Reality and solutions to develop quality service of logistics companies in vietnam

MINISTRY OF EDUCATION AND TRAINING HCMC UNIVERSITY OF FOREIGN LANGUAGES AND INFORMATION TECHNOLOGY DEPARTMENT OF INTERNATIONAL GRADUATION REALITY AND SOLUTIONS LOGISTICS BUSINESS ADMINISTRATION PAPER TO DEVELOP QUALITY SERVICE OF COMPANIES Student's IN VIETNAM name: TRA.N THJ KIM TIEN Class: KQ1l02 Advisor: PH.D NHAN CAM TRI ACKNOWLEDGEMENT The graduation paper is carried out by Tran Thi Kim Tien, Department of International Business Administration's senior student - Ho Chi Minh City University of Foreign Languages and Information Technology (HUFLIT) First of all, I would like to thank my family who love me by all their love Especially, my parents who always encourage me when I feel tired or overload, is a source of huge encouragement to me Secondly, I would like to give all of my heartfelt to say thank to my advisor, Ph.D Nhan Cam Tri who helps me complete my graduation paper Mr Nhan gave me lots of useful advices for my thesis as well as experience lesson in field about Logistics Moreover, he transmitted his enthusiasm and inspiration to me It helps me to be more interested in Logistics Thirdly, I would like to show my gratitude towards the International Business Administration Department of HUFLIT and all teachers They taught me carefully about specialized knowledge It is foundation to help me to complete this thesis Finally, I would like to thanks my friend who besides to me to listen and share my emotion when I am stressful about thesis After chatting with them, I feel relax and have more motivation for my decision when deciding to implement thesis instead of studying two subject ADVISOR'S ASSESSMENT The thesis "reality and solutions to develop quality servIce of logistics companies in Vietnam" of student Tran Thi Kim Tien is a good one About the content: Kim Tien shows that she understands the reality of Vietnam Logistics Companies fairly well in the context of serious competition with other foreign companies She finds out strong points and weak points of local logistics companies by SWOT analysis, and suggests a full set of workable solutions to the situation About the technics or research method: she has applied several research methods which are usually applied in social sciences research such as: statistics, analysis, comparison to make the contents more clearly The data has been search from reliable sources such as: Work Bank, local economic websites, and doctorate thesis to ensure the scientific characteristics About the attitude: Kim Tien always tries her best to search for relevant materials to fulfill her thesis She contacts the advisor regularly for advice and matches the time line She is very enthusiastic in her studies It is a must for a person to a scientific task I'm appreciated her effort in fulfill this thesis and pleased to introduce it to the Scientific Board of Faculty Advisor's signature f ("nan ii '1.L Can-> 7lV' , ABSTRACT Although logistics is still a new field on Vietnam's market, that is profitable industry for logistics companies Moreover, with strong development of globalization trend, logistics become essential factor in trade operations as well as production process Therefore, domestic logistics companies will have lots of opportunities to develop in the future but they also have to face with huge logistics corporation in the world However, with lacking of quality about logistics service, they will be very difficult to compete again For this reason, the objective of this research was to determine the reality and restrictions about quality of logistics service providing by logistics companies of Vietnam This thesis will analyze figures by scientific methods such as integrated approach and economic analysis, SWOT analysis Through that analysis, results indicated that logistics companies of Vietnam should improve quality of service to enhance competitive capacity and fulfill customer's need iii CONTENTS REALITY AND SOLUTIONS TO DEVELOP QUALITY SERVICE OF LOGISTICS COMPANIES IN VIET NAM Pages ACKNOWLEDGEMENT i AD VISOR'S ASSESSMENT ii iii ABSTRACT CONTENTS , iv LIST OF ABBREVIATION ix INTRODUCTION Research objectives Scope of research Research method Research content CHAPTER 1: SEVERAL THEORETICAL BASES OF LOGISTICS SERVICE 1.1 What is Logistics? 1.1.1 History of Logistics iv 1.1.2 Definition about Logistics 1.1.3 Characteristics of Logistics service 1.1.3.1 Characteristics o/Logistics service 1.1.3.2 Characteristics about commercial service o/Logistics service : 1.1.4 LPI - Measure that evaluate quality service 10 1.1 SWOT analysis 12 1.2 National Logistics system (NLS) 12 1.3 Roles of Logistic 14 1.3.1 In macro economy -for national economy 14 1.3.2 In micro economy -for business 16 CHAPTER 2: THE REALITY OF QUALITY SERVICE PROVIDED BY LOGISTICS COMPANY IN VIETNAM 19 2.1 SWOT analysis about quality service of Logistics Company in Vietnam 19 2.1.1 Strengths 19 2.1.1.1 Geographical location has advantages/or Logistics companies o/Vietnam 19 2.1.1.2 Labor is young and cheap 20 2.1.1.3 Logistics companies o/Vietnam have applied in/ormation technology in working 22 2.1.2 Weaknesses 24 2.1.2.1 Less capital 24 2.1.2.2 E-Iogistics is not popular and widely-used 25 2.1.2.3 Weak competitiveness 27 2.1.2.4 Lack 0/ orientation and cooperation between logistics companies v 28 2.1.3 Opportunities 29 2.1.3.1 Vietnam logistics can reach wider logistics market with the trade preferences 31 2.1.3.2 Domestics logistics companies can attract more investmentfrom outside 31 2.1.3.3 Companies of Vietnam will have opportunities to learn more about experience, information technology and management skills 31 2.1.4 Threats 32 2.1.4.1 Fiercer competition from international logistics corporation 32 2.1.4.2 Low in development of technology about logistics 33 2.1.4.3 Habit when using logistics service for export and import goods of Vietnamese 33 2.2 Analysis about reasons that caused restriction in developing quality service of Logistics companies of Vietnam 34 2.2.1 Human resource in Logistics service 34 2.2.1.1 Situation of excess or shortage of labor 34 2.2.1.2 Labor with no specialized knowledge 35 2.2.2 Not be on time in delivering 37 2.2.3 Ability in tracking and tracing 39 CHAPTER 3: SOME SOLUTIONS TO IMPROVE QUALITY OF LOGISTICS SERVICE 42 3.1 Trend of Logistics development in the future 42 3.1.1 Development trend of Logistics in the world 42 3.1.1.1 Electronic logistics (e-Iogistics) 42 vi 3.1.1.2 One stop-shop 43 3.1.1.3 Third party logistics (3rd PI) and Forth party logistics (4th PI) 43 3.1.2 Demand of Logistics in~n 45 3.2 Recommendations the future to improve quality of Logistics service provided by logistics companies of Vietnam 46 3.2.1 Improving the quality of human resource in Logistics companies 46 3.2.1.1 Establishing logistics major in University 46 3.2.1.2 Cooperating internationally in training logistics 47 3.2.1.3 Having logical training method 48 3.2.1.4 Organizing scientific seminars to share experience 49 3.2.2 Applying information technology 50 3.2.3 Cooperating between logistics companies 52 3.2.4 Having more value-added in providing service 53 CONCLUSION 55 LIST OF REFERENCE 57 vii ABSTRACT Although logistics is still a new field on Vietnam's market, that is profitable industry for logistics companies Moreover, with strong development of globalization trend, logistics become essential factor in trade operations as well as production process Therefore, domestic logistics companies will have lots of opportunities to develop in the future but they also have to face with huge logistics corporation in the world However, with lacking of quality about logistics service, they will be very difficult to compete again For this reason, the objective of this research was to determine the reality and restrictions about quality of logistics service providing by logistics companies of Vietnam This thesis will analyze figures by scientific methods such as integrated approach and economic analysis, SWOT analysis Through that analysis, results indicated that logistics companies of Vietnam should improve quality of service to enhance competitive capacity and fulfill customer's need viii LIST OF ABBREVIATION LPI : Logistics Performance Index ASEAN : Association of Southeast Asian Nations NPS : National Logistics System GDP : Gross Domestic Product E-logistics : Electronic Logistics UNCTAD United Nations Conference on Trade and Development FOB : Free On Board (term in Incoterm) CIF : Cost, Insurance and Freight WTO : World Trade Organization SWOT : Strengths - Weaknesses - Opportunities - Threats VNACCS : Vietnam Automatic Cargo and Port Consolidated System VCIS : Vietnam Customs Intelligent Information System : Third Party Logistics : Fourth Party Logistics 1sl PL : First Party Logistics 2nd PL : Second Party Logistics ix CHAPTER 3: SOME SOLUTIONS TO IMPROVE QUALITY OF LOGISTICS SERVICE from the place production, export procedures, import, transfer of goods to the final point of consumption These connections create excellent supply chain Thus, now, linkage trend to coordinate the logistics operation on the worldwide has developed strongly 3.1.2 Demand of Logistics in Viet Nam in tlte future In the future, logistics is extremely profitable field for country, for logistics companies as well as for employees Cost of logistics occupied about 25% of GOP in 2014 However, domestic logistics companies just satisfY about 18% of the total carriage of goods export8 Those data shown that demand of logistics is huge while its supply is still limited Nevertheless, logistics service is very potential and it can continue to thrive