Competitive advantages for warehousing service businesses in Vietnam
Warehousing is an indispensable part of the supply chain as well as logistics services. According to the assessment, Vietnam has many competitive advantages compared to other countries in the region.
According to calculations by the Center for Industry and Trade Information (VITIC, 2022), the average inventory rate of the whole processing and manufacturing industry in the first nine months of 2022 is 76.4% (the average of 9 months in 2021 is 81.1%)
The inventory index of the entire processing and manufacturing industry was estimated as of September 30, 2022 is up 7.3% over the same period last month and up 13.4% over the same period last year (the same period last year increased by 28.2%). The inventory index increased on the one hand due to seasonal factors when suppliers had to stock up for the peak consumption season at the end of the year, on the other hand, the rate of release of goods began to slow down due to a decrease in demand. especially in the export segment. If demand in the export market declines more sharply and suddenly, it is likely that demand for storage will increase in the short term.
An increase in the inventory index in the economy will promote the need to rent warehouses to store and preserve goods. Especially the demand for temperature preservation of agricultural products, seafood and pharmaceutical products is increasing.
Vietnam has many competitive advantages compared to other countries in the region.
– Firstly, compete thanks to low production costs such as labor, land rent, electricity, water,…
– Secondly, benefit from the “China +1” policy of multinational corporations when choosing Asian countries, including Vietnam to set up branches or production facilities.
– Thirdly, is the movement of large FDI enterprises into Vietnam. Therefore, from the beginning of 2022, there have been many encouraging signs for the industrial real estate market and this growth momentum is forecasted to continue until 2023.
Specifically, in Ho Chi Minh and southern provinces: the ready-built warehouse market has a positive growth rate, with a supply of 3.52 million m2 of floor space. Warehouse rent is 3.9 USD/m2/month (equivalent to 90,000 VND), up 1% QoQ and 5% YoY. For ready-built warehouses, occupancy was 93%, up 7% QoQ and 3% YoY. Typical transactions come from the e-commerce, 3PL and retail industries. The total supply of industrial land in Ho Chi Minh City. Ho Chi Minh City and 4 key southern provinces including Dong Nai, Long An, Binh Duong and Ba Ria – Vung Tau remained stable at approximately 25,200 ha, up 1% YoY. For cold storage, food and pharmaceuticals are the key demand drivers, the total market supply by the end of the third quarter of 2022 reached nearly 900,000 pallets, an increase of more than 1% over the same period. This volume of pallets has reached 95% occupancy rate, with an average rent of 0.88 USD/day/pallet (equivalent to 20,000 VND), an increase of 3% over the same period (Savill, 2022).
In the North, JLL Vietnam recorded the occupancy rate for the ready-built factory sector at 98%, the rental price was 4.7 USD/m2/month (increased by 3.5% over the same period last year (JLL, 2022). In the Northern IPs, occupancy rate in this quarter remained at 80%, rapidly increasing compared to 75% in the same period last year. The average price of industrial land in the first quarter of 2022 reached USD 109/m2/lease cycle, a slight decrease compared to the previous quarter, but maintained a rapid increase with an increase of 9.2% over the same period last year.
In addition to increasing the scale and development forms of warehouses from traditional warehouses to distribution centers, processing and sorting centers, and cargo handling centers. Warehousing services are also invested in equipment, technology and people to increase value and serve customers.
The rate of application of warehouse management system (WMS) reached 41.4% (Ho Chi Minh City Department of Industry and Trade, 2022). Multinational enterprises are equipped with this system, when operating in the Vietnamese market, they share the system of the parent company. With domestic companies and large enterprises specializing in distribution warehouses, new warehouse management applications are being developed to achieve data synchronization between the delivery, inventory management, financial accounting departments. For small and medium enterprises, investment costs are currently a major barrier.
Many logistics companies have had strategies and plans to invest in developing modern warehousing systems, forming accredited logistics centers or licensed inland ports. However, in general, the foundation of Vietnam’s warehousing system is not of high standard, and many logistics enterprises have not yet provided a chain of services in the entire supply chain. Meanwhile, the demand for a modern logistics system combined with automation to meet the development of retailers and the e-commerce industry in Vietnam is very high. The supply chain logistics system lacks integration, has not applied digitization of total management, and automation in operation is still a new concept.
Therefore, modernization in the logistics management operation system to create a professional management system is a combination not only in modern infrastructure and technology application, but also in integration between modern and professional logistics service providers to create values for the logistics industry, for logistics to adapt and develop stronger.
Where to start to take advantage of the advantages and breakthroughs in the field of warehousing services?
Since most of the tasks involved in warehousing service management are interlinked in some way, a small breakdown in one work task can lead to costly errors in other tasks. next service. Using an inventory management system can help keep these glitch-free operations running. Take a look at Blue Yonder Warehouse Management Solution (BY WMS), a cloud-based warehouse management solution, built on the application of new technology, to empower each user. WMS simplifies the operation process in the warehouse, speeding the circulation of goods in the warehouse. The process is user friendly, helping them control their activities better, and be proactive at work. More importantly, the solution has upgraded the entire warehouse system of the business, making it faster, more accurate, and economical.
The warehouse management solution’s core function is to help managers and employees manage inventory through warehouse operations such as a receipt, storage, loading, unloading, loading, and transporting.
Blue Yonder has overcome the challenges of traditional IT in management by converging the best solutions. First of all, it is impossible not to mention the cooperation with Microsoft, a notable highlight that contributes to the added value of this solution. It was this collaboration that helped the company build a cloud-based ecosystem to optimize system responsiveness. The application of this technology has helped eliminate the technology cycle burden.
Blue Yonder has partnered with Microsoft to bring solutions to the market on the Azure platform. The Azure ecosystem has proactive monitoring and provides an extended and secure approach through the API Gateway, thereby promoting warehouse operations through the Luminate platform.
Blue Yonder warehouse management system helps businesses scientifically arrange warehouses to help find, transport, import, and export goods faster, saving time, and workforce. The arrangement and arrangement of products and scientific materials help to protect warehousing areas, increase labor productivity, and facilitate convenient and convenient ex-warehousing, management, and control. Warehouse management software (WMS) helps users improve the efficiency of inventory control operations.
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*Source: Vietnam Logistics Review