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Purpose: The purpose of this assignment is to discuss current challenges related to international trade and technological solutions that could alleviate those challenges. Requirements From a global perspective, you will explain how the following challenges have aggravated and contributed to supply chain disruptions around the world since 2020: Supply chain shortages, e.g., raw material shortages, supply delays (what they are, why they are caused, what are their consequences, examples). Infrastructure problems, e.g., port facilities, road and railroad conditions, IT infrastructure (why they are caused, what are their consequences, examples). From an industry perspective, you will identify and comprehensively discuss one important challenge and one important opportunity that the supply chain disruption represents for a specific industry in Vietnam. You should inform your analysis with concepts learned in class and actual examples (using trustworthy sources academic andor nonacademic). Importantly, you will not choose your specific industry. The lecturing team will assign to you your specific industry on Monday of Week 9 from the following list (you can refer to the MSCI Global Industry Classification GICS MethodologyLinks to an external site.) : Automobiles (GICS 251020): Manufacturers of cars, trucks and motorcycles (e.g., Tesla) Textiles, apparel and luxury goods (GICS 252030): Apparel, shoes, watches, jewelry, luxury bags (e.g., Nike) Food products (GICS 302020): Agricultural products (e.g., coffee) and packaged (milk) (e.g., Nestle) Household personal products (GICS 3030): Producers of detergents, diapers, toilet paper, cosmetics (e.g., PG) Health care providers and services (GICS 251020): Distributors of products, and health care facilities (e.g., any hospital) Technology, hardware and equipment (GICS 4520): Routers, (smart)phones, personal computers, elect. components (e.g., Apple) From a country perspective, you will analyze what technologies could be implemented in Vietnam for: facilitating exporting and importing processes (for example, verification of documents). strengthening its trade corridors andor freight hubs for the management of traded commodities. overcoming or alleviating one additional challenge that Vietnams logistical trade is currently facing (you need to identify the challenge) When engaging with each of the previous requirements, you must consider the effects from the Covid19 pandemic and the RussiaUkraine war.
Individual Report, 2023 TABLE OF CONTENT I INTRODUCTION .4 II GLOBAL PERSPECTIVE .4 III INDUSTRY PERSPECTIVE IV COUNTRY PERSPECTIVE V CONCLUSION VI REFERENCES OMGT2321_GLOBAL TRADE OPERATIONS Individual Report, 2023 OMGT2321_GLOBAL TRADE OPERATIONS Individual Report, 2023 ABBREVIATION Household and Personal: H&P Vietnam Cotton and Spinning Association: VCOSA Vinh Phuc ICD Logistics Center: VPP Automatic Container Code Recognition: ACCR Vehicle License Plate Recognition: ALPR OMGT2321_GLOBAL TRADE OPERATIONS Individual Report, 2023 Automated Guided Vehicles: AGVs Artificial Intelligent: AI Vietnam Logistics Association: ALA Warehouse Management System: WMS OMGT2321_GLOBAL TRADE OPERATIONS Individual Report, 2023 EXECUTIVE SUMMARY In recent years, supply chains have become increasingly complex In addition, the operational activity of supply chains was influenced by global changes like the COVID-19 pandemic, the Russia-Ukraine war, and its consequences, as well as significant shifts in consumer and supplier behavior These global changes included the dynamic development of technology and production organization In this report, the first part “Global Perspective” presents one of the biggest challenges that the global is facing is supply chain disruption in many countries and across many industries around the world The supply chain disruption mainly can be aggravated by supply chain shortages, including the shortage of raw materials and supply OMGT2321_GLOBAL TRADE OPERATIONS Individual Report, 2023 delays The shortage of raw materials lessens the manufacturing of many industries, causing product supply chain disruption Besides, the supply delays induce delivery time to transport raw materials or final products to customers on time in a period of time, which contributed to a temporary supply chain disruption Further, port congestion due to lack of technological support, a worker shortage, Covid-19, and the Russia-Ukraine war, which prolonged the shipping turnaround and waiting time lengths, caused supply delays that exacerbated the supply chain disruptions The part of “Industry Perspective” displaces the challenge and opportunity the global disruption presents in the “Household and Personal Products” industry in Vietnam (GICS 3030) Vietnam's supply chain for both goods and inputs is sensitive and vulnerable in the event of a disruption in the global supply chain due to the country's heavy reliance on raw materials imported from foreign suppliers, particularly