Going smarter remains realm of the giants

June 21, 2022 | 11:00
In anticipation of huge opportunities in the Fourth Industrial Revolution, leading Vietnamese manufacturers are developing smart factories. However, there remains a long journey to go for Vietnam’s manufacturing industry to make it a success.
Going smarter remains realm of the giants
Not enough small businesses take smart manufacturing seriously, Photo: Shutterstock

In April, Tan Hiep Phat Group (THP Group), one of the biggest beverage producers in Vietnam, officially put into operation the innovative cloud-based platform SAP Ariba as one of the key projects in its digital transformation strategy in 2021-2026, aiming to eventually make revenues of $1 billion.

THP has partnered with SAP in its digital transformation journey for a decade. During the pandemic, digital transformation was accelerated successfully, and now procedures such as contract signings are automated, with e-signatures being used.

The company has thus far garnered strong results thanks to this digitalisation. THP’s exports grew 30 per cent on-year, with its main markets currently North America, Japan, Australia, the Netherlands, South Korea, and Singapore.

THP is one of several locally-invested groups that are embracing advanced technologies in their manufacturing, with others including Vinamilk, TH Group, Thaco Madaz, and VinFast.

In February, TH Group began construction of a high-tech foodstuff factory in the northern province of Thai Binh costing around $27 million. To be completed next year, the facility will boast equipment imported from Europe, the US, and Japan.

TH Group, owner of the TH true MILK brand, has been continuously making investments in technology applications in its factories since 2009. The conglomerate’s smart manufacturing journey was marked when its $1.2-billion Nghe An factory has been recognised as the most concentrated large-scale high-tech dairy cow production project in the world by the Asian Book of Records.

The group’s milk products have also won awards at home and abroad, such as at World Food Moscow from 2015 to 2019, ASEAN Best Food Product 2015, Gulfood Dubai 2016, the Stevie Awards 2018 and more.

Hitting new highs

Elsewhere, Vinamilk has changed the operational model towards developing smart storehouses, applying a model originating from Germany. Moreover, the conveyor system at Vinamilk is supported with automatic product boxing, thus increasing productivity and accelerating assembly compared to traditional methods.

Supported by leading advanced technology and robots, Vinamilk’s productivity has continuously increased and greatly contributed to helping Vinamilk retain its No.1 position in the local dairy market.

Last year Vinamilk’s revenues hit a new record high, reaching over $2.6 billion and up 2.2 per cent on-year. The growth momentum has continued in the first quarter of 2022 with revenues rising over 5 per cent on-year to over $603 million.

Like the dairy giant, Vingroup is a valuable name in smart manufacturing. In 2019, its car-making arm VinFast put into commercial production the country’s first-ever automobile manufacturing factory in the northern city of Haiphong. With uninterrupted connection and high automation, its processes are on par with the best in the world and fully meet tech trends in the 4.0 era.

Also that year, the 15-hectare Vinsmart manufacturing plant was officially put into operation with the capacity of 125 million products a year for the local market and global exports. The facility manufactures smartphones and other high-tech devices with cutting-edge production lines, carving out a spot for Vinsmart on the world map of high-tech companies. The plant is expected to become one of the most modern in the region, with production lines imported from the US, Germany, Japan, and South Korea.

Meanwhile, Truong Hai Auto Corporation (THACO) began smart manufacturing at its Mazda automobile manufacturing plant in 2018 when it was inaugurated in Quang Nam province. The $528.6-million facility is equipped with cutting-edge technology, meeting the global standards of Japan’s Mazda Group.

Employing thousands of workers and operating a distribution network of about dozens of showrooms nationwide, THACO uses product lifecycle management software, machining design software, and product verification solutions from Siemens for research and development (R&D).

Long road to go

The 13th National Party Congress resolution, which set the target for Vietnam to become a developing country with modern industry and upper-middle-income status by 2030, also sets out the plan for the country to become a developed and high-income country by 2045.

Several resolutions from the Politburo involve directly speeding up industrialisation and modernisation on the basis of scientific and technological development and innovation, and the integration of information and automation application in industrial production to create intelligent production processes, smart factory models, and smarter products.

To this end, the Ministry of Industry and Trade (MoIT) is promoting development of smart factories. In late May, the MoIT in coordination with the northern province of Vinh Phuc and Samsung Electronics Vietnam, kicked off a smart factory development programme. It aims to help 50 businesses to develop smart factories this year and next, with the first phase benefiting 14 companies in Bac Ninh, Vinh Phuc, Hanoi, Hung Yen, and Ha Nam.

Experts predict that businesses will be able to increase productivity by 30 per cent when they carry out smart manufacturing. However, not all manufacturers are yet paying attention to such processes. Financial capacity, human resources, and operational scale are among the reasons, meaning smart manufacturing remains the playground of only the biggest players.

According to research released by the World Bank in East Asia and the Pacific in November 2021, processing and manufacturing among Vietnamese firms involve 70 per cent of machines being operated by humans while 20 per cent are handmade, 9 per cent use computer-controlled machines, and less than 1 per cent use advanced technologies like robots.

Moreover, over three-quarters of surveyed small- and medium-sized enterprises, as well as two-thirds of bigger groups, still have doubts about the benefits of investing in advanced technology.

A report by CSIRO, Australia, and the Ministry of Science and Technology last November also states that the number of manufacturers involved in R&D and innovation activities remains low.

A recent survey by the MoIT also shows that the majority of businesses are on a low level of smart manufacturing compared to the requirements of smart factories. Their application of Industry 4.0 technologies remains limited, at just 2-3 per cent.

Nguyen Duc Hien, deputy head of the Central Economic Committee, admitted that development of smart manufacturing in the country’s process of industrialisation towards 2030 will face challenges. However, he noted that Vietnam’s ICT industry is developing rapidly. The rapid development of the digital economy and commercialisation of 5G, as well as development of core infrastructure with high-speed broadband, are a good foundation for the acceleration of smart factories,” Hien said.

By Minh Anh

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional