Human factor at centre of Fourth Industrial Revolution

Ethnic communities in rural areas are provided with useful apps to manage their crops and produce

While this often comes with a reduced need for manual labours, the sustainability of these gains may only be ensured if businesses make the necessary investment in their people to operate and maximise the gains from the new technology.

After the traumatic experiences from recent pandemic waves, many businesses have changed their minds and decided to invest more in digital transformation to adapt to the new normal.

As an exporter of Vietnamese organic cinnamon and anise to fastidious international markets such as the United States, Japan, South Korea, and the European Union, the biggest concern for Vina Samex JSC was finding a way to ensure all input materials are completely organic. With raw materials sourced from a growing area of 4,000 hectares stretching across the three northern mountainous provinces of Yen Bai, Lang Son, and Lao Cai, the company quickly realised that this was not a task for office personnel. Instead, it decided to invest in machinery, technology, and skills training for the 3,000 households growing and supplying these raw materials.

At the end of 2020, the company developed an agricultural association handbook app to track progress at each material area, providing clear visibility on the origin of each batch of cinnamon and anise arriving at its facilities and ensuring that they satisfy organic standards. Farmers in the Vina Samex supply chain are now required to install the app, set a daily care schedule for their crop, and then regularly report on progress. If a seedling is infected, the growers can take a photo and upload it to the app so that company experts can provide prompt advice.

According to project manager Nguyen Ngoc Minh, the organic assessment unit can check the farmers’ handbook to see how they have raised each crop. This not only ensures traceability and the quality of raw materials, it also saves the company significant expenses on staffing and travelling to supervise materials areas.

“New technology in agricultural production can save farmers quite a lot of effort. It also allows us to detect issues sooner and provide them with support and education to properly handle and care for their crops. People can also calculate their revenue based on the output they report through the app, which gives them more financial certainty,” said Minh.

However, the company has also encountered some difficulties such as supplier households being mainly ethnic minorities with lower awareness of technology. Many of these people are illiterate or do not use smartphones. Therefore, each area has a team leader to guide and support people.

The key to reviving business

Businesses large and small are now investing in technology and innovation, from mountainous to busy urban areas, edged on by pandemic disruptions like social distancing and limited contact, as well as time pressures.

Bui Van Hung, director of Thuy Son Agro-Forestry Cooperative in Bac Ha district of Lao Cai province shared that he decided to spend more than VND300 million ($13,000) on a solar drying house earlier this year. His decision came after the pandemic made the production of the main agricultural product of the cooperative, bamboo shoots, more difficult, while is also reduced prices. Most workers of the cooperative have moved to the city to find new jobs. Unfavourable weather conditions and the lack of workers slowed the manual processing of bamboo shoots, resulting in more products spoiling.

“The drying house uses solar energy to dry the product slowly, preserving the colour and taste. Additionally, it is hygienic, so it can be sold at a higher price than products dried by coal,” Hung said, adding that with the new technology, he only needs half as many employees as before.

Elsewhere, garment producer Viet Thang Jean Co., Ltd. has also automated production to replace 800 workers. According to Pham Van Viet, chairman of the board, an automatic laser machine can replace 49 manual sewists and takes less than 10 seconds to create a product – three minutes faster than the old technology.

Currently, 30 per cent of large enterprises in the textile and garment industry apply automation technology to at least one stage of production, according to the Ministry of Industry and Trade.

Improving employee skills

Although highly appreciating the benefits of technology for business, many economists point out that technology cannot completely replace people and that, besides investing in technology, it is extremely important to invest in human resources.

A recent government report to the National Assembly emphasised the importance of training tech-savvy and skilled human resources with high technical qualifications to meet the requirements of the Fourth Industrial Revolution and restructure the labour market.

Recognising the need for good workers to complement its technology, Grab Vietnam entered a partnership with the General Directorate of Vocational Training (GDVT) under the Ministry of Labour, Invalids and Social Affairs on July 20 to support the development of vocational skills for its driver-partners across the country.

The GDVT and Grab Vietnam expect to develop national vocational skills standards related to Grab’s fields of operation and coordinate in assessing and issuing national certificates for drivers.

Meanwhile, ASL Law managing director Pham Duy Khuong shared that his company has looked into using AI to draft contracts. However, they found that while AI can ensure the accuracy of the information, it lacked the necessary judgment and flexible thinking of experienced members.

Dinh Thi Quynh Van, general director of PwC Vietnam, also highlighted that human resource transformation remains the most important factor in the success of a business’ digital transformation process. “When it comes to what needs to change the most, 97 per cent comes down to the human factor, because the revolution is not only about mindlessly adding new technology, it is about changing the way we think,” she said.

Simon Matthews - Regional manager, ManpowerGroup Vietnam, Thailand and Middle East Foreign-invested enterprises (FIEs) in the manufacturing and processing industry will shift towards automation and apply more technology. Thus, it is forecasted that the workforce structure will have a fundamental change to higher demand of medium- to high-skilled workers instead of low or unskilled workers as before. According to the survey titled “The situation and demand of working skills at foreign-invested manufacturing and processing businesses in Vietnam 2021-2023”, jointly conducted by ManpowerGroup Vietnam and the Institute of Labour Science and Social Affairs, most businesses are using cutting-edge technologies from a high to very high level (32 per cent) or medium level (63 per cent). Only 5 per cent are at the low and very low level. Moreover, 94 per cent of them will enhance their technology and automation plan in the next three years, projecting a notable trend in high-skilled labour demand. FIEs have planned to expand manufacturing operations in Vietnam in an effort to diversify supply chains. This will bring about great opportunities for Vietnam to take manufacturing to the next level, creating thousands of meaningful jobs for the local workforce. The survey also reported that more than two-thirds of FIEs are focusing on utilising re-training and enhanced training for their workers. In the future, most of them plan to re-train the workforce (86 per cent), considered as a sustainable approach and contributing to enhancing working capacity and business performance in the middle and long term. Due to the speed of digital transformation and technological revolution globally, 65 per cent of all jobs that Gen Z will carry out do not even exist yet, and nearly 50 per cent of all roles in manufacturing will need to change within the next 3-5 years as the industry transitions to become fully digital. In that context, employers would need to develop an effective and holistic workforce strategy. As the world of work is changing fast and it becomes more challenging to find workers with suitable skills, organisations must build, bridge, and borrow the skill sets they need. That will be critical for their success in the short, medium, and long term, especially in the digital age.