China and the United States Due to global supply disruptions, Vietnam's H&P industry has experienced disruptions in raw material supplies due to its dependence on importers for inputs Vietnam's production of H&P products suffers shocks as a result The part of “Country Perspective '' presents the ways technology facilitates exporting and importing in Vietnam, strengthens the trade freight hub, and overcomes the challenges of high logistics costs in Vietnam Their many technologies such as IoT, AI, and WSM are recommended to apply to help Vietnam's trade and logistics industry enhance their operations, OMGT2321_GLOBAL TRADE OPERATIONS Individual Report, 2023 facilitate the faster movement of freight, prevent supply delays that have an impact on manufacturing, increase security, and further restricts human contact to prevent the Covid-19 pandemic from being contagious I INTRODUCTION This report will be presented in three parts Part one “Global perspective” analyses an overview of global supply chain, how supply chain shortages and port congestions contribute to supply chain disruptions ‘Industry perspective” part clarifies the challenge and opportunity that supply chain disruptions presented on H&P industry in Vietnam (GICS 3030) “Country perspective” mentioned technologies use to facilitate export/import processes, and freight hubs, and solve high logistics costs challenge II GLOBAL PERSPECTIVE OVERVIEW Recently, global supply chains have become increasingly unpredictable, volatile, and disrupted Complexly intertwined factors including a shortage of inputs and workers, supply delays, weak production capacity, logistic bottlenecks, low port efficiency, and extreme phenomena such as the Covid-19 outbreak and Russian-Ukraine political conflict have aggravated global supply chain disruption (Grzybowska & Stachowiak 2022) Many different parts of the world have experienced supply chain disruptions The global supply chain of intermediate inputs, semiconductors, electronic components, chips of machines, OMGT2321_GLOBAL TRADE OPERATIONS Individual Report, 2023 computers, and appliances is seriously disrupted because Asian countries, especially China, which are the main manufacturers have implemented border control, mobility restrictions, production scale contraction, or even factory closure to prevent Covid-19 pandemic consequences (Aboagye et al 2022) Hence, automobile, electronics, and household appliances supply chains in Asia, Australia, U.S, and Europe are interrupted by the disruption of Asian input supply chains (Aboagye et al 2022) Africa, North America, Latin America, Asia, and Europe confronted an unbelievable supply chain disruption of consumer products, textiles, apparel, aluminum, plastics, construction materials, and notably food (WorldBank 2022) Aside from the lockdown, UK, and Brexit imposed policies on reducing the number of drivers to increase their competitiveness, resulting in a severe driver shortage that aggravated supply chain disruptions in meat, medicine, and household products (Portes 2022) Further, the Russia-Ukraine war exacerbated food, raw material, and energy supply chain disruption, particularly in Europe (Igan et al 2022) Supply chain shortage Supply shortage means the case where the amount of supply of inputs, goods/services across regions or nations becomes insufficient (Ivanov & Dolgui 2022) The globe was facing supply chain shortages of raw materials or intermediate inputs Last two years, shortages in inputs mainly arose from Corona lockdowns and travel restrictions, labor shortages, and logistics difficulties that disrupted input supply chains worldwide (Grzybowska & Stachowiak 2022) OMGT2321_GLOBAL TRADE OPERATIONS Individual Report, 2023 Further, Russia and Ukraine’s export of agricultural commodities, fuel, and gas in the world account for 10-20% of global exports (OECD 2022) However, Russia-Ukraine political tension to stop or curtail some raw material exports, resulting in input supply shortages Input shortage impaired manufacturing capacity, leading to insufficient products to meet demand, which exacerbates global supply chain disruptions (Islam et al 2019) For example, China's pursuit of the "Zero Covid-19" policy which limits exports, caused shocks to textiles, apparel, household appliances, and electronics industries in Vietnam, Thailand, and Malaysia which disrupted their supply chains (VNS 2022) Russia-Ukraine war disrupted palladium, nickel, and neon gas supplies (inputs to produce semiconductor chips), leading to chip shortages and causing an 11.3 million production unit loss in the global automobile industry, which worsened the world’s car supply chains (Ebbers 2022) Besides, supply delay is the failure to make delivery of raw materials or products to their destination on time, resulting in goods shortages in a certain period (Awaysheh et al 2021) The COVID-19 pandemic, lockdowns, worker shortages, and global port congestion pressure due to Russia and Ukraine political tension that slowed