in coming years Especially, when retail market of Vietnam is developing strongly and attracting lots of famous foreign retailers such as Aeon, Lotte Mart, Parson and Big C, it will make big opportunities for logistics service As with a population of over 90 million people, those retailers need supports from logistics companies to distribute product to different places in country for customer In addition, cost of logistics is a part of cost of product Therefore, logistics has an important role for retailers http://www.vinamarine.gov.vn/I htt p:f /www.ipcs.vn/vn/phong-van-ong-do-ha-nam-tong-giam-doc-cong-ty-co-phan-tap-doan-intimex-W474.htm ndex.aspx?page=detai l&id=2187 45 Tran Thi Kim Tien - KQll02 Ph D Nhan eim Trf CHAPTER 3: SOME SOLUTIONS TO IMPROVE QUALITY OF LOGISTICS SERVICE 3.2 Recommendations to improve quality of Logistics service provided by logistics companies of Vietnam 3.2.1 Improving the quality ofhuman resource in Logistics companies Human resource is an important factor in logistics companies, because they are employees who produce directly logistics products Therefore, if logistics companies want to increase quality of logistics service, they will be prioritized in improving quality of human resource 3.2.1.1 Establishing logistics major in University Logistics field need a huge workforce in the present as well as in the future However, almost all universities not have branch of learning about logistics In some of universities in Ho Chi Minh City, they have taught some subject related to logistics in learning program After graduating, students will not have enough knowledge or depth knowledge, because logistics is a wide field and require knowing about maritime law, customs law, international law, mode of payment, skills in working Thus, logistics enterprises will take time and money to retrain for new employees who are fresh graduators For those reasons, universities should open branch of learning about logistics This recommendation should have benefits for universities, logistics companies and students • For universities: in the present and future, logistics study will become more attracted because demand about human resource in logistics is very huge Therefore, if which university pioneer in opening this field, they will have lots of registration from students As the result, branch of learning about logistics will bring big interest and reputation for university • For logistics companies: They will have quality human resource because those employees are trained completely and specifically Thus, logistics companies will save time and money when recruiting employees • For students: they will gain specialized knowledge after graduating Therefore, students may have more chances to find suitable job about logistics Furthermore, they will work effectively and efficiently based on knowledge taught at university 46 Tran Thi Kim Tien - KQll02 Ph D Nhan Cam Trf CHAPTER 3: SOME SOLUTIONS TO IMPROVE QUALITY OF LOGISTICS SERVICE Besides that, universities and logistics companies can cooperate together so as to make a closed recruitment process University will warrant about output quality when students finish learning program about logistics Logistics enterprises may recruit employees from those universities because they are taught based on requirement criteria in activities of logistics Therefore, logistics can recruit employees in shortest time but with high efficiency 3.2.1.2 Cooperating internationally in training logistics Scope of logistics operation is not only limited in national territory, but also extended other countries in the world For this reason, international cooperation in training logistics is very necessary When studying abroad, students will learn more about expert knowledge and skill, new technologies as well as working style in a modem and professional working environment There are some countries closed to Vietnam but had a development logistics industry such as Singapore, Japan, Korea, Hong Kong, Taiwan Universities of Vietnam can cooperate with Wliversity of Singapore or Japan in training process about logistics There are two learning programs in international cooperation about training logistics Program 1: years in Vietnam - years abroad years abroad and graduation years in Yietnam In this learning program, students will have years to learn general knowledge about logistics and improve English ability in universities of Vietnam After complete program in Vietnam, students will exchange to another country which is linked to university on Vietnam In years abroad, students will gain larger knowledge, new looks and new technology about logistics order to global employees in the future Program 2: Internship abroad 47 Tran Thj Kim Tien - KQ1102 Ph D Nhan Cam Tri CHAPTER 3: SOME SOLUTIONS TO IMPROVE QUALITY OF LOGISTICS SERVICE Studyill