by Anh H. Nguyen
The next decade is looking good for Vietnam warehousing.
Vietnam is one of the fastest growing Asian economies, owing in no small part to the overall robustness of the manufacturing sector. In fact, manufacturing in Vietnam has been on the rise for years, accounting for 16.48 percent of the country's total GDP in 2019 to the tune of $43 billion. The recent China-US trade war fueled that momentum even more: foreign companies have shifted production from China to Vietnam for a while, but since 2018, the relocation of supply chains has become much more energetic. In 2019 alone, Foreign Direct Investment into manufacturing was up over 70%. Also in the same year, Vietnam's exports to the US increased by 34%, from $45.4 billion to $60.9 billion.
It was not only about exports, either: the rapid and steady urbanization rate in Vietnam coupled with a predominantly young middle class population mean demand, demand, and more demand, so there is still plenty of room for locally-based growth. And Covid-19, while devastating to many industries and businesses, gave the e-commerce sector a timely push. The worldwide disruption in the logistics chain due to Covid-19 has also accelerated the need for more factories and warehouses in-country, since dependency on China (or any other supply market, for that matter) proved to be a dicey endeavor. All these elements have combined to boost both warehousing occupancy and rents all over Vietnam, but especially around key industrial areas. For instance, during the first half of 2019, Dong Nai’s warehousing occupancy and rents leapt by 20% and 21% respectively. For Binh Duong's, it was 27% and 54%. Those are impressive, unheard of, promising figures, a testament to the untapped potential of Vietnam as the next manufacturing powerhouse.
The assets and liabilities of warehousing in Vietnam
Vietnam certainly has many innate advantages when it comes to the expansion and development of warehousing. The relatively low labour cost, estimated to be at least one half of China's, is often cited as the most critical factor when it comes to choosing Vietnam as the location to set up new industrial parks. The country possesses over 2000 miles of coastline and many trade ports, which poses a huge advantage, since shipping by ocean is vastly cheaper than shipping by air. Vietnam also shares a border with China, which allows the manufacturing segment to benefit from the expertise, equipments, materials, and demand surplus of the so-called "world's factory". Even before the trade war began, many cautious industrialists have adopted a "China Plus One" policy, maintaining secondary suppliers in Vietnam in case of geopolitical turmoil and natural disasters. Recent events including tariffs and the pandemic no doubt validated their prudent approach.
Industrial warehouses for rent in Vietnam
However, there are a number of problems that bog down the country's production still, preventing it from progressing to the "leading manufacturer" status. The first one would be the lack of highly-skilled labour. The level of industry expertise in Vietnam paints an uneven picture, which in some cases result in inferior products. The second one: a weak infrastructure system despite continuing investments, e.g. poor road conditions. The last one? Amateurish, inefficient logistics practices that are deeply rooted in an agricultural society. Alas, all of those are changing for the better, but much too slowly. These problems and the negative publicity associated with them could hold hesitant investor back from putting more resources in Vietnam, which in turn perpetuates the adverse cycle even more. The question is: what initiatives could businesses carry out to tackle, or at least lessen the impact of these issues?
Logistical pain points for warehouse executives
Let's address the logistics subject first, since labour skills and infrastructure are beyond the scope of this article and what technology can do (for now). The problems with managing warehouse operations are plenty, since they deal with large number of people in confined space with many synchronized activities. There are various locations with specific prerequisites to get in and get out, the problems with keeping track of employees clocking in, the cumbersome nature of sign-ins and access permission for each person, employee dissatisfaction, the disconnect between traffic/attendance and payroll/HR/management. With so many moving parts, things can get hectic fast.