port turnaround times, contributed to cargo shipping delays, prolonged time delivery of raw materials and goods to businesses or customers, thus, reflecting temporary supply disruptions (Kamali & Wang 2021) OMGT2321_GLOBAL TRADE OPERATIONS Individual Report, 2023 Figure 1: Supply delivery times in U.S and EU (Adapted from Port of Seattle 2021) For instance, U.S ports have a long averaging around 21 days of wait time for cargo loading and unloading, U.S suppliers’ delivery times are considerably longer (Figure 1), implying a supply delay for importers, disrupting their supply chains (Brown & LaTonja 2021) Port congestions Port congestion occurs when there are more cargo ships than a port can handle, needed to dock at a berth to unload or load (Nze & Onyemechi 2018) Port congestion can arise from lack of digitization, automation, and advanced technology supports that expand loading/unloading cargo or procedure times (Kia et al 2000) During the Covid-19 pandemic, sick and death cases increased, further, a large labor force in logistics and port shifted to work in other industries 10 OMGT2321_GLOBAL TRADE OPERATIONS Individual Report, 2023 Figure 3: Cotton import of Vietnam by TMT (Adapted from Vo 2021) Opportunity Global supply chain disruption creates opportunity for the H&P industry in Vietnam The information about foreign supply chain disruption, and factory closures, shelter-in-place in response to the coronavirus pandemic, encourages the psychology nervousness and panic-buying of Vietnam consumers toward necessities (toilet paper, tissue, soap, or hand sanitizers), which dramatically push domestic demand (Nguyen 2021) Regarding Figure 4, Vietnam's domestic consumption of H&P items increased to 40.18%, placing it in the top products with the highest domestic demand in 2020 (Nguyen 2021) Thereby, domestic production of H&P products is focused to be seriously promoted, increasing Vietnam’s H&P industry competitiveness Further, supply disruption support Vietnam's H&P products not need to compete with foreign products Generally, the Vietnam H&P industry achieved the remarkably surging domestic 14 OMGT2321_GLOBAL TRADE OPERATIONS Individual Report, 2023 demand for toilet paper, toilet paper, diapers, hand soap, and hand sanitizer Based on the “Demand condition” factor implication in Porter’s diamond (Porter 1990), heightened domestic demand for H&P items implies an opportunity for Vietnam’s H&P domestic industry and a competitive advantage for Vietnam in manufacturing H&P products against other foreign suppliers amid global supply chain disruption Figure 4: Main products that were purchased more often online during coronavirus (COVID-19) in Vietnam 2020 (Adapted from Statista 2021) Besides, Vietnamese government conducts ‘self-sufficient’ manner, encourages supports from other industries such as agricultural, wood, or chemical industries to supply domestic raw material for H&P production (Luong 2020) Based on Porter's diamond ‘Related and supportive industries’ factor (Porter 1990), the Vietnam H&P industry gains other industries' support for domestic raw material supply, which is considered more successful and competitive than others 15 OMGT2321_GLOBAL TRADE OPERATIONS Individual Report, 2023 Further, supply chain disruptions strengthened Vietnam’ domestic H&P companies’ production and management capacity IV COUNTRY PERSPECTIVE Facilitating exporting/importing process Vietnam's export/import processes are challenged by many manually complex paper procedures, long-time processes, inconsistency in collecting and managing information from various stakeholders, shortcomings in monitoring the correct number of goods, and lack of safety in stock (Nguyen 2021) Internet of Things (IoT) can be an ideal solution to facilitate Vietnam’s export/import processes IoT is a system of connected digital, mechanical, and computing devices that can summary and transfer data without human interaction (Madakam et al 2015) IoT helps exporters/importers connect and share information with different stakeholders, benefits customs authorities to increase the variety of data, improved risk management, greater the customs clearance process, and better analytics (Figure 5) IoT tracks the integrity of transshipment cargo movement between entry and exit control points, standardizes procedures for traders' benefit, speeding up the loading and unloading of cargo in port regions, connects potential creative solutions, and streamlines manual operations to increase (Kumar & Dash 2017) For example, QR Codes for transit and barcode readers; automated license plate readers; RFID antennas to monitor freight delivery times, e-seals to ensure traceability of goods and means of transport, 16 OMGT2321_GLOBAL TRADE OPERATIONS Individual Report, 2023 usage of e-lock, GPS tracking, X-ray scanners, and CCTVs interconnected with customs to automatize border crossing procedures, guarantee security at ports (Varese et al 2021) As a result, IoT helps the faster movement of freight, avoiding