What Do People In The Logistics Industry Say About ‘Supply Chain Disruption’?

In 2021, unprecedented situations like the Ever Given ship getting stuck in the Suez Canal, and the enforcement of social distancing measures under Directive 16 in Vietnam, have raised concerns about the fragility of supply chains, domestically and globally. Both traditional logistics and e-logistics are considered “disrupted”. But, is that true?

According to Huynh Minh Phung, Operations Manager at Lalamove Vietnam and Senior Manager at Lazada eLogistics Vietnam, also a former MBA student at RMIT Vietnam, instead of calling it “disruption”, we should just see this as a “congestion”.

With nearly 10 years of experience in logistics and e-logistics, in the series “Transform your possibilities” — co-produced by RMIT Vietnam and Vietcetera, Minh Phung shares the differences in nature, operating mechanisms and challenges in both traditional logistics and e-logistics, and most importantly the skills and knowledge required to succeed in this challenging field.

Technology — The difference between traditional logistics and e-logistics

After serving as the Assistant to Supply Chain and Production Deputy General Director at Hoa Sen Group, Minh Phung was appointed to the position of Deputy Transportation Director just after two years. He then took up the position of Distribution Supervisor at YCH Vietnam — Singapore’s largest privately owned supply chain management company.

Through these positions, Minh Phung gained a solid understanding of the traditional logistics industry, thanks to being in charge of high volume orders due to the nature of the B2B (business to business) model.

In the role of goods delivery and distribution manager, Minh Phung’s main tasks were to plan and supervise the distribution of goods from the warehouse, coordinate resources and survey new routes to optimize delivery time. To complete these tasks effectively, it requires a manager like Minh Phung to have firm strength and persistent spirit, in order to less depend on external factors such as drivers, weather, and traffic.

In 2016, witnessing the penetration of e-commerce platforms with advanced technology foundations, he decided to join the growing e-logistics industry.

During the four years he worked at Lazada eLogistics, Minh Phung’s work revolved around freight routes management, including planning, supervising the distribution of goods from the warehouse, coordinating resources and surveying new routes to optimize delivery time. His experience in the traditional logistics industry has helped him do well in the role of Senior Manager in the field of e-logistics.

Drivers and delivery routes are two factors that determine efficiency in the logistics industry. However, the e-logistics industry — with the automation advantage of technology — has optimized the process of driver management and delivery so much more. Moreover, the application of technology has created a new operating model, which is different from traditional logistics.

Due to the nature of e-commerce platforms that focus on B2B (business-to-business) and C2C (customer-to-customer) models, measuring the success of e-logistics is also different from traditional logistics, which is setting the number of active users as a basis rather than the volume of goods. Therefore, the delivery management system of e-logistics aims to diversify forms of delivery, helping both buyers and sellers actively choose.

In addition to creating a platform for exchanging goods, technology also helps to manage the delivery process more meticulously and accurately. Delivery time is automatically calculated according to the routes designed by people like Minh Phung.

The warehouse system is distributed across the country to each locality, helping to optimize the amount of goods exported and imported. Shippers and drivers are also equipped with knowledge of tracking processes and applications to be proactive in picking up and delivering goods.

To Minh Phung, technology has helped him manage the remote delivery system, so that he can meet the target of 85-95% assigned orders being delivered (order completion rate). This number is quite high for the traditional logistics industry, where it lacks the support of technology.

The truth about supply chain disruption

Although technology brings about new opportunities for the logistics industry, it also comes with unprecedented challenges. And those challenges have gradually emerged with the economic uncertainty ensuing from the pandemic.

Ho Chi Minh City has the highest demand for online shopping. At Lalamove, sales and the number of drivers in HCMC are three times higher than in Hanoi, both in the two-wheeler and four-wheeler segments. Every month, there are about 3000 two-wheelers and 1000 four-wheelers in operation.

When they just joined the market, the growth rate of Lazada e-logistics and Lalamove Vietnam was just around two digits per year. In the period of 2020-2021, the demand for delivery increased dramatically as the pandemic happened, about one and a half times to twice that of before.

Especially, in the time of social distancing, this number could reach 300-400% compared to the previous average.

