while the demand of human resources is very large This is one of difficulties of develop human resources in logistics as well as supply chain sector of Vietnam Industry 4.0 has placed Vietnam in front of a huge challenge: profuse and cheap labor source is not a factor creating competitive advantage and attract foreign investment to Vietnam any more Instead, it is a high quality human resource, meeting the evolution of the Industry 4.0 In today’s trend, industry 4.0 is at its beginning stage, countries have almost “equal” opportunity of approaching this revolution Hence, Vietnam can take the advantage of this opportunity to shorten the gap with developed countries To this, besides, Vietnam needs have to go straight to researching and applying or attracting new technology investment, we also need focus on develop high skill human resource because the human resource is one of important factors to implement and manage all stages of supply chain 416 ... consumer The three main flows of the supply chain are the product flow, the information flow and the finances flow, and SCM involves coordinating and integrating these flows both within and among... affecting the development of Vietnam supply chain? ??s human resources in the process of industrial revolution 4.0 In the context of fierce competition towards the trend of international integration,... 412 With the customers, the goal of any supply chain is to maximize the overall value of the chain The value of a chain is generated from the difference and transformation between the final product