An elegant solution: access control powered by facial recognition
For clients looking to maximize their workforce capability, streamline their operation processes, and provide their end users with exceptional services, automated face detection at warehouse distribution centers is a good first step. Facial recognition in Vietnam, while still considered new-fangled and futuristic by outsiders of the technology community, is actually quite mature and one of the more reliable forms of biometrics to date. In fact, managing attendance is an excessively simplistic umbrella - clients could actually implement facial recognition softwares for many purposes: utilize productivity hours, track operation, secure perimeter and control access, ensure uniform adherence, etc., By installing those unassuming checkpoints, clients could transform their business beyond measure. These are three bases that support facial recognition as a game changer for warehousing in Vietnam:
1. Facial recognition is a contactless kind of authentication. Merely by that virtue, it is exceedingly more hygienic than fingerprint scanning, which is a significant bonus in the time of Covid-19. It is also practically instantaneous while fingerprint scanning could take many tries due to sweat, dirt, etc., both wasting time and increasing the risk for cross-contamination and the spreading of diseases.
2. Facial recognition has the dual power of both a remarkably high rate of accuracy AND being nearly impossible to fake, which makes it superior to all systems using key cards to log in. The biggest drawback of key card systems is how extremely easy it is to beat them: unethical employees could simply use a proxy in their place. Stealing or cloning them is also a walk in the park: there are key card copier on sale for $10 each. If it is not a nightmare to have your facility violated for less than the price of a pizza, then I do not know what is. Even if no deliberate skulduggery takes place, "normal", responsible employees lose their key cards all the time, which adds to the overhead expenses. And security experts say that a large number of key cards are still in the possession of visitors and past employees, with the companies having no simple way to get them back. All these weaknesses are precisely why key card system is quickly becoming an outdated means of attendance management.
With facial recognition technology, unless unscrupulous individuals have identical twins or exact doppelgangers, cheating the system is out of the question. Why? Because the newly developed facial recognition technology by Palexy, for example, is 99% correct all of the time, which is a cut above human performance. The icing on the cake? Instead of allocating extra personnel to keep watch over the attendance by checking badges or viewing multiple monitors, which is susceptible to biases, fatigue, or dishonesty, the clients could simply put a kind of tireless "Smart guard" powered by facial recognition technology near each entrance. This also frees the employees from having to carry physical identifications with them (key cards, badges, lanyards,...) all the time or risk being locked out, and eliminates the cost of replacing/issuing those old-fashioned artifacts.
3. Facial recognition technology is extremely versatile. Since all relevant data are stored on the cloud, the solutions could be easily tweaked and tailored to perfectly match the clients' requirements. Here are a few examples:
-Despite its name, the technology range is not limited to facial features only. It could also detect larger patterns such as uniforms or safety gears to make sure that the staff is properly attired according to the clients' standards.
-Who works where, when, and for how long? Since the process is automatic, it could be seamlessly integrated with other functions such as real time & location tracking. This could make payroll management much smoother AND at a lower cost. Another possible offshoot is that the solutions could also help warehouse and factory workers better comply with occupational safety and health guidelines: e.g. if they exceed the set time for operating heavy machinery or working with dangerous substances, the system would alert the workers, the managers, or both. Traffic count and occupancy heat map are also valuable tools to determine the optimum number of employees in each zone, which could be used to plan future operations.
-Security is a huge concern of all warehouse managers. With automated facial recognition technology, they can rest assured that not only are their whole facilities protected, they can customize it so that restricted areas only allow in authorized personnel. Furthermore, specific settings can be applied to outside visitors to make sure that they are both approved and accompanied by known employees. The system also detects unknown, unregistered individuals, blacklisted troublemakers, or highly esteemed guests to swiftly notify the admins, all the while keeping a detailed log.
-If the need arises, more sophisticated packages are available. Palexy has been leading the regional market at tracking physical movements, and has now perfected the proprietary algorithms that monitor employees' undertakings to make sure they follow procedures .
The more people under your charge, the more difficult it is to keep things in check. Real problems call for real solutions. Throwing money at the problems is a legitimate one, of course, but let's all agree that where you throw the money matters above all. Choose your fixes wisely, or you may end up with more troubles than you begin with. Facial recognition softwares using AI technology is the ideal companion for large, complex enterprises that strives to improve their performance across all tasks. With a proven track record of successfully helping retailers, Palexy is developing new, exciting projects for manufacturers, warehousers, and industrialists in Vietnam. Be our guests in 2021!