With the growth in consumer demand (both before and after the pandemic), e-commerce platforms have to expand the number of drivers and optimize freight routes. Therefore,  when facing sudden and unprecedented changes in policy, Minh Phung has to come up with flexible solutions.

As someone who acts as a “bridge” between the drivers and the company, Minh Phung is responsible for communicating policy changes to drivers. At the warehouses, he also establishes the process of moving between different locations to ensure the health and safety of employees.

However, difficulties still come along with the adjustment of the directives, which include the congestion of goods and changes of delivery routes due to local restrictions. However, to say that this “congestion” is a supply chain disruption is not accurate. Once the policy has been adapted, the delivery time will be calculated more accurately and the shippers’ work will gradually stabilize.

Higher education builds the foundation to cope with difficult situations

While studying for a Bachelor of Business Administration in Australia, Minh Phung determined that he needed to study and practice hard to have a solid foundation before diving into a market full of fluctuations.

After returning to Vietnam, he decided to enroll in the MBA program at RMIT University Vietnam for further study right after graduation, as a way to acquire more up-to-date knowledge of the Vietnamese market, and expand his professional network in the country as a premise for his future career.

The openness in networking programs and the diversity of the RMIT students and alumni communities have helped him to be more flexible in his communication style when interacting with people in many different fields and segments.

When implementing projects in the traditional logistics industry, Minh Phung’s KPIs were as big as the volume of goods. There was a project that required him to dispatch 150-200 trucks a day to ensure progress, even though he had to work from 6AM to 2AM the next morning.

He must evaluate and work closely with the drivers to come up with possible change solutions, then discuss with and convince the company for the plans to be approved. Therefore, the ability to communicate flexibly is a skill that has helped him transform pressure into motivation.

Remote management of delivery routes is inherently risky, therefore capturing information and responding need to be quick. The professional relationships built when studying MBA at RMIT also helped Minh Phung capture a lot of information inside and outside the industry. From there, he can prepare more carefully before the orders are delivered.

The MBA program at RMIT has one advantage: students are allowed to register a number of electives according to their own interests and orientations. Coincidentally, Minh Phung has chosen to study further in logistics & supply chain management. Through “testing”, he found that he had the passion and potential to succeed in this industry.

When looking back at the time of studying MBA 10 years ago and comparing it to his current job, Minh Phung finds that RMIT University’s pioneering in introducing new disciplines into the program has inspired him a lot. It was the subjects he studied at that time that helped him in strict planning of product delivery, and gave him in-depth knowledge about consumer behavior.

Furthermore, the soft skills he learned from the MBA program such as communication and networking have supported him a lot in this challenging job.

AI — The “lever” that helps e-logistics stay ahead in the pandemic

When asked about the resilience after the pandemic, Minh Phung did not hesitate to share that “AI is the lever of e-logistics”. The development and improvement of AI helps the system to automatically suggest the right path for the shippers, especially when social distancing measures are being strengthened.

AI is also the basis for setting up “automated warehouses”, which could self-distribute orders to the destinations and drivers in charge according to QC codes. In addition, it also helps to improve the calculation of delivery time and track the delivery process from seller to buyer.

This automation is the future of e-logistics. Together with the growth in online shopping demand, the e-logistics industry post-pandemic will bring a lot of promise to the market. Keeping up with this trend is also key to becoming a potential industry leader.

AI, although possessing the power as a “lever”, is still only a tool. According to Minh Phung, to be able to stand firm in this volatile industry, a leader needs to hone both professional skills (auditing and reconciliation, route analysis and consumer behavior) as well as soft skills (flexible management and communication).

To Minh Phung, a leader in e-logistics and on-demand delivery should not limit themselves to one skill, but should be an “all-rounder” to understand the journey of an item from the factory to consumer. More importantly, it is the soft skills such as communication and crisis management that are the “weapons” that help him confidently cope with any unprecedented event.

The MBA program at RMIT University helps students hone their expertise in business and management, expand their professional networks, gain international experience, and become potential leaders.

The October semester is open for enrollment with many scholarships worth 25-50% of the entire program’s tuition fees, as well as opportunities to experience attractive subjects or sub-majors, catching up with market needs, highly practical ways of teaching and learning, which are convenient for busy working people.

Please find out more about scholarship opportunities and apply here today.

Adapted by Thao Van