supply delays affecting manufacturing, more security, further, limiting human contact that can avoid the Covid-19 pandemic contagious Figure 5: Benefit of IoT (Adapted from WTO n.d) Strengthening freight hubs Vietnam has applied IoT and AI to facilitate seaport operation efficiency to reduce procedure times and port management inconsistency (Nguyen 2021) 17 OMGT2321_GLOBAL TRADE OPERATIONS Individual Report, 2023 Vietnam strengthens port operational efficiency, for instance, VPP by applying IoT such as using robots to automate warehouses with the computer control system; automatically monitor the information and schedule of containers entering and exiting ports, which are transmitted to the control center through existing information networks (Nguyen 2021) Moreover, VPP applied AI on the Edge technology, AGVs improve ports’ warehouse efficiency, AI Machine learning helps the port automate its manual producers, reduce the paper- documentation pressure, reduce errors in exporting/importing process, and save times that enhance the efficiency and speed of cargo transportation (Nguyen 2021) AI cameras with ACCR, ALPR, and driver-face recognition systems, support Vietnam’s seaports to ensure port security (Tsolakis et al 2021) Those technology upgrades port management and eases customer procedures, which facilitates the export-import of freight Additionally, Vietnam implements installed an automatic gate at its center seaports, such as Da Nang port, utilizing an AI-powered ACCR algorithm to identify the container code, identify the tractor/trailer license plate numbers, control the barrier's opening and closing with a PLC, reading the electronic weighing terminal's indicator, using a Robot (RPA) to carry out commands, sending information through the driver's smartphone app, reduce delivery times and save money on printing with all digitized documents (Lan 2022) Regarding the smart gate, every document-handling sector is considerably more convenient with the utilization of Internet- connected devices The ePORT software saves waiting times, lowers customer costs, improves 18 OMGT2321_GLOBAL TRADE OPERATIONS Individual Report, 2023 objectivity, guarantees information transparency, and lessens handling paperwork errors (APEC 2014) Consequently, the port management capacity and efficiency are strengthened by advanced technologies Logistics Challenge: High logistics costs Vietnam's logistics industry is facing high logistics costs Regarding Worldbank (2020), Vietnam’s logistics costs are about 20.9-25% of GDP, much higher than China (18%) and nearly three times higher than the US (7.7%) and Singapore (8%) (Nguyen 2021) High logistics costs arise from ICT investment absence at first Vietnam logistic enterprises lack capital, experience, and proficient management capacity Further, Russia-Ukraine war also increases Vietnam's export/import costs, reducing its competitive advantage over Asian countries (Jacobs & Soone 2022) Therefore, Vietnam applies IoT and WMS to lower transportation and warehousing costs to reduce logistics costs Through integrated diagnostics and sensors, trucks or vessels can be transformed into data-transmitting vehicles, allowing IoT systems to track their routes (Song et al 2021) Thus, IoT can map the shortest and most fuel-efficient vehicle routes, lowering transportation costs IoT permits data from data capture devices installed on vehicles sent directly to a web-based software platform for fleet management software tracking(Barcelo et al 2016) Hence, better truck or ship coordination can help to save fuel costs, reduce transportation expenses WMS automates the process of order fulfillment from sourcing raw materials to 19 OMGT2321_GLOBAL TRADE OPERATIONS Individual Report, 2023 shipping finished goods WMS handled all routine tasks such as picking-and-placing items, scanning barcodes and RFID tags, and immediately updating inventory records in the ERP system, optimized warehouse operation, reduced incurred costs (Ramaa et al 2012) Overall, IoT combined WMS can be considered a method to reduce logistics costs in Vietnam V CONCLUSION In short, from the “Global perspective”, the global supply chain is seriously disrupted due to a shortage of raw materials and intermediate inputs and supply delays Further, the port congestions contribute to exacerbating supply chain disruption As far as the "Industry perspective" is concerned, Vietnam's H&P industry has suffered from raw material shortages due to disruptions in supply chains Finally, “Country perspective” presented IoT, AI, and WMS, combined power tools to facilitate export/import processes, and freight hubs, and overcome high logistics costs VI REFERENCES Aboagye A, Burkacky O, Mahindroo A and Wiseman B (2022) When the chips are down: How the semiconductor industry is dealing with a worldwide shortage, World Economic Forum website, accessed 12 January 2023 https://www.weforum.org/agenda/2022/02/semiconductor- chip-shortage-supply-chain/ 20 OMGT2321_GLOBAL TRADE OPERATIONS